This action might not be possible to undo. Are you sure you want to continue?
Encouraging entrepreneurialism and economic growth
The role of sport in Abu Dhabi’s future
Modernising date farming ADX’s stellar performance
The economic birth of Al Gharbia
Stelios Haji-Ioannou Employing Emiratis Hosting IRENA Nanotechnology
We always welcome your feedback. the western region is undergoing an exciting transformation 22 The fruits of new labour processes Dates have always been important to Abu Dhabi’s heritage and. following a major overhaul. And major investment in Al Gharbia will open up this region. I hope you enjoy this issue of The Economic Review. 24 Databank Abu Dhabi’s economic indicators Waleed Al Mokarrab Al Muhairi Director General Abu Dhabi Council for Economic Development 26 In conversation Stelios Haji-Ioannou on entrepreneurialism. Date farming is a case in point. We’re also improving and modernising our traditional industries. It will soon be exporting brand Abu Dhabi across the world. Abu Dhabi is working hard to ensure those institutions and systems are in place across all sectors.. But sport is not the only thing that is elevating Abu Dhabi to the global stage. rich in economic potential. An estimated 600 million people are expected to watch the event on television. In particular. the newly established International Renewable Energy Agency (IRENA) chose Abu Dhabi as its new home (page 9). Abu Dhabi is spreading its wings and building momentum to achieve its 2030 vision. But reputations also depend on strong institutions and strong systems of governance for support. as investments start to pay off 18 18 Going west With the government acting to reverse the migration trend in Al Gharbia. easyGroup and Abu Dhabi Cover illustration by McFaul Studio THE ECONOMIC REVIEW AUTUMN 2009 3 . The UAE Central Bank has also taken advantage of the opportunity afforded by the global financial crisis to introduce measures to strengthen the banking system and implement a governance framework for the banks to enhance their independence and accountability (page 5). and how the global slowdown has hit the industry 8 9 Nanotechnology Renewable energy Nanotechnology is on the verge of big things 8 The International Renewable Energy Agency heads for Masdar City 10 Corporate governance Abu Dhabi strengthens efforts to help businesses improve their corporate governance practices 11 Employment Why nationals need to overcome their aversion to working in the private sector 13 An economic driving force The world may be in financial turmoil. This is significant for the emirate – it is the first time that an international body has chosen an emerging economy as its headquarters. This summer. but the ADX stock market is holding strong 14 feAtureS 14 A game of patience Abu Dhabi has stepped up its presence on the international sporting calendar this year.ae. the date farming industry is ready to take on the world 26 ANd fINAllY. NewS ANAlYSIS & commeNt 5 Financial services A Why the global financial crisis has not been all bad news for Abu Dhabi 6 Real estate The government reins in the real estate sector. In so many ways.. the new Abu Dhabi Centre for Corporate Governance will help all companies strengthen their governance system (page 10).CONTENTS welcome ll eyes will be on Abu Dhabi over the next few days when the prestigious Formula 1 Grand Prix motor race comes to town. presenting Abu Dhabi with an unprecedented opportunity to share our successful growth story with the world (page 14). to the world (page 18). Please email us at feedback@ theeconomicreview. the very things that will attract global investors to the emirate in the first place. These are two good early wins – now we must deliver a worldclass event and headquarters to cement our global reputation. further enhancing our reputation (page 22).
chairman of Abu Dhabi Finance.AGENDA Financial services In this section: Financial crisis (p5) Real estate (p6-7) The role of nanotechnology (p8) Hosting IRENA (p9) Corporate governance (p10) Employing Emiratis (p11) What the crIsIs dId for us By Abeer Al Jassim n the past year. including bankto-bank deposits. bankruptcy. is a wise decision that aims to assure the public that our financial institutions are in good shape. The bank has been aggressively targeting consumer demand for mortgage financing. “The decision by the government to guarantee all bank deposits of all kinds. real estate and finance companies I – Mubadala Development. which had dried up during the crisis. Will this group of initiatives lead to a stronger economy? Dr Hoe Ee Khor. chief economist at the Abu Dhabi Council for Economic Development (ADCED). Ali Eid Al Mehairi. “These initiatives are aimed at enhancing the financial performance of government bodies through strategic planning and allocation of financial resources. The financial crisis has also prompted the Abu Dhabi government to seek more cost-effective ways of delivering its own services.” he added.” A dramatic plunge in the UAE’s inflation rate from 12. a positive outcome of the financial crisis was the Abu Dhabi mortgage company.” said Hamad Al Hurr Al Suwaidi. which have borne the brunt of the crisis. have been the targets of the policy measures. said: “We may have to adopt a wait-and-see approach but one thing is certain. In particular. thanks in part to the initiatives adopted by policymakers to shield the economy from future crises. Aldar Properties. Sorouh Real Estate and the Tourism Development and Investment Company. Abu Dhabi has had a softer landing than most.” THE ECONOMIC REVIEW AUTUMN 2009 5 All illustrations by Gary Bates . a plunge in investment opportunities and historic lows in consumer confidence – all triggered by the global financial crisis. said: “Abu Dhabi Finance will provide liquidity to a market where demand remains high for property.3% in 2008 to 4.’ The Abu Dhabi government has seized the opportunity of the financial crisis to adopt various initiatives to strengthen the financial system and the economy. As an old Chinese proverb says: ‘A crisis is an opportunity riding the dangerous wind. It reflects a cooling of the property market. Abu Dhabi’s department of finance’s undersecretary. the financial crisis has not been all bad news for Abu Dhabi.9% during the first four months of 2009 is another positive outcome of the crisis. In the property market. the UAE and Abu Dhabi governments have taken several measures to stabilise the banking system and stimulate the economy. The government has also pledged to guarantee all bank deposits – including ones with foreign banks with core operations in the Gulf area – for the next three years. the state passed legislation extending a federal government guarantee to bonds issued by local banks to support their borrowing in international capital markets. words like ‘turmoil’ and ‘downturn’ have dominated the papers as they reported on job losses. which had become overheated. More recently. The ultimate objective of the plan is to encourage economic growth. It is hoped this will also provide investors with a sense of security. The financial services and the property sectors. Al-Mashreq Bank CEO Abdul Azeez Al Ghurair said the UAE economy was strong. Though not immune. Abu Dhabi Finance was launched in November 2008 by five of the emirate’s major investment. It recently announced a five-year “priority financing” plan designed to find efficient ways of financing government projects and to develop a common financial framework. Abu Dhabi Commercial Bank.
