Since 2006, Abu Dhabi Ports has been the pulse of trade in the emirate by managing eve service and innovative partnerships, our entities are ensuring that everything is faster, s
Khalifa Port Free Trade Zone, the largest Free Zone in the Middle East covering an area it one of the most attractive destinations for foreign direct investors to grow and expan
EXPANDING POSSIBILITIES & RAISING EXPECTATIONS
ery commercial port in Abu Dhabi. By focusing on cutting-edge technology, world-class safer and more cost-effective – which means that your needs are always in good hands.
of 100sq km, is fully integrated with the 2nd fastest growing port in the world, making nd their business.
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CONTENTS Chapter 1 | Vision 2021
14 18 24 28 30 34
1.1 Innovation In Mind
The story behind Vision 2021: The UAE’s national agenda to create a global hub
1.2 In Numbers
A snapshot of the modern economy
1.3 Private Sector Nationalisation
Cultivating the Emirati workforce in the Knowledge Economy
1.4 Energy Innovations
How the UAE pioneered next-generation energy solutions for global use
1.5 Sustainability Pioneer Transforming the UAE from oil-producing nation to a leader in sustainable living and design
1.6 Science in the Emirates
Science, the Knowledge Economy and the 100-year race to Mars
Chapter 2 | Creating the Hub
38 40 42 45 52 58
2.1 The Islamic Economy Positioning the UAE at the centre of the $3.3 trillion global Islamic economy
2.2 The Heart of Global Finance
How DIFC pioneered global finance and the future of fintech and blockchain
2.3 The Future of Oil and Gas
Weathering the storms since the global oil price crash in 2014
2.4 The Global Logistics Super-hub
Building on a history of trade and export to enhance global connectivity, followed by an interview with NAFL president, Nadia Abdul Aziz
2.5 Flying High
Connecting trade, tourism and logistics, GCAA chairman Sultan Bin Saeed Al Mansoori shares the UAE’s aviation strategy
2.6 A Tale of Two Smart Cities
How the UAE’s Smart cities enhance connectivity, innovation and sustainability
UAE 2018 — Creating a global hub
09
76 80
3.7 A Capital for Culture
Showcasing record-breaking cultural developments and attractions across the UAE
3.8 Destination Maker
Mohamed Alabbar, Chairman of Emaar Properties, on Downtown Dubai and Dubai Creek Harbour
Chapter 4 | Megaprojects
COnTENTS 84 86 60 90 92 64 68 69 70 74 Chapter 3 | Tourism & Culture 3.1 The Centre of Travel and Tourism How the UAE forged a reputation as one of the most visited places on earth
3.2 In Focus: Ajman
Director General of Ajman Tourism Development Department, HE Saleh Mohamed Al Geziry, on the emirate’s tourism strategy
4.1 UAE Megaprojects
The next generation of projects transforming the UAE skyline
4.2 Expo 2020
On site at Expo2020 Dubai with Expo Director General, Reem Ebrahim Al Hashimy
4.3 Dubai World Central
The aerotropolis set to transform global aviation
4.4 Bluewaters
Dubai’s newest offshore entertainment and leisure haven
3.3 In Focus: Dubai
H.E. Helal Saeed Almarri, Director General, Dubai Tourism, reveals Dubai’s plans to attract 20 million visitors by 2020
3.4 In Focus: Sharjah
H.E. Khalid Jasim Al Midfa, Chairman of SCTDA, on the story behind Sharjah’s 2021 tourism vision
3.5 The Tourism Revolution Simon Press, Exhibition Director ATM, writes about the UAE’s work to promote sustainable tourism
3.6 Culture in the UAE
Traditional Emirati culture and its significance to UAE tourism
UAE 2018 — Creating a global hub
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COnTENTS 106 94 110 96 98 112 100 116 118 104 Chapter 4 | Megaprojects 4.5 Kizad
Behind the scenes at Abu Dhabi’s integrated industrial free zone
4.6 The Tower, Dubai Creek Harbour
5.2 Humanitarian Aid and FDI
The story behind the UAE’s reputation as the most generous nation on earth
5.3 Creating the Future
How the UAE champions innovation to spearhead global development
Building the world’s next tallest structure in a new urban destination
Chapter 6 | Doing Business
4.7 UAE Theme Parks
The world-class parks boosting leisure tourism in the UAE
6.1 SMEs in the Emirates
Philip Atkinson, Grant Thornton International, outlines the opportunities for SMEs
4.8 The UAE’s Mega Malls
The projects supporting a retail industry that generates 11% of GDP
Chapter 5 | The Global Stage
5.1 Invest in the Emirates Maya Turk, VP, MENA Research Partners outlines the UAE’s FDI opportunities
6.2 Distribution, Agency and Franchising
Clyde & Co’s Benjamin Smith and Joycia Young explain franchise opportunities and challenges
6.3 Establish and Operate your SME
Links Group founder John Martin St. Valery shares practical advice for business set up in the emirates
An official publication of the Embassy of the United Arab Emirates in London Published by GT MEDIA ME Publisher: Khaled Algaay Editor: Melanie Mingas Copy Editor: Ben Watts Art Director: Steven Castelluccia Business Development: Tom Kennedy Contributors: Tom Kenning Matthew Martin
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UAE 2018 — Creating a global hub
Published by 20-22 Wenlock Road, London N1 7GU, United Kingdom +44 207 608 5137 UAE@gtmediame.com www.gtmediame.com
Copyright 2017. The entire contents of this publication are protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means: electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. The views and opinions expressed by independent authors and contributors in this publication are provided in the writers’ personal capacities and are their sole responsibility. Their publication does not imply that they represent the views or opinions of the Government of the United Arab Emirates or GT Media ME and must not be regarded as constituting advice on any matter whatsoever, nor be interpreted as such. The reproduction of advertisements in this publication does not in any way imply endorsement by the Government of the United Arab Emirates or GT Media ME of products and services referred to therein.
LETTER FROM THE AMBASSDOR
CREATING A GLOBAL HUB
I
n fewer than five decades, the visionary leaders of the United Arab Emirates have transformed a vast desert into a series of thriving metropolises where people from all over the world come to live, work, learn and trade. We are now implementing an ambitious agenda for change; boldly rewriting the rules of the economy in ways no country has ever done, and creating a global hub for trade, aviation, Islamic finance and tourism. Supporting this commitment, we will invest heavily in key economic sectors over the coming years, creating world-class infrastructure and arming the next generation with the skills required to navigate a labour market that will be revolutionised by the Internet of Things. Already one of the most advanced nations in the world, the UAE will pioneer IoT connectivity, 3D manufacturing, robotics, Smart cities, driverless transport networks and space exploration — restructuring the economy to reduce the GDP contribution of oil to zero within 50 years. The world has changed; no longer can we depend upon the economic models that underpinned growth in previous decades. Each country has a responsibility to contribute to a stable and prosperous future for the whole world — one built on innovation, sustainability and a fair society that provides opportunity to all. It is with great pride that, through this publication, I present the story of the UAE’s leading work in these areas. Building on the legacy of our founding father, the late Sheikh Zayed bin Sultan Al Nahyan, we have cultivated a nation where people from all over the world can prosper. Today, on those foundations, we are creating a global hub that champions humanitarian values, innovates the technologies that will drive the future, and is a force for peace on the global stage. We strongly believe in sharing this story with our global partners so that together we may benefit from the success of this global hub, while we address the challenges facing our world. We also wish for our valued peers, partners and friends in the United Kingdom to know the UAE is open for business. HE Sulaiman Hamid Almazroui Ambassador of the United Arab Emirates to the United Kingdom
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1.1 | VISION 2021
Innovation in Mind UAE Vision 2021 is the United Arab Emirates’ National Agenda to create a global economic, entertainment and commercial hub for more than two billion people by placing itself at the heart of the world economy for tourism, trade, innovation and finance.
T
he decades of rapid development that have ensued since the unification of the Arab Emirates in 1971, need no introduction. Setting the pace of development, Dubai was the fastest growing city in the world between 1975 and 2008, ahead of Singapore and Hong Kong. As a country, over the last decade the UAE has unveiled the world’s tallest building, almost 400 miles of additional coastline, an entirely new aerotropolis, new logistics and free zones and an automated metro. Through the vision of the country’s founding fathers, a modern and progressive nation has emerged, which today leads the world in innovation, development and its ability to rise to the challenges of the Fourth Industrial Revolution. In 2021, the UAE’s 50th national day will not only celebrate the country’s golden jubilee but the start of a new chapter in the UAE’s story, for which a series of ambitious transformations will be in place, to cement the country’s position as a global economic, touristic and trade hub for more than two billion people. The strategies driving this are collectively known as UAE
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UAE 2018 — Creating a global hub
Vision 2021, launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, in 2010. In addition to the Vision’s focus on the future of the UAE, it is rooted in the same principles that guide the National Work Programme, launched by His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE. UAE Vision 2021 aims to make the UAE one of the best countries in the world under six national priorities: society and national identity; fair judiciary; competitive Knowledge Economy; education; healthcare; and environment. Known as pillars, these elements are addressed under four areas: an ambitious and confident nation grounded in its heritage; a strong union bonded by a common destiny; a competitive economy driven by knowledgeable and innovative Emiratis; and a nurturing and sustainable environment for quality living. The directives of UAE Vision 2021 cascade into each emirate’s individual plan for long-term economic prosperity, which roadmaps the development of each autonomous jurisdiction at a localised level, through to 2030.
VISION 2021 | 1.1
“We are determined to respond proactively to all challenges in a way that will bequeath to future generations a legacy worthy of the pioneers who founded our great nation, a legacy defined by prosperity, security, stability and a life filled with dignity and respect” His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai
The Knowledge Economy
40%
Of all employment to be generated by the Knowledge Economy by 2021
3.3%
Non-oil growth projected for 2017
20%
Contribution of oil to UAE GDP by 2020
0%
Contribution of oil to UAE GDP by 2070
70%
Collapse in global oil prices since 2014
84%
Of all firms in the UAE are classed as SMEs
72%
Of UAE working population employed by SMEs
45%
Contribution of SMEs to UAE GDP by 2021
120,000 5,000
British expats in the UAE
British companies have invested in the UAE
The most transformational element of UAE Vision 2021 is the plan to reconfigure the country’s economic DNA, as focus shifts from the oil and gas industry to the creation of a Knowledge Economy that will generate up to 40% of all employment opportunities by 2021. The diversification from a hydrocarbon-based economy was mapped out in the 1970s, yet the collapse of global oil prices by more than 70% since mid-2014 has shaped growth of the Knowledge Economy ahead of schedule. Much of this growth has been organic as multinational organisations established regional offices in the country and infrastructure, technology, manufacturing, logistics, tourism and real estate reaped the benefits of heavy foreign investments. As these trends continue across Abu Dhabi and Dubai, with further development ongoing in other emirates, the UAE will limit oil’s contribution to national GDP to 20% by 2020, with it eventually falling to zero within 50 years. Progress to date is strong: with the smallest oil reserves, Dubai now generates a mere 5% of its GDP from oil. Although Ras Al Khaimah is not an oil exporting emirate, its industries are heavily reliant on the oil price and, despite this, upwards of 30% of GDP is generated by manufacturing, with tourism contributing almost 20%. These achievements gained recognition from the IMF in its annual report on the country, which states: “The UAE is adjusting well to the new oil market realities. Its large financial buffers, diversified economy and the authorities’ robust policy responses are facilitating the adjustments while safeguarding the economy and the financial system.” By its calculations, non-oil growth is projected to rise to 3.3% in 2017, reflecting more gradual fiscal consolidation, stronger global trade and higher Expo 2020 investment. Oil GDP is projected to decline by 2.9%, reflecting agreed OPEC cuts in production.
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1.1 | VISION 2021
Achieving the UAE’s National Priorities Priority: Cohesive society and preserved national identity Performance: National Identity Index, UAE University 96.2% (2016); Social Cohesion Index, Ministry of Community Development 93.11% (2016); UN Global Happiness Index position 21 (2017) Priority: Safe, public and fair judiciary Performance: World Bank Doing Business, position 25 (2017); World Economic Forum Global Competitiveness Report, position 7 (2016-7); sense of security measured by Ministry of Interior 93.6% (2016) The move away from hydrocarbons is not the only economic challenge facing the world today. While the Digital Revolution of the early millennium connected new areas of everyday life, the continued development of these technologies, in tandem with the introduction of the Internet of Things (IoT), is radically changing the labour market. Automation and IoT blur the lines between human and machine interaction, with the first “teachable” systems now available. The Knowledge Economy will be vital to the preservation of the UAE’s status as a leader in innovative technologies and a pioneer of evermore sophisticated systems. As a country committed to its status as a global innovator — and home to the first Smart city in the region, Dubai — the UAE has established a number of programmes, organisations and independent bodies to drive the practical use of emerging capabilities to solve common issues. Part of their work includes boosting the UAE’s performance in the global Ease of Doing Business Index, enhancing waste and recycling management, introducing new healthcare schemes and offering more support to promote higher education.
UAE: The place to do business The entrepreneurial culture of the UAE has been essential in fostering the necessary drive to succeed in such frameworks as UAE Vision 2021. Currently, Small and Medium Sized Enterprises (SMEs) account for 84% of all firms in the UAE, collectively employ 72% of the country’s working population and contribute 40% to national GDP, with work ongoing to increase this to 45% by 2021. The majority of SMEs are established by expatriates. However, following in the footsteps of the country’s biggest business names, a significant proportion of the country’s 400,000 young nationals will enter the world of business over the coming years, incentivised by the government to balance the high demand for public sector jobs among Emiratis. With UAE Vision 2021 designed to position the economy to adapt to developing trends and changing global realities, the agility of the SME sector will be an integral force for growth. The government has outlined its plans to respond to changing economic realities with new strategies to foster the progression of key industries and services where the country can lead global standards. Both indigenous and international companies, SMEs and large corporations alike, will benefit from this as the country continues to attract more stakeholders.
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UAE 2018 — Creating a global hub
Priority: Competitive Knowledge Economy Performance: Gross National Income Per Capita rank 10 globally (2016); Global Competitiveness Index rank 16 (2017); Ease of Doing Business Index rank 26 (2017) Priority: First-rate education system Performance: Upper secondary level graduation rate 96.7%; Preschool enrolment 91% (2016); Share of students with high-level Arabic skills 67% (2016) Priority: World-class healthcare Performance: Healthcare Quality Index position 28 (2016); 2.53 physicians per 1,000 population; 3.16 nurses per 1,000 population Priority: Sustainable environment and infrastructure Performance: Air Qualitry Index score 76% (2016); Networked Readiness Index position 26 (2016 report); Quality of Air Transport Infrastructure position 2 (2017); Quality of Port Infrastructure position 2 (2017); Logistics Performance Index position 13 (2016); Online Services Index position 8 (2016)
VISION 2021 | 1.1
The UAE’s reputation as a business and investment destination is reinforced by its performance in a number of global rankings, which underline the strength of the Knowledge Economy and the unique advantage this gives the UAE as an Arab nation on the global stage. In the global Ease of Doing Business Index, the UAE has consistently scored highest in the region, specifically for dealing with construction permits, paying taxes, and ease of connecting to electricity. It is expected Dubai will top the Index in 2021. The UAE also ranked 16th in the Global Competitiveness Index for 2016-2017 issued by the World Economic Forum, with particular regard to technological adoption and business sophistication. Further recognitions have seen the country gain 21 points on the Market Efficiency Index, rising to seventh position globally, and 10 points on the Quality of Institutions Index. The UAE ranked first among Arab countries in the Ease of Starting a Business Index as a result of actions taken by the government to facilitate business and enhance competitiveness. Most recently, the UAE improved its standing in the 2017 Global Innovation Index, ranking 35th globally and first in the region, an improvement of six places on 2016. Predominantly this is supported by the establishment of free trade zones, of which the UAE has more than 37, clustered by business category. Free zones boast favourable tax and business regulations, with 100% foreign ownership of the enterprise permitted and exemption from import and export taxes. Quality of life also fares highly; the National Agenda seeks to place the UAE among the top countries in the world in income per capita — which currently stands at US$67,117, equivalent to 311% of the world average — and ensures high levels of national participation in the private sector workforce. The UAE is also one of the happiest countries in the world with a dedicated Minister of Happiness, Her Excellency Ohood Al Roumi, appointed in 2016. The country moved up to 21st rank globally in the 2017 UN World Happiness Report, landing the title of Happiest Country in the Arab World for the third consecutive year. Education plays a key role, with existing systems and teaching methods soon to be adapted to equip all schools, universities and students with Smart systems and devices as a basis for teaching, projects and research. Significant investments will be made to promote and reinforce enrolment in preschools as the UAE continues to recognise the role early development plays in shaping children’s future potential. The opportunities for the private sector during this period of unprecedented change in an already ambitious nation, are presented in many areas. Combining an appetite for innovation with the power of a robust SME, entrepreneurial and start-up ecosystem, in 2016, Dubai Future Foundation launched the Dubai Future Accelerators programme designed, as it describes, for “cutting-edge entrepreneurs, in partnership with the government of Dubai, to use the city as a living testbed for creating solutions to the global challenges of tomorrow.” The mission statement continues: “[We] imagine, design and create the future by facilitating partnerships between for-
“Cutting-edge entrepreneurs, in partnership with the government use the city as a living testbed for creating solutions to the global challenges of tomorrow”
ward-thinking entrepreneurs and the government, using the city of Dubai as a living testbed.”
ON The horizon The UAE continually scrutinises the experience of establishing a successful business in the country and responds with measures devised to streamline and assist in the process. In the first major financial development since the opening of the UAE Stock Exchange, VAT will be introduced across the country, and a select number of other GCC states, on January 1, 2018, bringing an even higher level of diversity and maturity to the UAE economy. The adoption is part of a GCC-wide framework, which will see all six countries introduce legislation over a 24-month period. It follows recommendations from the IMF in 2016, after the collapse in oil prices the previous year contributed to oil-exporting countries in the MENA region losing $340 billion. A standard rate of 5% will be applied to all goods, with zero rate and exemptions for education, health, real estate and local transport, balancing the need to raise government income with a low rate of taxation. In its first year of implementation, it is expected VAT will raise 1.2 to 1.6% of GDP for each Gulf state, totalling around AED12 billion for the UAE. The coming 24 months will also see final preparations begin ahead of Expo 2020, with a number of high-profile construction projects nearing completion and the addition of entire new sectors to the leisure, entertainment and tourism industries. As the UAE continues to prosper, the UK has maintained a strong political and commercial relationship with the country and today around 120,000 British expatriates live in the UAE. According to figures from UK Trade and Investment, there are 779 commercial agencies and 4,762 British brands capitalising on the country’s geographic position, strong economic outlook and business environment. As the UAE embarks on unprecedented development and diversification plans, British businesses will be uniquely placed to capitalise on this historic relationship and share in the country’s success.
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1.2 | VISION 2021
In Numbers
UAE
The UAE’s primary areas of investment, economic projections to reduce dependency on oil revenues, and the plans for a prosperous future.
Nationalstats UAE Population 6,302,500
UAE GDP Dirhams
2.0
total workforce 2014 aged 15 years or above 1.47t
Inflation declined in three emirates
1.58t
1.0
0
9,86000
0.5
-5
510.9b 2006
2014
2015
-15
120,000 British nationals
-20
GDP growth %
4.0 3.5
Consumer spending Dirhams
1000
non-oil growth 3.6%
3.0 2.5 2.0 1.5
2.6% overall
Down from 805.6b
To 792.5b
800
600
2014
2016
UAE 2018 — Creating a global hub
Ajman
Fujairah
-17%
Ras al-Khaimah
Inflation increased %
+2.5
2.5 2.0 1.5 1.0
1.0 0.5 0
-.1%
2016
population 2015
resident in the UAE
-.5%
- 10
0
9,157000
%
5
population 2010 population 2014
018
August 2016 against August 2015
1.8 t 1.5
8,264,000
Inflation
0.5 2015
2016
0
+ 0.6
+0.5
+ 0.3 Abu Dhabi
Dubai
Umm Al Quwain
Sharjah
VISION 2021 | 1.2
Oil and the UAE 5.8%
Of world’s proven reserves
Government investment per sector 72.2% of total investments in 2015
25%
20%
16.2 %
15.3 %
14.9 %
Real estate
Manufacturing
Investment
Investment channelled to transport, storage and other telecommunications sector
13.2 % 12.6 %
of GDP contributed by oil export revenues
AED145.8 billion Public sector contribution
AED208.6 billion Private sector contribution
> 6,300 Factories
worth more than AED103.1 billion in operation across UAE in 2016
30%
of state GDP contributed by oil revenues
2015 private and public sector investments in strategic projects in the fields of energy; tourism; material, electronic and logistic infrastructure; and financial services
Manufacturing
of sector is F&B manufacturing, the largest share
24%
Oil and natural gas
Governmental services sector
Primary mineral industries followed by
14.9%
Non-metallic raw products industry
6.6%
VAT at 5%
Refined oil products
ÆTo be introduced in UAE from January 1, 2018
Chemical industries
ÆOther GCC countries to implement January 1, 2018
6.5% 5.5%
Metallic product industries
ÆForecast to raise 1.2 – 1.6% of GDP in the first year ÆAED 10 – 12b generated by UAE VAT
Average income per person $67,117 (2017) Equivalent to 311% of the world average
UK/UAE Trade The UAE is the UK’s largest civil export market in the Middle East and 12th largest globally. UK-UAE bilateral trade in goods and services reached £12.95 billion in 2014. Around 50% of UK goods are re-exported to a regional MENA market worth over £150b.
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ADVERTORIAL
H.E. Hamad Buamim, President and CEO, Dubai Chamber of Commerce and Industry.
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UAE 2018 — Creating a global hub
ADVERTORIAL
The voice of the business community Trade, exports and MICE activity all increased significantly in 2016, with Dubai leading national performance across a number of key economic areas. As H.E. Hamad Buamim, President and CEO, Dubai Chamber of Commerce and Industry explains, the success is a result of strategic plans and policies.
E
stablished in 1965 by a decree issued by the late Ruler of Dubai, Sheikh Rashid bin Saeed Al Maktoum, Dubai Chamber is the bridge between business and government in the emirate. Tasked with supporting the development of business in Dubai, identifying trade and investment opportunities for companies in the emirate, and protecting the interests of Dubai’s fast-growing business community, the Chamber’s strategy for 2017 to 2021 outlines six initiatives to support the attainment of Dubai Plan 2021. These include the Chamber enhancing its international network; promoting Dubai as an attractive market; and leveraging relationships to become the voice of Dubai’s business community. Today, the Chamber’s network boasts 210,000 members and in 2016 it participated in 78 events across 50 cities, additionally hosting 681 delegations from 81 countries. Over the same period, more than 1,500 meetings were held with 1,525 delegates, while International Offices conducted a total of 484 meetings.
To enhance this outreach in the future, the Chamber invested in a portfolio of Smart solutions and services designed to make transactions and procedures more efficient and convenient for members. As part of what the Chamber terms its “Smart shift”, more than 60% of services are now offered on Smart platforms. Dubai Chamber works closely with business groups that represent various sectors in Dubai to better understand challenges faced by companies in the emirate. The Chamber seeks suggestions from the business community, which are directed to relevant government authorities. In addition, workshops, seminars, networking events and trade missions are initiated regularly to provide members and businesses in Dubai
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ADVERTORIAL
with the knowledge, tools, and opportunities they need to grow and thrive.
Growth targets The UAE’s non-oil trade grew by 1% Year-on-Year (YoY) in 2016 to AED1.6 trillion, with growth supported by diversified trade and a steady increase in trade volumes, including a 5% increase in exports over the year. Trade, tourism, retail, and real estate remained the main engines of growth for the UAE economy during the year. The retail and wholesale sector accounted for more than 11% of the country’s GDP and 29% of Dubai’s GDP. Bolstering this further, e-commerce is a major focus of Dubai Chamber’s 2017-2021 strategy, which will push its contribution to the emirate’s retail industry from 5% currently to 10% within a few years. Making a strong start, Dubai’s e-commerce sector made global headlines throughout 2017, with the recent entry of Amazon and Noon.com into the market. Dubai Chamber has also worked
AED1.6tr UAE’s non-oil trade 2016
1% 11%
YoY Non-oil trade growth 2015 - 2016
Volume of total UAE trade generated with GCC countries (2016)
to secure partnerships with Alibaba.com and Souq.com to facilitate and expand members’ access to e-commerce and provide exclusive benefits and value-added services. H.E. Buamim says: “Dubai’s e-commerce sector presents a great growth potential as consumers increasingly turn to digital channels and smart devices for their purchases. There is no doubt that e-commerce is changing the way business is done in this part of the world.” Another area of focus is Small and Medium-sized Enterprises (SMEs). The backbone of the UAE economy, SMEs account for around 95% of the country’s private sector and are among the biggest contributors to innovation output. The government has realised the importance of SMEs in terms of fostering innovation, attracting foreign investment, and diversifying the economy — which is why it has introduced a number of programmes and initiatives to nurture growth in this sector (see box). The phenomenal growth witnessed
Aerial view of Dubai ‘s Business Bay.
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UAE 2018 — Creating a global hub
ADVERTORIAL
recently in the UAE is the direct result of economic diversification policies, which prioritise change, innovation and new solutions to new problems. Faced with a crash in global oil prices — a major source of GDP only a few years ago — the UAE’s leaders adopted a proactive approach to implementing the country’s post-oil economic agenda. Instead of allowing global markets to set the pace of change, they faced the situation head on. H.E. Buamim says: “The UAE’s strong focus on trade and diversification has served it well and has enabled it to offset the impact of lower oil prices on the economy in recent years. Dubai has played a major role in fuelling growth by developing and investing heavily in non-oil sectors and strengthening its position as a regional and global business hub. We have also seen increased efforts from the government aimed at building capacities in new sectors, such as the Islamic economy, fintech, technology, and manufacturing.” In 2017, Dubai Chamber set out plans to invest AED100 million on innovation-focussed projects and next-generation business capabilities through a series of competitions and initiatives. Starting a business in Dubai is simple and efficient thanks to the digitisation of multiple government and business registration services. H.E. Buamim explains: “The UAE is a very attractive market for foreign companies that want to set up or expand their reach in the region. However, a strong understanding of local laws and the business environment is essential to the success of any new business. This is where Dubai Chamber can offer businesses a lot of support. “The UAE offers plenty of attractive incentives and unique advantages for international companies with its worldclass infrastructure and business-friendly environment. Our country’s cosmopolitan nature gives professionals the opportunity to experience diverse cultures, build their network, and expand their global reach.” The outlook for the rest of the decade is promising, as efforts to diversify and strengthen the UAE’s non-oil sectors continue to gain momentum. The
Supporting SMEs Tejar Dubai: Offers Emirati entrepreneurs valuable support and guidance as they take their first steps into the business world. The Dubai Startup Hub: Online platform that connects SMEs, startups, entrepreneurs, venture capitalists and technology enthusiasts. The portal aims to facilitate new connections and partnerships, foster innovation, and stimulate local economic activity. The Dubai Smartpreneur Competition: One of the most successful initiatives of recent years, launched in collaboration with Smart Dubai. The competition, open to all entrepreneurs in Dubai, provides an opportunity to be part of Smart Dubai’s mission to create happiness by embracing technology innovation and transforming Dubai into a smart city. Participation increased 100% between the first and second editions of the competition.
5% 83.6m 24m 850k Increase in UAE exports (2016)
Passengers travelled through Dubai International Airport (2016)
Passengers travelled through Abu Dhabi International Airport (2016)
Passengers welcomed at Al Maktoum International Airport (DWC) in 2016
government is implementing national policies and strategies that are focussed on innovation, industry, smart city solutions, women empowerment, renewable energy, sustainability, education and research, happiness, and humanitarian work. Expo 2020 and major initiatives under the Dubai Plan 2021 are expected to drive infrastructure spending and economic growth in the short-term, creating new trade and investment opportunities. H.E. Buamim concludes: “The UAE is on track to deliver on Vision 2021. The government’s comprehensive strategy is designed to put the country on the path of sustainable development while it will also enhance the competiveness of the UAE’s economy. Going forward, the 2030 Dubai Industrial Strategy, launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, will become a major contributor to the emirate’s growth and will support the development of businesses in new economic sectors.”
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1.3 | VISION 2021
private sector Nationalisation Under Vision 2021, the UAE has set a target to increase the number of UAE nationals in the private sector 10-fold, and 2017 saw the introduction of a number of new initiatives to support the targets.
