UAE, ABU DHABI - Economy
Director General, Abu Dhabi Council for Economic Development (ADCED)
Fahad Saeed Al Raqbani was appointed Director-General of the Abu Dhabi Council for Economic Development (ADCED) in September 2010. He joined ADCED in 2008 as Deputy Director General, having gained experience with both Mubadala Development Company and the UAE Offsets Group. He is also a Board Member of General Holding Corporation, Waha Capital, Siraj Finance, Tanqia, Algerian Utilities International Limited, Al Hikma Development Company, SKH in Algeria, Addax Bank, and Abu Dhabi Basic Industries Company. He has a Bachelor’s degree in International Economics from the American University in Paris and a Master’s degree in Finance and Risk Management from the Lille Graduate School of Management.
Abu Dhabi is in the process of transforming itself through an ambitious economic vision that aims to achieve sustainable growth through economic diversification away from a heavy reliance on the oil sector. On the other hand, thanks to its position as a major oil producer, Abu Dhabi possesses the necessary financial resources that are needed to help in achieving its goal of building a vibrant and expanding non-oil sector. The healthy and competitive business environment in Abu Dhabi has encouraged domestic and foreign investment. The Emirate is considered an attractive market for international business due to its strong economy and encouraging investment laws. The investment climate in Abu Dhabi is becoming more conducive for local and foreign investors to set up businesses and to enter into joint ventures, as the Emirate has made significant headway in the past five years in developing the role of the private sector. Given Abu Dhabi’s environment and the continuous efforts to develop viable and sustainable non-oil sectors, opportunities for investors exist almost everywhere, with the clean energy and tourism sectors occupying a prominent destination for investment. When it comes to attracting business, favorable tax laws are among Abu Dhabi’s key competitive advantages. The UAE government levies no corporate or income tax and, at 1.7% of GDP, tax payment rates are among the lowest in the world. For many foreign investors, low taxation policies are a major incentive in deciding where to establish a business, and the government of Abu Dhabi is committed to maintaining a low taxation regime and retaining its competitive edge. Abu Dhabi has invested heavily in developing infrastructure that has underpinned the Emirate’s growth over the past 30 years. Power and water utilities have grown to serve an expanding residential and commercial market. Modern transport and communications links have facilitated trade and business with regional and global partners. The municipality of Abu Dhabi is currently engaged in executing infrastructure projects worth AED19 billion, or $5.2 billion, and has spent more than AED20 billion on major road works and bridges over the past three years.
ADCED is a government advisory agency that provides a platform for the government and private sectors to work together to achieve economic diversification and sustainable growth. The Council was established in 2006 with a specific mandate to act as an interface with the private sector, consulting its representatives across its activities on issues of economic policy and trying to incorporate the interests of the sector into government policy. ADCED deals and coordinates with a wide range of entities from the government and the private sector. It works closely with the regulatory bodies of different sectors and economic activities to ensure that laws and regulations are up to date and capable of enhancing the growing sophistication of the national and local economy and its integration within the world economy. ADCED coordinates with public and private stakeholders to support different non-oil sectors and activities. ADCED is actively involved in joint projects and initiatives with the Abu Dhabi Urban Planning Council, the Directorate of Municipal Affairs, and major real estate developers from the private sector to enhance stability and growth in the local and national real estate sector. ADCED also coordinates actively with Abu Dhabi Tourism Authority and other stakeholders from the private sector to expand the tourism sector and to transform the Emirate into a regional and global tourist destination. ADCED partners with the Department of Economic Development and Abu Dhabi Chamber in many projects that aim at improving the local business environment. ADCED works closely with the Western Region Development Council (WRDC) and other regional entities to ensure that the benefits of economic development are spread to the remotest part of the Emirate through enhancing the attractiveness of the regions for investment.
Abu Dhabi, with its significant infrastructure development, is an environment that is well suited to the PPP model. Partnerships have ranged from arms-length outsourcing to stronger cooperation between parties. The Abu Dhabi government is using the PPP structures in the infrastructure, power, water, health, and education sectors including the development of the Industrial City of Abu Dhabi (ICAD) Special Economic Zone. In the health sector, Abu Dhabi has outsourced the management of six of its 12 hospitals to private sector operators. As part of its strategic initiative to improve education at Abu Dhabi government schools, the Abu Dhabi Education Council (ADEC) has engaged with the private sector since 2006. It is certain that the PPP model is gaining ground in the economic development of Abu Dhabi and has started to cover wider business activities, especially with the increasing role of the private sector.
The simple answer to this question is to facilitate financing to SMEs. Similar to other markets, access to finance for projects and initiatives represents the most formidable obstacle facing the expansion of SMEs based in Abu Dhabi. Given this difficulty in securing credit, SMEs often rely on informal sources of capital, such as borrowing from relatives or personal savings. Besides difficulties in obtaining credit, SMEs in Abu Dhabi face other obstacles, such as getting access to public procurement contracts. The lack of data on SME activity in Abu Dhabi is another challenge that makes it difficult for the government, as well as the private sector, to better understand the make-up of the local SME sector. In 2010, ADCED initiated a study into the challenges and obstacles facing national SMEs. The study found that, despite the support and encouragement from the government, SMEs struggled to obtain financing from commercial banks in Abu Dhabi. As a result, the SME share of bank lending in the UAE as a whole is significantly below the MENA average. This represents a major restriction on the ability of Abu Dhabi entrepreneurs to launch and grow their businesses. The study suggested a loan guarantee scheme with the government that encourages banks and financial institutions to be pro-active in supporting local SMEs and to extend a larger share of their credits to these enterprises.
With a consistent flow of investment into the manufacturing sector and the development of several mega infrastructure projects, such as the Khalifa Industrial Zone Abu Dhabi (Kizad), Abu Dhabi is rapidly transforming into an industry-oriented economy driven by a long-term strategy and a clear vision to diversify the economy away from hydrocarbon resources. Many new industrial zones with world-class infrastructure and supporting facilities are being developed under the Higher Corporation for Specialized Economic Zones (ZonesCorp) and Abu Dhabi Ports Company (ADPC) to attract industrial investment and stimulate economic growth. Opportunities within the industrial sector are increasing with the effort to create a favorable investment climate and streamline the industrial licensing process through the introduction of a single window system known as One-Stop Shop (OSS). As part of the Emirate’s efforts to take industrial development to remote areas including the Western Region, Abu Dhabi is working on the development of new specialized industrial zones and industrial infrastructure in the Western Region. The new industrial cities in the Western Region include Ruwais industrial city and Madinat Zayed industrial city.
High-end tourism is currently witnessing unprecedented growth and looks set to grow at higher rates in the coming few years, as Abu Dhabi is taking major steps to transform into a regional and international tourist destination. The financial services sector also has exciting opportunities for financial business, with Abu Dhabi’s aim to be an international financial hub. The announcement at the end of April 2013 by the Abu Dhabi government on the creation of the Abu Dhabi World Financial Market—a new financial free zone located on Al Maryah Island—is a major step toward transforming the Emirate into a global and regional financial center. The clean energy sector also has huge potential for growth as Abu Dhabi is seeking to become an international center in the field of renewable energy and limiting carbon dioxide emissions. With a high rate of population growth, the health and education sectors are seeing strong growth and the government is seeking an active role for private investments in the development of these two sectors.
© The Business Year – August 2013