000 per square foot. rather than a leader of that growth.000 to AED3. which means it is now well positioned to contribute to the emirate’s economic growth in a positive manner. When prices of some properties in AUTUMN 2009 THE ECONOMIC REVIEW The progress of projects is increasingly linked to developers’ abilities to secure sound financing “ ” Al Reem Island.AGENDA Real estate steadIer groWth By Abd Al Majeed Al Heeti B anking isn’t the only sector in Abu Dhabi to have been hit by the world financial crisis – real estate has had its fair share of bad luck too. it has also led to a slowdown in building activity and ongoing projects have been rescheduled. But while the banking sector is managing to resume normal activities with the help of a government cash injection at local and federal levels. the financial crisis has triggered a number of beneficial developments that have placed Abu Dhabi’s real estate sector on a sounder footing. This situation is due to several factors: first. While the crisis has brought an abrupt end to the frenzy of new high-profile construction projects. Most notably. the sudden disappearance of bank credit to fund major building projects and the purchase of real estate units and. This will see the sector fall back into its normal role as a supporter of economic growth. real estate prices in Abu Dhabi are down by 30% from their peak in 2008 and are expected to decline by an additional 15% in 2009. which will bring a greater degree of certainty and transparency to the market and avoid cases of failure or uncompleted or scrapped projects. speculation was the prime driver. second. property prices are falling back to more realistic levels. But there are also upsides to the financial crisis for the real estate sector – even though it may not feel like it right now. a sharp fall in demand. for example. which has resulted in an oversupply of properties in the market. 6 . That means end consumers will play a major part in determining the fortune of the real estate market. Despite its initial effects. That’s led to a decline in property prices during the last two quarters – according to some estimates. with the associated risks of inflicting harm on the economy during a downturn. increased dramatically during the first half of 2008 from AED1. And now that banks and investors are exercising more prudent lending and borrowing policies. the effects of the crisis on the real estate sector are still visible. The progress of real estate projects is increasingly being linked to developers’ abilities to secure sound financing. the flurry of off-plan property selling has died down. Now that the financial crisis has forced speculators to exit the market. the crisis has put an end to the excessive speculation that characterised the property boom.
many developers have rushed into too many projects in the past few years. An unregulated sector with access to cheap credit will inevitably experience difficulties in the face of an economic slowdown. Finally.000 8. The laws are intended to regulate the real estate sector and will hopefully provide property investors with more confidence when investing in the emirate. with regulations in place.000 units have been constructed or are in the pipeline in Abu Dhabi City (see table. While that is not great news for the major developers who have suffered sharp earnings declines due to an inability to sell units and land (see table below). putting the emirate’s real estate sector on a stronger footing again. which will be submitted to the government soon. developers can be encouraged to use a build-and-sell model. Abu Dhabi’s Department of Municipal Affairs has finalised draft laws on a range of real estate-related activities including land registration.236 687 Y/Y (%) -80 115 -88 -40 324 682 145 410 UNioN ProPErtiEs AlDAr soroUh Note: Emaar’s 2Q08 figures are based on prior accounting standards and are thus not comparable with forecasts THE ECONOMIC REVIEW AUTUMN 2009 7 . While the property boom has been good news for Abu Dhabi’s economy. it may encourage auctions for land between two and three companies (which should be joint ventures between large and small local property developers with broad local investor bases).660 318 1. design and residential building projects in Abu Dhabi since 2007 Al Markaziyah Al Raha Beach Al Reem Island Breakwater Ghantoot Khalifa Cities Mohamed Bin Zayed City Saadiyat Island Tourist Club Area Zayed Sports City 1. Since 2007.000 10. the government can set a cap on annual growth rates.800 77. Second.800 Source: Colliers International Real Estate Overview Project Number of units environmental friendliness. palm trees and oases to a modern business and residential location dominated by glitzy skyscrapers. mortgages. but current problems should produce one positive outcome – prices will fall to a more reasonable level and the balance of supply and demand will correct itself. which is more suited to the current economic slowdown. escrow accounts and strata. instead of granting land to selected companies. private sector property developers that. triggering a quiet phase in the real estate sector. employed a sell-and-build approach to property development. Abu Dhabi has grown from a desert city with sand dunes. They in turn sold the land to a selection of smaller. buyers pulled out and developers found themselves with thousands of empty units on their hands.300 41.750 5. The problem is the result of a boom in an unregulated sector. First. The government may consider some more fundamental changes.AGENDA Real estate tIme to reflect By Hamda Al Kindi N ew property laws that the government of Abu Dhabi is considering can help anchor investor confidence in the emirate’s real estate sector after a decade of rapid development. the sector should be in better shape than ever. In just 10 years. the government gave away plots of land to state-backed real estate companies such as Aldar. when the financial crisis took hold. giving investors the confidence to return to the fold once more. The financial crisis has left both developers and buyers without liquidity.500 15. it’s an ideal time to pause and consider how the sector can be regulated to avoid such problems in the future.600 3. Bidders should be judged on a range of criteria including price. That worked fine during the period of growth but.700 43. And this time round. nearly 215. top right).165 -84 227 1Q09 237 30 889 125 2Q08 1.000 7. under pressure to deliver a return to investors. In a bid to encourage property development during the early stages of the boom. Abu Dhabi real-estate companies: 2Q09E Net income comparisons Company Net income to common equity (AEDm) 2Q09E EmAAr Source: Company reports Change Q/Q (%) 37 2.