I
n 2016, 9.5 million people called the UAE home. However, unlike the populations of other countries, the UAE’s residents come from all over the world, with more than 200 nationalities currently holding residencies and a total population of 1.4 million Emirati nationals. Translated to the labour market, this near unique social makeup has significantly skewed employment demographics between the private and public sectors, with a high of around 90% of employed Emiratis working for state bodies in 2013. Recognising this structural division in the labour market, the UAE government named 2013 the Year of Emiratisation and embarked on a path to increase the number of Emiratis in the private sector 10-fold by 2021. The drive places specific focus on Emiratisation in the Knowledge Economy, requiring changes in education and employment strategies, in addition to the structure of the public sector. A number of organisations and entities have been established to support the mission, such as Tanmia, the National Human Resources Employment Authority, Abu Dhabi Tawteen Council, and the Emirates Nationals Development Program. Initiatives launched to date include Absher, with a target to provide 20,000 jobs for nationals. The framework is based on
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UAE 2018 — Creating a global hub
four themes of job opportunities for nationals, vocational guidance and counselling, training and development. Over a 12- or 18-month programme, Mustaqbali, a TECOM Group Emiratisation scheme, grants participants fulltime posts at TECOM Group to engage in a number of learning and development exercises ranging from technical on-the-job tasks and classroom education, to comprehensive project assignments. Moreover, Mustaqbali offers participants the opportunity to shadow and be mentored by assigned department heads. Successful trainees who achieve their pre-set objectives are assigned permanent positions within TECOM Group, including Dubai Science Park. In 2016, the Emirates Scientists’ Council was established to launch programmes for the development of a generation of researchers, scientists and academics. Further initiatives exist to nurture entrepreneurship and startups, specifically in technology and science-related sectors and SME development receives support through initiatives such as the Khalifa Fund and the Mohammed bin Rashid Establishment for Young Business Leaders. However, mandatory nationalisation quotas do not apply to businesses operating in free zones. The Ministry of Human Resources and Emiratisation (MoHRE) was established to source suitable job opportunities for nationals under the Labour Law (Federal Law No 8 of 1980). Such laws mandate that all companies wishing to employ new secretaries must contact the National Human Resource Development and Employment Authority (Tanmia) who will nominate UAE nationals for the post. Additionally, the role of Human Resources Manager should be carried out by a UAE national. In 2005, new laws mandated that all companies with 100 employees or more require an Emirati PRO (Public Relations
VISION 2021 | 1.3
Nationalisation in the Knowledge Economy The UAE space sector employs around 600 staff, half of whom are UAE nationals, and the UAE Space Agency workforce comprises almost 40% emirati females. H.E. Dr. Eng. Mohammed Nasser Al Ahbabi, Director General, UAE Space Agency, says: “Job creation and economic diversification were among the key factors that contributed to the government’s decision to establish the UAE Space Agency. We are actively engaged in ongoing recruitment campaigns and welcome applications from individuals with a range of backgrounds.” The Agency is engaged in a number of human capital and development programmes, often conducted in collaboration with different partners and stakeholders and recently ran an initiative called ‘Generation Space: The Space Fundamentals Training Programme’, alongside Lockheed Martin and Mubadala, across the UAE and USA.
Nationalisation in Oil and Gas Emiratis comprise more than half the workforce at Abu Dhabi National Oil Company (ADNOC). Supporting them, ADNOC Future Leaders, part of the ADNOC 2030 growth strategy, provides the company’s most talented people with the opportunity to succeed at the highest levels, by giving them the skills, knowledge and experience necessary to drive the next wave of ADNOC’s growth. Separately, a Women’s Leadership scheme has been created to significantly increase the number of females in key leadership roles. H.E. Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, says: “We are investing in the brightest and best national talent to give them the tools they need to succeed. By identifying and developing the next generation of the company’s leadership we will continue to forge a forward-looking organisation, underpinned by a high-performance culture, to ensure our future success for the benefit of our people, the organisation and the nation.”
Officer), and in the same year, quotas were introduced for the banking, insurance and trade sectors at 4%, 5% and 2%, respectively. Under these laws, the Ministry of Labour can cease dealing with companies failing to meet annual targets. Then, in 2014, Minister of Human Resources and Emiratisation, Saqr bin Ghobash Saeed Ghobash, announced a series of potential changes to increase the attraction of private sector jobs to Emirati workers, including potential changes to working hours and leave entitlement, although no formal legislation has been introduced.
Nationalisation today In late 2016, Saqr bin Ghobash Saeed Ghobash an-
nounced the launch of the National Employment Programme, involving 250 private companies in the first phase. The NEP places Emirati job seekers aged between 18 and 60 years old in jobs suitable to their ambitions and qualifications. Ghobash explains: “We are currently working on targeting all private institutions, as per the approved measures. We want to encourage Emiratis to join the private sector and excel in it; it is an ambitious domain with a promising career.” Recalling the success stories to date, he adds: “Our goal is to employ 1,000 Emirati jobseekers in the banking, insurance and finance sector within 75 days. We communicated with 166 financial, insurance and banking sector companies, out of which 98 were cooperative and 24 fulfilled the intended goal. We also communicated with 7,637 jobseekers via email, phone, social media networks and media platforms, and 46.7% of the target number were employed in a period of 51 days. “Now, we are targeting to employ 3,000 Emiratis over a period of two years in the private sector across the country.” In Q1 2017, MoHRE announced three changes to existing resolutions. The first concerns the construction and industrial sectors, which are now required to employ an Emirati health and safety officer. The second change requires companies with 1,000 or more employees to register with the MoHRE electronic system Tasheel, and employ at least two Emiratis to access the system, to increase the number of nationals in data processing positions. Thirdly, qualifying establishments can upgrade their nationalisation classification by meeting certain targets. Companies registered with labour offices in Abu Dhabi, Dubai, Sharjah and Ajman can achieve one, two or three degrees, by appointing Emiratis to a minimum of 3%, 5% and 10% of roles, respectively. For businesses registered with the labour offices of Ras Al Khaimah, Umm Al Quwain, Fujairah, Kalba City and Khorfakkan City, the targets are set at 2%, 3% and 5%. Nationalisation is also addressing the labour imbalance from the public sector, with 10 new positions created in government entities in Q1 2017, specifically for non-nationals. These expatriate job opportunities cover roles in Dubai Culture, Dubai Government Media Office, Dubai Women Establishment and Dubai Customs, among others. The market is complicated and, as the UAE’s millennial generation enters the workforce, dynamics are changing again. Globally minded and driven by innovation, large numbers possess the desire to pursue their own business ventures, with many others attracted to the finance industry. However, skills gaps still exist and this year specific calls have been made for male Emirati teachers and doctors. According to the Human Resources Authorities, the number of Emirati jobseekers ranges between 12,000 and 13,000 annually, out of whom 80% are female, with many holding high qualifications. As the Knowledge Economy builds and Emirati nationals continue to pursue the economic and social opportunities this creates, various indicators will no doubt continue to demonstrate an upwards trend in the number of Emiratis joining, and thriving in, the private sector.
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ADVERTORIAL Hywind Floating Offshore Windfarm, Scotland
Powering the future As the region’s largest developer of renewable energy, since 2006 Masdar has invested $2.7 billion in projects globally. Now, with an energy revolution happening closer to home, CEO Mohamed Jameel Al Ramahi, explains how British innovators can make a change.
What are the future plans for the UAE’s energy mix and how is the country securing its renewable energy industry? The business case for renewable energy is beyond doubt. For developers like Masdar, which has more than a decade of experience in solar and wind projects worldwide, the growing commercial appeal of renewables will deliver continued expansion. An important recent development in the renewables industry has been the emergence of auctions as a means of procuring new capacity and driving down costs. The UAE, through its utility companies ADWEA and DEWA, has been at the forefront of this trend. We expect most additional capacity in the UAE, whether conventional or renewable, to be developed in this way.
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Masdar is ready to partner with utility companies and other industry stakeholders to accelerate the realisation of these ambitious goals through the deployment of practical, commercially viable solutions.
How much of the UAE’s energy will come from non-fossil fuels in future? Through our projects across the UAE, Masdar is contributing to the UAE’s larger target of producing 24% of its electricity needs from alternative energy sources by 2021. By 2050, the UAE hopes to secure half of its domestic power requirements from clean energy sources.
What is Masdar’s projected investment to 2020 and where will it be focussed? Masdar aims to become one of the world’s largest renewable energy developers,
consolidating its position in developed markets, growing the share of the energy mix for renewables in the Middle East and North Africa, while penetrating new high-growth markets, such as India, China and the US. We are on track to achieve double-digit per annum growth in our clean energy portfolio in line with global trends, with a pipeline of ambitious projects either planned or underway — mainly in solar and wind — while also diversifying our capabilities to include energy-efficient seawater desalination and waste-to-energy projects, two areas where we are already active. In terms of new technology, we will see Masdar becoming increasingly focussed on the integration of battery storage with renewable sources.
Will tender opportunities exist for British companies in any other international or domestic Masdar projects in 2018? As a recognised leader in the deployment of renewable energy, the United Kingdom remains a strategic market for Masdar. In addition to London Array, currently the world’s largest offshore wind farm in operation, we are committed to delivering
ADVERTORIAL
International Projects
“We are on track to achieve double-digit per annum growth in our clean energy portfolio in line with global trends, with a pipeline of ambitious projects either planned or underway — mainly in solar and wind — while also diversifying our capabilities to include energy-efficient seawater desalination and waste-to-energy projects, two areas where we are already active”
ProjECT SPAN 20+ countries, including UAE, Jordan, Egypt, Morocco, UK, Serbia and Spain
2.8GW
gross generated from:
117MW
630MW
Tafila wind farm, Jordan, the Middle East’s first utility-scale wind power project
London Array, currently the world’s largest offshore wind farm in operation
Shams 1
Gemasolar
Abu Dhabi, one of the largest concentrated solar plants
Seville, Spain, the first solar plant to produce electricity 24/7
Mohamed Jameel Al Ramahi, CEO MASDAR
HIGHLIGHTS
Baynouna Solar Energy Project in Jordan
Dudgeon, UK
402MW
200MW
capacity offshore windfarm Norfolk, UK
Hywind floating offshore wind farm
30MW
capacity, located in Scotland, UK. World’s first commercial scale floating offshore windfarm
capacity, Largest single solar energy project currently under development in Jordan. 110,000 homes powered 360,000 tonnes of CO2 emissions saved/year
Dolovo province, Serbia. Tesla wind farm in Serbia Utility scale onshore wind farm, due 2019
158MW
113,000 homes powered 750,000 tonnes CO2 saved/ year
DOMESTIC Projects Mohammed Bin Rashid Al Maktoum Solar Park, Phase 3, DUBAI
800MW
solar photovoltaic plant will be the largest solar power plant in the world in terms of electricity output, upon completion in 2020.
Waste-to-energy plant
300,000
tonnes of municipal waste incinerated First in region | 30MW power capacity
The UAE-Pacific Partnership Fund projects
$50M
Led by Masdar to deliver grant-funded renewable-energy projects across 11 Pacific nations, in cooperation with local government. Grant funding provided by the Abu Dhabi Fund for Development.
on our new project pipeline in the country, bringing our total installed electricity generating capacity there to more than 1 gigawatt (GW). We are also excited to be working with the National Graphene Institute at Manchester University, alongside the Masdar Institute here at Masdar City (part of the Khalifa University of Science and Technology), on the development of the Graphene Engineering Innovation Centre, expected to open next year.
British companies have the opportunity to work with Masdar on technology development and value chain components. Where do the main business opportunities lie for British companies who wish to establish a branch of their environmental enterprise in the UAE? The UAE has led the way for the adoption of renewable energy and clean technologies in the Arab world, and the sector continues to go from strength to strength, whether in utility-scale renewable energy, clean energy desalination, sustainable mobility, urban design and building efficiency, or banking and investment—the opportunities are numerous. The UAE is also, of course, an ideal base to access other markets in the region and
How does Masdar work with partners? ≠ Mergers and acquisitions ≠ Project co-development ≠ Responding to public tenders
How does Masdar assess projects? ≠ Robust legal and regulatory frameworks ≠ Good potential partners ≠ Returns commensurate with risk
beyond, and this partly accounts for the success of Masdar City, which today is home to more than 500 companies, from multinationals to clean energy start-ups. My recommendation to any company seeking to enter the MENA region, regardless of their country of origin, would be to attend Abu Dhabi Sustainability Week (ADSW) in January, today one of the world’s largest sustainability gatherings and very much at the forefront of the modern global energy transformation. ADSW receives more than 30,000 attendees each year, including heads of state, major trade delegations, as well as Arab youth passionately engaged in clean energy and sustainability. It is an ideal platform for any company seeking regional business opportunities in the sustainability domain.
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1.4 | VISION 2021
Energy Innovations Traditionally in the UAE, oil has powered transport, utility networks and even GDP, but now the country is forging a network of diversified clean energy sources to the benefit of the economy and the environment.
A
ccording to the International Energy Agency (IEA), fossil fuel consumption is in decline globally, with its contribution to the global energy mix falling from 25% to 3.6% over the last four decades. While oil output will continue in the mid-term, the UAE will depend less on oil for economic stability and, under the UAE Energy Plan 2050, the country will increase its use of clean energy by 50%, increase energy efficiency by 40% and cut CO2 emissions by 70% by mid-century. In Dubai, it is expected 75% of the total energy mix will be generated from clean sources by 2050.
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Reducing dependence on oil as a driver of GDP — and fossil fuels as a convenient source of power — is not only about economics. The UAE wants to lead the world’s response to soaring energy demands and the resulting challenges posed by climate change, through the creation of policies to transform infrastructure. In preparing for the future, the UAE has set out plans to diversify its energy mix, already reporting a number of milestone achievements and projects. Under the Paris Agreement, the UAE has pledged to produce 27% of its energy from clean sources by 2021; previously, it was the first country in the region to commit to a target of 24%.
VISION 2021 | 1.4
In addition to the R&D contributions the UAE will make to the development and adoption of clean and renewable energy, the country is also generating economies of scale by placing solar, nuclear and other clean technologies into mass production.
In cooperation with the International Atomic Energy Agency, the UAE is pursuing a nuclear power programme spearheaded by the Emirates Nuclear Energy Corporation. The country’s first nuclear plant begins operation in 2018, to help meet a CAGR of 9% in energy demand and, as capacity increases, it will eventually meet 25% of the country’s energy needs. Located in the Al Dhafra Region of Abu Dhabi, the Barakah Nuclear Energy Plant is the largest single nuclear energy new-build project in the world, with four APR-1400 units constructed simultaneously. Companies can register their interest to become an approved supplier to the ENEC programme via its website.
boost in the UAE over recent years with a number of high profile projects launched. In Abu Dhabi, construction is underway on the largest photovoltaic (PV) solar project to date, with a capacity to power 200,000 homes, and in Dubai the AED50 billion Mohammed bin Rashid Al Maktoum Solar Park will later become the largest single-site solar park in the world. At the start of H2, 2017, contracts worth US$3.8 billion were awarded, bringing the total cost of the project to $13.6 billion. DEWA, the Dubai Electricity and Water Authority, has also launched the Shams Dubai project. An initiative to connect solar energy to buildings, it is DEWA’s first Smart initiative and is part of the Distributed Renewable Resources Generation programme. It is the largest rooftop solar project in the Middle East, with DP World one of the first to join, installing 88,000 panels across its portfolio of commercial and industrial properties.
Waste to energy
Dubai Smart Grid
In 2007, with support from His Highness Dr Sheikh Sultan bin Mohammed Al Qasimi, Member of the Supreme Council and Ruler of Sharjah, an organisation called Bee’ah was established with a core mission to achieve zero waste to landfill. In 2017, Bee’ah partnered with Masdar to form the Emirates Waste to Energy Company (EWTE) and establish Sharjah’s first waste-to-energy facility. Once complete, the revolutionary plant will process 300,000 tonnes of waste yearly, supplying 35MW of energy to the Sharjah power grid and reaching more than 15,000 homes. French waste-to-energy company, CNIM, was employed to design, build and operate the plant, which will make Sharjah the first city in the region to achieve the zero waste to landfill goal.
Joining the dots of each respective element of Dubai’s renewable energy strategy, the Dubai Smart Grid will integrate the various links in the generation and supply of renewable energy for homes and transport, through a multiphased infrastructure development scheme that started in 2014. In line with targets for both Dubai Smart City and Vision 2021’s Environmental Pillar, it is the first initiative of its kind. The first phase involved the rollout of the Shams Dubai project, with surplus energy directed back to the grid. The second phase, implemented in 2016, involved the installation of Smart metres in private and public buildings across the emirates, arming building occupants with the tools to monitor, and therefore reduce, consumption. The third initiative covers the infrastructure necessary for a city-wide fleet of electric vehicles to recharge.
Nuclear power
6% nuclear energy 12% clean fossil
2050 Target
38% gas
44% renewable energy
10% clean sources
Present day
90% natural gas
Solar No doubt the most obvious solution, solar energy has received a significant
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1.5 | VISION 2021 Today, techniques from old and new architectural design are combined to maximise sustainability.
Sustainability Pioneer F From oil producer to a leader in the development of an environmentally sustainable world, the UAE is today a driving force in environmental protection and a COP21 participant.
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or a short time in its fascinating history, the UAE had a reputation for flashy skyscrapers, big cars and excessive consumption yet, traditionally, Emirati and Islamic culture pays close detail to the protection and preservation of nature and the environment. Before the discovery of oil, Bedouin tribes enjoyed a fundamentally sustainable lifestyle, and today, building on the wealth generated during the oil producing decades, the country is returning to its sustainable roots. Following the first generation of glass and steel skyscrapers, architectural trends have now shifted to encompass the princi-
ples of traditionally constructed Bedouin dwellings, by strategically creating airflow, shading and cooling. Phased introduction of the UAE’s first building codes started in 2008, with the launch of Estidama — Arabic for sustainability. Produced by Abu Dhabi Urban Planning Council (UPC), Estidama is designed to promote sustainability across all aspects of the emirate’s future growth and enhance Abu Dhabi’s contribution to the global sustainability agenda. The Pearl Rating System (PRS) followed two years later — the Arab world’s first sustainable rating system designed to assess the performance of communities, buildings and villas from design, construction and
VISION 2021 | 1.5
operational stages. Since its introduction, all new buildings have been bound to achieve the minimum Pearl rating and, by the end of 2016, a reduction of 55% has been recorded in overall energy consumption in new building developments, with a further 45% reduction in water consumption. With its relevance to desert climates, Estidama has reached further afield to other emirates and Middle Eastern countries with similar energy and water limitations, and cultural considerations. Design and construction teams can apply PRS ratings in the same way, with the help of trained sustainable Pearl Qualified Professionals (PQP) guiding them through the process. Discussions for projects across the UAE have already taken place, with the Estidama PRS being applied to projects based in Dubai, Fujairah, Ras Al Khaimah, Umm Al Quwain and Ajman, and other countries such as Bahrain. The system has even enjoyed record breaking application at the emirate’s Midfield Terminal Complex — officially the largest sustainable building in the Estidama programme to achieve the 3 Pearl Rating. H.E. Falah Al Ahbabi, Director General, Abu Dhabi Urban Planning Council, says: “Estidama PRS ensures resources are used efficiently via sustainable construction practices to reduce energy and water consumption, carbon emissions, construction waste and landfill waste. The introduction of PRS has led to developers, design teams and even homeowners thinking differently about how they approached the planning, design, construction and operation of the built environment. The PRS recognises the transition of responsibility as a project evolves from the design team to construction to facilities management. Based on this, three rating stages have been established: design, construction and operation.” Next on the agenda is a retrofit project, combining the reach of Abu Dhabi Water and Electricity Authority (ADWEA), the Department of Economic Development (DED) and the Ministry of Economy, under the Tarsheed programme. Tarsheed aims to reduce energy and water consumption in buildings over the next five years, saving up to 445,000MW hours per year, and complementing the emirate’s
“Construction industry stakeholders are now inspired to innovate on their construction approach, including the use of green building materials and systems, to maximise energy and water use efficiency” target to reduce overall water and electricity consumption by 20% by 2030. The projects will be tendered on a performance contract basis, meaning that building owners will pay nothing upfront for the engineering and construction costs of the upgrade. Design and construction work will be provided by energy service companies, with their investment recouped over the lifetime of the performance con-
Green Transport in the UAE • Strategy for Self-Driving Smart Transportation – increasing the number of driverless trips to 25% by 2030 • Extension of the Dubai Metro • Construction of Abu Dhabi metro • Conversion of half of all RTA taxis to hybrid vehicles by 2021 • Walking and cycling masterplans for Abu Dhabi and Dubai, plan for 900km of cycle path by 2020, connecting communities to beaches, malls and parks, as well as to Dubai Metro and Dubai Tram stations.
tract, typically four or five years, through the difference in utility costs.
International standards While government-initiated action drives the national agenda, the implementation of international standards, and the development of many of the UAE’s sustainability laws and regulations, have occurred in collaboration with international bodies. Emirates Green Building Council (EmiratesGBC) was established in 2006, to drive and facilitate the UAE’s current position and future ambitions for a sustainable nation. Primarily concerned with the built environment, EmiratesGBC is a catalyst for collaboration across the building industry supply chain, allowing stakeholders to meet, discuss, exchange ideas and help promote a sustainable built environment. Promoting sustainable building and the retrofit of the UAE’s existing building stock, EmiratesGBC has implemented several initiatives, such as the 2015 launch of the EmiratesGBC Energy Efficiency Programme (EEP), to support the growing number of building retrofit projects, and the EmiratesGBC Hospitality Programme, benchmarking energy performance in 40 UAE hotels. In response to the announcement of the Dubai Integrated Energy Strategy (DIES) 2030, EmiratesGBC has published the Technical Guidelines for Retrofitting Existing Buildings. Available in both English and Arabic, it assists owners of identified buildings to meet 30% reduction targets for energy consumption.
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1.5 | VISION 2021
Energy Diversification
UAE Energy Plan ■ Double the production of clean energy ■ Change culture of consumption
40%
AED 600m
reduction in invested to drive residential energy the nation’s and water use sustainable growth
■ Aims to make the city a global hub for clean energy and the green economy
75%
energy needs met through clean sources
7% target for energy from clean sources by 2020
AED 700m
25%
75%
projected savings
target for energy from clean sources by 2030
target for energy from clean sources by 2050
Additionally, Dubai is one of 12 new cities to join the UN Secretary General’s Building Efficiency Accelerator (BEA) programme, to double the rate of energy efficiency of buildings by 2030, with EmiratesGBC directly involved in the creation of policy under the scheme. EmiratesGBC Chairman Saeed Al Abbar notes: “Construction industry stakeholders are now inspired to innovate on their construction approach, including the use of green building materials and systems, to maximise energy and water use efficiency. “There are clear governmental frameworks that enable businesses to be more sustainable. There are also several frameworks with a focus on waste management. Emirates Environment Group offers recycling services to businesses and organisations while Tadweer, Abu Dhabi’s Centre of Waste Management, follows government waste management directives to help the public and private sector with their waste management goals; and Bee’ah is an award-winning recycling and waste management facility in Sharjah. EmiratesGBC serves in coordinating all the different stakeholders in the industry to drive awareness and concrete action to promote sustainable operations.” In addition to pioneering domestic sus-
032
Dubai Clean Energy Strategy 2050
UAE 2018 — Creating a global hub
tainability, the UAE has also made several commitments on the global stage. At COP21, where the Paris Agreement was signed, the UAE put forth what is regarded as one of the most ambitious Nationally Determined Contributions (NDCs) — defining its aims for the next five years. In tandem with its national initiatives, the UAE has reinforced its target to increase the contribution of clean energy to the total energy mix from 0.2% in 2014 to 24% by 2021. A delegation of more than 100 representatives of the UAE reiterated the pledge the following year at COP22 in Morocco. Al Abbar explains: “The UAE’s COP21 roadmap provides strong insights on some of the pioneering steps made by the nation such as efforts by its national oil company to promote reduction of gas flaring and the UAE developing the region’s first commercial-scale network for carbon capture, usage and storage. Across the world, the UAE is extending its expertise and development aid to promote renewable energy with the total aid in this regard exceeding US$900 million. Some 11 projects were initiated by the UAE in other markets last year.”
Built to last Sustainability is central to the philosophies that underpin Vision 2021 and the
Al Sa’fat Targets ■ Dubai’s green building rating system, launched by Dubai Municipality
20%
15%
reduction in energy use
reduction in water consumption
50% reduction in waste
country has made a strong commitment to achieving its targets to date. In the UAE, sustainability means creating places where people can live, work and visit without causing an impact on the environment. Far from demanding the same lifestyle changes as other governments around the world, the country’s focus instead falls on its infrastructure and the establishment of a culture of efficiency across all operations. This provides a platform for the private sector to bring its innovations to the table and drive further developments. Opportunities to join the UAE’s innovative and ambitious sustainability industry are present in many forms, from the construction supply chain, to the development of conservation and efficiency boosting technologies. Al Abbar explains: “The UAE and UK share strong business relations and there is tremendous opportunity for British companies to partner in the sustainable development narrative of the UAE. With such a clear vision and definite goals for promoting sustainable built environments, the opportunities are limitless. We see strong synergies for British companies operating in the sustainable development sector in offering their solutions — from consultancy to green products.”
1.6 | VISION 2021
Science in the
Emirates
Science is at the heart of the Knowledge Economy and the UAE is leading global work in a number of areas, from 3D printing to robotics. Now pursuing a 100-year plan to build a human settlement on Mars, even the sky provides no limit to the country’s ambitions.
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T
o spark the imaginations of the next generation of Emirati scientists, the UAE has outlined its strategy for scientific innovation across multiple development frameworks, including UAE Vision 2021, Dubai Plan 2021, Dubai Industrial Strategy 2030 and the UAE Innovation Strategy. Identified as a key sector to support efforts to diversify the national economy, science has also enjoyed a boost in funding. The UAE is looking to channel up to 3% of GDP into scientific research and R&D, in line with other developed economies, with the money funding scientific research policies, space programmes, educational reforms and investment in research intensive insti-
VISION 2021 | 1.6
tutions. Specific technologies will also be pursued in line with the country’s development, diversification and economic goals, including work on nanotechnology, 3D printing, Artificial Intelligence (AI) and space exploration, all led by Emirati nationals. UAE Space Agency Director General, H.E. Dr. Eng. Mohammed Nasser Al Ahbabi, explains: “Since the very founding of the UAE, its leaders have recognised the importance of science and education. In fact, the UAE’s roots in the space industry reach back to 1976, when the late Sheikh Zayed bin Sultan Al Nahyan met the NASA team responsible for the Apollo Moon programme. Decades later in April 1997, the nation’s first satellite operator, Thuraya, was founded and today the UAE operates seven satellites for both commercial and military use. Companies and institutions like Thuraya, YahSat and the Mohammed Bin Rashid Space Centre have been operating successfully for the better part of a decade now.” The Emirates Space Innovation Group (ESIG) launched in 2016 to provide a framework for creating new collaborative projects with space sector and industry stakeholders. These range from universities and research centres such as the Masdar Institute, to government agencies like the Environment Agency Abu Dhabi and private companies, to support funding and encourage innovative and scientific creativity. The sciences are also supported through funding, mentorships, international exposure and the creation of bespoke, world-class facilities.
Bringing science to life According to research conducted by UNESCO, global public spending on science and research increased from US$522 billion in 1996 to $1.3 trillion in 2009, but faced a sharp decline in the years following due to the global financial crisis. It was not until 2014 that public spending on science recovered, reaching values of $1.6 trillion that year led by North America, the EU and Asia. Bucking the trend, over these years the UAE was laying the foundations for it Science, Technology and Innovation (STI) policy. Covering public spending and education, the policy outlines a 40% total labour force share of “knowledge workers” and a re-designed education system, which aims for students to achieve top 20 performance on a global scale in mathematics, science and reading, by 2021. Al Ahbabi says: “As the UAE transitions towards a diverse, knowledge-based economy it is of paramount importance the school curriculum reflects the changing economic reality within the UAE by focussing on STEM early on. Currently, education experts are advising on curriculum developments that will include more on space science so that children are taught and inspired at an early age about the opportunities the space industry brings. Special campaigns to engage with school children are also being introduced to keep the education fun and exciting.” However, relevance must also be considered when supporting scientific innovation. While the UAE Space Agency engages young people through programmes such as the Mars Habitat, Rocket Design and Genes in Space competitions, at Dubai Science Park, the focus falls on enabling businesses to develop new solutions to
“Since the very founding of the UAE, its leaders have recognised the importance of science and education. In fact, The UAE’s roots in the space industry reach back to 1976, when the late Sheikh Zayed bin Sultan Al Nahyan met the NASA team responsible for the Apollo Moon programme”
global and regional issues. Executive Director, Marwan Abdulaziz Janahi, explains: “Science needs to tie back to, and provide solutions for, relevant and current issues that impact everyday lives. When science is connected to the way we live, the way we operate businesses and the technologies we use on a daily basis, it instantly becomes relevant and gains the attention of the public and the support of governments.”
