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Fahad Al Gergawi

UAE, DUBAI - Economy

Here We Are

CEO, Dubai FDI

Bio

Fahad Al Gergawi began his career in 1994 in the Exhibition Department of the Dubai World Trade Center. He moved to the Dubai Chamber of Commerce in 1995, and later became the Executive Director for Trade and Industrial Development. Between 2004 and 2008 he worked at Dubai Holding as Executive Director of International Business Development at Dubai Properties Group. He is currently the CEO of Dubai FDI.

"We have excellent relations with GCC countries, and we all complement each other."

What evidence of stable growth have you seen in 2013?

There are a couple of matters to consider. One is the investor confidence index and the other is the consumer confidence index. Consumer confidence is higher now, and at the same time so are our economic figures—GDP growth is doing very well. In 2012, we achieved 3.5% growth. We are pursuing steady growth, while investors are seeing what they like to see, and certain sectors that were heavily impacted, such as real estate, are coming back slowly in a controlled way. At the same time, we are seeing indicators that new investors are coming to set up business in Dubai. Looking at the last survey that was conducted asking the Arab youth in which foreign place they would like to live if they got the chance, the UAE ranked first, and Dubai is the highlighted city; France and the US came second and third. These indicators are important to consider because stability comes not only from economic prosperity, but also lifestyle. It was the number one factor investors valued in our Why Dubai survey. People like to stay in a place to do business, but also one that fits around their lifestyle. People want luxury and safety, and you get both of those in Dubai. Security comes with having the clarity of where you are. The government has sought a continuous vision of where we are going, our targets, and the measures taken to get there. We are sending a message that within the larger region we are very clear about our goals and ambitions and how we will reach them.

Tourism is growing steadily, but which other sectors can you identify as having the biggest potential for growth?

FDI grew 26.5% in 2012 compared to 2011. It is very encouraging to look at what it could be in 2013. Tourism is one of the most important sectors, especially with His Highness Sheikh Mohammed’s new tourism strategy for 2020, which is looking to double Dubai’s current visitor numbers from 10 to 20 million. That will open up more opportunities for more investors to develop their future plans. We see trade and logistics as the strongest contenders because Dubai is a trading city. Trade will continue to be a strong sector, while exports will continue to grow stronger. Logistics is the tool Dubai uses to be a world trade hub. Logistics are expanding, with air and sea transport being strongly recognized, and Dubai is gaining global recognition as being a world logistics hub for many companies working in that field. The Dubai plan that people see comes with a strong logistics influence.

“We have excellent relations with GCC countries, and we all complement each other.”

International trade is always a precursor of direct investment. Do you see a relationship between the locations Dubai is increasing trade with and direct investment?

In Dubai, 85% of the average investment is in greenfield areas, while 70% is the global average. This shows that Dubai is a strong facilitator for trade. When we look at trade, we also look at facilitating start-ups to expand the market. Dubai is naturally the regional center for trade and exports. This is where companies come to grow their production through outreach programs and connectivity. We are focusing on trade to encourage investment. Trade is more likely to be the answer to the global crisis, rather than financial services. Trade will ensure a better flow of money globally, and that is what will allow businesses to rebound.

Some sectors, like oil and gas and telecommunications, remain protected by the government. What opportunities are available to foreign companies in these areas?

Oil and gas will continue to be a strategic sector for the government. It is not necessarily protected; however, it is for the better utilization of our current wealth. For telecommunications, we understand more companies can enter the market. Etisalat used to have a monopoly, and then Du came along and that brought a positive impact for consumers, and the services are ranked among the top in the world. By 2015, the government will look to allow additional telecommunications companies to enter the market, as long as they suit the UAE. Looking at both sectors, we have had no problem in allowing foreign investors to invest in oil production facilities, especially biodiesel and biofuel, since the government supports the green economy. At the same time, while there is a level of protection in certain cases, like telecommunications, the UAE is one of the most advanced countries in the region for connectivity per capita on a global scale. The system allowed for the better utilization of any service. You could bring in 10 telecommunication companies and you still wouldn’t have enough of what you think would allow for businesses to grow. Only with clear policies from the authorities can telecommunications perform well in the UAE.