significant investments have been witnessed in emerging markets such as China. while private investment was $9. a member of the advisory panel of Khalifa University Nanotechnology Center. military strategies and national security. HH Sheikh Nahyan Bin Mubarak Al Nahyan. told delegates at an international nanotechnology conference hosted in Abu Dhabi: “Nanotechnology bears huge potential that can effect changes in the fields of energy. research centres are not enough. Russia and India. Rao.AGENDA Nanotechnology Big opportunities in a small world By Abeya Mokhtar anotechnology – the manipulation of matter on an atomic scale to develop new materials – has moved out of the lab and into commercial markets with applications in virtually every sector and industry. According to figures from Lux Research. technology. a commitment from government to support the sector and to encourage local and global private sector investment. Governments and corporations worldwide are investing massively in nanotechnology research and development. Last November. communications. However. there should be a technology park or technology initiative where people will look at technological applications.R. minister of higher education and scientific research. too – its potential for water purification could put an end to Abu Dhabi’s mounting concerns about water shortages. Market analysts foresee a world market for nanotechnologies worth $3. medicine.6bn in 2008.” This leadership commitment and the subsequent decision to establish two nanotechnology research centres – at Khalifa University and UAE University – suggests Abu Dhabi is serious about building nanotechnology research infrastructure to help meet its future needs.” says Professor C. environmental and societal issues raised by nanotechnology .1bn by 2013 and estimate that 10 million nanotechnology-related jobs will be created by 2014 – that’s 10% of all manufacturing jobs worldwide. There needs to be a cluster of organisations that link research closely with businesses and end users of nanotechnology. The economic impact of the tiny world is huge. “Around the centre. European Union and Japan have traditionally been the biggest investors but recently. nanotechnology is not only a means to job creation and inward investment.6bn. Other elements are also crucial: a national nanotechnology framework. It could 8 AUTUMN 2009 THE ECONOMIC REVIEW n “ The economic impact of the tiny world is huge ” offer solutions to more fundamental challenges. experts say if Abu Dhabi wants a slice of this market. food industry. it’s also key to realising the emirate’s vision of economic diversification and creating competitive advantage in knowledge-based industries. and a regulator to address health. The US.N. government funding for nanotechnology reached $8. For Abu Dhabi. Could nanotechnology be the next big thing in Abu Dhabi? Investment in this increasingly popular strand of science is enjoying government support in the emirate.
with news that Abu Dhabi is to be the global headquarters of the International Renewable Energy Agency (see story. further enhancing its expertise in this area. The city beat tough competition from Bonn. IRENA will have a technology and innovation centre in Bonn and a third base in Vienna. the UAE’s foreign minister. The decision suggests the international community is confident that the emirate can become a global hub for renewable energy – an area closely linked to nanotechnology applications and research. A case in point? Masdar City. it needs to find a way of achieving ‘grid parity’ – the point at which the cost of renewable power is equal to or cheaper than grid power. right). For one thing. zero-waste city fully powered by renewable energy. Austria to be selected to host the global headquarters of IRENA. If these challenges can be overcome. it will also give young Emiratis increased opportunities to build their careers in the sector. It’s the first time an emerging economy has been chosen to host an international body. With all of these elements in place. IRENA may have found a home.AGENDA Renewable energy energy Boost By Khawla Al Qemzi a research. The emirate has been investing in alternative energy initiatives for some time now to demonstrate how a major oil producer can also have an environmental conscience. THE ECONOMIC REVIEW AUTUMN 2009 9 . Patient Capital investment philosophies such as Abu Dhabi’s Advanced Technology Investment Company (ATIC) are playing an increasingly important role at this stage. Abu Dhabi was always going to be a strong contender for the host city title. Germany and Vienna. In addition to its headquarters in Abu Dhabi. Not only that. bu Dhabi can expect to enjoy a bigger international profile and play a role in shaping global energy policy following its recent victory in the battle to be home to the newly established International Renewable Energy Agency (IRENA). most important. the emirate could become a regional hub for nanotechnology. but its first few months won’t all be plain sailing. IRENA was set up in early 2009 to promote the transition from non-renewable to commercially viable green energy sources. Abu Dhabi can expect to find itself at the heart of an energy revolution. longer term. currently has 136 signatory countries. the world’s first zero-carbon. which has a mandate to act as a think tank. The intergovernmental agency. Abu Dhabi could even become a global hub for nanotechnology. Steps to achieving that ambition have already been taken. By adopting the right strategy and displaying enough commitment. has said the IRENA win will boost the region’s ability to network internationally in the renewable energy sector. Sheikh Abdullah Bin Zayed Al Nahyan. The agency also needs to raise public awareness of the importance of an ethical energy policy and. which will be IRENA’s headquarters. it’s up against the clock – global warming has increased at a rate that has exceeded the expectations of many in the scientific community.