Dubai Science Park Dubai Science Park is a business hub where new and different types of innovations are born every day; from flavouring of food and beverages at the first PepsiCo F&B innovation centre in the region, to manufacturing pharmaceuticals. Executive Director, Marwan Abdulaziz Janahi, explains: “Today, science has become more than an element to help diversify economy, it is a key avenue that directly enhances quality of life for citizens and residents, and investing in this sector is essential for economic and social development.” DSP was conceptualised by TECOM in 2015, in response to the UAE’s Science, Technology and Innovation Policy, which acknowledged that science-based innovations provide higher return on investment compared to innovations in technology or business. The sector has since received funding of more than AED300 billion to foster development of the Knowledge Economy and the money has been shared between projects across the emirates. Underlining the need for such an park, DSP has witnessed phenomenal growth adding names like Pfizer, Amgen, Olympus and Thermo Fisher Scientific to its list of more than 350 tenants. Janahi comments: “These companies have brought insights and knowledge, as well as research and innovation to Dubai and the region, feeding into the science ecosystem and economy at large.”
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1.6 | VISION 2021
“When science is connected to the way we live, the way we operate businesses, and the technologies we use on a daily basis, it instantly becomes relevant and gains the attention of the public and the support of governments”
International Stage In addition to placing the UAE at the centre of global innovation, the country also actively seeks new stakeholders from across the world who can bring value to existing research and advance their own work in the UAE. Janahi says: “Unique opportunities exist for UK companies operating within the field of science, particularly in terms of the UAE’s ability to act as a springboard for growth into new markets. At Dubai Science Park, we believe that Dubai and the UAE have the attributes to become a truly global centre of innovation for the entire sector through its unique blend of a close proximity to significant markets such as Saudi Arabia and the Levant, as well as the ability to attract international and local talent. These elements are core to the UAE’s offering as a business hub.” DSP aims to work with businesses around the world to utilise cutting-edge technology to foster growth and change in the areas of human, plant, material, environmental and energy science. At the UAE Space Agency, the global trend for “commercial space” is opening new doors for private sector investors and innovators, specifically in aviation and manufacturing, as the agency looks to nurture private investment in space and related sciences. The Agency has also cooperated closely with its UK counterpart and recently sent Emirati students to the Senior Space School UK programme at the University of Leicester. Al Ahbabi says: “This will make the sector more efficient and financially independent. We plan to have the government as a kick-starter investor but being potentially overshadowed by growing investment from private actors. The breaking point would be within the next five to 10 years, after which we expect the private sector to take over as guarantor for projects and investments.” Janahi concludes: “The UAE has many advantages that allow the science sector to flourish and develop. World-class infrastructure that supports research, development and manufacturing activities, availability of capital, efficiency of the government and a capable human capital are all factors that create opportunities in the sector.”
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UAE Space Agency While a number of projects have been announced since the UAE Space Agency launched, one headline has captured the world’s attention: the UAE will establish a human settlement on Mars in 2117. UAE Space Agency’s Director General, H.E. Dr. Eng. Mohammed Nasser Al Ahbabi, says: “This is our largest and most significant programme to date and, while it seems like a very distant goal, in fact it involves a range of short- and mid-term projects that will develop specific skillsets, expertise and technologies in the UAE, including plans for the first Emirati astronauts. “In order for humans to survive on Mars, we will have to provide advanced technological solutions that guarantee water, food and energy supplies. Clearly, these advances will have direct benefits to the planet, particularly as these challenges will only increase with population growth and climate change.” Before that, the Mars Hope Probe will arrive on the red planet in 2021 to coincide with the 50th anniversary of the Unification of the Emirates and the agency will continue to operate research centres at the UAE University in Al Ain, Masdar Institute, Mohammed bin Rashid Space Centre (MBRSC), and the Sharjah University Astronomy and Space Centre. Al Ahbabi adds: “The UAE recognises the importance of a healthy space sector in terms of promoting scientific research, education, innovation and economic diversification and sought to create a federal entity that would oversee and promote the sector locally, regionally and internationally.”
2.1 | CREATING THe HUB
The Islamic Economy From opening the first Islamic bank in 1975, to ambitions for the UAE to be at the heart of the $3.3 trillion global Islamic economy by 2021, Abdulla Mohammed Al Awar, CEO of Dubai Islamic Economy Development Centre (DIEDC), explains how the UAE will become the centre of the global Islamic economy.
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he global Islamic economic was valued at US$2.293 trillion in 2016, across 124 countries, and is expected to grow to values of $3.3 trillion by 2021, driven by the increase in the global Muslim population, which in turn is expected to grow 73% between 2010 and 2050. Already a pioneer of Islamic banking, the UAE established the industry’s first institution, Dubai Islamic Bank in 1975, followed by the first global Shari’a compliant exchange, Dubai Financial Market, in 2007, and the first standard for Sukuk in 2014. In 2016, the UAE was named one of the top three healthiest Islamic economic environments worldwide in the Global Islamic Economy Indicator (GIEI) of 73 countries, over five fields: halal food, travel, fashion, media and recreation, and pharmaceuticals and cosmetics. The pace continued in 2017, with the Q3 launch of the FinTech Hive, a joint initiative between Dubai International Financial Centre (DIFC) and Dubai Islamic Economy Development Centre (DIEDC), located at DIFC. The FinTech Hive addresses targets under the DIFC 2024 Strategy and the vision of Dubai: The Capital of Islamic Economy, and will call on such institutions as Emirates Islamic Bank, Dubai Islamic Bank and Abu Dhabi Islamic Bank, to mentor participants in the field of Islamic finance technology. Established in 2013 under the patronage of His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, DIEDC is tasked with ensuring increased transparency and accuracy of Islamic banking and finance transactions through a unified sharia framework to meet people’s basic needs and protect wealth from risk. Initially founded on seven pillars, these were later streamlined to three — Islamic finance, the halal sector and Islamic lifestyle, including culture, art, fashion and family tourism — with a focus on creating benchmarks for universally accepted standards for DIEDC to implement on a global level. Abdulla Mohammed Al Awar, CEO of DIEDC, says: “Since 2013, when His Highness Sheikh Mohammed bin Rashid Al
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Maktoum, Vice-President and Prime Minister of the UAE, and ruler of Dubai announced his vision to make Dubai the capital of the Islamic economy, the country has set the stage for a new era in economic and social development. By working with all stakeholders, we have achieved key milestones in just three years and positioned Dubai as a global source of information and education on the Islamic economy, and an economic engine of Islamic finance.” This strategy will be executed as part of a five-year plan to 2021, which aims to identify new KPIs for monitoring the growth of important sectors; measure their contribution to the national economy; lead the growth of the Islamic economy sectors on a local, regional and international scale; and set a benchmark for the Islamic ecosystem worldwide. Al Awar elaborates: “DIEDC’s vision and mission to 2021 is to create a global hub for the Islamic economy to spearhead growth, innovation and standardisation across the various Islamic economic sectors and to set strategic direction and support to all stakeholders in the process. We will focus our efforts to further develop an innovative ecosystem that will enhance the role of the Islamic economy in stimulating knowledge and R&D, and encouraging projects that promote its ethics and principles.”
“By working with all stakeholders, we have achieved key milestones in just three years and positioned Dubai as a global source of information and education on the Islamic economy and an economic engine of Islamic finance”
CREATING THE HUB | 2.1
DIEDC Strategic Objectives 2017 – 2021
Established leader
In addition to the establishment of banks, financial markets and bonds, the UAE has developed the International Islamic finance Halal Accreditation Forum and the Dubai to become a global leader in Islamic capital Higher Sharia Authority for Islamic financial transactions. markets and a reference for Placing finance at the centre of the standards, philanthropy and knowledge Islamic economy has allowed the UAE to take the message of Sharia-compliant Halal Industry banking beyond Muslim traders and To become a global trade generate significant growth. and logistics hub for halal Al Awar comments: “The fact that products conventional banks have also started to operate Islamic windows shows the success of Islamic Islamic Lifestyle To become a home for creative financial products and their appeal to both Muslims and talents from around the world non-Muslims. In addition, there now exists a global leadership opportunity for financial solutions that are an integral and enhance the cultural identity of Dubai by providing part of an ethical and just financial system.” a globally distinctive Islamic Islamic finance is largely confined to social development lifestyle experience projects, with institutions not permitted to invest in prohibited or socially undesirable investments. According to Al Awar, emphasis on ethical issues, rigorous sharia supervision, and self-regulation ensure fair play and justice, while offering a superior consumer-protection model. Furthermore, these characteristics induce higher financial discipline and establish stringent ethical standards for all stakeholders, offering a strong and unique model of governance. Al Awar comments: “Today, there is a growing opportunity for Islamic finance to connect with the synergetic halal food and lifestyle sectors within the ever-expanding market. In the last couple of years we have been working towards developing and strengthening the links between Islamic finance and other sectors of the Islamic economy. We have helped foster investment opportunities and mega partnerships towards driving economic stability and sustainable development in our region.” With a steady focus on economic diversification for a post-oil future, the UAE has invested more than AED300 billion in achieving the targets set out, with the aim of preparing for a diverse economy that frees future generations from dependence on the ever-fluctuating oil market. In creating universally-accepted standards, the UAE is also placed to take the message of Sharia-compliant, ethical finance and trade to non-Muslim countries, where currently 350 million young Muslims are asserting their influence as consumers in such diverse markets as food, banking and finance, extending all the way to fashion, cosmetics, travel and healthcare. Al Awar comments: “Today, Dubai is a trusted name and solutions provider for the halal industry, a destination of choice for the family tourist, a pioneer of the Islamic digital economy and a hub of Islamic fashion, arts and design. Importantly, Dubai has gained recognition as a world-class centre for Islamic economic standards.” Naturally, this generates opportunities for international companies to join the UAE’s growing business community and become part of the creation of a standardised and strong global Islamic economy. Al Awar says: “In a few short years, Dubai and the UAE have helped revolutionise the Islamic finance sector. The UAE and the United Kingdom can build on their strong relationships in trade, commerce, service and academic sectors, to forge new partnerships in the Islamic economy and its related industries. There are various opportunities for British companies to tap into including halal, technology and innovation. The UAE’s drive towards stronger collaboration between the private and public sector to achieving the social and economic development goals set out, allows abundant prospects for sustainable investments — particularly in the Islamic economy sectors.”
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Abdulla Al Awar CEO of DIEDC.
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The Islamic Economy
$2.293 t
Estimated value 2016 across 124 countries
$3.3 t
Predicted value of Islamic finance sector by 2021 across 124 countries
$1.9 t
Spent by Muslims on food and lifestyle products in 2015
51%
Of global Muslim population is under 30 Source: DIEDC
UAE 2018 — Creating a global hub
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The Heart of Global Finance DIFC is the largest cluster of financial and professional services firms in the region with 1,750 registered companies and more than 21,000 working professionals, and will become a global centre for fintech and blockchain innovations over the coming years. Chief Executive Officer, Arif Amiri, highlights the achievements driving innovation. What are the UAE’s greatest strengths in creating a global financial hub in Dubai? One of the UAE’s greatest strengths is undeniably its strategic geographical positioning, located in the heart of the MEASA region, which has a population of three billion and combined GDP of US$7.4 trillion. But geography alone is not enough to drive the success of a country — it is the stability, infrastructure and connectivity that the UAE, and in particular, Dubai has created that provide accessibility to these emerging markets. Dubai is home to the world’s busiest airport and the largest marine terminal in the Middle East. Emirates Airlines, one of the world’s leading airlines, is headquartered in Dubai, and the city also provides some of the best social infrastructure in the region, with a number of leading educational institutions and world-class healthcare facilities. Complemented by
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a cosmopolitan community and ease of doing business, Dubai is a place where people want to live and work. This is a key factor in attracting and retaining the right talent pool for a growing financial services sector. It is the vision and foresight of the Government of Dubai’s leadership that has made many of these aspects a reality. And to this day, it is the support and backing of a progressive government, as well as its focus on innovation, that drives the city’s continuous growth and development. In fact, it was from this deep-rooted sense of creating something new and better that led to the establishment of the Dubai International Financial Centre (DIFC) in 2004. Over the last 13 years, DIFC has built an ecosystem that comprises of 1,750 active registered firms — including 463 regulated financial institutions and many of the world’s most reputable
Chief Executive Officer, Arif Amiri
difc 2024 strategy With ambitions to increase the number of regulated firms to 1,000 and increase the workforce from almost 22,000 to 50,000, DIFC’s 2024 Strategy will: • Facilitate trade and investment across the South-South corridor, while providing access to the vast potential of the emerging markets in the Middle East, Africa and South Asia (MEASA) region • Deepen core client synergies, and help existing clients to grow their business organically within the Centre • Build relevance in key sectors, such as Wealth & Asset Management, Islamic Finance and Family Business • Continue the enhancement of DIFC’s physical, regulatory and legal infrastructure.
CREATING THe HUB | 2.2
British connections
Fintech at DIFC
The UK is very important for DIFC with 16% of the Centre’s financial clients coming from this market. The UAE and UK have enjoyed strong relations historically and in terms of bilateral trade, the countries now work synergistically to achieve a new bilateral trade target of £25 billion by 2020 after reaching their 2015 objective of £12 billion two years early. His Excellency Essa Kazim, Governor of Dubai International Financial Centre, says: “The UK is an important trading partner for Dubai and we have strong ties due to the large number of UK expatriates living and working in the UAE, and the fact that Dubai, and the wider UAE, is such a popular tourist destination for British tourists. DIFC has a strong British presence, with many well-known firms from the UK operating in our Centre. We are set to triple in size according to our Strategy 2024, so there will be great opportunity for more British firms to enjoy our Centre’s enhanced infrastructure and reinforced position as an international financial hub.”
FinTech Hive at DIFC will build on DIFC’s existing fintech ecosystem, positioning DIFC alongside London, New York, Singapore and Hong Kong. DIFC has partnered with Accenture and its lab participants have raised a total of $386 million in venture financing after participating in the programmes. Arif Amiri, says “The application of advanced technologies to all areas of finance is causing major shifts in the industry. DIFC is committed to drive the future of finance with new strategies to promote innovation and infrastructure in the financial services sector. “We launched FinTech Hive by inviting fintech start-ups from around the world to apply for the inaugural Hive at DIFC Accelerator Programme. After an incredible response from the market, with over 100 applications from 32 countries, we selected 11 start-ups to develop and test their technologies within the DIFC ecosystem, with mentorship from senior executives from DIFC, Accenture and leading financial institutions such as Citi, Dubai Islamic Bank, HSBC, Emirates NBD, and VISA. The Programme will conclude with an Investor Day, where each of the companies will have the opportunity to showcase their products in front of potential investors and partners from the region’s financial industry.”
professional services institutions and — a globally recognised legal and regulatory framework, and a district that caters not only to business excellence but also art, culture and lifestyle. Today, we are positioned as one of the world’s top ten financial centres and the leading financial hub for the MEASA region.
How is DIFC contributing to global and regional innovations in finance? Innovation is built into the DNA of both Dubai and DIFC, and is a driving force in shaping the future of finance. DIFC has already made strides in creating a platform conducive to the development of financial technology. We are continuously evolving our regulatory and legal framework to build our existing fintech ecosystem, through a number of initiatives and collaborations with other government entities as well as private institutions. One example of this is our founding membership of the Global Blockchain Council, which looks to explore current and future applications, and organise transactions, through the blockchain platform. From a regulatory perspective, we are working closely with our independent regulator, the Dubai Financial Services Authority (DFSA), to develop a framework that is conducive to the growth and development of fintechs. The DFSA recently launched its regulatory framework for loan and investment-based crowdfunding platforms, the first such framework in GCC countries. In addition, the DFSA has also introduced its Innovation Testing Licence (ITL) — another first for the region — which allows qualifying fintech firms to develop and test innovative concepts from the DIFC, without
being subject to the regulatory requirements that normally apply to financial firms. Our legal infrastructure is also adapting to meet new technological developments. The DIFC Courts have recently partnered with the Dubai Future Foundation to create the Courts of the Future Forum, a collective of global experts in law, technology, IT and business to help lawmakers and legal systems accommodate the accelerating growth of technology. The Courts of the Future Forum will consider new ways to oversee disruptive technology, such as driverless cars, drones, blockchain and cyber security within DIFC’s jurisdiction.
How is DIFC working to diversify and grow its tenant base? DIFC caters to financial institutions and firms across a variety of sectors, including Banking and Capital Markets, Wealth and Asset Management, Insurance and Reinsurance, Professional Services Providers and Corporates, as well as a growing Retail community. We continue to see growth from across these industries, and are constantly developing a platform that supports this cluster of companies. In 2015, the DIFC facilitated the establishment of a trade association for the insurance market, the DIFC Insurance Association, formed to represent the collective interests of members, while acting as a forum to exchange views on market issues. Last year, we established the DIFC Wealth Management Working Group, consisting of senior lawyers, barristers and accountants, as well as executives from DIFC Authority, Dubai Financial Services Authority and the DIFC Governor’s Office. Since its formation, the Working Group has contributed
significantly to shaping the Centre’s strategy for the development of Wealth Management at DIFC, through proposed statutory reforms, as well as ways to reduce costs and increase ease of doing business in the Centre. The Working Group is also exploring avenues to enhance the operating environment for private wealth management and succession planning platforms, on both a conventional and Sharia compliant basis. Furthermore, we have been working closely with the DIEDC, growing the Islamic Finance sector in line with Dubai’s aim to become the capital of Islamic Economy. On a broader level, we have also signed two MoUs with the Dubai Land Department (DLD) and Dubai Economy, in response to the changing needs of the market. The MoU with DLD provides a mechanism for DIFC companies and funds to purchase and register properties in Dubai with the Land Department. Meanwhile, the agreement with Dubai Economy allows companies operating within DIFC to obtain dual licences to operate in mainland Dubai and therefore operate across the two jurisdictions in a more efficient way.
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2.3 | CREATING THe HUB
The future of Oilå & Gas G From the crash of 2014 to the volatility and false starts of 2016, the global oil and gas industry has weathered significant storms. H.E. Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, explains how recent events will shape the years ahead.
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lobally, the price of oil more than halved between 2014 and 2017, with PwC calculating 400,000 industry workers became redundant as oil and gas companies raced to cut expenditure by 40% in two years. Across all six GCC states, oil revenues as a share of total budget revenues are higher than 80%, resulting in severe restrictions in government spending as the price per barrel crashed, creating acute ripple effects — particularly across real estate, hospitality and construction (RHC). A number of projects — both on the oil field and off — faced adaptation, delay or cancellation. Globally, Deloitte reports projects with a combined value of US$620 billion have been deferred or cancelled as a result of the oil price crash. However, with production cuts in place, the coming years are set to bring better fortunes. Economic growth forecasts from the IMF and World Bank both point to recovery from 2017, following lower than expected growth in 2016. Similar trends are evident in the IMF forecast for OECD and non-OECD growth. In the UAE, where GDP growth averaged 5% annually before 2014, the impact is notable, with some elements of the country’s economic diversification strategy triggered ahead of schedule as a
CREATING THe HUB | 2.3
result. In 2016, UAE Minister of Economy, H.E. Sultan Bin Saeed Al Mansouri, set out plans for the UAE to reduce the GDP contribution of oil and gas to zero per cent by 2050, with an interim milestone of 20% by 2021. The UAE’s national oil companies are adapting to the new landscape by continuing to meet demand in the immediate term and pioneering new solutions to preserve the UAE’s competitive edge on the global stage, in the long term. H.E. Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, says: “The energy landscape is changing and we are evolving with it. It has forced us to reflect on how we make the most of our resources, enhance performance and maximise value for our shareholders. In common with other major players in our industry, we are focussed on balancing the need for efficiency and cost optimisation, with smart investments for growth across our upstream and downstream businesses.” According to analysts, it is the industry’s most agile companies that will be best placed to capitalise on their current position as prices begin to rise again. While the re-adjustment in the price per barrel will no doubt help, it will not reverse the efficiency measures that slashed the cost of production since 2014. Al Jaber adds: “While we cannot predict the future price of oil, the cost per barrel is well within our control, so we have significantly reduced our operating cost per barrel, sharpening our competitive edge and enhancing our value, to ensure our long-term resilience. At the same time, we are making smart, sustained and targeted investments to enable growth, across our value chain. In particular, we plan to bring additional high margin products to market, to exploit the growing demand for refined and petrochemical products, particularly in Asia, making us more resilient to economic cycles and crude oil price fluctuations.”
Capitalising on change For ADNOC, the disruptions are a chance to drive through innovation, with the company steering efforts across four pillars: people, performance, profitability and efficiency. In November 2016, the Abu Dhabi Supreme Petroleum Council approved ADNOC’s 2030 growth strategy to create a more profitable upstream, a more valuable downstream and a more economic and sustainable supply of gas, while developing a world-class work force. ADNOC enhanced its operating structure across all companies under the group umbrella, including the consolidation of offshore operations, starting with the integration of shipping and marine services and later, placing focus on the refining and petrochemical businesses. The group also centralised procurement to enhance the relationship with suppliers; introduced a harmonised performance management system; benchmarked against aligned KPIs and international standards; and unveiled a revitalised brand identity, alongside new Mission, Vision and Values commitments. Al Jaber reflects: “2016 was a year of transformation for ADNOC, as we began our evolution into a more commercially minded, performance driven company, focussed on improving operational efficiencies and optimising our assets. In short, we laid the foundations for our long-term growth that will ensure we continue to be successful.”
H.E. Dr. Sultan Ahmed Al Jaber is a Minister of State of the United Arab Emirates and member of the federal cabinet. As minister, he is responsible for handling strategic portfolios. As CEO of ADNOC, Dr. Al Jaber oversees the operations and growth of the Group. Since 2011 Dr. Al Jaber has served on the United Nations Secretary General’s High Level Group on Sustainable Energy for All and in 2012 was recognised as a “Champion of the Earth,” the United Nations’ flagship award for outstanding visionaries and leaders in the fields of policy, science and entrepreneurship. In 2013 Dr. Al Jaber was also appointed an honorary Commander of the Most Excellent Order of the British Empire (CBE) by Her Majesty Queen Elizabeth II.
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2.3 | CREATING THe HUB
At a glance: Oil in the UAE Value of petroleum exports (million $)
45,559
Proven crude oil reserves (million barrels)
97,800
Proven natural gas reserves (billion cu. m.)
6,091.0
Crude oil production (1,000 b/d)
3,088.3
Marketed production of natural gas (million cu. m.)
61,083.7
Refinery capacity (1,000 b/d)
1,124.0
Oil demand (1,000 b/d)
799.2
Crude oil exports (1,000 b/d)
2,407.8
Exports of petroleum products (1,000 b/d)
630.0
Natural gas exports (million cu. m.)
13,200.0 Source: Opec
As a cornerstone of the national economy, ADNOC will remain fully owned by the government of Abu Dhabi, however, Al Jaber will look to harness the power of potential relationships with the private sector and other investors by implementing partnerships and co-investment plans. This will build on ADNOC’s flexible operating model and 2030 strategy. He comments: “As part of a more proactive approach to the management of our portfolio of assets and businesses, we are considering the IPO of minority stakes in some of our ADNOC service businesses which have attractive investment and growth profiles. Any such IPO would allow the public and other investors to invest alongside ADNOC and benefit from the future growth of these assets. ADNOC would continue to be a committed, majority shareholder in any businesses listed. “The partnership and co-investment approach will enable us to more proactively and efficiently manage our asset portfolio, as we unlock and maximise significant value from across the group, ensure competitiveness, drive business and revenue growth, enhance performance, and secure greater access for our products in key target markets.”
Legacy of success Despite recent volatility, it is possible to plan for outcomes and under His Excellency’s leadership, ADNOC is equipped for a number of positive — and potentially negative — future developments. The mid-term outlook for the oil and gas industry indicates
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some recovery, but limited global economic growth and delicate political relationships around the world continue to pose risk. As ADNOC strives to provide a haven for investment and innovation in oil and gas, it is expected a number of international players will join the likes of BP and other companies, and capitalise on the opportunity to become part of the UAE’s story. Such firms are invited to shape “strategic partnerships that deliver technology, enhance market access and leverage value across our integrated upstream and downstream portfolios”. The focus falls on headhunting the best third party associates the industry can offer, including new types of partners and investors in infrastructure and energy, specialist investors, institutional investors and international pension funds. Al Jaber adds: “The ADNOC Group is an integral part of the UAE economy and prosperity and will remain so for many years to come. We have made real progress against our long-term strategic objectives and have delivered significant performance improvements and operational efficiencies across the organisation. “We have put in place a growth strategy that has the support of the Abu Dhabi government and is fully aligned with the UAE’s long-term vision and plans. It will enable us to build on our legacy of success, by being a smarter, more agile organisation, which is resilient to market dynamics. This process will be continuous, to make sure we remain a highly efficient, performance-driven and cost-effective oil and gas company, that is competitive in any price environment.”
CREATING THe HUB | 2.4
The Global Logistics Super-hub Building on a history of trade and exports, the UAE is developing world-class infrastructure and supporting leading technology to create an integrated, future-proof logistics hub for the 21st century.
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eading the non-oil economic drivers, trade and logistics in the UAE are valued at AED1.6 trillion and more than AED99 billion respectively, thanks to the focus placed on the creation of a sustainable environment and infrastructure; a pillar of the country’s National Agenda. This pillar builds on the opportune geographic positioning of the UAE and resulting access to a regional population of two billion people within a four-hour flight time, as well as the country’s historic role as a trading hub and port. Intelligence from Frost & Sullivan predicts the region will be one of the world’s busiest trade routes by 2030 and the implementation of this pillar secures continued investment to develop the world’s best transport and utility infrastructure, in preparation. The performance of the UAE’s logistics industry is measured in the context of the World Bank’s Logistics Performance Index, in which the UAE currently takes 13th position. The Index measures the quality of infrastructure support for logistics activities based on a global survey on the performance of border and customs management, shipping and infrastructure, and other factors. Like other economic plans, elements of the roadmap to achieving
these targets cascade to the individual emirates. For example, the Abu Dhabi Economic Vision 2030 aims to increase the GDP contribution from non-oil sectors by 60% by 2030, with logistics and transportation named as one of the 12 strategic sectors identified for growth. In Dubai, logistics has underpinned the transformation from a resource-based to service-based economy and currently contributes 14% to GDP — the highest of any emirate. Several major global logistics brands are indigenous to Dubai, including Emirates SkyCargo, the port of Jebel Ali, DP World, Dubai International Airport and Al Maktoum International Airport. Sharjah, the UAE’s industrial hub, accounts for more than 40% of the country’s manufacturing production and is home to a number of pioneering projects. Gulftainer’s land bridge, integrating the company’s port and logistics offerings, will link seaports to inland container depots. Additionally, Sharjah Municipality has unveiled new cargo-clearing procedures and Sharjah Port Authority has launched a new customs clearance e-portal. In Fujairah, growth is underpinned for the next five years by the creation of the 68,000 square metre Smart Logistics City Fujairah.