The Bankruptcy Law will be soon implemented. What other policies are being employed to encourage FDI?

The Bankruptcy Law is still being negotiated, and we are waiting for a couple of laws such as the FDI Law and the Companies Law. There are more than five relevant laws currently under discussion. It is not of course a case of pushing the law through; we need the right law to encourage investors to utilize the incentives. Some laws can hinder economic development. What we are looking for are laws that will allow better business development and for us to really bring in more investors, because they see the incentives of these laws and have confidence in our system. We are working with a number of authorities as well as a range of stakeholders to ensure we design the best law possible to achieve this.

His Highness Sheikh Mohammed aims to make Dubai the center of Islamic finance by pushing the sukuk market. What impacts will that decision have in attracting FDI?

I think it is beyond sukuks; however, the sukuk market will be an important element. The strategy is multi sector and goes into finance, production, and the implementation of certain other measures to allow for an Islamic economy, not just Islamic finance. The components are of significant importance, not forgetting that the first Islamic bank and modern Islamic finance started in this city. Dubai is a strong facilitator of services for business, and we will try to make it similarly applicable for Islamic businesses, which will give the city a boost. Islamic finance took many years to reach $1 trillion in size. We expect it to reach the second trillion in five years’ time. We are taking the holistic view, and I think His Highness was clear about Dubai’s ambition. When we add sectors to the Islamic economy, they are the ones that are already strong in Dubai, and we will help integrate them.

Many Dubai companies voice concerns about sustainability, both with regards to business and the environment. What actions are you taking to tackle this?

We have been working hard over the past year to establish the green economy partnership program with other governments and private sector stakeholders. This is a very unique perspective that goes beyond the environment and toward business sustainability. It is about how to utilize the resources that you have and make them better in the short term, not only in time but also as per the economic impact on people’s lives. Economic development always involves people. This is what His Highness envisioned, and this is what we are trying and able to achieve, starting with the better utilization of our resources. When we look at developing our IT program to better utilize our resources, we look at it from a larger perspective. We need to use every component of our economy and ensure it is sustainable. Looking to the future, we aim for clean technology. The green economy is totally linked into that. By 2020, this business will be rolled out on a global scale and will amount to $4 trillion.

In 2012, Dubai FDI attracted 119 companies to Dubai. How would you evaluate the competitive nature within the GCC in attracting new FDI?

We have excellent relations with GCC countries, and we all complement each other. Competition helps us, and we see it as very positive. We believe that challenges are the motivator for change and for better future development. From a regional perspective, if an international company wants to establish itself in the GCC, looking at it as one bloc, we see this as very positive. Then, it depends on the nature of the investment and the economies around us. We strongly emphasize our strengths in trade and services. This is the very unique proposition of Dubai globally. We can promote doing business in Saudi Arabia, Qatar, and Bahrain and many other countries in the entire MENASA region through Dubai, and at the same time have businesses coming to us first. We have these discussions internally in the UAE as this healthy competition between the cities is a normal practice for many years, and it has helped to ignite positive economic change. This engine was always one of the successes of the UAE—the combination of competition and collaboration. There are many complementary aspects we share as a country that made us able to provide a wide range of offerings to investors and attract a large number of them to start here. We have already approached some regional investment bodies to collaborate with them and we have a good understanding. We promote the region as a whole—we promote investment opportunities in Qatar, because the businesses will come here to set up and then if they want to go to grow into another country we will take them with us on our outreach program. We want them to expand their operations here and launch their investments in other countries from here. Whenever we can assist a neighbor, we will. We are not afraid of competition, because there is always a positive side and we focus on the glass half full.

© The Business Year – July 2013

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