Although disclosure standards of businesses listed in Abu Dhabi have improved. transparent and accountable environment. To encourage reform and modernisation of corporate governance practices. It also provides a structure for setting and attaining company objectives and monitoring performance. if Abu Dhabi-based companies are to become globally competitive and attract foreign investment. According to a study by CLSA Emerging Markets. the Abu Dhabi Chamber of Commerce and Industry launched the Abu Dhabi Centre for Corporate Governance earlier this year. inaccurate financial reporting and governance malpractices in general. It ensures that business operates in a fair. stocks of companies with strong corporate governance policies tended to outperform the market. consultation on implementing better corporate governance practices.AGENDA Corporate governance Steering a Steady courSe By Majid Julfar J ust how effective are corporate governance policies in today’s corporate world? That’s a question on every regulator’s lips following recent global uproar about disproportionate executive pay. Such initiatives are a step forward but. . Ultimately. training and raising awareness about the issue through seminars and conferences. The centre is aiming to achieve these objectives via a range of services including corporate governance audits. more fundamental challenges need to be tackled – the dominance of family-owned businesses in which the families are unwilling to cede control is one example. The system specifies the rights and responsibilities of different participants in a corporation and spells out the rules and procedures for making business-related decisions. Good corporate governance is critical to the long-term future of any firm. although the Organisation for Economic Co-operation and Development describes it as a system by which businesses are directed and controlled. A second study by the group – Saints and Sinners – established a positive link between strong corporate governance practices and a high return on equity. Other challenges include the lack of a long-term investment culture. The centre has two main objectives: to provide consultancy services to the private and public sectors to help them adopt best practice in corporate governance. Investors who are putting up debt or equity financing are demanding fair and accurate financial reporting – and better governance standards in general. Investors tend to feel more secure when they invest in companies with strong internal controls. and to raise awareness and build local expertise in this issue. inexperienced boards and conflicts of interest stemming from multiple board directorships. the irresponsible use of shareholders’ wealth. The recent economic growth enjoyed by Abu Dhabi has been “ Investors are demanding better governance standards 10 AUTUMN 2009 THE ECONOMIC REVIEW ” largely due to investment-driven projects. There is no globally accepted definition of corporate governance. they still lag far behind counterparts in other emerging and developed markets. it hopes to promote economic growth and foreign investment through good corporate governance.
12% work for government-owned entities and just 8% work in the private or other sectors. has launched the ‘Ebda’a Programme’ to prepare nationals – and especially new university graduates – for the workplace. According to Abu Dhabi’s Statistics Centre. Unemployment among non-nationals in the emirate is just 2. More initiatives like this. a subsidiary of the Abu Dhabi Chamber of Commerce and Industry. Nationals tend to believe the public sector offers a better deal than the private sector in a variety of areas. The UAE Academy.3%. there is a mismatch between science and engineering skills required by employers and the humanities training that many Emirati graduates bring to the job market. even though. It says private companies are not entirely committed to taking on nationals. The problem? Nationals just don’t like working in the private sector. at around 823. working hours and job security. There is also a cultural perception that administrative jobs. 80% of nationals in employment work for local or federal government. which educate nationals about the benefits of working in the private sector.3% ” THE ECONOMIC REVIEW AUTUMN 2009 11 . which all private sector companies to ensure Emiratis make up at least 1% of their workforce. are needed to tackle that rising Emirati unemployment rate. “ Emiratis working in the private sector constitute just 0. Labour experts say the rising jobless rate is due to a number of factors. the government has a more fundamental challenge to tackle if it is to achieve its objective. and also match what the education and training system supplies with skills employers want. In response. the government has passed an emiratisation law that requires Source: Statistics Centre Abu Dhabi.000. estimated 2008 % 9 9 % 6 6 3 3 0 0 1985 1995 2005 2008 National Non-national dominate the public sector.000 nationals of working age. Emiratis working in the private sector constitute just 0. right). The Abu Dhabi Emiratization Council has been set up not only to ensure that every Emirati jobseeker finds employment. outlined in the Economic Vision 2030. The government says the lack of representation of nationals in the private sector is not just due to the preference of Emiratis.AGENDA Employment Public to Private By Amna Bin Hraiz e miratis must be encouraged to change their attitude towards working in the private sector if Abu Dhabi is to tackle its record 12. A number of additional initiatives are now under way. non-nationals account for a much greater part of the workforce compared with the estimated 96. The Ministry of 15 15 15 15 Unemployment rate in Abu Dhabi 12 12 Source: Statistics Centre Abu Dhabi.7% unemployment rate among nationals (see chart. but also to facilitate interaction between jobseekers and the public and private sectors. estimated 2008 Labour’s figures are even lower. However. of increasing the participation of nationals in the workforce and particularly in the private sector. including an influx of cheaper foreign labour and a lack of supply to meet the demand for jobs. are more socially acceptable than jobs in ‘hands-on’ private sector industries such as oil and gas. including pay and benefits. Not only that.5%. Of the total workforce registered with the ministry. and to advise the government on labour-market policy.
1 WORLD CHAMPION.19 FOR TICKETS VISIT WWW.COM/UAE2009 OR CALL +971 (0)2 449 9955 .BEST CLUBS ARE COMING TO ABU DHABI THE WORLD’S 8 GAMES. DECEMBER 9 .FIFA. 7 TEAMS. FIFA CLUB WORLD CUP UAE 2009.