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2.4 | CREATING THe HUB
Jebel Ali Port
The Centre of Global Trade
between the emirate’s government, Minpoint Business Investments Trade is deeply ingrained in the business culture of the UAE, with and NIRAS International Consultancy. With construction due to the first records of the country indicating an economy built on commence at the end of 2018, the project will comprise three stagpearl diving, fishing and re-exports. es over five years. Implementing the highest-specification technology Today, the combined value of exports and imports equals 176% available, the design of offices and Smart storage systems will cement of GDP and the logistics industry’s major players hold both domes- the new business park as a prime choice for enterprises that target tic and diversified international interests. For example, DP World emerging and local markets. operates 77 marine and inland terminals, supported by more than Connecting the emirates, as well as the country to its GCC 50 related businesses and 40 countries, which span both highneighbours, the 1,200km Etihad Rail project will act as a catalyst growth and mature markets. for economic growth and sustained social development, with the Such activity and growth has built the UAE’s reputation on the power to redefine logistics and transportation in the region. global stage as a leading power in trade and a The network will extend across the United series of projects on home soil will strengthen Arab Emirates, from the border of Saudi the positioning. Arabia to the border of Oman, covering Gh“Logistics will be In 2016, Eco Logistics Park at Masdar City weifat, Abu Dhabi, Dubai and the Northern launched, offering EU-spec warehouses and Emirates, and linking with major connecting challenged by inoffice facilities in close proximity to Abu Dhabi points including Al Ain and Madinat Zayed. creasing competition Airport and the option of free zone licensing. Etihad Rail will also feature freight termias well as a growing The continued development of Dubai Wholenals, distribution centres and depots located shortage of skilled sale City is on track to generate AED30 billion close to major transport hubs, warehouses, in investments and increase the UAE’s share of a and storage facilities across the UAE, includworkers as the baby global wholesale trade sector valued at US$4.3 ing Mussafah, Khalifa Port, Jebal Ali Free boomer generation trillion, with expectations to reach $4.9 trillion Zone, Port of Fujairah and Saqr Port. retires. To solve these in the next five years. Within Wholesale City, challenges, logistics Innovation and the future Dubai Food Park will be developed at an investContinuing this spirit of innovation, the fument of $1.5 billion to cluster all food-related is entering a phase of ture of the UAE logistics industry will bring services under one umbrella. technical transition” the implementation of some of the industry’s On the country’s Indian Ocean coast, most high-tech breakthroughs. At Jebel Ali Smart Logistics City Fujairah is under develFree Zone (Jafza) an array of tech-driven opment following a partnership agreement
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CREATING THe HUB | 2.4
traffic congestion in Dubai costing the economy $800 million in lost working hours. To date, DP World has invested $50 million in the project and Sultan Ahmed Bin Sulayem sits on the company’s board of directors. In addition to pioneering future technology, the UAE will also embrace the global tech trends re-shaping human and machine interaction and the division of labour in a connected world, harnessing them to capture the imaginations of the next generation of business leaders. For example, the headline-grabbing UAE Drones for Good Award is dedicated to “transforming the innovative technologies behind civilian drones into practical, realisable solutions for improving people’s lives today”. Presented by the UAE Government, the first competition, held in 2016, received 800 individual submissions from 57 countries. On the ground, IoT connectivity enables more efficient port traffic and port fleet management; it delivers information on the condition and location of freight; and can be used to track movement, efficiency and even fuel consumption of road vehicles. 3D printing has also received a boost in the UAE with the Dubai 3D Printing Strategy launched by Sheikh Mohammed bin Rashid Al Maktoum in 2017. The global initiative aims to “exploit technology for the service of humanity and promote the status of the UAE and Dubai as a leading hub of 3D printing technology by 2030.” Innovators, pioneers and developers of emerging technology in the sector, will work to innovate manufacturing in the emirate’s medical and construction sectors. According to Dubai Future Foundation, the technology will restructure economies and labour markets, and redefine productivity. Supporting the manufacture of products at their point of use, 3D printing allows product schemes to be digitised and delegated to small factories closer to the customer, driving new logistics service concepts. Summarising its predictions for what it calls a “period of rapid change”, the World Bank predicts technology will continue to define progress and its influence will have the power to drive economic strength. Jean Francois Arvis, senior economist, Trade and Competiveness Global Practice, the World Bank, says: “Logistics will experience a systemic change in terms of workforce and technology adoption. Logistics will be challenged by increasing competition as well as a growing shortage of skilled workers as the baby boomer generation retires. To solve these challenges, logistics is entering a phase of technical transition. Adoption of automation technologies like collaborative robotics will significantly rise in order to meet increasingly complex customer needs and to cope with the ageing workforce and skills shortage.”
Airports
Ports
·Dubai International ·Abu Dhabi International ·Sharjah International ·Dubai World Central Al·Maktoum International ·Al Ain International ·RAK International ·Al Bateen Executive Airport ·Fujairah International Airport ·Ajman International ·Sir Baniyas Airport
·Port Zayed, Abu Dhabi ·Port of Dibbah Al-Fujairah ·Port Rashid, Dubai ·Port of Fujairah ·Jebel Ali Port ·Khalifa Port ·Port of Khor Fakkan ·Port Khalid ·Port of Hamriya
solutions are now present throughout the area. Community tools such as the iJafza app are designed to improve interactivity at an individual level, with tools to report incidents and maintenance requirements. An Automatic Plate Recognition System (APRS) is planned with access control and high-definition CCTV to register all vehicles. Further expansion of the free zone will be aided through drone supervision, to support technical accuracy and comply with regulations. Sultan Ahmed bin Sulayem, Group Chairman and Chief Executive Officer of DP World and Chairman of Ports, Customs and Free Zone Corporation, says: “Jafza has always put customers at the top of its priorities and we offer new, innovative services for investors and traders to carry out their transactions effectively and efficiently in record time. “The launch of Smart services signifies Jafza’s efforts in achieving the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, to transform our services into Smart government services in order to achieve the highest level of happiness for customers and investors. We aim to transform Jafza into an ideal free zone through the development and use of the latest applications, and become a global knowledge and innovation hub.” One of the most exciting developments in the pursuit of this ambition is DP World’s Memorandum of Understanding with Hyperloop, to explore the feasibility of the technology transporting cargo from Jebel Ali Port to an inland depot 29 kilometres away. The study covers the efficient handling of containers, costs, benefits, and demand and volume patterns of moving cargo using the magnet-based technology. According to reports, up to 4,000 vehicles travel daily between Abu Dhabi and Dubai, with
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Steering change
Steering change Captain Mohamed Juma Al Shamisi, CEO of Abu Dhabi Ports, talks about economic resilience and creating opportunities, as the port operator looks to new emerging markets and digital solutions .
Capt. Mohamed Juma Al Shamisi, CEO, Abu Dhabi Ports.
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What were the highlights of Abu Dhabi Ports’ performance in 2016 and 2017? The 2016/17 season was a record-breaking year for Abu Dhabi Ports’ Cruise Terminal, with 49% increase in passengers and 44% increase in vessels. The works required to expand one kilometre of quay wall at Khalifa Port and the adjacent yard behind it is currently 48% complete, which includes reclamation, being 75% complete and the quay wall, 13% complete. The new quay wall will add an additional 600,000 square metres designated for cargo handling. During 2017, we have delivered on our strategy for diversification and building capacity. We have also made several significant announcements such as the launch of Maqta Gateway, the 35-year concession agreement with the Port of Fujairah and the 50-year Musataha agreement signed with the Jiangsu Provincial Overseas Cooperation and Investment Company Limited (JOCIC). This will bring investments of AED 1.1 billion into Khalifa Port Free
Kizad offers free zone and non-free zone solutions for land leasing, pre-built warehouses and free zone offices
Trade Zone (KPFTZ). These major milestones show that our strategy is paying off. Our strategy for next year will follow the same rationale: sustaining growth through diversification.
What were the main factors driving performance? The resilience of the Abu Dhabi economy has played a positive role in our business because ports mirror economic activity. At the same time, port companies cannot simply rely on the GDP and organic growth from their hinterlands, instead, they must look to create opportunities to grow. Our activities have boosted tourism, trade, industry and logistics and are contributing to making Abu Dhabi’s economy more diverse and more dynamic, as well as making substantial investments in assets and infrastructure outside of Abu Dhabi’s borders. Abu Dhabi Ports’ growth has been driven by the company’s varied income generating streams that include cruise, general cargo, container and RoRo services, marine
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services, industrial zone and free zone development, which has been augmented by a willingness to invest in new assets both in Abu Dhabi and globally in order to drive our business growth objectives Out of the different business services, the cruise tourism, one of the newest sector, has shown great promise. We saw the longest cruise season in the history of Abu Dhabi with with 49% increase in passengers and 44% increase in vessels. This was made possible by our investment to create a state-of-the-art cruise terminal and, in 2016, the opening of our Sir Bani Yas offshore cruise beach destination. The very first of its type in the region.
Abu Dhabi Ports have many international operations − are there any new/emerging markets that will receive focus over the coming years? There is great potential for Abu Dhabi Ports in the global market place. China will be a significant focus for the UAE and Abu Dhabi Ports specifically as we have grated a longterm concession to Cosco Shipping Ports in Khalifa Port to operate a container terminal of up to 3.5 million TEUs and will be operational towards the end of 2018. In addition to the container terminal concession, we also signed an agreement with Jiangsu Province (JOCIC) to develop a two square kilometre Chinese demonstration zone within our free zone. This will allow Chinese manufacturing to locate here in Abu Dhabi. These two agreement will open up significant trade between the UAE and China as well as linking into the global shipping network. India and the MENA region remain a strong focus to us and we expect our presence to grow in west Africa, where Abu
Dhabi Ports already manages the Port of Kamsar in Guinea Conakry. At the same time, we will maintain a strong presence in the region. In 2017 we expanded our footprint by concluding the agreement to manage Fujairah Terminals on a 35 year concession. Our operations commenced on the 1st October 2017 and will include around AED1billion of investment to upgrade the operational port area. We will be creating a state of the art facility to cater for containers, general cargo, RoRo and cruises.
What have been the top five factors driving the growth of the logistics industry in the UAE? The support of the government and its directives to elevate the UAE’s position as a diversified economy have accelerated infrastructure development – creating new opportunities for the logistics industry to be part of. At the same time the UAE’s own strategic location with access to all major international and regional markets has allowed the logistics industry to expand to new territories including other GCC countries, Europe, China, India and others. In addition, because of the multi-national client base, the UAE has unique trends in consumer demands, which need to be met. The logistics industry and foreign companies understand this and are heavily investing in the UAE. An example of this is our recently signed agreement with the Jiangsu province in China to invest over AED1.1 billion in KIZAD for future tenancy by other Jiangsu companies. The presence of industrial zones and free trade zones such as KIZAD and the Khalifa Port Free Trade Zone are another reason for the growth of the logistics
Ports and facilities operated by ADPorts • Khalifa Port • Zayed Port • Fujairah Terminals • Musaffah Port • Al Sila Port • Sir Bani Yas Port, • Delma Port, • Al Mirfa Port, • Mugharrag Port.
• Abu Dhabi Cruise Terminals • Maritime Training Centre • SAFEEN • Maqta Gateway • Khalifa Industrial Zone Abu Dhabi (KIZAD) • Khalifa Port FTZ • Port of Kamsar - Guinea Conakry
industry here given the complementary services these units provide and act to boost trade in the UAE – which leads to more business for logistic companies. The UAE focus on digitalisation and online services is also rapidly attracting increased attention due to added ease and convenience. This is why Abu Dhabi Ports has invested in Maqta Gateway – a state of the art digital solution for trade customers and related entities, including logistic industry players who are looking for faster and smoother information exchange and transactions in order to drive their growth. The UAE’s GDP growth remains higher than many other parts of the world.
There is a sharp growth projected in the value of the logistics industry over the coming decade − what opportunities does this present to new players who wish to enter the local market? The growth in the logistics industry is catalysing further improvements into the services and efficiencies of the market. The strong performance of major players such as Abu Dhabi Ports demonstrates that world class companies with strong value propositions can perform well in the region. As new investment from retailers and industrial manufacturers grows in the region it will create demand for services and particularly new technologies to drive greater logistic efficiencies and services. There are many technologies on our horizon that will present disruptive opportunities in the logistics sector. The UAE has always been an early adopter and an innovator of new technologies, and these new technologies are creating new market spaces for people to operate in. Abu Dhabi Ports is working on a number of developments through our Maqta Gateway company to really use new technologies to drive new solutions to our customers.
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Walking the walk Bringing UAE’s logistics strategy to life, president of the National Association of Freight and Logistics, Nadia Abdul Aziz, highlights the key investor prospects and future opportunities in the industry.
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Nadia Abdul Aziz President of the National Association of Freight and Logistics.
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s the UAE logistics industry positions for a future built on innovation and connection, the National Association of Freight and Logistics (NAFL) will become crucial to its continued evolution. As mandated by the Government of Dubai, NAFL is an agent for collaboration between freight and logistics service providers in the UAE, with president Nadia Abdul Aziz — who is also managing director and partner at UNASCO — working to cement the UAE’s status as a transport and logistics powerhouse on the world stage. The oldest association of freight and logistics service providers in the Middle East, NAFL was established in Dubai in February 1992 as the National Committee of Freight Forwarders (NCFF) — the first such association in the Gulf. With only 24 members at its inception, today NAFL boasts more than 350 members and facilitates continued professional development and partnerships for the advancement of the logistics sector. Today, with a sharp growth projected in the value of the industry and a National Agenda that places infrastructure development, transport and trade at the heart of the new economy, NAFL will expand on its influential position to drive collaboration across the industry and investment in the country. In line with Vision 2021, this will include work to ensure the provision of basic training and insurance; increasing collaboration with government licensing departments; building on the strategic relationships the UAE enjoys with various international markets; and ongoing work to tell the world about the UAE’s progress.
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Part of this work involves the International Federation of Freight Forwarders Associations (FIATA), of which NAFL is a member, supporting the body through regional events, e-learning and networking. The UAE has twice hosted the prestigious FIATA World Congress, in 1999 and 2007, under the patronage of HH Sheikh Ahmed bin Saeed Al Maktoum, and the FIATA-NAFL UAE Chapter supports networking to enhance business opportunities for member companies.
Supporting growth
Investor highlights By Nadia Abdul Aziz, president of NAFL and managing director and partner at UNASCO While activity is concentrated in Abu Dhabi and Dubai, the other emirates offer an attractive proposition for investors, offering lower costs, a reduced cost of living and labour, and integrated free zones. The UAE Chamber operates a network of international offices to support potential investors and facilitate trade. The UAE’s free zones afford 100% foreign ownership, with no-restrictions on fund transfers to your home country. The free zones provide specialised one-stop-shop registrations where all business requirements are met promptly from one contact office. Not only does the UAE have straight forward procedures, but there are many areas to invest in and a larger choice compared to other countries, with business protection services provided by multiple departments across the emirates. The country is open for FDI and enjoys stable rules and regulations favour FDI and trade. Bank facilities are available for foreigners, as well as nationals, with more than 18 global banks operating in the UAE. As well as banks, all the major global organisations operate a Middle East headquarters from the UAE, which makes it a very lucrative market for logistics companies to work in, for cargo movements as well as storage.
A sharp rise in the value of the logistics industry is projected for the coming years, expanding on the already lucrative sector and building on the opportunities presented to date. Al Masah Capital reports the UAE and Saudi Arabia will continue to lead regional performance and growth as the global T&L industry reaches movements of 92.1 billion tonnes annually by 2024, and the 3PL market grows by 5% CAGR to 2020. Aziz explains: “The growth of the logistics industry in the UAE is underpinned by the array of new megaprojects, the zero rate taxation and huge government investments in high quality and efficient infrastructure. The digitisation of services has also increased efficiency in the industry, with Smart and e-services now available for all customs and booking transactions, saving money and time.” Across more than 38 free zones, specialised by industry and featuring integrated services to support investors, the UAE boasts a portfolio of dedicated logistics facilities, strategically co-located with port and airport infrastructure and with direct access to sea-air cargo corridors. “The UAE boasts many unique offerings for investors. For example, the upcoming Expo 2020 will generate an estimated 300,000 jobs and we are lucky to have national award-winning airlines here in the UAE, with more than 150 direct international destinations. In addition to this, the UAE is developing what will become the largest airport in the world, Dubai World Central, with capacity for more than 200 million passengers a year once complete. “Fujairah boasts the second largest bunkering port in the world for oil import and export and we have the one of the largest and best ports between Rotterdam and Singapore. The UAE is the first in the Middle East to have the Authorised Economic Operator programme and certification for reputable freight com-
panies, which helps organisations to move their goods faster than before with less documentation and fewer inspections. “Last but not least, our rulers always focus on being the leaders in various industries and bringing the best to the country. This creates a bond of trust with the country’s residents and investors and subsequently drives investment and trade in our region.”
Changing landscape
As the UAE looks to the future, a series of new logistics zones and transport infrastructure will be delivered over the coming decade. The new infrastructure will dramatically change the logistics landscape, not only adjusting the supply and demand equilibrium on existing facilities, but by introducing entirely new modes of transport to the country. The first of these is the planned Etihad Rail network, a 1,200km nationwide route linking major cargo ports, with plans to later introduce a passenger network. Eventually the line will link with projects developed in tandem across the GCC, providing a level of connection never before seen in the region. “The introduction of new physical and digital infrastructure will enhance the logistics landscape by facilitating faster deliveries at lower costs, with no time wasted at borders or by delivery drivers. We will also have more eco-friendly and green transport modes, generating cost savings and also supporting the ability for companies to serve the UAE from a single office rather than multiple branches, since the transport is so fast.” The second innovation transforming how the UAE moves people and goods is the proposed Hyperloop, connecting the port at Jebel Ali to inland facilities up to 30km away, in a matter of seconds. Although only in the R&D phase currently, the technology could be implemented as soon as next decade, following investment from DP World in the region of $50 million and the appointment of Sultan Ahmed Bin Sulayem to the company’s board of directors. Aziz says: “The Hyperloop is just one of the ways the UAE is delivering real world applications of the most cutting-edge technology. We have also heard about the development of driverless and flying taxis, automated and drone courier services and the use of Smart and blockchain technology. These, along with the increasing human capital across the UAE, will secure the country’s competitive advantage over many nations by enhancing collaboration, transparency, innovation and security.”
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flying high A vital link for trade and tourism, the aviation industry is the backbone of the UAE economy. General Civil Aviation Authority Chairman, His Excellency Sultan bin Saeed Al Mansoori, explains the strategy for the next phase of growth.
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y 2020, the UAE’s aviation sector is expected to contribute US$53 billion to the national economy and support 750,000 jobs, as it enters a phase of rapid growth in line with that of China and the United States. By 2030, air traffic in the UAE will stand at double the current volume and the General Civil Aviation Authority (GCAA) could handle up to 5,100 aircraft movements per day. As a region, the Middle East will take delivery of 3,000 new aircraft over the coming two decades, requiring more than 55,000 pilots and 62,000 technicians over the same period to match growth. Monitoring the success to date, the GCAA is working on its Strategic Plan 2017 to 2021, to roadmap the future of aviation growth, the continued impact of
globalisation and how to meet the future demands of the industry. GCAA Chairman and Minister of Economy, His Excellency Sultan bin Saeed Al Mansoori, says: “Being at the crossroads of ancient trade routes, the UAE has always enjoyed the status of being a trade hub for the region through its land and marine links. Aviation has added a new dimension and impetus to these already well-established industries and the increased airfreight activity allows the UAE to connect global supply chains efficiently and effectively.” Aviation also underpins the economic and diplomatic relationship between the UAE and United Kingdom. With 200 weekly connections, it is one of the most important international markets in the world, with connectivity vital to creating
His Excellency Sultan bin Saeed Al Mansoori General Civil Aviation Authority Chairman.
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opportunities for British companies in the aviation, tourism and trade industries in the UAE and wider Middle East. The UAE airline industry is one of the largest customers for the UK aerospace industry, including Rolls-Royce, and numerous partnerships exist with universities and businesses in such specialised services as airport development and operations, catering, ground handling, logistics, consulting and aircraft maintenance.
Taking flight Since its inception in 1996, the GCAA has made notable progress in the creation, enforcement and provision of sector-specific legislation and air navigation services, without limiting business through regulation. Despite the challenges that naturally occur, the body has enhanced the overall connectivity in the country and also secured the UAE’s place as a transit, tourism and trade hub on the global stage. Mansoori explains: “Our plans are guided by the UAE National Agenda and its strategic priorities and I am pleased to say that the 2017 to 21 Strategic Plan reflects our ambitions to support the growth of the aviation industry, at home and abroad. We look forward to the support of our valued stakeholders and industry partners with much enthusiasm and confidence, and commit to continue our efforts to advance the civil aviation sector and enhance its efficiency and safety.”
Abu Dhabi International Airport 45m AED19b 700,000 19,000 3
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Passengers a year predicted to use ADIA by 2025 Invested in Midfield Terminal Complex Sqm new facility with 28,000sqm of retail and F&B Bags processed per hour through 27km of conveyors Pearl Design Rating
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The role of GCAA over this time will build on its capacity as a regulator to support the industry’s growth. Crucially, one of its founding principles is to avoid unnecessary regulatory and administrative burden and to understand how new regulations influence industry behaviour. Mansoori continues: “As of now, through its constant efforts and negotiations, the UAE has 104 fully liberalised air service agreements, placing it among the most connected countries. We expect the infrastructure development in the UAE, particularly in the leisure and entertainment sector will work in tandem with the aviation sector and lead to the growth of each other,” he continues. In line with the ambitions set out under Vision 2021, the UAE has set its sights on leading the World Economic Forum’s Global Competitiveness Index for aviation capabilities by 2021. In pursuit of the goal, in Abu Dhabi, infrastructure development has focussed on the Midfield Terminal Complex (MTC) at Abu Dhabi International Airport. The AED19 billion project will be visible from a distance of more than 1.5 kilometres and will include 28,000 square metres of retail and food and beverage outlets. It will have four piers, the longest of which stretches more than 550 metres, housing 65 aircraft stands, and at 700,000 square metres, the Midfield Terminal Building (MTB) will be one of the largest buildings in the emirate.
Passenger numbers are forecast to reach more than 45 million a year by 2025, boosted by the additional 30 million passengers a year facilitated through MTC. In Dubai, where the goal is to be not only the world’s biggest airport but also its best, annual capacity at Dubai International increased from 75 million passengers to 90 million passengers in February 2016 following the opening of Concourse D, the last major physical infrastructure possible at the airport. Dubai’s second airport, Dubai World Central, opened for passenger operations in October 2013 and currently has a capacity of up to seven million passengers, rising to 26 million passengers per annum by 2018. The $32 billion expansion project will make DWC the world’s biggest airport with an initial capacity of 120 million and an ultimate capacity of more than 200 million passengers per year. DWC will also link with Jebel Ali Port and Dubai South, creating a multi-modal hub surrounded by logistics facilities and high-worth, mixeduse real estate.
Connecting the future The UAE’s emergence as a global aviation hub is the result of its visionary leadership and pursuit of such strategies as the open skies policy. In 2017, the IATA estimates demand for air travel will grow 9% across the region, but performance will be defined by the
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Dubai International Airport 89m $7.8b 7.2% 6.7%
Passengers forecast to travel through DXB in 2017 Airport and airspace expansion programme under way Projected average annual growth in passenger traffic Projected average annual growth in cargo
anticipated recovery in oil prices. Fuel is expected to account for 18.7% of the industry’s cost structure in 2017, “significantly below” recent peaks of 33.2% in 2012-2013, according IATA chief economist, Brian Pearce. However, changes in the price of Brent oil from $52 a barrel to $64 a barrel in 2017 will push jet fuel prices. In the UAE, the pace continues with a host of targets mapping the journey to 2030. A new state safety programme allows for more fluid direction of resources and the regulation and use of unmanned aerial systems. Growth in airspace capacity and aerodrome mega-projects has been delegated to the Aviation Safety Affairs Sector
(ASAS) and aircraft part manufacturing has been innovated through the approval of 3D printing for simple aircraft parts. The UAE Airspace Restructuring Project (ARP), launched in March 2014, included two initial phases: development of Conceptual Airspace Designs for the Terminal Airspace and En-Route Airspace. Between 2016 and 2020, phase three will see the integration of earlier work in order to accommodate the expected increase in traffic to 2020. Additionally, the new airspace needs to ensure safety despite the increased traffic. Mansoori explains: “Being at the crossroads of ancient trade routes, the
country has always enjoyed the status of being a trade hub for the region through its land and marine links, and the increase in airfreight activity allows the UAE to connect global supply chains efficiently and effectively. “The GCAA has two very critical roles to play in the growth of aviation and, as a regulator, we must support the industry to comply and grow. This thinking stems from our strong belief and historic experience in trade that increased competition results in reduced prices and improved quality, and our work will include simplifying how the industry liaises with GCAA, thus minimising administrative burdens,” he concludes.
Dubai World Central 200m
Passengers will use the airport every year once complete
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Passenger carriers in operation
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Scheduled cargo operators covering 128 destinations
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Pedal to the metal Abdulla Kalban, Managing Director and CEO of Emirates Global Aluminium, explains how for decades the UAE has supplied high quality aluminium that makes modern life possible worldwide.
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What is Emirates Global Aluminium? Emirates Global Aluminium is one of the world’s largest premium aluminium producers and the biggest industrial company in the United Arab Emirates outside oil and gas. We employ more than 8,000 people and we make about one tonne in every 25 tonnes of aluminium produced worldwide. We began production in 1979, which means we are one of the oldest major companies in the UAE outside the oil industry. Our development has taken the UAE from no aluminium production to the fifth largest aluminium producing nation in the world. Our metal ultimately becomes part of the buildings, planes, cars, electronics and packaging that make modern life possible, from the Burj Khalifa in Dubai to the smartphone. We have operations in Abu Dhabi and Dubai and we are the largest company that is jointly owned by the two Emirates.
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Abdulla Kalban, Managing Director and CEO, Emirates Global Aluminium.
“Each year we spend around US$1 billion in the local supply chain, including energy, contributing to the development of local industries from engineering to IT to trucking”
in the UAE. Each year we spend around US$1 billion in the local supply chain, including energy, contributing to the development of local industries from engineering to IT to trucking.
How does EGA contribute to the development of a knowledge-based economy?
Facilities at the Al Taweelah plant.
Under Vision 2021, how does EGA contribute to a diversified national economy? Our product is the second biggest made-in-the-UAE export. We supply aluminium to over 60 countries, so EGA has directly been part of the UAE’s economic diversification since we started production. We also supply about 10% of our aluminium to customers here in the UAE, who make products with our metal. There are 26 downstream aluminium companies in the UAE, and the sector as a whole employs 30,000 people, making it the largest employer amongst the UAE’s energy intensive industries. The downstream aluminium sector makes products from construction materials to car parts, which are used in the UAE and exported around the world. We also contribute to economic diversification through our supply chain – our procurement of goods and services
We have focussed on innovation for more than 25 years, developing technology in the UAE. We have used our own smelting technology for every expansion since the 1990s, and we have retrofitted all our older production lines too. The technology challenge in our industry is to produce more aluminium with less energy, saving costs and environmental emissions. We are on the 10th generation EGA technology, and it is amongst the most competitive in the global aluminium industry. Technology development has been a key foundation of our business success. Last year EGA became the first UAE industrial company to licence its process technology internationally, in a commercial deal with another aluminium company. This was a major milestone in the development of a knowledge-based economy in the UAE.
Where do the main opportunities lie for potential British business partners and how would you advise they approach the market? The UAE scores highly in many global rankings of places to do business and there are clearly opportunities for international companies throughout the economy. We currently have around 1,400 British companies registered with EGA as potential suppliers, and in a typical year more than 300 British companies win contracts with us. As you would expect, we run competitive tenders and we judge proposals on their merits based on our quality needs and cost. Opportunities with us range from huge engineering projects to academic partnerships on our technology programmes, and from public relations to catering.
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Left: The Masdar Institute of Science and Technology, Abu Dhabi. Below: Dubai, where more than 500 Smart city initiatives. are underway
A tale of two Smart Cities In 2008, Masdar City became the first urban centre in the Middle East designed with Smart city principles in mind. Today, with 545 Smart city initiatives underway in Dubai and $8 billion earmarked for Smart city infrastructure, Smart networks are bringing the Knowledge Economy to life.
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he Smart city movement can be traced back to the Dubai Smart City Dubai aims to be the world’s best-connected, smartest and hap1970s, when the Los Angeles Community Analysis piest city, and a number of initiatives have launched since Smart Bureau (CAB) set out to create what it had termed an city ambitions were formally adopted in March 2014. The emir“Urban Information System”, in order to better direct ate currently has more than 500 Smart city initiatives underway, resources. and has earmarked US$8 billion to realise the projects. It was an area social science had long worked in, but this Dubai is home to more than 300 global and regional ICT was the first time city authorities would use the information to firms as well as rapidly developing infrastructure and greenfield respond to resident’s needs and direct the municipality response, initiatives, providing strong foundations for innovation and a essentially creating the first Smart city. blank canvas on which to test it. Since then, advancements in social science, Big Data and huIn 2015, Dubai Smart Government localised the popular man/tech interaction, have created the capacity to combine tech Google Now app and announced the migration of 2,000 governand data, unifying the previously siloed innovations of the govment services to the Dubai Now app. The same year, the emirate ernment, public and private sectors, and changing how systems turned on the first Smart street lights at Dubai Silicon Oasis and work behind the scenes. in 2017, Dubai Silicon Oasis Authority laid the foundation stone Big Data remains at the heart of the idea, but today the term for Silicon Park — a mixed use development with Smart foundaSmart city conjures more glamorous — and visual — ideas: tions, valued at $354 million. driverless electric cars and drone delivImprovements have also been made to eries; a city integrated with Internet of public WiFi networks with up to 90% of Things (IoT) technology and sensor netThe Smart Dubai Index Dubai covered by open connections by the works. This is the Smart city of the UAE. The Smart Dubai Index is a set of KPIs under six end of 2017 and, at Dubai Airport, the inIt is here, in 2017, the first robotic dimensions, created by the International Telecomtroduction of WOW-Fi allows passengers police officer started duty with Dubai Pomunications Union and Dubai Statistic Centre to to access connections of up to 100Mbps lice and the Roads and Transport Authorevaluate and measure how facilities and services in in the airport. ity (RTA) pledged to introduce “flying Dubai contribute to the vision of Smart Dubai. Under Elsewhere in Dubai, the RTA will exetaxis” by 2020. At Abu Dhabi’s Masdar the District Guidelines, responsibility for achieving cute 34 Smart transport projects by 2021, City, a Smart city that uses technology to KPIs is delegated to each district of the emirate. including autonomous drones, self-driving enhance sustainability, driverless electric The dimensions are: Economy, Living, Governance, Environment, ICT, Mobility and Infrastructure. buses and Smart parking, street lights and vehicles have been commonplace since pedestrian crossings. 2011.
