Central & Friendly

When we spoke to you in 2012, you mentioned that it is important for Dubai to abandon boom and bust cycles and aim for stability. What evidence of stable growth have you witnessed over the past year?

Just to clarify, Dubai was impacted by the global financial crisis in 2009, but since then the economy has been on a stable growth path, free from boom and bust cycles. Upturns and slowdowns have not been ruled out as these are natural given our exposure to the world economy. Dubai saw stable growth of 4.4% in 2012, and growth in 2013 is expected to be around the 5%. Again, this reflects faith in our sound macroeconomic management and is a clear indication of stable, fundamental growth. In terms of the Dubai Chamber, our members’ exports and re-exports increased 9% to AED268 billion in 2012, up from AED246 billion in 2011. This was on the back of 15% growth between 2011 and 2010 and 15% growth in 2010 compared to 2009. Again, in 2013 we are seeing steady and consistent growth, with our members’ exports and re-exports rising 7% in the first half of the year to reach AED145.2 billion, up from AED136.2 billion for the same period in 2012. The number of certificates of origin we issued during the same period increased by 12.2% to a total of 418,000, compared to 372,000 in 1H2012. This puts us firmly on track to meet last year’s targets. Meanwhile, along with trade, tourism continues to go from strength to strength. Strong numbers are being reported by the city’s hotels and Dubai International Airport alike. While another indicator of Dubai’s stable economic growth is the recent pick-up in real estate that we are currently witnessing. Rental yields have increased in most areas and across various housing stock, with more popular locations reporting double-digit growth. At the same time, new projects are coming on stream, yet this has done little to dampen prices, which indicates that demand is still strong.

What does the announcement of Mohammed Bin Rashid (MBR) City indicate for Dubai?

This new city within Dubai will set a new benchmark for urban development in the region. Comprised of four key components, the city will feature world-class leisure facilities and provide an integrated environment for the development of entrepreneurship and innovation that will benefit the private sector considerably. MBR City is aligned to Vision 2030 and will enable the UAE to enter a new era in which it becomes the capital of entrepreneurship, arts, culture, and family tourism for over 2 billion people. This is an ambitious project and one that shows Dubai is still growing and developing into one of the world’s leading cities for business and leisure. For the private sector and the economy, this announcement is a major boost and will provide a new impetus for a revival of the construction sector. This is going to create more jobs and increase consumer confidence and spending and will help to boost economic output across the board.

What kind of growth has the Chamber experienced over the past year? Which economic sectors comprise the largest portion of your membership base?

In our core business we have seen increases across the board in certificates of origin, membership and our members’ trade activities. In terms of their spread, a large portion of our members operate in the trade sector, followed by the construction and real estate sectors, respectively. Other activities, such as manufacturing, leisure, financial intermediation, and health and social work make up the remainder. As an organization, we have physically grown by reaching out into new markets around the world. We now have a presence in Baku, Azerbaijan and Addis Ababa, Ethiopia. We are in the final stages of opening another branch office in Erbil, Iraq, and are examining possibilities in another 17 different markets. Our target is to open 20 such offices in key markets around the world in order to help our members tap into the investment opportunities in these markets, while helping to attract FDI flows into Dubai. We are also seeing growth in our SMEs and are working on a number of projects to help support these businesses. This includes Tejar Dubai, which is an initiative to encourage and train the next generation of Emirati entrepreneurs. We launched this initiative recently and are in the process of recruiting our first round of candidates to start the bespoke training and mentoring program later in 2013.

Can you comment on other significant growth areas for bilateral trade, such as Africa?

Africa is home to some of the world’s fastest-growing economies and offers the highest risk-adjusted returns on foreign direct investment among emerging economies. While mining and oil are big businesses, infrastructure investment and the consumer market are major growth areas. The continent has a growing middle class, which is driving significant consumer growth. At the same time, around 70% of its population is under 35, which is also helping to power further economic development. The IMF has predicted that no other continent will grow more strongly over the coming years. At the same time, governments across Africa are working to improve the business climate, which can only serve to strengthen its investment potential. Dubai is a gateway to Africa as the Emirate’s close proximity and business-friendly climate is an ideal hub for the continent. Dubai offers international companies a safe haven to do business across the Middle East, African, and south Asian regions, and we will continue to facilitate and promote Dubai as an international business hub for decades to come. We envisage developing our existing trade relationship by encouraging more African companies to use Dubai as a base to trade with Europe, Asia, the Middle East, and North America. To this end, we organized the Africa Global Business Forum 2013 in May, held under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice-President and Prime Minister, and Ruler of Dubai. The forum highlighted the growing ties between the UAE and the continent and the areas of business potential for both sides. Over the course of two days 4,500 attendees participated in the event, including 40 government ministers and business leaders and the clear message was the Africa is ready for investment and Dubai is an excellent gateway and business partner.

Regionally, how have trade relations between Dubai and GCC countries grown over the past year?

The popularity of GCC countries as export destinations has further accelerated in 2013, with our members’ total exports to the region between January and June expanding by 19% to AED82.6 billion. Saudi Arabia is the biggest market in the GCC, with our members’ exports reaching AED44.1 billion, or 30% of their total exports for the period. Qatar is second to Saudi Arabia as the largest export destination, with a 17% share and exports worth AED13.8 billion. However, during this period Qatar grew at a much faster pace, with exports rising by 33%. Kuwait then follows in terms of share with 12% of our members’ exports to the GCC, then the UAE with 8%, Oman with 7%, and Bahrain with 3%.

What is your outlook for 2013 and beyond?

Looking ahead, initiatives like the Islamic Economy, launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice-President and Prime Minister, and Ruler of Dubai, earlier in 2013 will play a major part in driving new business growth. This initiative is to make Dubai the capital of the Islamic economy and it sends a clear message to all investors that Dubai is the most prominent destination for sharia-compliant finance and business in the region. As a major Arab business and leisure destination, Dubai is an ideal choice to become the hub for all Islamic economic related fields due to its existing strengths in this area. We see opportunities to enhance the halal food industry, develop trade policies and commercial laws, and for the development of the Islamic finance industry, through the provision of this initiative. For instance, the UAE is already one of the biggest markets in the region for Islamic banking, accounting for 27% of all Islamic banking assets in the GCC. Given Dubai’s position as a key destination for many global banks and financial institutions, this initiative will serve to strengthen this thriving sector. The establishment of an Islamic economic capital will encourage competitiveness, of which Dubai has many advantages like multiple promising sectors, the unlimited support given by its leadership and help to open doors to new opportunities. To this end, Dubai Chamber is organizing the Global Islamic Economic Summit later in 2013 which will bring together experts, policy makers, and stakeholders from around the world to initiate a dialogue on the development of the Islamic Economy sectors, including sharia finance, halal manufacturing, and related lifestyle sectors.