has issued a statement that all bank deposits in the UAE will be guaranteed until 2012 to enable the sector to weather the current global financial crisis. Overall. Egypt and Pakistan. it is perhaps a testimony to a market that has defied the downward trend of other emerging stock exchanges in the world. for instance. and Dana Gas. Another plus point? ADX offers exposure to the Gulf ’s muchcoveted energy sector.000-square kilometre emirate. Its stellar performance so far indicates it will continue its rise as one of the region’s leading stock markets By sultan sooud al Qassemi N atural resources and oil abundance are often associated with Abu Dhabi. ADX volumes topped Despite the global financial turmoil. ADX topped the GCC index in terms of investors’ positive outlook. now known as ADX. “ Illustration by Cath Riley New interest Recently. ADX. The Abu Dhabi Securities Exchange.From the academies stock market An economic driving force ADX is nine in November. with 46% continuing to believe its stocks are undervalued. Aldar Properties. the world’s energy centre. one institution in the capital should not be neglected when one ponders the economic driving force of the 67. mostly from the banking sector. a Sharjah-based firm that has regional and international operations in a sector gaining more and more global attention. including access to companies such as Taqa. including a 60% stake in Etisalat. The Abu Dhabi-based UAE Central Bank. This also encourages investors to take a long-term view. 44 firms listed on ADX distributed cash dividends and 24 of them distributed stock dividends. is celebrating its ninth anniversary in November. the telecoms giant with operations in 18 markets including Saudi Arabia. ADX will continue its rise as a leading stock market in the emerging economies. which has recently expanded its mandate. According to a regional and global survey by investment bank Shuaa Capital published in July. what entices most investors is the fact that. Aabar Petroleum. rose by more than 10% in the first six months of 2009 despite the global financial turmoil. Cairo’s Commercial International Bank and Kuwaitbased Gulf Cement. Few markets in the region can offer the depth and exposure that ADX can. a series of new firms started listing to take advantage of the increasing volumes that ADX has to offer. however. the leading real estate developer in Abu Dhabi. which opted for a dual listing on ADX as a strategic choice. and has multiplied over the years. In addition. Palestine and Sudan. Today. New entrants include the official telecoms firms of Qatar. aDX rose by 10% in six months 70% in NBAD. Even in the current year. Government support Many ADX-listed companies enjoy implicit and explicit government support. and the National Bank of Abu Dhabi (NBAD). even before the creation of ADX. Coupled with the strong fundamentals of the Abu Dhabi economy and the improved regional and international exposure of the opportunities that it offers. also enjoys government support in the award of long-term projects to develop real estate and tourist attractions such as the Yas Marina Formula 1 Circuit. Sultan Sooud Al Qassemi is a non-resident fellow at the Dubai School of Government. It was launched with only 12 stocks. tHe ecoNomIc reVIeW aUtUmN 2009 13 . which has a market capitalisation of more than $71bn. when companies have tended to defer dividend payments. however. the exchange includes some of the leading stocks not only in the United Arab Emirates. the Middle East’s second-biggest economy. the Abu Dhabi government has significant shareholdings in many listed firms. 72% in Taqa and a 50% stake in Union National Bank. Notable listed companies include Etisalat. but throughout the area. considered one of the leading companies in the region. In 2008. $63bn and today the average monthly trading exceeds $4bn. Abu Dhabi-based firms have distributed stable dividends year after year.
page 21).” says Al Mazrouei.000 – a major increase from the current 10. which has seen both Emiratis and expatriates flock to the cities of Abu Dhabi and Al Ain. building new infrastructure and improving 18 AUTUMN 2009 THE ECONOMIC REVIEW E “ Al Gharbia’s AED115bn GDP comes mainly from the energy and industrial sectors educational facilities.” explains Mohamed Hamad Bin Azzan Al Mazrouei. only 10% of the population lives there. This presents many problems. migration will reverse and Al Gharbia’s population will grow.000 residents of Abu Dhabi’s western region (Al Gharbia) as businesses are launched.00020. Liwa and the industrial area of Ruwais (see box. But the government hopes that by investing in local businesses. Ghayathi. educational facilities expanded and hotels opened. Urbanisation is an inevitable side effect of the country’s strong economic growth. The seven are Madinat Zayed.INSIGHT Al Gharbia going west Abu Dhabi’s western region of Al Gharbia is at the heart of an investment drive to boost population growth and encourage economic diversity By Mariam Al Mehairbi and Bernadette Redfern xciting times lie ahead for the 120. The central coordinating body for the plans is the Western Region Development Council (WRDC). “There are seven urban concentrations and we would like to start by developing two or three of them to 40. director general of the WRDC. ” Illustration by Jane Webster . “A principal factor the emirate faces is migration from Al Gharbia. in a recent report on the area by the Oxford Business Group*.000. The government is pursuing a range of investment initiatives totalling more than AED98bn to improve opportunities in the seven main townships. Dalma Island. Mirfa. and the WRDC aims to stop this trend by developing our people through education and job creation. Sila. houses and roads constructed. Although Al Gharbia accounts for 83% of Abu Dhabi’s landmass.
Its AED115bn GDP constitutes about 40% of Abu Dhabi’s total and mainly comes from the energy and industrial sectors as the area hosts Abu Dhabi’s downstream oil industry with the enormous 417. involving the private sector is key to achieving its aims. “WRDC will only promote and execute projects and initiatives that are in line with Abu Dhabi’s 2030 vision and protect Al Gharbia’s culture and traditional heritage.” Improving the region’s THE ECONOMIC REVIEW AUTUMN 2009 19 . Al Mazrouei told The Economic Review: “One of WRDC’s main objectives is to provide businesses and investors with guidance. According to WRDC. promoting diversity beyond the oil and gas industry is high on the list of federal and local priorities. Growth in the energy sector is already under way through a range of expansion plans aimed at developing the burgeoning petrochemicals industry.000 barrels/day refinery in Ruwais.” But he is clear about the types of projects the council wants to promote. as outlined in the Abu Dhabi Economic Vision 2030. help and support to be successful in the region. However. which are still practised and found in the region today.