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Smart City Infrastructure in the UAE
AED 16b Savings
predicted by eliminating all paper in Dubai Government by 2020
100% 1.2% Digitisation
of all Dubai Government services by 2021
Dubai’s GDP
could be generated by commercialising government data, with the process due to begin in Q3, 2017
450 Companies
from six continents operate from Masdar City, from start-ups to multinationals.
50,000 People
will live in Masdar City, with up to 40,000 working and studying there every day, when complete
Masdar City With its driverless electric cars, intelligent architecture, renewable energy and automated systems, Abu Dhabi’s purpose-built Masdar City — the world’s most sustainable eco-neighbourhood — is a Smart city ahead of its time. Since 2006, Masdar City has used data, technology and intelligent design to optimise the use of resources and create a healthy, functional and entirely sustainable urban community. Masdar City is home to the largest cluster of high-performance buildings in the world, which together create a real-time laboratory to monitor and study how cities use, conserve and share resources. Buildings utilise passive and intelligent design to reduce energy and water demands by 40%, with all buildings meeting a minimum rating of 3 Pearls under the Estidama sustainability framework — equivalent to LEED Gold. Transport options around the city include a driverless, point-to-point personal rapid transit system and a ride-sharing programme featuring electric vehicles, with shading utilised to improve walkability and reduce electricity loads for cooling. The area is also a free zone, created to be a hub for cleantech companies with the Masdar Institute at its heart, while also providing edutainment elements for visitors. Today it is home to major corporations including Siemens, Mitsubishi and General Electric, in addition to the International Renewable Energy Agency (IRENA). The research conducted in Masdar City is used in innovations across the world.
The bottom line of Smart The introduction of Smart capabilities comes during a period of sustained flux for many national economies. In the UAE, the collapse in oil prices and the dawn of IoT and automation across industries are just two recent events to change how, why and when we consult and interact with technology and data. Industry has also changed and the capabilities of new technology have helped to bring new opportunities: consider, the processor speed in iPhone generations increased 71 times between the launch of the iPhone 3G in 2008 and the iPhone 6S in 2015, bringing significant advancements in real-time connections. But a Smart world will cause disruption in the labour market. Analysing the impact of computerisation on 700 jobs, researchers at the University of Oxford concluded 47% of total jobs have a high probability of disappearing due to computerisation. In the UAE, the Knowledge Economy will create the foundations for a workforce that is skilled appropriately for this new reality. Cisco predicts 50 billion connections will be forged by 2020, unlocking a potential market value of $14.4 trillion and, like the work of the Los Angeles CAB, the real value is found beyond the gadgets that enable the end-user technology. In democratising IT, the Smart city urban model is capable of efficiencies that create jobs, connect systems, people and businesses and ultimately generate economic value. Cascading the wealth, the system creates hundreds of opportunities for the most innovative, agile and forward-thinking companies to bring their own solutions to market, sharing the value among a wide pool of beneficiaries, in line with the principles of the Knowledge Economy.
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HEADYLINE The centre HEADYLINE Passenger trafficthe andfirst hotelIslamic check-ins From opening bank in 1975, across the UAEfor break records to ambitions thenew UAE to be at the heart every quarter, placing the country of the $3.3 trillion global Islamic economy by amongAbdulla the top global destinations for 2021, Mohammed Al Awar, CEO of leisure,Islamic retail and businessDevelopment tourism. Dubai Economy Centre (DIEDC) explains how the UAE will become the centre of the global Islamic economy.
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At The Top Burj Khalifa.
iles of coastline, record-breaking skyscrapers, world-famous hotels, culture, history, art and a selection of the world’s largest and most exclusive malls, have elevated the UAE from an arid oil field to a must-visit destination for business and leisure that in 2016 welcomed a record number of international visitors. Continuing the trend, first half figures for 2017 show Abu Dhabi welcomed more than 2.25 million guests to its 165 hotels and hotel apartments, an increase of 7% Year-on-Year (YoY), and Dubai welcomed a record total of 8.06 million international overnight tourists, reflecting a 10.6% increase YoY. In Ras Al Khaimah (RAK), international tourist arrivals increased 10% with hotel occupancy up 4.7%, positioning the emirate to surpass its 2017 annual targets. In Sharjah, H1 arrivals surpassed one million visitors for the first time, marking an increase of 15% on 2013 figures and pushing occupancy across the emirate’s 10,000 rooms to 74% on average. Saudi Arabia, the UK, China and India continue to build on their leading arrival figures in Abu Dhabi and Dubai, with German, Russian and Eastern European visitors leading demand in RAK and Sharjah. The trickle-down impact on the economy is undeniable. From the days of the first Bedouin tribes, hospitality has been central to Emirati culture. Today it represents a booming industry forecast to contribute AED163.8 billion to GDP in 2017, up 2.9% on 2016, with the UAE leading the world in terms of quality, innovation and ambition in the sector. According to figures from the World Travel and Tourism Council (WTTC), the UAE’s hospitality industry will create 18,000 jobs in 2017, in turn boosting the industry’s contribution to GDP. This will rise by 4.9% per annum to reach 12.4% of total GDP in 2027. International visitor spending for the business and leisure segments combined totalled AED109.8 billion in 2016, according to WTTC figures, and this will rise 3.3% in 2017 driven by an increase in total arrivals to 19.1 million. By 2027, international tourist arrivals will total 31.4 million generating expenditure of
18,000 20% PA 2.9%
New jobs created by UAE’s travel and tourism sector in 2017 Increase in employment, reaching 770,000 jobs by 2027 GDP growth forecast in tourism and hospitality
$44.6b
(AED163.8bn) Projected 2017 GDP contribution
12.4%
GDP contribution forcecast for 2027
35,000
Mid-market hotel rooms will be added to existing stock in Dubai
$460,000
Hotel construction cost per key, Dubai
25%
Higher ADR recorded by hotels attached to malls
4.5m
MICE visitors recorded across DWTC, DICEC, ADNEC and AACC in 2016
AED184.5 billion and marking an increase of 5% per annum.
The travel and tourism hub The successful establishment of a passenger transit and tourism hub is evidence of the success of the complementing hubs. While the majority of existing infrastructure projects were completed during the boom years of the early 2000s, in the run up to Expo2020 focus has turned to the entertainment and leisure sector, which according to studies from PwC could soon rival that of Orlando, Florida, in terms of arrivals and hotel performance. Since 2010, Ferrari World and the wider Yas Island have been joined by IMG Worlds of Adventure and the first phase of Dubai Parks and Resorts (DPR), with
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3.1 | Tourism & Culture
Ferrari World, Abu Dhabi.
a further IMG park, a Warner Bros. park and completion of DPR all due over the coming years. Tapping into the experiential travel segment, the continued development of Abu Dhabi’s cultural district at Saadiyat Island and the recent launch of Dubai Opera and La Perle add a new dimension to the country’s demand drivers and tourism mix. Dubai also attracts a number of international music, comedy and performance artists to venues such as Dubai World Trade Centre and Meydan Racecourse. The retail industry has been utilised to drive arrivals during typically low-demand periods, with promotions such as Dubai Shopping Festival and Dubai Summer SurHotels in the UAE offer superior accommodation across all categories.
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prises driving hotel occupancy in January and the summer. Replicating this model to add new leisure elements to cultural and public holidays, similar events take place across the country for Diwali, Chinese New Year and UAE National Day. Some of the biggest malls in the world are located in the UAE and all are juxtaposed with world-class hotels, which enjoy a 25% higher ADR than their competitors. Data collected over 10 years by Colliers International shows a correlation of 95% in the UAE between tourist arrivals and retail spending, with Dubai’s selection of retail concepts leading the way in the country. While renowned for fun, the UAE has
long been a top destination for business travel. The country’s robust business environment, calendar of corporate events and conferences, unrivalled business facilities and connectivity have pushed the segment to reach an annual average value of US$653 million. The projected annual growth rate for MICE travel to the emirates to 2020 currently stands at 7% according to data published by dmg Events. Corporate events and conferences will drive the bulk of this business. In 2016, Dubai International Convention and Exhibition Centre (DICEC) hosted 298 MICE and business events — 100 of which were classed as “mega-events” — and welcomed more than three million attendees, with a further one million foreign business travellers recorded at Dubai World Trade Centre (DWTC). Eight new international congresses will be held at DWTC from 2017 to 2020. In Abu Dhabi, the National Exhibition Centre (ADNEC) and Al Ain Convention Centre welcomed a combined 1.5 million visitors across 480 local and international events, an increase of 30% on the previous year. MICE and business travel is a segment that requires unwavering support from the tourism industry stakeholders, especially those in hotel development and operation. A number of brands have repositioned offerings to suit the evolving market and
Tourism & Culture | 3.1
a new generation of business hotels are enjoying above-average occupancy rates. In 2012, Marriott International opened the Marriott Marquis, the first Marquis branded property outside of North America and the tallest hotel in the world, to cater specifically to this segment. Designed to meet the needs of large MICE groups, with 1,608 keys it was a bold addition to Dubai’s growing hotel stock at the time however, it remains the only hotel in the country with capacity to host and sleep 1,000 MICE delegates. Since its opening, a number of properties have refined existing facilities to increase MICE capacity, in both the resort and urban hotel categories
Investment sectors Investment in tourism and hospitality is strategically incentivised. According to STR, the midscale segment has out performed the Upscale and Upper Mid classes, as well as the Luxury and Upper Upscale classes since 2011 across the GCC. In response to this trend — and to meet the demand created by Expo 2020 — Dubai will add 35,000 mid-market hotel rooms to existing stock ahead of the event. In 2013, Dubai’s Department of Tourism and Commerce Marketing (DTCM) announced it would waive the 10% municipality fee levied on the room rate for each night of occupancy for a set period in all new mid-market hotels in the emirate. Additional incentives announced in January 2014 focussed on speed of delivery by reducing the construction approval process to two months; setting up a one-stop-shop for sector approvals; standardising all approvals through Dubai Municipality; and allocating government land to develop 3- and 4-star hotels. Only half of the hotel rooms planned ahead of 2020 are expected to fall into the luxury category, which along with a rise in budget airlift will significantly expand the country’s tourism mix. A number of new international mid-market and budget brands have entered the market recently, such as Wyndham and Premier Inn, and indigenous luxury hospitality brands have expanded their mix with the debut of 4-star brands, such as Emaar Hospitality’s Rove Hotels.
Ras Al Khaimah With stunning desert, sea and mountains, Ras Al Khaimah is home to the UAE’s highest peak, Jebel Jais, the world’s longest zip line, Via Ferrata, and the first and only luxury desert camp in the region. The fastest growing tourism market in the UAE, RAK welcomed 820,772 adventure-seeking visitors in 2016, predicted to climb to 900,000 in 2017 following a new marketing drive that has seen RAK Tourism Development Authority (TDA) open partner offices in core markets including Ireland, India, China, Russia, Saudi Arabia, Germany and the UK. By 2020, 20% of the emirate’s GDP will be generated by tourism.
Haitham Mattar
In January 2016 RAK TDA launched three and 10-year development strategies, with targets set for one million visitors in 2018 and three million annually from 2025. To meet demand, the emirate’s 5,500 hotel rooms will double to 2019, with a further 10,000 rooms required before 2025. CEO of RAK TDA, Haitham Mattar, says: “We are already talking to investors about investing in RAK for the 2025 target. The family segment currently represents 70% of our visitors, so to build on this business we must meet the high demand for branded serviced apartments, new 4-star and high quality 3-star products in the emirate. “This demand presents a number of opportunities for investors, including Joint Venture opportunities with the government. Depending on the investor profile, we provide assistance in terms of consultation, hotel operator selection and contract negotiation, free of cost.”
Dubai remains the most expensive of 21 major MENA region cities to construct a hotel, with the price per key averaging $446,000 according to Colliers International, while RAK takes fifth place in the same survey due to the growth in tourism. The calculation is based on the projected 10-year operational cash flow of a hypothetical 200 key hotel in each city. However, the figure has done little to deter investors attracted by the high ROI the UAE’s tourism and hospitality
industry offers. As of August 2017, Dubai topped the Middle East and Africa hotel development pipeline with 24,832 rooms in 85 projects currently under construction. The UAE contributes more than 25% of the MEA region’s 159,711 rooms under construction across 581 hotel projects and, with a nationwide hotel pipeline of 32,604 rooms in 116 projects, it is expected 2018 will be a key year for the industry.
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3.2 | Tourism & Culture
Ajman A former Bronze Age settlement, today Ajman is the home of ecological and historic tourism in the UAE with its Department of Tourism Development working to boost visitor numbers by 20%.
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tretching from the Gulf coast to the vast dunes of the UAE desert, Ajman is the smallest of the seven emirates and provides a stark contrast to the developed metropolises of Abu Dhabi and Dubai. Covering 260 square kilometres, and with a population of 373,000, the former Bronze Age settlement is today the historical heart of the UAE, with archaeological attractions, historic fort houses and a museum. But its appeal doesn’t end there — Ajman is developing a series of luxury and family tourism projects for a new
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generation of visitors, complementing its natural beauty with stunning hotels, leisure facilities and miles of golden coastline. With a remit to highlight Ajman’s unique tourist attractions and promote its potential at a local, regional and international level, the Ajman Department of Tourism Development (ADTD) helps to boost investment in Ajman, raise the profile of the emirate as a unique destination and continually increase the number of visitors. In addition, ADTD prepares legislation, rules and regulations to develop the emirate’s tourism sector.
With strong performance in 2015, Ajman recorded a 19% boost to tourism revenues on the previous year. Keeping the pace, in 2016, guests arriving to the emirate’s hotels, resorts and hotel apartments, generated US$110 million in revenues. Hotel occupancy for the year averaged 69% and hotel apartment occupancy averaged 72%. In 2017 ADTD worked to boost tourism arrival figures by a further 10%, following increased demand from European and Russian tourists. Building on positive results in 2016, ADTD aims to achieve this through partnerships with tour
Tourism & Culture | 3.2
Hotel stock
(2017)
Hotels Hotel apartments Furnished apartments Resorts Total establishments
14 18 4 3 39
Hotel revenues (2016) AED 411m
Total accommodation revenues 2016
guests (2016) 542,891 Total guests OCCUPANCY (2016)
operators, as well as new source markets in the CIS countries, Scandinavia, East Europe, India and China. The plans are outlined in Ajman Vision 2021 — a roadmap for Ajman Tourism to build, enhance and sustain its strategic performance for all stakeholders and partners. The vision also outlines a new, comprehensive, classification system for all accommodation types in the emirate, with Ajman the first destination in the UAE to pioneer a classification programme for desert camps and tourism villages. Leading the work, Saleh Mohamed Al
Geziry, Director-General of ADTD, was appointed by His Highness Sheikh Humaid bin Rashid Al Nuaimi, Supreme Council Member and Ruler of Ajman, by Royal Decree in May 2017. He says: “We draw from the unique potential offered by Ajman as one of the UAE’s leading tourism destinations, and harness key opportunities in rapidly-growing international markets, to continue our growth trajectory in line with our strategic objectives of achieving Ajman Vision 2021. Through strategic partnerships, ADTD aims to increase the awareness of Ajman
72%
Hotel and furnished apartment occupancy
28.3%
Resort occupancy
Guests by NATIONALITY (2016) 25% 21% 16.5% 15.5% 9.4% 6.3% 6.3%
UAE Asian & African Other Arab GCC European American Russian
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3.2 | Tourism & Culture
and highlight its wide range of diverse tourism offerings, as well as enhance engagement, cooperation and bilateral relations. Our strategic goals also include enhancing corporate identity, maximising investment in the tourism sector, and developing tourism legislation, standards, marketing systems and infrastructure,” he continues. One of the prestigious developments currently being constructed under this strategy is Al Zorah, a premier, mixed-use retreat, catering primarily to the luxury wellness market. Boasting world-class hotels and resorts, residences, commercial space, leisure facilities and an 18-hole golf course surrounded by mangroves, visitors and residents in the area can enjoy kayaking, wakeboarding, a dhow cruise or a luxury yacht experience on board the 37-metre Nordic Star. The Italian-built classic yacht has an extraordinary history as a centre of entertainment during Hollywood’s heyday, and retains much of the original furniture, glamour and luxury that inspired film stars such as Frank Sinatra and Tony Curtis. Al Zorah also played host to the UAE’s World Tourism Day celebrations on September 27, under the theme of sustainable tourism. Aiming to “strike the right balance between personal pleasure, environmental protection and sustainability of resources”, the celebration united Abu Dhabi TCA, the Environment Agency – Abu Dhabi, DTCM and Shurooq, among others, in the emirate.
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Hospitality is also an important driver of local businesses, which receive additional support through the creation of new concepts. Ajman Qubes, provides a live example of applying innovative solutions to new challenges, by supporting local entrepreneurs in a modular building that was sustainable, cost effective and quick to design and construct. Now setting a social and commercial example for other businesses, the building has been praised by HH Sheikh Ammar Bin Humaid Al Nuaimi for its architectural excellence and is a favourite with thousands of foodies. While the new developments set the scene for the emirate’s future, Ajman’s charm is most evident in its past and a series of heritage attractions have been developed to celebrate this. The Ajman Pearl Journey experience is the first cultural tourism project of its kind in the emirate. Designed as a unique edutainment attraction, it demonstrates the rich history of pearl diving in the Arabian Gulf region, teaching the historic art of oyster opening to hundreds of visitors every year. Guests are transported on a traditional dhow, known as a jalboot and, true to history, everybody keeps the pearls they find. Under its strategic plan and the 2021 Vision, Ajman will continue to pursue its niche as an environmentally conscious, historically significant destination in the region. New sites of historic and environmental importance will continue to be developed, creating investment opportunities for dozens of new economic partners and enhancing Ajman’s competitive advantage on the regional stage. Al Geziry concludes: “We acknowledge the vital role our shareholders and stakeholders play in building a destination, and industry, which reflects the true spirit of modern Emirati hospitality, our participation in major tourism projects, activities and operations comes in line with our commitment to ensuring the creation of lasting long-term, sustainable value for our shareholders, stakeholders and the economy.”
3.3 | Tourism & Culture
Dubai In pursuit of its goal to become the world’s most visited city, Dubai welcomed almost 15 million visitors in 2016, placing the emirate on track to achieve its 2020 ambition of 20 million overnight tourists. His Excellency Helal Saeed Almarri, Director General of Dubai Tourism, explains the vision.
HE Helal Saeed Almarri, Director General, DTCM.
What do you observe to be the driving factors behind Dubai’s popularity as a destination? Our focus is on maintaining market share across our existing source markets and growing market share across countries and regions with high growth potential, positioning Dubai as a premier tourism, business and events destination to drive both new and repeat visitation and capture transit traffic. Furthermore, we work closely with partners to improve connectivity and increase air capacity to and from the city, while at the same time working on a federal level to improve accessibility, removing barriers to entry and making it easier for more travellers from across the world to visit Dubai. At the same time, together with our partners and stakeholders in the public and private sectors, our efforts are focussed on continuously evolving and expanding Dubai’s proposition across infrastructure, attractions, hotels, holiday packages and more, ensuring the destination’s growing year-round appeal. All of these factors combined have helped drive Dubai’s performance over the years and enabled it to become the fourth most visited city in the world.
What has been the most significant recent developments in the emirate’s tourism infrastructure? In terms of hotels, 2016 saw the opening of such luxury properties as The St. Regis Dubai, W Dubai and Westin at Al Habtoor City, Palazzo Versace Dubai and Jumeirah Al Naseem. There has also been an increased focus on diversifying the hotel inventory to attract and cater to mid-market segments. Several new trendy and boutique accommodation propositions like Rove Hotels have carved a niche in the local market, facilitated by this strategy, which helped us pass the 100,000 hotel room milestone in mid-2016. Beyond accommodation, we have continued our infrastructure investments
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across the family entertainment landscape and Dubai’s retail infrastructure continues to see investment. Last year we inaugurated a new landmark, the Dubai Canal, adding to the city’s already strong lifestyle proposition. We have also focussed our efforts on highlighting the heritage and culture unique to the city and region through the ongoing Dubai Historic District project that aims to enhance the visitor experience in Dubai’s oldest neighbourhoods of Al Fahidi, Shindagha, Bur Dubai and Deira. Additionally, we are working to establish the city as a cultural hub through more modern landmarks such as the recently opened Etihad Museum and Dubai Opera.
What is Dubai’s USP? Dubai’s tourism proposition continues to evolve and expand year after year, meaning there is always a reason to return to Dubai. The diversity of offerings is especially unique and nowhere else can visitors have as many contrasting experience. Drift over the desert at sunrise, skydive over Palm Jumeirah in the morning, ski down a black run at midday, dive with sharks in the afternoon and watch the dancing fountains at Burj Khalifa, at sunset. Everything and anything is possible in Dubai.
Dubai to 2020 · 10 million visitors 2012 · 8% CAGR in visitor numbers since 2012 · 20 million visitors 2020 Projection · 14.9 million overnight visitors in 2016 · 8.06 million arrivals, H1 2017 · 10.6% YoY · 20 million Projected international arrivals in 2020
Where do the main opportunities lie for British businesses? Dubai’s close ties with Britain are long-standing and mutually beneficial, and in 2016, more than 1.2 million British travellers visited Dubai. A number of high-profile British brands already have a presence in Dubai, such as John Lewis, Waitrose, Marks & Spencer, Harvey Nichols, Premier Inn, Dukes and celebrity chefs Jamie Oliver, Gordon Ramsay, Jason Atherton and Gary Rhodes, underlining the attractiveness of Dubai as an investment opportunity.
TOURISM & CULTURE | 3.4
Sharjah HE Khalid Jasim Al Midfa, Chairman, Sharjah Commerce and Tourism Development Authority (SCTDA) talks about boosting visitors numbers and the multi-million dollar developments transforming tourism in the emirate.
How many tourists did Sharjah welcome in 2016 and how is this likely to increase in 2017? Sharjah welcomed 1.8 million guests in 2016 and, as the emirate launches into the exciting winter season with its many events and festivals, in addition to a number of new projects and infrastructural developments, this number is expected to increase.
What do you observe to be the driving factors behind the arrival figures? Throughout 2017, SCTDA followed a comprehensive strategy of running roadshows and workshops in several major tourist markets, covering HE Khalid Jasim Al Midfa, SCTDA Chairman. major cities in China, India, Russia, the Baltic States and the GCC, and exhibiting at the most important travel markets such as ITB Berlin and WTM London. We recently opened representative offices in India and China, and these have already generated a large boost in arrivals from these source markets. To reach more potential visitors, we have launched a series of mini-guides to the emirate, available in five languages, and these help us distribute information to a wider market. Furthermore, we are moving more aggressively into online marketing and our website is now offered in more languages than ever. These forward-thinking initiatives and new investments increase Sharjah’s profile on the global stage and, as a result, the emirate welcomed 885,417 guests from all over the world to its hotels in the first half of 2017. This figures is comprised of 66,000 guests from India; 107,000 from Russia; and 62,000 from China.
What has been the most significant development in Sharjah’s tourism infrastructure over recent years? Sharjah’s tourism infrastructure has grown exponentially over the last few years and a number of significant developments can be cited as the basis for the emirate’s growth as a successful tourism destination. Sharjah now boasts 106 hotels and hotel establishments and this will increase to 163 by 2020, as our profile on the global stage continues to grow. Equally, Sharjah has witnessed a surge in luxury cruise tourism in recent times with the arrival of numerous international luxury cruise liners in its deep water port on the East Coast. By the end of 2016, the emirate attracted more than 28 cruise trips with 72,000 tourists to Khorfakkan Port on six cruise lines. The East Coast operations also recently saw the inauguration of SCTDA’s new East Coast office and tourism information centre in Khorfakkan, a move that will emphasise this area’s rich natural resources and considerable economic potential. Some of the most exciting developments are the many additions to Sharjah’s outdoors tourism and environmentally-friendly sectors with a number of EPAA (Environ-
ment and Protected Areas Authority) driven projects highlighting Sharjah’s natural resources and heritage. These include Al Hefaiyah Conservation, Wasit Wetland and the Kalba Bird of Prey Centres, along with the ancient archaeological site of Mleiha. A place for extreme outdoor sports and educational pursuits, Mleiha will soon be home to Fossil Rock Lodge, where guests will have the chance to enjoy true desert surroundings, with stargazing experiences and dune bashing for the more intrepid.
Coming up Highlights from Sharjah’s multi-million dollar pipeline of tourism-related projects Fossil Rock Lodge: located at Mleiha Archaeological and Eco-tourism project Novotel Sharjah Expo: the official 4-star, 200-key hotel of the Sharjah Expo Centre Four Points by Sheraton: 225-key business hotel Al Bait Sharjah: a luxury resort, located in the Heart of Sharjah area Kalba Kingfisher Lodge: a high-end eco-tourism destination Al Mamsha: Sharjah’s first fully-walkable community, covering an estimated area of 3 million square feet. City Centre Sharjah: Established in 2001 and undergoing a AED260m re-redevelopment City Centre Al Zahia: Currently under construction at the upcoming Al Zahia residential community in Sharjah Zero6: A new generation of malls developed by Alef Group
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3.5 | TOURISM & CULTURE
The tourism revolution Simon Press, Senior Exhibition Director, ATM, writes about the UAE’s work to reduce the environmental impact of tourism and create a culture for responsible hospitality across the region
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ourism plays an increasingly vital role for GCC countries as they diversify from a reliance on hydrocarbon receipts. However, the industry must continue to evolve in a responsible fashion. It is crucial that we all work towards a tourism sector which protects the environment, preserves the cultural heritage of destinations and fosters respect for local communities everywhere. To that end, Arabian Travel Market 2018 will integrate a responsible tourism theme across all show verticals and activities, including sustainability-focussed seminar sessions, featuring dedicated exhibitor participation. ATM will build upon the responsible tourism agenda started by sister-event WTM London, which runs World Responsible Tourism Day (WRTD). WRTD is the largest day of responsible tourism action in the world, and WTM London has been at the forefront of the responsible tourism debate for the past decade. Travellers have become very conscious of the carbon footprint they are leaving while visiting destinations across the globe and the subsequent impact this has on the environment. This growing trend has meant the entire industry has had to look long and hard at how sustainability and a credible social conscience must drive business strategy. More than 1.2 billion international tourists crossed the globe in 2016 and this is expected to grow to 1.8 billion by 2030.
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Tourism generates 10% of the world’s gross domestic product (GDP), is responsible for one in every 10 jobs and 30% of world trade in services, making it central to economies and livelihoods across the world. However, consequently, the UNWTO estimates that tourism is responsible for about 5% of global CO2 emissions. Accommodation accounts for approximately 20% of emissions from tourism, which includes energy demand, dining and leisure. It is important to highlight that the GCC is one of the fastest growing regional hospitality markets on a global scale and is a resource-intensive industry. Its impact on the environment is multi-dimensional, ranging from CO2 emissions, water and energy demand, to food waste, noise and light pollution. According to recent research from Colliers International, hotel carbon footprints in the UAE are within the global average range (20,000 – 30,000 KGCO2E per room); but Saudi Arabia is up at over 50,000 KGCO2E. It is a similar story in terms of hotel energy usage per square metre — the UAE is within the global average at just under 500KWH, but Saudi Arabia is up at around 750KWH. Energy costs alone in UAE hotels represent approximately 6% of total hotel revenues, so even small savings could have significant financial benefits, underscoring the business case for sustainability. To address global warming, the UAE Government has set itself ambitious targets to reduce its carbon emissions by 16%
by 2021. While a long-term strategy for sustainable tourism has also been developed to be in line with other national and local emirate visions and strategies — UAE Vision 2021, UAE Green Growth Strategy, Dubai Plan 2021, Dubai Clean Energy Strategy 2050 and more. Quite what the hospitality industry in the UAE and wider Middle East will look like in 2050 nobody knows. It has certainly come a long way since the first ATM 25 years ago, with tallest buildings and tallest hotels; revolutionary transport infrastructure; theme parks and leisure attractions that are the envy of the rest of the world. With a host of top speakers lined up for ATM 2018 we will be looking back on the tourism revolution in the Middle East over the last quarter of a century and also forecasting what lies ahead for the industry, with continuing geopolitical tensions across the globe, economic uncertainties, huge technological advances and, of course, the increasing trend of responsible tourism.
