Fortifying Foundations

Ras Al Khaimah (RAK) is experiencing strong growth both in the tourism and manufacturing/industrial sectors, driven by significant levels of foreign investment. What makes RAK an attractive destination for foreign capital?

First and foremost, RAK has a long history of both political stability and social harmony, accompanied by a track record of policy consistency guided by the principles of economic openness, modernization, and diversification. These are vital because they provide fundamental building blocks for development and prosperity, and are the first things foreign investors examine when they choose a location for their business. We continue to build upon these intrinsic strengths of the Emirate by offering an attractive investor-friendly environment with rule of law, no taxes, and an easily navigable administrative system. The World Bank Doing Business study, published in April 2016, ranked RAK the 45th most business friendly place in the world out of 190 countries surveyed, well ahead of all other GCC countries. This is a testimony to the success of our ongoing efforts to create the best physical and legal infrastructure for industries of all kinds to thrive in this Emirate.

Looking ahead, where do you see potential future FDI into RAK coming from?

Given our geographical location and fundamental institutional strengths, we are uniquely positioned to take advantage of investment inflows from the advanced economies of Europe, US, Japan, the Republic of Korea, as well as from emerging markets in Africa. Investors from developed countries tend to find the aforementioned combination of our low cost base, light administrative burden, and exemption from taxes highly compelling. Investors from the subcontinent and lesser-developed parts of the world are attracted by the rule of law, political and social stability, and high-quality infrastructure. That said, we continue to diversify the economy and are conscious of the necessity of having a diversified pool of investors. From our point of view, Asia is under-represented in the Emirate, and through more highly targeted awareness campaigns, we can attract more firms from Japan, China, and the Republic of Korea.

How does the Emirate ensure that young Emiratis are given the opportunity to engage in RAK’s economic growth?

RAK’s economic growth and development is all-inclusive, but at the same time we pay close attention to the needs and conditions of our young population. Education is the key element of our strategy to empower local young people. We have several programs aimed at developing entrepreneurship and raising the level of technical skills, which complement our initiative to develop SMEs. Over the past 10 years a number of educational institutions have been established in the Emirate, such as AURAK and RAKMHSU, and having these institutions here enables local students to obtain tertiary education in a number of disciplines at an affordable price without having to leave the Emirate.

Rating agencies give RAK an ‘A’ level with a ‘stable’ outlook. From RAK’s perspective, which fundamentals need to be focused on for a higher rating?

The sovereign rating assigned to us by Fitch Ratings and S&P give due recognition to our many credit strengths: political stability, ease of doing business, track record of fiscal prudence, and a low and declining debt and interest burden. Where we need to improve is in the provision of macroeconomic data needed for economic analysis and forecasting. This coincides with the UAE’s push for more accurate and wide-ranging work on big data. We need to be able to provide robust and credible statistics about the Emirate, and to do that, we need to overcome some institutional deficiencies in our data gathering and analysis. We are well on the way to accomplishing that with the establishment in July 2016 of the RAK Statistics and Studies Center. To strengthen our statistical capability, we also need to improve governance, especially as it pertains to the management of state-owned enterprises (SOEs). We have a large number of SOEs, which provide the majority of the Emirate’s revenue, and we need to improve policies, processes, and transparency in order to improve oversight over these entities and expand their level of efficiency.