“The objective of the . affecting approximately 98% of the housing stock in Al Gharbia. it will enable faster development with excellent potential for growth.” Meeting these needs is a challenge for a relatively young organisation. and more than 150 “ A railway will be built to link the emirates from the coast to the Saudi border outsourcing agreements worth more than AED2. manager of the fund’s Entrepreneurship Development Department. Also. Al Gharbia covers almost 80% of the land area of the emirate. “We have dedicated AED4bn to improve public housing. WRDC agrees that improving the transport infrastructure is a major priority. the municipality identifies several key development areas. So far the measures appear to be working. it has meant bringing in private expertise. particularly the date farming industry. In July. community facilities such as parks. which currently has minimal infrastructure. A major catalyst for new enterprises is the Khalifa Fund. A design contest with the Vocational Education and Training Institution (VETI) Al Gharbia resulted in students receiving business counselling and financial rewards. processing and trading industries are growing. “New businesses vary from concrete blocks manufacturing to home-based handicrafts products. and are helping more than 40 applicants to develop their business plans.” she says (see feature on page 22). In some cases. set up in 2006. Once the region overcomes its accessibility issues. However. “The type of development that the region is in need of spans issues such as housing – both maintenance and creation of new units – roads and infrastructure. which gives financial and advisory support to locals with small to medium-sized businesses.INSIGHT Al Gharbia infrastructure is vital to achieving the 2030 plans. WRM executive director for area services.000 houses in urban centres such as Mirfa and Madinat Zayed. There are also a few services and tourism sector projects that could seem profitable.5bn have been signed. The fund has also used a competition to target students as well as professionals. executive director of strategy and performance. and several date packaging. licensing businesses and registering births locally rather than in Abu Dhabi City. The fund also supports the agricultural sector. We are actively leveraging the private sector and local expertise to deliver quality 20 AUTUMN 2009 THE ECONOMIC REVIEW ” municipal services at reduced cost. due to the concentration of petroleum engineers and industry in the region. this is all set to change following the release of the Abu Dhabi Urban Planning Council’s 2030 plan for the region later this year. “Already.” he continues. “Many families own date farms. community facilities and further growth of the government administrative offices known as TAMM centres.” says Dr Allaoui. “We have approved nine loans in the western region. Working with WRDC on this is the Western Region Municipality (WRM).” says Al Mazrouei. libraries and recreational centres and landscaping. Externally. Dr Allaoui says this is one of WRM’s main achievements to date. the trans-emirates rail network announced that a railway will be built to link all the seven emirates from the coast to the Saudi border in Sila. “Al Gharbia is a vast region. “WRM is targeting a 35% reduction of its operational cost for increased quality services through a leveraged outsourcing scheme.” The municipality has also earmarked a further AED4bn for roads. which will make Al Gharbia even more accessible in the future. we have received a few applicants with plastic-recycling and petrochemical-processing industries. this March.” says Leila Ben-Gacem.” says Ben-Gacem. These are being rolled out in all of the towns and allow residents to carry out activities such as paying bills. plans were revealed for replacing or upgrading more than 3. says: “The main challenges emanate from different perspectives. New businesses Making it easier to do business is critical if new enterprises are to flourish. as a range of new businesses – from farming and tourism projects to petrochemical and handicraft manufacturing – are launching in the area. Dr Chafik Allaoui. and all of its cities need to be equally served to accommodate the needs of the dwellers within these urban centres.” says Khalifa Al Mansoori.
Dalma Island • Population: 4.000 • Location: Coastal town.000-year-old arrowheads. sports centres. THE ECONOMIC REVIEW AUTUMN 2009 21 * Taken from The Report: Abu Dhabi 2008 by Oxford Business Group . rich marine life and a historical and cultural society. are considered to be the first of their kind found in the Arabian Peninsula. a subsidiary of the Abu Dhabi Tourism Authority.” says a spokesman for the organisation. solar power facilities and government defence projects. but much has happened since the establishment of WRDC in 2005 and the municipality in May 2006. food-distribution centres and mosques. and projects planned include schools. Tourism revenue is hoped to reach AED690m by 2020. 300km from Abu Dhabi City Ruwais is the industrial centre of Al Gharbia and home to the 417. Mirfa • Population: 15. proposed projects for the city include residential development. close to the Qatari and Saudi Arabian borders Sila is Al Gharbia’s westernmost township. The city is also home to the famous Mazayin Al Dhafra Camel Festival. Liwa • Population: 20.800 • Location: 42km offshore and 116km from Doha A 45-sq km island off the coast of Abu Dhabi. It contains a port and small airstrip. housing. Expansion plans include investing AED30bn in building a second 400. Attracting tourists Building on the area’s heritage is one of the principles underpinning several new tourism projects under way in the region. Fossils dating back eight million years. inland from Ruwais This traditional Bedouin settlement is best known for its archaeological finds. By 2020. Sila • Population: 7. Liwa’s economy is dominated by agriculture. but the Desert Islands project should see tourism making a major contribution to growth in the future. with a raft of new businesses opening. and is home to some of the tallest sand dunes in the world. In more recent times.000 • Location: 250km west of Abu Dhabi City and the southernmost town in the region The birthplace of Abu Dhabi’s ruling families. recreational facilities and healthcare provision. Ruwais • Population: 16.” Al Gharbia’s investment and economic expansion plans are still in their early stages. pearl and fishing industries. It is located on the edge of the Rub Al-Khali (the Empty Quarter) desert. along with a multitude of other downstream petrochemical-production facilities. and develop their entrepreneurial spirit through a practical exercise in researching heritage and finding the balance between modernity and tradition.” Plans are evolving for Al Gharbia’s main towns Madinat Zayed • Population: 29. “Desert Islands is home to eight natural islands off the shores of the western region. it is intended that the area will generate AED100m per year in tourism income. houses being built. According to the Abu Dhabi Urban Planning Council. educational initiatives under way and transport links improving. the area’s tourism industry is expected to contribute AED230m to GDP. By 2020. discovered in East Ghayathi.900 • Location: Coastal town 350km west of Abu Dhabi City. Ghayathi • Population: 14. Plans for the GCC railway could lead to it becoming a key transport interchange with a station planned for the town. Madinat Zayed is Al Gharbia’s capital city. Our flagship schemes in this region are Desert Islands and Qasr Al Sarab. it seems that the opportunities are being taken and many more are certainly on the way.000 barrel/day (bpd) oil refinery run by the Abu Dhabi Oil Refining Company (Takreer).contest was to make students aware of business opportunities in the handicraft sector. Qasr Al Sarab will represent the heart of touristic attractions in the Liwa area. Only time will tell whether the measures will reverse the migration but. Agriculture has been the main source of income but the city’s proximity to oil and gas fields has led to an economy in industrial services. 160km west of Abu Dhabi City Mirfa is a small township established in the 1970s and is famous for its farming. A range of projects is planned for the town including new educational facilities. manufacturing and residential construction. “TDIC has several projects in motion for the western region. Fishing and pearl diving are the mainstays of the economy.000 • Location: Coastal town. Tourism is the main growth sector for the area and is expected to contribute AED140m to the economy by 2020. which include 7.000bpd refinery. and hosts vibrant wildlife.000 • Location: 320km west of Abu Dhabi City. Ghayathi’s economy has been dominated by agriculture.000 • Location: 150km southwest of Abu Dhabi City Established by the late Sheikh Zayed Bin Sultan Al Nahyan in 1968. Dalma Island is also known as Pearl Island because of its pearl industry. This is being led by the Tourism Development & Investment Company (TDIC). Mirfa also has a large power plant and a water-desalination plant that can produce up to 38m gallons/day. but is best known for its archaeological finds. Liwa is one of the largest oases on the Arabian Peninsula and comprises 53 villages.