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Homegrown hospitality
Since 1992 Rotana has grown from a single property in Abu Dhabi to a portfolio of 55 hotels and resorts across 21 cities. With a pipeline of 50 new hotels to 2020, Omer Kaddouri, President and CEO, Rotana Hotel Management Corporation, sets the scene for the next chapter in the company’s story.
From top: Saadiyat Rotana Resort and Villas; Al Bandar Rotana Dubai Creek; and Omer Kaddouri, President and CEO, Rotana Hotel Management.
What do you believe is driving the UAEs popularity as a destina� tion on the global stage? Over the years, UAE has firmly reinforced its position on the world map as a global destination for both the business and leisure segments. The country’s sharp focus on continuously innovating its offerings has enabled it to constantly stay ahead of global industry trends and create a dynamic tourism proposition that has something in it for everyone: from families and young couples to solo visitors and children of all nationalities and backgrounds. This is complemented by the UAE’s attractive hospitality offering featuring a range of hotels — from luxury to mid-market. Therefore, the diversity of experiences available to visitors makes the UAE stand out as a travel destination like no other.
How has Rotana grown since the opening of its first hotel? Rotana was founded in 1992 — period when the hospitality sector in the UAE was in a nascent stage and many years away
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ADVERTORIAL
from the enviable status it enjoys today. A year later in 1993, we opened our first hotel, Beach Rotana Abu Dhabi, and over the next few years we concentrated on building our domestic portfolio before setting plans to expand in the wider region, which happened with the launch of our properties in Beirut, Lebanon and Sharm El Sheikh, Egypt in 2000. It is around this time we had set ourselves a goal of having a presence in every major city in the region with an overarching objective of playing a leading role in shaping the future of the hospitality sector in the region – more so as a home-grown brand. From those initial years when we had to overcome many challenges — including tough competition from international brands that dominated the scene — Rotana has come a long way. Today, we are one of the leading hotel management companies in the region and our success in being a prominent player in the industry is supported by our rigorous expansion in the region and beyond.
What have been the major milestones in the company’s develop� ment and growth? As part of our growth story, we pride ourselves on introducing several innovations to the market including bringing the ‘all suites’ concept and launching our affordable lifestyle hotel brand ‘Centro by Rotana’ in 2006, which is proving to be a game-changer for the mid-market hospitality segment in the region. This year, in particular, we are celebrating a major milestone — our 25th anniversary of operations in the region. During these years, we believe we have contributed tremendously to the continuous growth of the regional tourism sector. In addition to creating jobs for 10,989 people, we have enabled thousands of indirect jobs throughout the region while also providing locals the opportunity to serve as ambassadors of UAE’s rich hospitality cultural by working in the hospitality sector. On the whole, we have been consistently recognised for our commitment to hospitality excellence and its contribution to the economic and social development of the communities, regions and countries in which it operates and, during its two and a half decades of being in business, the company has received more than 350 regional and international awards in recognition of its performance.
What is the strategy to drive the future growth of the company over the coming years? The last two years have been sluggish for the region’s hospitality industry and part of the reason is its excessive reliance on a set pool of feeder markets — depending on only a few markets for business is not a wise strategy for long-term growth. It is important for hospitality companies to diversify their source markets and target audiences to become resilient to external
forces especially those specific to the regions or markets in which we operate. This has been the core of our growth strategy at Rotana. Our 25th anniversary milestone provides us with a strong impetus to lay the foundation for our next phase of success and growth. We have a strong pipeline of projects ahead of us, including 50 properties located in 27 cities in the Middle East, Africa and Turkey, which are currently under various stages of development. Of these hotels, 16 are scheduled to open before the end of 2018, which will add more than 3,000 keys to our existing inventory. As part of this, our focus is also on creating a more diversified mix of feeder markets and, to that end, we have launched a wide variety of initiatives to attract visitors from Poland, Hungary and Slovakia. Guests from these markets have helped offset the decline in arrivals from our traditional markets such as Russia and China. In addition to this, we have also been hosting an increased number of guests from within the GCC such as Saudi Arabia and we are committed to capitalising on this opportunity even more. Anticipating the needs of new guest segments, such as millennial travellers, and aligning our offerings with their requirements — has been another key area of focus. In line with this, we now offer free WiFi in all of our hotels, actively running initiatives that drive online bookings to Rotana.com and our mobile website. Engagement on our social media platforms is now more pronounced to better connect with our guests on Facebook, Twitter, Instagram, YouTube and other channels.
What are the UAE’s unique selling points as a tourism destina� tion and how does Rotana help people enjoy these USPs? The diversity of its offerings makes the UAE an exceptional destination for tourists as well as residents. With diversity comes choice, enabling visitors of all ages and nationalities to discover and enjoy something of great personal interest to them during each trip to this country. From cultural and heritage to entertainment, dining and leisure — there is a wide variety of experiences to be explored in the UAE and this selection only keeps getting better and bigger with the country’s sharp focus on further strengthening its credentials as a world-leading tourism destination.
55 operating properties 21 cities 13 countries across Middle East, Africa and Turkey 15,000+ rooms across operating regions 11,000+ associates employed by the company from 105 countries 6m hotel guests in 2016 9m F&B guests across our 188 dining outlets every year 100+ properties worldwide target for 2020 27,000 rooms target for 2020
How will Rotana support the UAE in reach� ing its visitor arrival targets to 2021? As a leading home-grown hospitality brand, our vision for growth is firmly aligned with the UAE’s long-term tourism strategy. We are supporting the government’s efforts in driving tourism figures in the coming years through a wide selection of existing and upcoming hospitality offerings that will allow visitors from all parts of the world access to a diverse range of accommodation types and hotels.
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3.6 | Tourism & Culture
Culture in the UAE With its skyscrapers and mega-malls, the UAE’s image as a global innovator has distracted from a rich history of music, dance and art. Today, with a renewed focus on celebrating its fascinating past, the UAE has a plan to establish art and culture as a driver of the new economy.
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he emirates may have been unified as recently as 1971, but a rich history dates back thousands of years, with parts of the country inhabited by Bedouin tribes as long as 5,000 years ago. The ancestors of modern Emiratis, these tribes pioneered a way of life that was dependent on unique and inventive ways to use the few resources available to them, creating a national identity that is deeply rooted in nature, religion and peace. In the decades that followed the discovery of oil, the country faced rapid development and an influx of millions of expatriates and tourists, each with their own cultures and traditions. These societal changes led to a decline in the prominence of traditional Emirati ways of life, with many of the country’s new residents unaware of the rich history of their new home. Over recent years, the UAE’s leaders
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have worked hard to reverse this trend, through events, cultural understanding initiatives and outreach via cultural centres in each emirate, such as the Sheikh Mohammed Centre for Cultural Understanding. Established in its current form in 2016, the Ministry of Culture, Knowledge and Development works across 13 areas to explore, support and promote the history, heritage and culture of the UAE. The Ministry works both domestically and internationally to ensure culture becomes a productive sector for the national economy, and actively scouts the next generation of talent to become part of the UAE’s growing cultural scene. Culture also plays a part in the UAE’s tourism strategy, particularly in Dubai’s pursuit of the title of “world’s most visited city”. In both Dubai and Abu Dhabi, commitments have been made to enhance cultural interaction with visitors through a
Drawing on its rich history, the UAE has created a cultural capital for the region.
series of attractions. These range from the UAE’s first UNESCO Heritage Site, opened in 2016, to street art on display at Dubai International Airport as part of ArtDXB, showcasing local and international artists. In 2017, the UK/UAE Year of Culture was held under the patronage of His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and His Royal Highness The Prince of Wales. A number of events were held throughout the year, covering literature, theatre, music and education, with highlights including the Proms. In pursuit of an equilibrium between old and new, the UAE is developing an inclusive and accessible cultural sector, which today stands as a symbol for the transition to a knowledge-based economy, and a means by which to preserve Emirati identity for future generations.
GO BEYOND A JOURNEY IN RAS AL KHAIMAH From mountains, deserts and ancient cultural sites to beaches, mangroves, water sports and more, Ras Al Khaimah is truly an unforgettable experience. Only 45 minutes from the hustle and bustle of Dubai, the UAE’s northernmost emirate offers every adventure seeker a wide array of playgrounds.
Only 45 minutes from Dubai International Airport
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Just one of the sandy beaches along 64kms of coastline
3.7 | Tourism & Culture
A capital for culturE Culture and the arts are central to the UAE’s holistic development and national tourism strategies. In true Emirati style, the country has developed several new cultural megadistricts and performance venues.
Guggenheim Museum, Saadiyat Island.
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Tourism & Culture | 3.7
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ulture is a driving force of diversity, societal development and, crucially, tourism. According to figures published in the Post-2015 UN Development Agenda, the cultural and creative industries represent one of the most rapidly expanding sectors in the global economy with a growth rate of 17.6% in the Middle East — the highest in the world. When culture is coupled with the world’s fastest growing economic sector, travel, it accounts for 40% of world tourism revenues. The protection and nurture of the UAE’s unique culture, heritage and traditions lies at the heart of Vision 2021 and, building on these foundations, the country has recently developed a series of internationally recognised cultural districts, venues and events. Today a multi-billion dollar portfolio of world-class museums, theatres, concert venues and galleries — which have called on some of the world’s most renowned architects — cement the UAE as the home of modern culture in the Middle East. Celebrating both individual and shared cultural values, 2017 marked the UK/UAE Year of Cultural Collaboration, organised by the British Council, with a series of events and educational outreach programmes taking place throughout the year in both countries. In the UAE, Dubai Opera hosted sellout performances of Cats and Mary Poppins and the Welsh National Opera performed Puccini’s Madame Butterfly and La Bohème. Last Night of The Proms was held in Dubai for the first time in March 2017, with Edward Gardner leading the BBC Symphony Orchestra. At a grassroots level, a series of workshops and open dress rehearsals engaged young fans in theatre, while the Arabian Youth Orchestra and Centre for Musical Arts held workshops in schools. Together, this mix of engagement and infrastructure will not only attract the world’s greatest talents to the UAE, but it is hoped it will inspire the next generation of UAE nationals and residents to pursue their own talents and interests in the arts. As Jasper Hope, CEO, Dubai Opera, says: “Having places where the arts can be pursued to this very high level, and allowing the world-class exponents of these art forms to come and perform, gives you a platform
for inspiration. If you have that, when you think about the next 400 years and where your city might go in a global sense, then I think the cultural aspect to a place becomes enormously more important.”
Dubai Opera Every great city has at least one theatre. Whether it’s London, New York, Paris or Rome, part of what makes each great is its cultural scene. With a near 50-year modern history of fast-paced development, in 2017 Dubai joined the ranks of these global cultural capitals with the opening of the 1,800 seat, US$300 million Dubai Opera. Addressing the shortfall in venues for literature, sculpture, fine art, music and dance, Dubai Opera is part of the wider masterplan for Downtown Dubai; a dhow at the centre of dozens of skyscrapers, with the world’s tallest building next door. Hope says: “A great city has all these art forms developing together, and it has places where they can be pursued to a very high level. In terms of the development of the UAE’s modern cultural landscape, Dubai Opera is a bold statement with which to start that journey and it has made Dubai a more interesting place every day since it opened.” Dubai Opera will become a catalyst for the performing arts in the UAE, with Jasper hoping it will spur the establishment of orchestras and dance companies, slowly replacing imported talent with local. “You need an environment that is receptive to talent in all forms. You need it for people who might go on to become physicists just as much as you need for people who will go on to become dancers. Dubai is developing all of these different industries in different ways and in different time frames and Dubai Opera is one of those.” Designed by architect Janus Rostock, it is one of the only concert halls constructed world-wide in recent years and features a state-of-the-art acoustic shell around the orchestra, enabling an impeccable acoustic environment for perfect sound quality. The space can be transformed from a theatre into a concert hall, flat floor banquet or event hall. Recalling the curtain rising on Placido Domingo’s opening night performance, Jasper adds: “To have worked with so many
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“The dome’s complex pattern is the result of a highly studied geometric design, repeated at various sizes and angles in eight superimposed layers to create the ‘rain of light’”
people for so long and so hard to get the point where Dubai could announce itself to the world, a world of old buildings with a building like this, and say ‘there’s a new kid on the block. Hello’, that was enormously rewarding. In the context of the old great cities with old great opera houses, in some cases 300 years later they are still full, they are still famous, they are still the vibrant cultural heart of city, the opera is still relevant and it is still one of the great things about that city. Dubai Opera will be equally important to Dubai in 300 years time.”
Saadiyat Island One of Abu Dhabi’s most anticipated projects, in the first five years of its development Saadiyat Island was transformed from a mangrove reserve to a luxury getaway with hotels, restaurants, azure water and white sand beaches. But it is Saadiyat’s Cultural District that will truly put the island on the map – as a regional hub for culture and the arts. With Louvre Abu Dhabi, Zayed National Museum and Guggenheim, Saadiyat Cultural District will be a place where people can build bridges and connect with each other through the universal language of the arts. Unprecedented in scale and scope, it will be a live canvas for unique exhibitions, permanent collections, productions and performances, housed in iconic institutions of the finest architecture at the beginning of the 21st century. Complementing the international galleries, at the Zaha Hadid-designed Zayed Above, Dubai Opera and below, CEO, Jasper Hope.
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National Museum, visitors will learn the story of the late Sheikh Zayed bin Sultan Al Nahyan, the unification of the United Arab Emirates, the history of the region and its cultural connections across the world.
Louvre Abu Dhabi Born from an intergovernmental agreement between Abu Dhabi and France in 2007, Jean Nouvel’s Louvre Abu Dhabi embodies the spirit of openness and dialogue among cultures, displaying works of historical, cultural and sociological significance from different times and civilisations. The museum’s permanent collection, as well as important loaned artworks from prestigious French institutions, will form a historical narrative taking the visitor from ancient times to the contemporary through 23 permanent galleries in 12 sequences. Applying a contextual approach to the site, Nouvel designed Louvre Abu Dhabi as a ‘museum city’ in the sea, with its contrasting series of 55 white buildings, including 23 galleries inspired by the medina and low-lying Arab settlements, a temporary exhibition space, a Children’s Museum and a 200 seat auditorium. The Museum Galleries incorporate approximately 6,400 square metres and will showcase more than 600 artworks, of which 300 are loaned from French partners. His Excellency Mohamed Khalifa Al Mubarak, Chairman of Abu Dhabi Tourism and Culture Authority and Tourism Development and Investment Company, says: “Louvre Abu Dhabi forms one element of Abu Dhabi’s cultural strategy, which safeguards our rich heritage and catalyses creativity. Investment in a vibrant cultural ecosystem supports the UAE’s economic diversification and development as a modern, dynamic society. Louvre Abu Dhabi will inspire a new generation of cultural leaders and creative thinkers to contribute to our rapidly-changing and tolerant nation.” In the opening year, approximately 300 artworks from 13 key French institutions will be on display alongside the museum’s permanent collection. These will include Leonardo da Vinci’s, La Belle Ferronnière, and a Spanish fountain spout of a lion, said to be from Monzon; Claude Monet’s Saint-Lazare station and Edouard Manet’s The Fife Player, both from musée d’Orsay.
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The rain of light, at Louvre Abu Dhabi.
La Perle Dubai’s first and only permanent show, La Perle by Dragone, is located at Habtoor City, the entertainment and Starwood-flagged hotel complex on Dubai’s Sheikh Zayed Road. Brought to Dubai by Founding Chairman of Al Habtoor Group, Khalaf Ahmad Al Habtoor, at the centre of La Perle is a stateof-the-art aqua theatre that uses 2.7 million litres of water to create a captivating performance, both above and below stage level. With 1,300 seats and performances twice a day, five days a week, each show includes aquatic and aerial acrobatics alongside creative imagery and cutting-edge technology. Taking place in, on and above water, the show is designed to encapsulate the spirit of Dubai and pay homage to the region’s rich history, present and future. Franco Dragone, Founder and Artistic Director of the show production and creation company, Dragone and Director of La Perle, says: “I want to provide a little piece of
eternity for the region, a place of escape that any culture and ethnicity can understand and enjoy. I was so inspired by Dubai and it is an honour to introduce that vision to the world.”
d3 Uniting a regional design industry predicted to be worth $35.9 billion by 2019, in 2013 Sheikh Mohamed bin Rashid al Maktoum, UAE’s Prime Minister and Ruler of Dubai, conceptualised d3: a living museum, a place of work, a destination for leisure and entertainment, a creative hub, a Smart city and crucially, a free zone. Providing essential infrastructure to support the UAE’s next generation of designers, painters, photographers, fashion icons and innovators, d3 is today home to a community of creative minds from across the region. When Phase 1 opened in April 2015, more than 30,000 people attended the opening weekend. Work immediately began on Phase 2 when Her Highness Sheikha Latifa Bint Mohammed Bin Rashid Al Maktoum,
Vice Chair of the Dubai Culture and Arts Authority, formally endorsed plans to develop and curate a dedicated Creative Community. Encompassing around 100,000 square feet within d3, it will act as an incubator for emerging local designers and artists, as well as providing a natural home for art galleries and studios looking to engage directly with the region. More than 250 businesses are based in the freezone, including anchor tenant Chalhoub Group, which has two buildings in the district. Dr Amina Al Rustamani, Group CEO of TECOM Investments, the master developer behind d3, says: “We are honoured to have such a fantastic array of design and fashion brands, creative talents and entrepreneurs joining d3. They are signing up to be part of a living, breathing and thriving design ecosystem, and they are actively helping to propel Dubai’s global position as a hub for design, innovation and creativity.”
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Destination maker 3.8 | TOURISM & CULTURE
A force for transformation across the UAE, Emaar has pioneered a series of record-breaking developments to create one of the most visited places on earth. Mohamed Alabbar, Chairman of Emaar Properties PJSC, explains how Emaar became a catalyst for growth and laid the foundations for a cultural centre to rival New York and London.
Mohamed Alabbar, Chairman of Emaar Properties PJSC.
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Dubai Creek Harbour and Dubai Creek Tower, designed by Santiago Calatrava.
Emaar has transformed several areas of the UAE into iconic landmarks and lifestyle destinations. What was your vision for the UAE and Emaar when the company embarked on its first project? How has Emaar’s success to date aligned with those ambitions? Along with a group of friends, when I founded Emaar Properties in 1997 with our personal savings, we had a very clear vision for the company. In my journeys across the city I used to pass empty strips of land, and their development potential was not lost on me. Dubai was also transforming at a dramatic pace, led by the visionary leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. The city was evolving as a magnet for talent, with professionals from across the world coming to explore the potential that Dubai offered. The focus on economic diversification, which I was leading at the Dubai Department of Economic Development as its founding Director General, was energising the economy, and I believed that there was a strong need for a transformation in the real estate sector too. As the first public joint stock company, we brought a new business model to the region. We had bigger ideas: we had a vision to build a company that would transform not only the physical landscape of Dubai but every aspect of the city. At that time, housing in Dubai meant single-block apartments offered for rent, or housing compounds developed by the government. We pioneered the concept of master-planned integrated communities in Dubai that offered every lifestyle amenity — schools, retail centres, hospitals, mosques. The real game-changer in the property sector was the introduction of the freehold concept — giving the opportunity for expatriates to own a home in Dubai. We launched Emirates Hills,
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Dubai Marina and Arabian Ranches, which reflected our vision of creating world-class integrated neighbourhoods. A major turning point for Emaar was the launch of the 500-acre megadevelopment, Downtown Dubai, on a parcel of land that was an abandoned military barracks. We created the most prestigious square kilometre on Earth, anchored by the iconic Burj Khalifa and with attractions such as The Dubai Mall, The Dubai Fountain and several premium hotels. By expanding our competencies from premium real estate development to malls, retail, hospitality and leisure, we were not only creating a new narrative for urban property development but also adding value to our stakeholders and to the national economy. As we now develop projects such as Dubai Creek Harbour, Dubai Hills Estate and Emaar South — each bringing in unique value propositions and leveraging the latest in technology — we continue to uphold our founding vision to shape the future, which remains as relevant today as it was when Emaar was established.
“As the first public joint stock company, we brought a new business model to the region. We had bigger ideas: we had a vision to build a company that would transform not only the physical landscape of Dubai but every aspect of the city”
Part of Emaar’s current development pipeline comprises around 13,000 residential units and 35 hotels, which will significantly change the balance of lifestyle, tourism and retail destinations within the emirate. How does a city engage in such rapid development without changing its identity? I do not believe that our developments change the identity of the city. At Emaar, our focus has always been on enhancing lifestyles and providing a sense of belonging to our residents. The pace of developments at Emaar do not stand in isolation: they reflect the sustained growth of the nation, with the UAE today being a global hub for business and leisure. It is important that we create robust assets that will continue to welcome the world to our nation, and create added economic value. Emaar’s projects have been catalysts for growth, creating new jobs and driving ancillary industries. And as we continue to develop premium real estate, malls and hospitality assets, they continue to contribute to the vision of the leadership to establish the UAE as one of the best nations in the world.
In less than a decade Downtown Dubai has become the most visited destination in the world. How was that achieved? Downtown Dubai brings a new approach to urban development. It is not a stand-alone project but a growth engine that serves the economy and the people. We researched extensively when developing the masterplan of Downtown Dubai, and in this our inspiration and guidance has been H.H. Sheikh Mohammed bin Rashid Al Maktoum. When we presented the blueprint of Burj Khalifa, which was then a 90-storey structure, he challenged us to build it higher. He was not asking us to build the tallest building but inspiring us to push ourselves and to create something that would add to our civic pride and position us as a global city. With Burj Khalifa, The Dubai Mall, The Dubai Fountain, Dubai Opera and Souk Al Bahar, in addition to several worldclass hotels, residences and offices, we created a fully-fledged integrated neighbourhood — a true ‘work, live, play’ environment. Downtown Dubai, and its components, are the result of global collaboration and we not only created a new, defining skyline but
Dubai Hills Mall.
also added to the pride of our nation. Today, with events such as the Downtown Dubai New Year’s Eve Gala, we are welcoming the world to Dubai, which has helped it position as the world’s most visited destination.
What are the long-term plans for Downtown Dubai? Are there any further project announcements on the horizon? Currently, we have several new hospitality and residential projects such as the Address Fountain Views, Address Sky View as well as new Vida properties. We are also expanding the Fashion Avenue at The Dubai Mall by another one million square feet of built-up area, which will add over 150 international brands and leisure attractions. The key here is to offer innovative lifestyle experiences for our visitors and residents — be it the continually refreshed repertoire of The Dubai Fountain or the addition of new experiences at Burj Khalifa, such as At the Top SKY, Burj Khalifa.
The attention of the world is now on Dubai Creek Harbour. How will Downtown Dubai and Dubai Creek Harbour complement each other, both on the skyline and in the market? Dubai Creek Harbour and Downtown Dubai both add immense value to the economy. The projects are adding to the pride of the nation and creating a brand-new skyline. Such reinvention and a consistent focus on pushing the boundaries is key to keeping our-
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Downtown Dubai, home to Burj Khalifa and Dubai Opera.
selves competitive and to add continuous value to our stakeholders and the economy. The development approach of Dubai Creek Harbour is naturally different from that of Downtown Dubai. Set in a unique location, we are creating a world-class community that celebrates waterfront living with a wide range of choices including a marina, board walk, yacht club and a range of retail and F&B choices. At the heart of Dubai Creek Harbour is the iconic Dubai Creek Tower, designed by Spanish-Swiss architect Santiago Calatrava, which will feature the world’s highest observation decks. A dedicated retail district is also part of the development, in addition to a choice of luxury homes. With the Dubai Creek Tower and Burj Khalifa, the nation will have a new skyline while the retail and hospitality choices will add further value to the economy.
Aside from providing the necessary physical infrastructure, how do Emaar’s current mega-projects contribute to the UAE’s plans to be at the centre of global tourism, trade and culture under UAE Vision 2021? As mentioned, each of our developments is envisaged as an economic catalyst. Dubai Creek Tower is set to become one of the world’s leading tourist attractions, which will in turn drive the tourism and hospital-
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ity sectors of the nation. This complements the success of Downtown Dubai, which has welcomed about 80 million visitors annually for the past three years. Our new Emaar South is set in Dubai South, near the Al Maktoum International Airport, billed to welcome 220 million passengers annually and in close proximity to the site of Expo 2020 Dubai. Across all our developments, through our hotels, malls and leisure attractions, we are creating dynamic urban centres that promote trade, tourism, hospitality and allied sectors that add value to the economy, and complement the goals of UAE Vision 2021. In welcoming visitors from around the world, promoting non-oil sectors, creating job opportunities, supporting small and medium enterprises, and by leveraging next generation digital technologies, we are building the foundations of the city hub of the future.
What are the UAE’s primary business and investment opportunities? The UAE has strong fundamentals: a robust economy that offers opportunities for growth, and a leadership vision that steers its journey into the future. There are three factors that define the UAE narrative: Optimism, Openness and Opportunity. A beacon of hope for the region, our nation’s reputation is underlined by the excellent
standards of safety and security, our sustained economic growth and our focus on job creation. The true capital of our city is not oil wealth: We are a fully diversified economy — and we continue to take sure-footed measures to diversify our economy, industry and energy. Oil does play a part today, but it will be smaller and smaller each year. Even when the world resorts to increased protectionism, the UAE functions as an open economy welcoming talent and expertise from across the world. We are also model for global collaboration and this is reflected in all our national icons, from Dubai Creek Tower, Burj Khalifa, Emirates, Etihad, DP World, ADNOC to ADIA and Mubadala, and many more. We are home to more than 200 nationalities — more nationalities than countries in the United Nations — and we offer equal opportunity for all to thrive. As the gateway for Europe and the US to the fast-growing markets in Asia and Africa, we attract global wealth, and today Dubai is one of the top destinations for HNWIs and a haven for large-value deals. I see significant opportunities for international investors, including from the UK, here in the UAE, with potential for partnerships in diverse sectors, including e-commerce and next-generation Smart technologies.
4.1 | Megaprojects
d3, Dubai
UAE Mega C Projects An established market for the construction industry, the UAE’s rapid development has spurred trillions of dollars worth of projects over recent decades, and the pace is set to continue as the country prepares to celebrate its golden jubilee, in 2021.
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onstruction contracts in the GCC will reached values of US$85.6 billion in 2017, up 7% on the previous year, with the UAE expected to award contracts in the region of $45 billion, up 4% on 2016. BMI Research forecasts 6.6% growth for the UAE construction industry in 2017, with the IMF predicting an average 2.6% growth for the wider economy, buoyed by Expo 2020 projects. The national project pipeline covers a combination of aviation, manufacturing and logistics parks, infrastructure, residential, hospitality and commercial projects, in addition to a new generation of projects quintessentially UAE in style: the $43.6 million Dubai Frame, $280 million Dubai Safari and $1.14 billion Louvre Abu Dhabi. Nationwide, infrastructure spending
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saw the UAE government set aside AED17 billion in 2016 for developments to 2020 and Dubai alone has earmarked $100 billion for projects to 2030, with the largest share channelled into real estate and transportation. Looking to the future, a number of new megaprojects have been announced recently. These include Dubai Food Park — located within the 550 million square feet Dubai Wholesale City and tipped to attract up to AED30 billion in investments — and the $1.7 billion Marsa-Al-Arab hospitality and entertainment destination, off the coast of the 7-star Burj Al Arab. While Dubai’s pipeline is dominated with leisure and entertainment projects, Abu Dhabi’s is dominated with infrastructure projects such as Barakah Nuclear Power Plant, which will generate 25% of the emirate’s energy needs by 2020, producing 5,600MW at the $23 billion facility. The Midfield
Construction of the Dubai Frame.
billion. These are Terminal Complex, Forecast growth in UAE construction industry, 2017 to be developed by which will boast 49 Omran Properties, a gates once complete JV between Sharjah in 2019, is also unInvestment in Al Sinniyah Island, by Sobha Group, Umm Al Quwain Investment and Deder construction at a velopment Authority cost of $3.5 billion. (Shurooq), Emaar Social infrastrucProject value of Barakah Nuclear Power Plant, Abu Dhabi Properties and Abu ture and housing Dhabi-based develprogrammes in oper, Eagle Hills. Abu Dhabi include Invested in mixed use projects across Sharjah Reports detail a the world’s longest portfolio of work sewerage tunnel at covering the 5-star, 41km, costing $1.5 Cost of Midfield Terminal AED120 million Al billion to build; the Complex, Abu Dhabi Khan Village Resort new E11 highway, and the AED106 linking Abu Dhabi million Kalba Waterfront Mall, among to Saudi Arabia; Zayed City, a $909 million project due in January 2020; the Jebel other projects. Eagle Hills is also developing two Hafeet Housing Development; and Al Ain projects on the UAE’s east coast, FuNew Hospital, costing $1.2 billion and jairah Beach featuring the 162-key Palace due in December 2018. Hotels, and The Address Fujairah Resort Like Abu Dhabi, Sharjah has invested + Spa, with 170 branded and serviced heavily in energy infrastructure, pioneerapartments, 10 villas and a luxury hotel. ing a waste-to-energy plant in the emirate The other emirates are also engaged in under a joint venture (JV) between envitourism, retail and integrated residential ronmental management company Bee’ah projects. In Umm Al Quwain, the AED25 and Masdar. A short drive from Sharjah billion Al Sinniyah Island will be develInternational Airport, the AED2.4 billion oped by Sobha Group to include up to five Tilal City development will house 65,000 residents upon completion along the Emir- resorts, two golf courses, two villa communities, low-rise apartments and a marina. ates Road (E611). In Ras Al Khamaih, a sharp increase in Other projects in Sharjah will see the tourism arrivals and business registrations is renovation of the University City road pushing the emirate into a new phase of econetwork, a new private jet terminal at nomic growth. There, the real estate market Sharjah International Airport and a series grew by 45% to 2015 and the construction of mixed-use projects valued at AED2.47 sector by 18.3% over the same period, with malls, hotels, resorts and offshore developments all in the pipeline. Highlights include a series of resorts, hotels and residential developments across the Al Marjan islands; Majid Al Futtaim’s $18 million mall, My City Centre Al Dhait; and the continued development of facilities at Jebel Jais, the UAE’s highest peak. With heightened activity closing the decade, the economic rollercoaster of the mid-2000s looks to be firmly in the past. With each emirate on its own path to increased prosperity, the opportunities across the country cover every sector and project type, and it is this diversification from the trademark flash of the UAE’s construction industry, which will truly cement its future success.
6.5%
AED 25b $23b
AED 2.47b $3.5b
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Expo 2020 T
he Expo 2020 site is a 4.38square kilometre plot located within Dubai South, a sprawling 1,082 acre site strategically located between Dubai and Abu Dhabi, with Al Maktoum Airport at its heart. Masterplanned by HOK in collaboration with Arup, the site will comprise exhibition facilities with capacity for a projected 300,000 visitors a day. Sustainability is high on the agenda, with at least 50% of the site’s energy to be generated from renewables, and low-emission public transport networks
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planned. Walkability plays an integral part in urban planning and landscaping; designs draw on the traditional Arab souk (marketplace), with themed pavilions accessible by foot and the centre of the Expo site no more than a 15-minute walk from any point within the complex. The contract for deep infrastructure works, including irrigation, sewerage, pipes, cabling, roads and utilities, was awarded to Besix in partnership with Orascom Construction in January 2017. Habtoor Leighton Group (HLG Contracting) has been awarded two sections of the Expo Village residential
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Project: Expo2020 site Project size: 4.38km2, with capacity for 300,000 visitors a day Project budget: AED25 billion Masterplan: HOK, Arup Tenders: 47 construction projects valued at AED11 billion tendered in 2017 Ongoing work: 98 non-construction project contracts valued at AED360 million still to tender, with 47 — totalling more than AED11 billion — due in 2017. Completion Due: Exhibitors begin construction of pavilions in April 2018, with handover of the sites from 2019 component and Al Futtaim Carillion has been appointed to head construction of the six themed districts. In 2016, 230 tenders were launched, raising 806 orders with a value exceeding AED1 billion. More than 12,000 businesses registered on the Expo e-sourcing portal over the course of the year and 4.7 million cubic metres of sand was moved in preparation for the main construction phase. In 2017, 47 construction projects valued at AED11 billion are scheduled for tender and a further 98 non-construction contracts valued at AED360 million are awaiting
tender. Building work is due for completion in 2019, following which exhibitors will begin work on their installations ready for the opening in October 2020. After Expo 2020, the three main pavilions — themed opportunity, sustainability and mobility — will combine to establish a National Museum, opening April 2021 in celebration of the event’s achievements. As much as 80% of the site is to be re-purposed after the event. Billed as an expo of human ingenuity, the event is projected to create 275,000 jobs in associated sectors and generate $20.14 billion for the national economy.
Associated Infrastructure: Phased into 4 packages, including: Expo Village, road networks and Dubai Metro Route 2020 Fast Fact: 4.7 million cubic metres of sand was moved in preparation for main construction works
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Connecting minds As Director General of Expo 2020 Dubai Bureau and UAE Minister of State for International Cooperation, Her Excellency Reem Ebrahim Al Hashimy leads the team delivering Expo 2020, uniting the world in Dubai.
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H
er Excellency Reem Ebrahim Al Hashimy joined the Federal Government in 2008 as Minister of State, with responsibility for a number of international endeavours, including Dubai’s bid to host Expo 2020. Following the successful bid, in 2014 Al Hashimy was appointed to the position of Director General, Expo 2020 Dubai Bureau, by His Highness Sheikh Mohammad bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. Today she holds this position alongside her role as Minister of State for International Cooperation and additional responsibilities within the Ministry of Foreign Affairs for the UAE’s bilateral relations with India, Pakistan, Sub-Saharan African countries and Small Island Developing States. Her Excellency is also the chairperson of The Federal Competitiveness and Statistics Authority and a chairperson of Dubai Cares. Speaking in Paris in November 2013, after Dubai was named host city of Expo 2020, Al Hashimy said: “We are committed to give the world an exquisite and memorable Expo with a meaningful and far-reaching legacy. An authentic portrait of the interconnected and fast moving world in 2020 and an opportunity to unlock potential for all who are a part of it.” In the years since, rapid progress has been achieved on the Expo 2020 site as well as the UAE’s supporting infrastructure, laying the foundations for the first carbon neutral mega-event in the world and the first Expo in the Middle East. Unveiled at Cityscape Global 2017, District 2020 is the highest-profile legacy project announcement to date. It will cover 65,000 square metres of residential space and 135,000 square metres of commercial space, providing a home for global innovation from Q4, 2021. Accelerating the UAE’s development, District 2020 will facilitate modern ways of living, blending work and recreation to foster stronger human connections both physically and digitally. Al Hashimy says: “We view Expo 2020 Dubai as a journey. It started when we were given the honour of staging the World Expo for 2020, it is continuing as we speak and will carry on in legacy when the doors to Expo 2020 Dubai close. We intend to create value at each stage of that journey. “We have set ourselves ambitious deadlines to ensure we are ready ahead of our opening. We are working towards having shell and core construction of the site ready a year before we open in October 2020, so that we can spend much of the early part of that year on operational preparedness. This will be a challenging target, but one that we are striving towards achieving.”
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4.3 | MEGAPROJECTS
Dubai A World Central
t the heart of Dubai South, Dubai World Central (DWC) Airport and its surrounding aerotropolis will handle in excess of 200 million passengers per annum and 12 million tonnes of freight once complete. With a total of five parallel runways, fully automated baggage handling system and four concourses (featuring a triple-plus layout 2.8km long and encompassing three nodes, each the size of seven football fields) it is billed as the airport of the future. DWC opened its doors on October 27, 2013, three years after the launch of cargo operations. Currently, the airport handles 19 passenger carriers, operating an average of 106 flights weekly to 44 international destinations and is home to 64 scheduled cargo operators that fly to as many as 138 destinations.
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megaprojects | 4.3
Ultimate capacity 240 million PPA Runways 5 Airlines 19 carriers currently operate from DWC Passenger traffic Up 29.5% in Q1, 2017 Air traffic Down 8.9% over Q1 2017 Freight volumes Increased 6.5% in Q1 2017
DWC’s first expansion project concluded in 2017, increasing capacity at the existing passenger terminal to 26 million passengers per annum. The terminal features 24 boarding gates, seven baggage reclaim carousels and 104 check-in desks. As Dubai’s second airport, DWC supports the attainment of a series of
economic targets across tourism, logistics and aviation. In 2017, passenger traffic at DWC grew 29.5% during the first quarter with 333,780 passengers, compared to 257,813 in the same period in 2016. First half figures for 2017 showed an increase in passenger traffic of 35%, with 554,993 passengers compared to
410,278 in H1, 2016. Flight movements at DWC totalled 18,371, down 11.1% over the 20,656 recorded during the first half of 2016. Freight volumes at DWC totalled 443,835 tonnes during H1 2017. compared to 430,132 tonnes in the first six months of 2016, an increase of 3.2%.
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4.4 | MEGAPROJECTS
Bluewaters
At 210metres, Ain Dubai will be the tallest and largest observation wheel in the world.
D
esigned as a family-oriented neighbourhood and world-class entertainment destination, the AED475 million Bluewaters is set on an island off the coast of Jumeirah Beach Residence, The Walk and Dubai Marina. At the centre of the development stands the landmark Ain Dubai, the world’s tallest and largest observation wheel, at 210 metres, surrounded by 10 apartment buildings and 17 townhouses, more than 200 retail and dining outlets, leisure and entertainment attractions, a marina, hotels and resorts. Residents at Bluewaters will be able to enjoy their own private landscaped garden podium; four swimming pools and chang-
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ing facilities; a children’s pool, splash pad, and play area; two basketball courts; two gyms; and a dedicated fitness area. Five major elements of the masterplan were constructed in tandem, including Ain Dubai and residential components. To date, the project has enlisted 40 consultants and, at the peak of construction, 16,500 employees and 25 cranes a day worked on the development, logging 64 million man-hours at the 12-month milestone. During the construction phase, 12,000 direct jobs were created. Developed by Meraas, the name behind such projects as City Walk, The Beach, BoxPark, Last Exit, Kite Beach and The Outlet Village, handover begins in Q1 2018.
Project: Bluewaters Projected visitors: 3 million annually Budget: AED475 million Developer: Meraas Associated infrastructure: Direct connection to Sheikh Zayed Road, public network of 25 autonomous vehicles with capacity for 2,500 passengers per hour to Dubai Metro, plus pedestrian bridge of 265 metres Completion: Handover begins Q1, 2018
4.5 | MEGAPROJECTS
kizad L
ike many projects in the UAE Khalifa Industrial Zone and Port (Kizad) holds a number of records — including the world’s longest conveyor belt at 14km — and, as of March 2017, it also holds the title of the UAE’s largest free zone. A cornerstone of Abu Dhabi’s 2030 economic vision, upon completion, the in-
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tegrated logistics, trade and industrial hub is projected to add AED146 billion to Abu Dhabi’s economy, a figure equivalent to 15% of GDP. Creating more than 150,000 jobs, developer Abu Dhabi Ports Company (ADPC) anticipates up to 80% of goods manufactured onsite will be exported around the world. Covering 418 square kilometres, Kizad
is strategically located between Abu Dhabi and Dubai and benefits from excellent multi-modal connectivity via sea, air, road and rail networks to ensure easy accessibility to and from the Industrial Zone. More than two million square metres of land has been leased to date to local, regional and international customers. All pre-built warehouses in phase one are also fully
megaprojects | 4.5
leased and, in 2016 phase two launched to meet growing demand in the market. Phase one, which covers 51 square kilometres with an investment of AED26.5 billion, was launched in 2012 and is now fully operational. The industrial zone is arranged into clusters to ease logistics, development and operation of the site. The clusters include
steel and engineered metals; glass; paper, printing and packaging; petrochems and plastics; trade and logistics; and a mixed use cluster for such activity as food processing, pharmaceuticals and medical products, high-tech and clean-tech. Kizad Business Park in Area A is developed for suppliers serving the needs of more than 50,000 customers, both employees and visitors, and offers multiple real estate opportunities. In response to the growing demand for free zones, in 2016 ADPC introduced Khalifa Port FTZ within Kizad, increasing its total free zone space to more than 100 million square metres in Area A. Spanning a total area of 84 square kilometres, Area B will feature heavy, light and logistics industries, commercial complexes, big-box retail stores, town centre and mixed-use developments and residential components. The site is also home to Khalifa Port, one of the world’s most advanced and fastest growing deep-water seaports. Due to the immense growth at Khalifa Port since its inauguration in 2012, Abu Dhabi Ports constructed an additional 1,000 metres of quay wall and has deepened Khalifa Port’s main channel and basin from 16 to 18 metres. In 2016, the port welcomed three new ship-to-shore cranes and 10 new automated stacking cranes, bringing the total to 12 ship-to-shore cranes and 52 automated stacking cranes.
Planed total size 418 sq kilometres Kizad Area A 51sqkm (6,375 football pitches) Kizad Area B: 367sqkm (45,875 football pitches) Transport 58 kms of roads, with 12 bridges, a planned rail network and three international airports within 45 minutes Advanced Mass Earthworks 40 million cubic metres Anchor tenant Emirates Global Aluminium Masterplan Atkins Khalifa Port Basin 18m deep Port Approach Channel 16.5m deep Quay wall extension 1,000 metres of additional wall
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4.6 | MEGAPROJECTS
The Tower, Dubai Creek Harbour
I
n 2010, Emaar unveiled the world’s tallest building, Burj Khalifa, Dubai. The 828 metre megastructure designed by Adrian Smith and SOM, captured the world’s imagination and now the developer is set to break its own record with The Tower, at Dubai Creek Harbour. The centre of Emaar’s latest integrated urban destination, The Tower will reach heights of 928 metres, emitting a “beacon of light” at night. Designed by Santiago Calatrava, the form is inspired by a lily bud and stands for “growth, progress and the possibilities of tomorrow”. At the top of the tower, The Pinnacle will offer visitors 360-degree panoramic views of the city and a VIP observation deck will be themed to recreate the Hanging Gardens of Babylon. Adhering to the same principle as Burj
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Project highlights Yacht club, marina and harbour; 6.79 million square metres of residential space across nine neighbourhoods, comprising 39,000 units; 8 million square feet of retail space; 3,664 office units; and 22 hotels with 4,400 rooms. Completion 2021 (phase one) The Tower Architect Santiago Calatrava The Tower height 928 metres
Khalifa and other supertalls around the world, The Tower will form the centrepiece of a mixed-use development that will join Emaar’s portfolio of record-breaking malls, skyscrapers and integrated urban spaces. Larger than Downtown Dubai, Dubai Creek Harbour will comprise a world class yacht club, marina and harbour, 6.79 million square metres of residential space, eight million square feet of retail space, 3,664 office units and 22 hotels with 4,400 rooms. Nine residential areas comprising 39,000 units will also be developed, including The Sanctuary District, situated adjacent to the Ras Al Khor Natural Wildlife Sanctuary. Creek Harbour will be future-proofed to reduce environmental impact and phase one is scheduled for completion over the coming five years.
4.7 | MEGAPROJECTS
UAE Theme Parks O
ne of the most highly anticipated drivers of the leisure and tourism industries, the UAE’s theme parks have enjoyed a rapid rise to fame since the debut of Yas Island in 2010. Recent years have been busy, with the launch of Yas Island’s Ferrari World and Yas Waterworld, and Dubai’s Wild Wadi, Atlantis Waterpark and Ski Dubai — with plans for a further two slopes elsewhere in the country. Then, in the summer of 2016 the world’s largest indoor theme park, IMG Worlds of Adventure, opened to the public. Covering a size greater than 28 American Football fields, it marked the beginning of a new era in the UAE’s status as the centre of regional entertainment and leisure. The same year, Dubai Parks and Resorts opened three co-located parks — Motiongate, Legoland and Bollywood — all first-of-a-kind attractions for the region, with the fourth park of the complex, Six
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Flags Dubai, due to open in 2019. The same year, IMG’s second park IMG Worlds of Legends, will open with 12 Nickelodeon-branded rides and attractions. Before that, Abu Dhabi will celebrate the opening of a new 1.65 million square feet Warner Bros. theme park in 2018, featuring 29 rides and attractions and a co-located Warner Bros. flagged hotel. It is estimated the entire development, launched in 2016, will cost US$1 billion. Each park has its own USP, with appeal to families, millennials, leisure and MICE groups. The new parks will bring the UAE closer to its 2020 tourism targets, with Colliers International projecting four million visitors across all parks in 2017, rising to 19 million by 2020, when revenues are expected to reach $837 million. More than 25% of all projected visitors are expected to travel to the parks from outside the UAE and 12% of visitors are expected to be MICE groups.
megaprojects | 4.7
IMG Worlds of Adventure: $1 bn estimated cost, opened 31 August 2016 IMG Worlds of Legends: Due 2019 Warner Bros.: $1bn complex with Warner Bros. hotel Ferrari World: Home to the world’s fastest rollercoaster, the Formula Rossa, reaching speeds of 150mph Dubai Parks and Resorts: Comprises three parks, Motiongate, Legoland and Bollywood, with Six Flags Dubai due 2019
UAE 2018 — Creating a global hub
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4.8 | MEGAPROJECTS
Developed by Nakheel, Deira Mall, towers and boulevard will be located on Deira Islands.
Meydan One Mall: $450 million development covering 30,000sqm and featuring the largest dancing water fountain in the world and a co-located 25,000 sqm multi-purpose sports facility Mall of The World: Developed by Dubai Holding and estimated to cover 9.15 million square feet of retail space
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Meydan One Mall.
megaprojects | 4.8
W
ith retail accounting for around 11% of UAE GDP, spending is big business. The country already enjoys an established reputation as a retail haven, with dozens of malls and specialist retailers in the diamond, gold and electronics sectors. In preparation for 2020, major mall developers in the UAE, including Emaar, Nakheel and Majid Al Futtaim, have all announced new mega-retail and entertainment projects, with the latter pledging investments of AED30 billion to 2026 in 10 community and mega-mall developments. Construction is now underway at Meydan One Mall, part of Mohammed Bin Rashid Al Maktoum (MBR) City, scheduled for phased opening from 2020. Additionally, Dubai Holding has launched the AED80 billion mixed-use complex, Mall of the World, which is expected to
The UAE’s Mega Malls
take more than a decade to complete. Nakheel is developing two new malls, including the AED4.2 billion Deira Mall and highly anticipated AED1.2 billion Nakheel Mall Palm Jumeirah. At the intersection of the new Dubai Canal and Sheikh Zayed Road, Gate Towers bridge will comprise a three-level, 300,000 square metre shopping mall constructed above the canal, with 434 retail outlets and restaurants. Expansion projects at existing malls including Mall of the Emirates, Festival City and the world’s largest mall Dubai Mall, continue alongside the launch of new concept destinations such as The Outlet Village and mixed-use destinations such as City Walk and Box Park. Under Vision 2021, the country will continue to place focus on the retail industry as a force in its own right, and an essential driver of other industries, including tour-
ism, with such events as Dubai Summer Surprises and Dubai Shopping Festival boosting arrival numbers at key times throughout the year. In 2016, Dubai launched its Dubai Retail Calendar, including such flash events as National Day Super Sale, and promotions surrounding Chinese New Year and Diwali, in addition to traditional Ramadan promotions and plans for a Family Week to boost family tourism. Since 2006, the UAE has witnessed the highest correlation between tourist arrivals and tourist retail spending of any GCC state at 95%, according to data published by Colliers International. Despite the recent boom in e-commerce across the MENA region — reports value the industry at $20 billion in 2017, with a projected rise to $200 billion beyond 2020 — the physical retail industry remains on track to reach values of $71 billion by 2021.
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5.1 | The Global Stage
Invest in the Emirates Maya Turk, Vice President of the financial practice at MENA Research Partners, explains why the UAE has attracted more than $122 billion in Foreign Direct Investment since 2001 and where the main opportunities will lie in the future.
O
ver recent years, the United Arab Emirates has positioned itself as a key global business hub, attracting investors and tourists from all around the globe and promoting domestic companies into regional and global champions. This has come on the back of a series of aggressive economic development strategies undertaken by the authorities to make the UAE a base for local opportunities along with a global reach. As reflected in Foreign Direct Investment (FDI) data gathered from the World Bank and the UAE’s Federal Competitiveness and Statistics Authority (see graph), between 2001 and 2016 the UAE attracted approximately US$122 billion, progressing since the year 2009 at a double digit annual rate of 11%. Such growth compares to only 4% globally and 8% at the MENA region level, bringing the UAE’s share of the cumulative value of MENA region FDIs over the same period to 13% in 2016 versus 10% in 2009. In terms of sector allocation, the FDI flows reflect the country’s commitment to diversify its economy away from hydrocarbons. Since 2009 and in the aftermath of the financial crisis, non-oil sectors attracted around 96% of all FDI. Trade and real estate accounted for the bulk, with shares of 31% and 29% respectively.
Working with the United Kingdom
Maya Turk, Vice President of the financial practice at MENA Research Partners.
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The UK has traditionally been a major business partner to the UAE, having strategically contributed to its economic development through different types of initiatives. In terms of investing countries, the UK comes well ahead of other countries as the major contributor to FDI in the emirates.
The Global Stage | 5.1
In fact, as of 2015, on a cumulative basis, the UK accounted for circa 24% of total FDI, followed by the US with 12%, India 11% and France 10%. The close ties also reflect in the bilateral trade relationships between both countries. In 2016, the UK ranked seventh in terms of total foreign trade with the UAE totalling $8 billion. Looking forward, this bilateral trade is expected to further strengthen based on the agreements being regularly set between to the two countries. Not to forget, the UAE hosts regional offices for almost 5,000 UK businesses including heavyweights Barclays Capital, HSBC, Clifford Chance, Norton Rose, Serco and Thomson Reuters. In addition, more than 100,000 British nationals live and work in the UAE, while more than one million British tourists visit the country each year. This is mirrored by the thousands of Emiratis who come to the UK to work or study in the UK’s world-class academic institutions. All of these factors, and many others, make the UAE an attractive business destination for British firms.
Historic trading partners A number of major, strategic investments, mergers and acquisitions have taken place between the UAE and the UK. • 2010: Abu Dhabi Investment Authority purchased a 15% stake in Gatwick Airport • 2008: MASDAR bought 20% of the London Array, the world’s largest offshore wind farm development • 2008: Abu Dhabi National Exhibitions Company acquired conference and exhibition centre ExCel London • 2008: Abu Dhabi United Group for Development and Investment bought Manchester City Football Club • 2006: DP World acquired P&O and took forward the £1.5 billion London Gateway development to create the UK’s first 210 century major deepsea container port and Europe’s largest logistics park • 2006: Dubai Investment Capital acquired UK hotels group Travelodge
The business environment These features contributed to the UAE achieving 26th out of 190 countries in the 2017 Ease of Doing Business report published by the World Bank, which is a continuous improvement from past performances where the country ranked 31st only two years ago. This comes on the back of the UAE implementing an ongoing reform agenda that aims to enhance the business environment in terms of infrastructure, macroeconomics, efficiency and business sophistication fundamentals, along with simplification for starting new businesses, dealing with permits and regulations among which ease of taxation. The UAE authorities created several initiatives to enhance FDI:
• Finance Organisations: The Arab Trade Financing Program whose mission is to promote Arab exports, proposes refinancing possibilities, credit loans for pre-shipment export and buyer’s credit. Foreign branches that are established in UAE and held at 51% by Emirati nationals can benefit from these possibilities. • Freedom of Establishment: Freedom of establishment is limited since it is mandatory to have a local agent and since foreign shareholding in the company cannot exceed 49%. • Acquisition of Holdings: The majority capital acquisition of a local company is limited to 49%. However, Dubai, Sharjah and Abu Dhabi have very flexible rules concerning the acquisition of real estate property by foreigners.
• Free Zones: The establishment of free zones has increased the ease of business, and limited restrictions, for many foreign investments since companies established in free zones are not subject to the requirement of having a local majority shareholder. Foreign investors can hold 100% of the capital. Moreover, there is no customs duty on imports. Finally, corporate or income taxes are waived should local authorities decide to levy these.
• Obligation to Declare: There is no special obligation to declare. Foreign capital in a company cannot exceed 49% except in free zones.
The FDI outlook
FDIs into UAE (cumulative 2001-16) $140bn $120bn $100bn
CAGR UAE 11% vs MENA 8% & 4%
15%
$80bn
11%
$60bn $40bn
Share of MENA FDIs 16%
10%
10%
10%
12%
12%
13%
13% 12%
11%
11% 10%
$20bn 0
14%
9% 2009
2010
2011
2012
2013
2014
Sources: World Bank, UAE’s Fedaeral Competitiveness and Statics Authority, MENA Research Partners analysis.
2015
2016
8%
Going forward, it is expected the UAE will preserve and build on its current positioning supported by a number of factors. Firstly the political stability and security that constitutes an incubator and a safe harbour for FDI and the strategic trend towards following a diversification of income sources, as policy shifts to support the Knowledge Economy. The UAE’s growing reputation as a host for major global events has also provided opportunities for global companies to invest in infrastructure and other projects. All these factors along with the strategic positioning of the UAE, its financial freedom, facilitation of procedures and excellent infrastructure, logistics and legislative structure, support the businesses that choose to call the country home.
UAE 2018 — Creating a global hub
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5.2 | The Global Stage
Humanitarian aid and FDI 106
UAE 2018 — Creating a global hub
The Global Stage | 5.2
I
n the months before the unification of the UAE, the late Sheikh Zayed bin Sultan Al Nahyan was busy shaping the country’s foreign policy. Acutely aware of the interconnected nature of a modernising world, Sheikh Zayed believed in the power of charitable work and the long-term impact of supporting others, not only in the UAE but all nations that require assistance. He knew that for the country to succeed, it must be founded on the principles of knowledge, prosperity and humanitarianism, with both a domestic and international perspective. Soon after the unification, Sheikh Zayed created the Abu Dhabi Fund for Development (ADFD) with an investment of AED500 million. By 1974, more than half the money had been used for aid projects in Tunisia, Jordan, Egypt, Bahrain and Yemen. To date, the fund has distributed AED35 billion to projects in 59 countries and is one of almost 50 organisations donating to international beneficiaries on behalf of the UAE. Sheikh Zayed also founded the UAE Red Crescent, which to date, has responded to medical emergencies in more than 100 countries, in addition to engaging in a wide variety of domestic aid and charity projects. In celebration of Sheikh Zayed’s life, his anniversary on 14 June is marked as Zayed Humanitarian Day, to celebrate the principles he instilled the during the formation of the union.
Foreign aid and development
One of the founding principles of the UAE is to support other nations for the prosperity of all people around the world. Living by the same moral code, today the country is the world’s largest provider of foreign aid.
A report by the Ministry of International Cooperation and Development, published on National Day 2015, concluded that between 1971 and 2014, the UAE’s government and non-government organisations, charitable and humanitarian institutions donated AED173 billion in foreign aid to 178 countries. The UAE is consistently named the world’s largest provider of foreign aid and, between 2010 and 2014, donated AED36 billion to global aid projects. In 2016, Dubai’s Mohammed bin Rashid Al Maktoum Global Initiatives (MBRGI), an umbrella organisation for 33 foundations and initiatives, spent a total of AED1.5 billion, benefitting 42 million people in 62 countries. In a statement, H.H Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, who is also the chairman of the board of trustees of MBRGI, said: “Day after day, successive developments in humanitarian work
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5.2 | The Global Stage
The UAE on the global stage 1971
1974
1975
1983
1998
Sheikh Zayed is elected president of the UAE and the emirates are unified under the principles of humanitarianism, stability, prosperity and peace. The Abu Dhabi Fund For Development (ADFD) is established with capital of AED500 million.
The UAE gifts aid worth AED377 million in the first three years of operation, benefitting projects across the Middle East.
UAE loans $100 million to one of its first diplomatic partners, Pakistan, for support programmes in the country.
The UAE spends AED664 million on humanitarian aid in Yemen. The same year, the UAE Red Crescent is established by Sheikh Zayed and responds to medical emergencies in more than 100 countries
Sheikh Zayed sends the largest non-Nato contingent to Kosovo, becoming the only Muslim country to participate in the UN peacekeeping mission.
2001–2009
2002
2005
2008
2010
2011
Operation Emirates Solidarity spends AED260 million clearing 58,000 mines in southern Lebanon.
The UAE embarks on a series of generous aid packages for Afghanistan, with $550 million donated by 2008 for infrastructure, health, education and defence. Further projects saw the construction of 11 schools, medical clinics for 35,000 patients, 38 mosques, a 7,000-patient hospital, a public library, accommodation for 200 families, 160 wells and other projects.
UAE donates $100 million to Pakistan when a large earthquake hits the country, with a further $8 million raised by UAE Red Crescent.