it’s starting to put the emirate on the world map for good a game Illustration by Jamie Sneddon 14 AUTUMN 2009 THE ECONOMIC REVIEW .SECTOR FOCUS Sport Abu Dhabi’s multibillion-dirham investment in sports is already starting to pay off but more importantly.
It is at the heart of an advertising campaign launched to promote the biggest sporting event in the Gulf this year. the government is hoping that will lead to a sustained attraction of mainstream tourists and investors to the UAE capital. In addition to hosting F1. And UK Premier League football club Manchester City was recently bought by the Abu Dhabi United Group for Development and Investment (ADUG). The FIFA Club World Cup (see box. The prestigious race is one of several international sports events that Abu Dhabi is planning to host in the coming year. sponsorship deals and global advertising campaigns benefit the local economy? The direct economic benefits – sports-related construction projects. It already hosts golf ’s European Tour every year on its National Course. a private equity firm owned by Sheikh Mansour Bin Zayed Al Nahyan. an event organised by THE ECONOMIC REVIEW AUTUMN 2009 15 . football and flying. the emirate has also invested in golf. overleaf) and the Red Bull Air Race are also on the W emirate’s sporting calendar. the UAE’s deputy prime minister and minister of presidential affairs.of patience here will you be on November 1? Most Emiratis know that question well enough by now. Abu Dhabi is certainly building up a strong record of investment in the global sports industry. November 1 is the final race day of the 2009 Formula 1 Etihad Airways Abu Dhabi Grand Prix. but experts say the intangible benefit of an increased overseas profile for Abu Dhabi is more valuable. Longer term. Mubadala Development Company has taken a 5% stake in F1 player Ferrari. new jobs and an influx of sports fans with money to spend – are undisputed. How will the multibillion-dirham investment in new sports infrastructure.
local merchants were selling poorly imitated bootleg versions several . director of marketing and media for Aldar.2bn). Al-Ahli. The team unveiled its new Umbro kit on July 18. they will be joined by the winners of the African and Asian champions leagues. But it’s not all about catering to the diehard supporters.” says Al romaithi. And two new golf courses – a Gary Player course on Saadiyat Island and a Links course on Yas Island – are under development. Etihad launched its weekend fan packages to Manchester. Rights fights It isn’t only the property sector that is benefiting – regional media companies. it involves refurbishing the two main venues – Mohammed Bin Zayed Stadium and Zayed Sports City Stadium – and laying brand-new pitches. the organiser wants the event to draw in new followers. with local contractors and developers enjoying a construction windfall. oceania champions Auckland City and our very own uAe champions. Etihad Airways. which features the Etihad Airways logo. communications manager for the local organising committee of the fifA Club world Cup uAe 2009. north and Central American champions Atlante.” says Lara Vanjak. South American champions estudiantes. The real estate sector has been one of the biggest winners in Abu Dhabi’s drive to attract major international sporting events. while Abu Dhabi Media Company has successfully outbid several broadcasters – including Dubai-based incumbent Showtime Arabia – to win the TV rights of the English Premier League with the deal estimated at around $330m (AED1. One of its highest-profile tie-ups has been its shirt-sponsorship deal with Manchester City Football Club. the UAE’s national airline. “Al Jazeera Sports is growing rapidly into the world’s top sports broadcaster and is in the process of launching more sports channels. the uAe capital is preparing to play host between December 9 and 19 to seven teams from around the globe. is developing Ferrari World Abu Dhabi – an indoor theme park that will include the world’s fastest rollercoaster under a roof designed in the style of a classic double-curve body shell of a Ferrari GT car. “it’s not just a sporting event targeting football fanatics. the All Ireland Senior Hurling Championships. “this a prestigious international tournament and our plan is to take it to a new level. Showtime Arabia has since announced that it will merge with Middle East pay-TV company Orbit in a bid to consolidate and compete with other players in the region. Aldar Properties. the mammoth logistical and construction task of preparing for the event is already in full swing. managing director of the UAE operation of international sports media company MP & Silva. striking deals with Harlequins Rugby Football Club in the UK.SECTOR FOCUS Sport the Abu Dhabi Tourism Authority (ADTA). one of the most prestigious events in the UK horseracing calendar. while telecoms company Etisalat has a fiveyear sponsorship agreement with FC Barcelona. the teams confirmed to play are european champions Barcelona. are also seeing an upturn in business. jostling for the rights to broadcast some of these major sporting events. ADTA sponsors the main races at Royal Ascot. which will give the airline international exposure and a potential boost in passenger numbers as the growing legion of fans working in the UAE fly back to the UK for games. to appeal to everyone. “Yas Marina Circuit and Ferrari World Abu Dhabi will play an integral part in the development of Abu Dhabi as a leading international city with world-class sporting and recreational facilities. both on and off the pitch. geAring up for the fifA CLuB worLD Cup football fever is gripping Abu Dhabi as the countdown to the fifA Club world Cup uAe 2009 begins. Australia. the Abu Dhabi Golf Championship and securing the naming rights of the Etihad Stadium in Melbourne.” says Shatha Al romaithi. which include tickets to the team’s home matches for the 2009/2010 season. In July.” says Ousama Ghannoum. has spearheaded Abu Dhabi’s sporting sponsorship offensive. Tourism and telecoms firms are getting on board too. the largest property developer in Abu Dhabi. It also sponsors the FIA World Rally Championship and the Race of Champions. Such was the demand for the kit from the team’s UAE-based fans. which are decided in november. we want it to have a much broader appeal by ensuring there are lots of entertainment elements. largely through sponsorship deals.