Khalifa bin Zayed Al Nahyan Foundation begins a seven-year programme to assist almost 2,000 low-income pilgrims in travelling to Mecca.
UAE donates $30 million to Pakistan following floods.
The UAE cancels Iraq’s entire debt to the country, valued at $7 billion.
The UAE is named the world’s largest provider of official development aid relative to its national income and goes on to donate AED36 billion to 2014.
Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, in collaboration with the Bill and Melinda Gates Foundation, launches a campaign to eradicate polio in Pakistan with AED807 billion pledged by 2018. Similar programmes have slashed polio rates in Afghanistan.
2011-2013
2011-2016
2013
2015
2017
2017
The UAE raises a further AED1 billion in aid for Afghanistan, from government and ADFD funds.
The UAE donates AED2 billion in aid to Syria, with AED600 million sent by UAE Red Crescent.
Red Crescent Authority embarks on a new round of projects in Palestine including the reconstruction of more than 600 houses on the Gaza Strip. The same year, the “Dress One Million Needy Children” project provides clothes for two million children in 44 countries.
The UAE sends 88-strong search and rescue team to earthquake-hit Nepal.
“Giving is Happiness” campaign empowers doctors from the UAE to treat more than 10,000 children and elderly patients in Zanzibar in the third phase of the UAE volunteer programme.
A five-year, foreign aid strategy is launched focussing on three issues: women’s empowerment and protection, transport and urban infrastructure, and technical cooperation.
confirm the urgent need for a large philanthropic framework, which integrates resources and mobilises humanitarian, charitable and development work that aims to help others face today’s challenges. We are dedicated to serving humanity and standing by those in need wherever they may be; we believe that our value lies in improving the lives of others, regardless of their colour, gender, religion or sect.” Today, development and humanitarian aid remain at the centre of foreign policy and in 2017 the UAE launched a five year, foreign aid strategy, outlining its commitments and responsibilities on the global stage to 2021. The strategy covers three issues of global importance: women’s empowerment and protection, transport and urban infrastructure, and technical cooperation. These will be pursued under the principle of “regional partnerships for development”, with aid pro-
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2010
grammes covering a range of activities in a number of sectors such as healthcare, education, water resources and renewable energy, while creating and strengthening trade and investment. Reem bint Ibrahim Al Hashemi, Minister of State for International Co-operation, explains: “The main goal of foreign aid offered by the UAE is to reduce poverty and improve the quality of life in underprivileged communities, promote relations between the UAE and other states, including the recipient countries and other donor states, and encourage creation of economic relations with developing countries based on mutual interests. The UAE seeks to establish a new approach based on providing assistance through developmental projects that benefit recipient countries. The wise UAE leadership has decided on a clear approach that does not link humanitarian aid with the policies of the beneficiary countries and this has earned the UAE high respect and appreciation globally.”
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5.3 | The Global Stage
Creating the Future
Advancing drone technology in the UAE.
Historically, the Islamic world has been the source of many scientific, social, health and economic innovations. Today, as the Knowledge Economy takes centre stage in the UAE, a culture of innovation is once again driving social and economic change.
F
rom the first university to the first toothbrush, historically the Islamic World is the source of a wide range of innovations and inventions. Over recent decades, financed by its energy industry the UAE has once again forged a place at the forefront of global innovation and, under Vision 2021, innovation’s role in the national economy is set to grow further. A place that dares to dream, a philosophy of innovation has driven the development of the UAE since the days of the first tribes, whose own survival depended upon their ability to utilise and adapt to their surroundings. Today, the ambition driving Vision 2021 is that the UAE’s world-class talent will produce the world’s next Facebook or Apple, placing the Middle East in direct competition with Silicon Valley. Senior officials from the UAE made their first trip to California in 2017, as part of the Dubai 10X initiative to embrace disruption and seek new ways of incorporating innovation. To support the organic development of such start-ups and ideas, the country’s leadership has embarked on a plan to establish a number of dedicated economic zones, business incubators and innovation communities across the country. In Dubai, the
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Dubai Creative Clusters Authority (DCCA) has been assigned to spearhead development, with an annual investment budget of $11 million. A further series of nation-wide programmes will drive the UAE’s reputation for innovation on the global stage, under the UAE Centennial 2071 plan.
Area 2071 Area 2071 will be a melting pot where innovative ideas and solutions are translated into reality, to realise the goals set out in the UAE Centennial 2071 plan. The Centennial plan aims to strengthen the country’s position as a soft power on the global stage, improve productivity in the economy and promote community cohesion. Launched in 2017 and located in the heart of Dubai’s Future Design Centre, Area 2071 will act as an umbrella to unite those in venture capital, R&D, advanced IT, engineering, disruptive start-ups and SMEs. The organisation will also join all government accelerator programmes and the World Youth Centre.
Dubai Innovation Hub Today, innovation has an address, in the heart of Dubai Internet City (DIC), the largest technology business community in the
The Global Stage | 5.3
Dubai Creative Clusters 10-year performance 2004 – 2014
region. Dubai Innovation Hub, announced in the year 2000 on the 15th anniversary of DIC, will become a vibrant community of 15,000 innovators, working in technology, new media, smart education and the sciences, in a state-of-the-art 1.8 million square feet park located between DIC, Dubai Media City and Knowledge Village. DIH will provide an essential space for companies of all sizes to nurture talent and creativity, with specific focus on the region’s start-ups and entrepreneurs. Completion is scheduled for 2019.
150%
Growth in businesses at DCC
64,027
People employed by businesses
IN5 The launch of Dubai Innovation Hub follows the establishment of the IN5 incubator, also located at DIC, to support ICT startups through access to training, mentorship, networking and funding opportunities. Operational since 2013, IN5 is growing to become a collective of innovation centres, with current focus on the emerging industries of technology and design. In 2017, IN5 opened its third innovation centre, Dubai Production City, where media freelancers and entrepreneurs can work and collaborate on projects related to the continued digitisation of the media industry, while accessing IN5’s network of support. Open to all nationalities, IN5 accepts applications from start-ups, students and freelancers, in addition to potential mentors.
Museum of The Future A key component of Dubai’s innovation strategy, the $200 million Museum of The Future is located at the centre of the new Emirates Towers Business Park, which will triple the size of DIFC by 2024. Designed by Shaun Killa, the museum is intended to “create examples of change” under the motto “see the future, create the future”. Installations will change every six months to consistently reflect the 10-year vision. Killa explains: “The solid element of the building symbolises what we know today and the void represents what we don’t know, so we are constantly looking towards the future and discovering new possibilities.”
“A key enabler of innovation has been the increased interest of venture capitalists and foreign investors in Dubai, who are supporting high-potential entrepreneurs. We look forward to seeing more advancement on this front in the years to come as Dubai positions itself to become a global innovation hub”
Hamad Buamim, President and CEO, Dubai Chamber of Commerce and Industry
300+
Businesses in DCC are operated by sole proprietors or freelancers GITEX For almost four decades, GITEX Technology Week has attracted the world’s brightest minds to Dubai. With 147,133 attendees and 4,473 exhibitors in 2016, the show is not only a hub for the region’s technology professionals, but a springboard for innovation. The 2017 show focussed on 3D printing, healthcare, cloud, Smart cities and automation.
Drones for Good The annual Drones for Good award, in collaboration with DIC and the Telecommunications Regulatory Authority (TRA), is held under the patronage and presence of H.H Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai. In 2017, 350 applications were received with 40 teams reaching the final stages of the competition. Engineer Omar Mahmoud, Acting CEO of ICT Fund, explains: “This event has a particular importance for being a special meeting platform for drones and Artificial Intelligence (AI) experts, allowing them to compete and share experiences on how to use modern technologies for the best of humanity. This goes in line with the vision of our wise leadership aimed at enhancing the country’s position on the global innovation map, as well as developing the national talents to be competitive in this field on the international level.”
Business Innovation Award Launched in 2017 by Dubai Chamber of Commerce and Industry in cooperation with the UAE Ministry of Economy, the first cycle of the Mohammed Bin Rashid Al Maktoum Business Innovation Award promoted the adoption of new innovative strategies among businesses in the UAE and the wider GCC region in line with the UAE’s National Innovation Strategy. Covering eight categories, the MRM Business Innovation Award is the highest level of recognition for attaining innovation excellence and honours outstanding business practices and performance in the realm of innovation, while placing a strategic focus on transforming business models to meet current and future challenges.
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There are currently 350,000 SMEs in the UAE accounting for 94% of all companies operating in the country and generating 60% of non-oil GDP. Philip Atkinson, Partner of Transaction Advisory, Grant Thornton International, explains the set up and funding options.
A
ccording to the published Cabinet Resolution No. 22 of 2016, the UAE’s unified definition of an SME distinguishes between enterprises based on employee headcount and annual revenues applicable to three different industry groups: trading, manufacturing and the services sector. There are currently 350,000 SMEs in the UAE accounting for 94% of total companies in operation. Net profit margins for SMEs in the region range between 7% to 18% in the manufacturing sector, 5% to 12% in the trading sector, and 3% to 20% in the services sector. Many SMEs in the UAE are export oriented with key export destinations including the wider GCC, Asia Pacific region, and Africa. According to the World Bank, SMEs play a significant economic role, particularly in emerging and developing economies, generating 60% of total employment opportunities and contributing 40% of GDP. In the UAE, the percentages are even higher as SMEs employ 86% of the total workforce and generate 60% of non-oil GDP. The UAE is placing high emphasis on SMEs and is setting strategic measures towards achieving its vision of boosting SME GDP contributions to 70% by 2021. Supporting this, Expo 2020 will allocate AED5 billion in contracts to local and international SMEs to stimulate employment, strengthen industries, and support sustainable economic growth.
Funding Challenges Access to finance is the biggest hurdle facing SMEs as they are less likely to be able to obtain bank loans than larger firms, leading SME owners to rely on internal funds or cash from family and friends to fulfill their working capital requirements. Even though SMEs are critical for an economy, approximately 70% of
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SMEs in the emirates
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SMEs in emerging countries lack access to finance and, without sufficient capital, SME growth languishes and stagnates. Currently, the credit gap for formal SMEs is estimated to be US$1.2 trillion. Moreover, in the GCC region, SME performance has been effected by sustained low oil prices. Despite the UAE having a strong banking sector, only 3.85% out of total bank lending is granted to SMEs as per a World Bank and Union of Arab Banks study. Banks are reluctant to provide funding to SMEs due to the high risks associated with new businesses. Challenges facing banks regarding SME lending also include the absence of quality financial information for credit risk assessment. As the UAE is a tax-free country, companies are not obliged to file audited financials which translates into almost 50% of SMEs not preparing financial statements, according to estimates from Dubai SME. In addition, SME lending in the region is largely unsecured due to most firms being in the trading and services sector and, unlike the manufacturing sector, do not possess major fixed assets to serve as collateral security for banks. As the majority of SMEs operating in the UAE are owned by expatriates, many business owners flee the country with unpaid debt. This resulted in around $1.4 billion in unpaid loans during the last financial crash. Another issue is that the end use of funds is not monitored by banks and business owners have been known to use bank facilities for other purposes, such as helping relatives and friends in other businesses without proper planning and adequate feasibility checks. These challenges lead SME owners to face high difficulties obtaining loans with countless documentations, delays, and non-committal answers from bankers in relation to SME financing.
UAE Government and Bank initiatives Improving an SME’s ability to obtain financing solutions is crucial to create jobs and accelerate economic growth. The UAE government is taking measures to improve SME funding, with measures to push banks to loan to SMEs. Draft reg-
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SME CATEGORIES Within Trading • Trading accounts for 73% of total SMEs in the UAE • A micro business is any enterprise with less than or equal to five employees and a turnover of less than or equal to AED3 million. • A small business is any enterprise with an employee headcount between six and 50 and a turnover of less than or equal to AED50 million. • A Medium business is any enterprise with an employee headcount between 51 and 200 and a turnover of less than or equal to AED250 million.
Within Manufacturing • Manufacturing accounts for 11% of total SMEs in the UAE • A micro business is any enterprise with less than or equal to nine employees and a turnover of less than or equal to AED3 million. • A small business is an enterprise with an employee headcount between 10 and 100 and a turnover of less than or equal to AED50 million. • A Medium business is an enterprise with an employee headcount between 101 and 250 and a turnover of less than or equal to AED250 million.
Within Services • Services accounts for 16% of total SMEs in the UAE • A micro business is any enterprise with less than or equal to five employees and a turnover of less than or equal to AED2 million. • A small business is any enterprise with an employee headcount between six and 50 and a turnover of less than or equal to AED20 million. • A medium business is any enterprise with an employee headcount between 51 and 200 and a turnover of less than or equal to AED200 million.
ulations state that all banks are required to have a dedicated unit for SME lending with solid policies and strategies in place. It also remarks that banks should set targets and limits for SME lending and provide explanation to the central bank in case targets are not met. Also, the proposed new rules indicate that banks are not to impose unreasonable collateral requirements for loans and are to provide borrowers with explanations as to why they withdraw credit or refuse lending. The Central Bank also developed a draft framework for crowd funding to ensure alignment with national law and transparency in relation to funding of creative projects. Under a rescue initiative, the UAE halted criminal actions against SME customers’ bounced cheques in 2016. This initiative enables debtors to have a 15 day period to restructure their payment scheme with creditors followed by a redressal period of 90 days where banks will refrain from prosecuting or issuing a travel ban. This measure allows customers to work out solutions and has stopped them from defaulting and fleeing from the country. In addition, Some UAE banks including RAK Bank, Abu Dhabi Islamic Bank, and Mashreq Bank have already set out plans to improve lending to SMEs by creating dedicated banking platforms that provide significant support catering to the needs of each individual business.
Alternative funding methods Business angels Business angels are one of the most important sources of funds for early stage businesses and innovative entrepreneurs, as well as businesses looking to expand operations. Some business angels invest through an angel syndicate or club and some invest on their own. These investments are usually associated with high risk and potentially high returns. Businesses at growth stage tend to receive higher amounts of funding from business angels than those at seed stage due to lower risk. As the business grows and further financing is required,
Doing Business | 6.1
business angels can offer more financing through co-investment with other sources of equity. A major benefit to this source of funding is that investors come with high expertise, skills, knowledge and network significantly impacting business development. Business angels usually make their investment decisions quickly, however, being able to find the right angel can be difficult and time consuming.
Crowdfunding Crowdfunding is of high significance to the growth of SMEs as it allows funding at lower costs, risk diversification, and smaller investment amounts due to the large pool of investors. Crowdfunding programmes match and connect businesses looking for equity financing with possibly hundreds of thousands of potential investors. The business has to put an attractive pitch to equity investors on the platform showing that the business is investment ready. A solid business plan and financial forecasts need to be produced by business owners as financial due diligence is usually carried out by the platform. In addition, summarising the business opportunity in a video is extremely helpful. Businesses may incur advisory and legal fees associated with the preparation of the pitch. There are three models of equity crowd funding including: pure crowdfunding where every investor has an equal share so they become a direct shareholder; angel-led crowdfunding where one investor leads the negotiations and terms while the crowd follow; and crowdfunding with a nominee structure where the platform appoints a single nominee to represent the crowd investors’ interests.
Venture capitalists Venture capitalists are those who invest in businesses with competitive advantage or a USP for the products and services they offer. They rarely invest in start-ups, rather, they invest in businesses with proven track records. Usually investments are made in a portfolio with a high number of businesses where the successful ones compensate for those with losses.
“The UAE is placing high emphasis on SMEs and is setting strategic measures towards achieving its vision of boosting SME GDP contributions to 70% by 2021” They are unlikely to get involved in the day-to-day business operations but will help with the overall business goals and strategies. Obtaining a VC investment can be a very costly and complex process as preparing a detailed business study is a must. Corporate venture capital is another source of funding for SMEs and is described as multiple equity investments undertaken by entities into private businesses with high growth potential.
Peer-to-peer lending P2P lending is a supply of debt in which lenders and borrowers are matched via Internet-based platforms. The UK is one of the leaders in this alternative funding method. P2P financing is less time consuming than banks and allows a wide set of investors to share the business returns. Many investors pitch very small amounts, which encourages them to participate in multiple loans. The loans range from a few thousand pounds to several millions and interest is usually set at a fixed rate by the platform. In some cases, lenders offer their own interest rates, which allows borrowers to pick the lowest interest rates. The platform has a set criteria that outlines which businesses are eligible for borrowing through the platform and borrowers are usually required to
submit a trading track record and financial accounts for credit assessment purposes.
Private equity Private equity investors make medium to long term investments or growth capital to businesses with high growth potential. PE investors increase profitability through improving the company’s operations and introducing a business management structure. They focus their investments in specific product lines and services to grow revenues and usually actively manage the investments for an average period of five to seven years and then exit the investment by selling their shares. Non-financial support offered by PE investors includes facilitating access to distribution and marketing channels.
Merchant cash advances The majority of SMEs operate an average 60-day cash cycle, however, it is difficult to obtain working capital financing. A strong funding alternative is Merchant cash advances — a quick and secure way for SMEs to raise funds. These are unsecured cash advances against future debit and credit card sales, which are repaid through an agreed percentage of business card transactions. The pre-agreed cost remains the same even if payments of these cash advances are delayed.
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Distribution, Agency and Franchising
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Entering new markets, including the UAE, presents tremendous opportunities but can also present challenges. Clyde & Co’s Benjamin Smith, Partner, Foreign Direct Investment, and Joycia Young, Intellectual Property and Commercial, explain.
Franchising
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ntering new markets, including the UAE, presents tremendous opportunities but can also present challenges. Having a clear understanding of the market entry options, or other options through which market access can be gained, is important to help frame strategic decisions. In the following paragraphs, we shall provide an overview of certain considerations that it is important to bear in mind when appointing a third party, such as an agent, distributor or franchisee, in the UAE to market and sell a company’s goods or services.
Appointing distributors, franchisees or agents Companies incorporated outside the UAE can appoint a third party representative, such as a distributor, agent or franchisee in the UAE through which their goods or services can be promoted and made available. The concept of commercial agency in the UAE captures a broad range of relationships between a principal and its representative. The UAE Commercial Agency Law (Federal Law No 18 of 1981, as amended) broadly defines commercial agency as any arrangement in which a foreign company or principal is represented by a third party appointed to “distribute, sell, offer, or provide goods or services within geographically defined limits [of the UAE] for a commission or profit”.
In practice, franchise agreements can also fall under the scope of the UAE Commercial Agency Law. Franchising is a popular model for principals looking to market and sell products in the UAE. This is partly because the franchising model does not require a franchisor to establish its own business operations directly in the UAE and incur the associated costs. As in any other jurisdiction, there are commercial risks associated with franchising a business, which need to be managed and documented carefully. In the UAE, there are many franchisees with decades of experience, a detailed understanding of the regional retail market, and sophisticated supply chain infrastructure. Numerous internationally recognised household name brands are represented in the UAE by franchisees. These arrangements have helped the UAE become what is arguably the most developed retail market in the region. It is, however, prudent for franchisors to be aware of and understand the legal and regulatory environment in the UAE which applies to franchising arrangements, which includes being aware of UAE Commercial Agency Law implications.
Registration, termination and rights of the agent
Benjamin Smith.
Agency and distribution The UAE Commercial Agency Law does not distinJoycia Young. guish between the roles of an agent or a distributor. A commercial agent in the UAE may, amongst other things (i) contract on a principal’s behalf and earn a commission for the sales that are made by the principal to customers in the UAE, or (ii) purchase products from a principal and sell those products on its own account and in its own name in the UAE. Under the UAE Commercial Agency Law, a commercial agent must be appointed on an exclusive basis.
Under the UAE Commercial Agency Law, commercial agency agreements must be registered with the Register of Commercial Agents that is maintained by the UAE Ministry of Economy. The UAE Commercial Agency Law affords considerable statutory protections to commercial agents in the UAE, in particular with regard to compensation payable to commercial agents on termination or non-renewal of a commercial agency relationship. In addition, commercial agents are entitled to commission on transactions irrespective of whether such sales are made by or through the commercial agent. Compensation may be payable by the principal if it does not renew a fixed term commercial agency agreement when it expires.
In conclusion There are a number of routes to market in the UAE, each with its own advantages and disadvantages. If a company incorporated outside the UAE considers appointing in the UAE a third party representative, such as a distributor, agent or franchisee, it is important to bear in mind that these arrangements are subject to a complex area of UAE law, the implications of which should be carefully considered.
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A global gateway to business and trade, the UAE boasts access to 2.2 billion regional consumers and, along with the wider GCC currently provides £30 billion in business opportunities for British companies. John Martin St.Valery, Founder and CEO, Links Group, shares his advice for those looking to capitalise.
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he UAE is unique in many ways, but when it comes to business the country’s offering is unparalleled. With access to 2.2 billion consumers within a four-hour flight time, the UAE is host to the regional operations of more than 120 Fortune 500 companies and record-breaking dedicated economic zones for logistics, manufacturing, food, technology and science. In 2016, the World Bank recognised the achievements made in facilitating business by placing the UAE ahead of its Gulf neighbours on the global Ease of Doing Business Index for the third consecutive year. In forging a competitive Knowledge Economy, the UAE plans to achieve first place globally on the Index by 2021. On its way to becoming the world leader for business facilitation, the UAE has placed diligent focus on establishing a fair and accessible judiciary, creating a number of regulations specifically tailored to the needs of international businesses looking to establish a national or regional presence from its major cities. The UK and UAE have long enjoyed a strong business and trade relationship — with the UK already confirmed to participate in Expo 2020 — and this will become increasingly important following the UK’s 2016 Referendum result to leave the EU. According to figures from the UK’s Department for International Trade, there are more than 5,000 British companies operating in the UAE, including BP, Shell, Rolls-Royce, BAE Systems, Mott McDonald, SERCO, Standard Chartered, HSBC and Fortnum and Mason. More than 800 commercial agencies and 4,700 British brands have invested in the UAE and the UK Foreign Office has identified £30 billion worth of opportunities for British business in the GCC to 2021, across 15 target sectors. At the 37th Gulf Cooperation Council Summit in Manama, Bahrain, in December 2016, British Prime Minister Theresa May announced a new UK-GCC Joint Working Group would be established to dismantle remaining barriers to trade and implement steps which could be taken to further liberalise the economies of both the Gulf and UK. However, there are some challenges and the move to a new international market can be daunting. Non-GCC nationals cannot own more than 49% of a company or enterprise and Arabic is widely used in documentation. From hiring top talent, to salary scales in major industries and finding office space, setting up a business in the UAE requires sound advice from multiple sources. John Martin St.Valery, founder and CEO of Links Group, an Equiom company, shares a guide to launching an enterprise in the United Arab Emirates.
“According to figures from the UK’s Department for International Trade, there are more than 5,000 British companies operating in the UAE, including BP, Shell, Rolls Royce, BAE Systems, Mott McDonald, SERCO, Standard Chartered, HSBC and Fortnum and Mason. More than 800 commercial agencies and 4,700 British brands have invested in the UAE”
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Prepare to operate in the UAE Know your market
The different emirates in the UAE have separate commercial drivers and individual commercial laws. It pays to do extensive research about the demand for your particular product or service and the requirements of the prevailing regulatory regime, rather than making broad assumptions.
Use all available resources
There is a huge reservoir of readily available regional knowledge, goodwill and experience which new market entrants can access. From embassies to national trade bodies, professional business groups and social media networks, all can provide valuable insight and help for how best to work in the UAE.
Understand the regulatory environment
Do not add to your risk burden by making hasty decisions or taking short-cuts when it comes to establishing your business in the correct jurisdiction with the right company incorporation model. By understanding the regulatory requirements and limitations from the outset, a huge amount of time and money can be saved.
Get professional legal advice
Given the fluid nature of the legal environment in the UAE and the consequences of getting things wrong, it absolutely pays to engage and retain legal counsel who can assist your business across the spectrum of company formation, labour law, commercial and contractual matters.
Engage, engage, engage!
There is no substitute for being here on the ground and getting to know your suppliers, customers, competitors and industry. Doing things at arm’s length from overseas rarely pays dividends and will almost certainly prove to be a ceiling to growth and success.
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The to do list
For foreign companies looking to enter the region, mitigating risk and maximising protection of assets should be the priority. It is crucial to understand where the business intends to operate, how it will grow and expand and, ultimately its legacy, in order to select the best structure and statutory requirements needed for company incorporation. Choosing the right legal presence is essential – the UAE’s commercial licensing is somewhat complex and distinctive in its makeup, differing from the models to which most international businesses are accustomed. For this reason it is best to engage a commercial facilitation and advisory service to uncover all the facts, establish your corporate structure, and ensure no stone is left unturned. Once the best structure for the company has been identified, the next step is to appoint a lawyer to incorporate the business and become legally registered. Keep up to date with business tax requirements, and most importantly, select your Emirati business partner. By embracing the Arabian culture of the UAE, you will no doubt begin to reap the rewards of doing business in this dynamic, proud and enterprising nation.
Free zone or onshore?
Establishing your business in one of the UAE’s 30-plus free zones, versus the adoption of an onshore legal presence, will depend on a company’s distinct needs and the target audience for the company’s product or service. If the audience for a company’s product or service is onshore (mainland or outside the free zone), then an onshore entity should be established. Under the current Commercial Companies Law, Federal Law No. 8 of 1984, UAE nationals must own a minimum of 51% of all public and private shareholding companies and limited liability companies. Links Group, through a portfolio of Emirati owned LLCs, acts as the local corporate nominee partner, effectively giving the foreign party shareholder beneficial ownership with 100% financial, operational and management control. If the audience for the company’s product or service is within a particular free zone, or located outside of the UAE, then the free zones are a great option for foreign investors as they offer 100% foreign ownership. If a foreigner wishes to carry out business in the UAE, but does not wish to maintain a physical presence in the country, it may enter into a commercial agency relationship with a wholly local-owned entity or UAE national. Commercial agents are generally used by foreign manufacturers and traders who are engaged in the largescale importation of goods into Dubai or the UAE on a regular basis. There are many routes to setting up a legal commercial presence in the UAE, but not all of them will be able to take businesses where they need to go. While the roadmap may seem complicated, a trusted local sponsor will be able to set SMEs on the right path and help avoid potentially costly roadblocks along the way.
Doing Business | 6.3
The UAE Bankruptcy Law
In September 2016, the UAE Cabinet approved the long-awaited UAE bankruptcy law, which will help owners of SMEs weather a slowing economy and rising levels of bad debt. In our dealings with foreign companies, the harsh penalties applied to defaulting businesses registered in the UAE has often been identified as a barrier to market entry. Decriminalising bankruptcy and simplifying the process to help struggling businesses makes the UAE an even more attractive investment destination.
2.2b £25b 120 5,000
Consumers live within a four hour flight of the UAE
UK-UAE bilateral trade target for 2020
Fortune 500 companies located in the UAE
British companies operating in the UAE
2021 £30b
Deadline for the UAE to achieve first position on the Ease of Doing Business Index
In business opportunities identified by British Foreign Office
Government Support
The UAE Government is committed to supporting and developing local enterprise — there are myriad government-led initiatives to support the development of the SME sector, many of which are led by Dubai SME, the agency of the Department of Economic Development (DED) in Dubai mandated to develop the SME sector. Another positive move by the Dubai Government is the publishing of a report by Dubai SME, titled The State of SME Equity Investment in Dubai. The report has formulated strategies and initiatives to improve SME performance, facilitate SME access to financing, and enhance SME competitiveness, as well as their value-add to the UAE economy. The report was launched to encourage investment in the sector and attract direct capital into areas with vast potential for entrepreneurial and start-up growth from private equity investors, venture capitalists and angel investors. Another great initiative by Dubai SME is the SME RATE Framework, which provides an independent assessment of an SME’s financial and non-financial performance. The Framework will facilitate governmental support to rated SMEs through strategic partnerships between the private and public sector. We are confident that the government will continue to provide a robust and flourishing ecosystem for entrepreneurs to translate their creativity into successful projects that support national economic development as outlined in the UAE Vision 2021.
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INDEX OF ADVERTISERS 0122
UAE creating a global hub 2017 OFC
04 IFC 01 123 IBC 89 109 124 OBC 71 06,07 08 67, 102
Abu Dhabi Ports Abu Dhabi Tourism & Culture Authority Ajman Tourism Development Department Al Habtoor City Hotel Collection Arabian Travel Market Dubai Chamber of Commerce & Industry Dubai Culture Dubai Healthcare City EGA- Emirates Global Aluminium Mohamed Hilal Group
93
Partex Oli and Gas
33
PwC
75
Ras Al Khaimah Tourism Development Authority
97
Rotana Hotels & Resorts
83
Shamal Communications
37
Sharjah Chamber of Commerce & Industry
10
Sharjah Commerce and Tourism Development Authority