in spite of the undeniable long-term potential of the sports industry in the Middle East.weeks before the genuine shirts were released. “ It’s not all about the bottom line – it’s all about putting Abu Dhabi on the map economics of sport. ADUG’s acquisition of Manchester City Football Club is a case in point. even for big events. especially for a country that sits on top of almost 10% of the world’s proven oil reserves. Turkey and Bahrain. the international sports consultancy. says MP & Silva’s Vanjak. four major museum openings are planned for Saadiyat Island. large influxes of spectators tend to ‘crowd out’ other tourists who may have occupied the same hotel rooms in the city.000 spectators a year who stay an average of 5. the direct economic benefits from employment. for big events such as the Olympics. He points to three main reasons why sporting events can fail to fulfil their economic potential for host countries – substitution. built in 1999. “When economists try to measure these things. have experienced a substantial increase in the number of visitors arriving specifically for the race. CNN reported that an estimated $11. but by strategically leveraging events such as F1. First.” says Victor Matheson. And evidence suggests that sports tourists stay for longer than the duration of the event. Malaysia’s Sepang circuit. it should. “However. Last year’s Beijing Olympics is a good example: the city attracted roughly the same number of visitors during the event as it had the previous summer. including Singapore. The exposure the Manchester City deal has brought Abu Dhabi will be repeated. Lastly. to some degree.4 nights – each Grand Prix event lasts three days. In the meantime. Abu Dhabi is realising its ambition of a diversified economy. Abu Dhabi has plenty of tourist attractions in the pipeline to keep visitors in town. income generated and overall tax receipts are often very small. major sporting events often draw mainly local crowds who substitute the money they would spend on other local activities for the sporting event. which opens in 2010. but Matheson says it’s not all about the bottom line. The fact that each F1 race attracts 600m television viewers across the world means that the emirate will reach a significant portion of the global TV audience. The company has since been joined by TSE Group. Indeed.3bn had been spent on motor sports in the Middle East between 2003 and 2007. revenues generated do not necessarily stay in the local economy. now attracts about 35. The increased visibility of the UAE on the sports pages of newspapers around the world this year has already started to attract international sporting brands and consultants at a rate that would have seemed unthinkable just a year ago. it remains in a nascent stage and will require continual investment. THE ECONOMIC REVIEW AUTUMN 2009 17 Measuring the benefit But some sports economists believe these tangible benefits aren’t as great as they may at first seem. Recent host nations to the prestigious F1 event. For him. with $600m entering the economy on the back of the 2008 race alone. This all translates into significant tourist dirhams as F1 fans spend on average twice as much as regular tourists on shopping. It has not come cheap. three times as much on food and drink. Second.” she adds. and stay two to three nights longer. it’s all about putting Abu Dhabi on the world map. and sound management of infrastructure and business conditions over the next decade to develop a fully fledged sports industry. Positive results Will all this investment eventually reap rewards? Based on past experience. For example. a US-based professor who specialises in the . The Manchester City deal has captured the imagination of thousands of fans and ” dominated British sports coverage thanks to high-profile signings that have included Carlos Tevez. the Mumtalakat Holding Company. established a UAE office earlier this year. This may sound discouraging. TSE set up its UAE office in July to target regional governments and sporting authorities. with every sport the emirate is involved in. In Bahrain. As well as Ferrari World Abu Dhabi. international hotel chains will suck out money spent on accommodation before it can circulate locally – known as ‘leakage’. Broadcast goals MP & Silva. according to a study by the Singapore Tourism Board. which holds the media rights to Italy’s Serie A football league. the emirate can bask in a significantly increased international media profile that has already changed the way it is perceived. the Gulf ’s commitment to the $500bn global sports industry is an exciting prospect for sector players who are facing slower growth in mature markets such as Europe and North America. said the event had generated nearly $2bn for the island over the course of five years. crowding out and leakage. which owns and operates the F1 Championships in Sakhir.
By bringing the processing system under one management and improving the efficiency of the receiving centres. a member of the Executive Council and board member of GHC. government subsidies to farmers were around AED180m. type and grade at the receiving centres. in the summer of 2005. Finding the right individuals to facilitate the transformation was key. supported at an operational level by new general manager Saeed Salem Messri Al Hameli.” In 2001. The Abu Dhabi Department of Agriculture operated 22 centres in the emirate to receive and evaluate dates. agreed to lead the implementation of a plan to transform the industry. however.000 tonnes of non-processed dates were thrown away. One major impediment to progress was the processing system from the 25.000 tonnes of dates. “Moreover. chairman of the Crown Prince’s Court. Processing system Sheikh Hamed came up with a solution. Volume growth had been principally achieved through subsidies. and of dates in particular. Evaluators – or muarfeen – graded the dates by volume. The new management team rapidly decided on five short-term priorities as part of a broad strategy to improve farming practices and overhaul the subsidy framework. owing to government policies to encourage agricultural industries and limit desertification. farmers frequently had to wait many days for their dates to be received in the heat at harvest time. A wholesale transformation was deemed necessary and. it represents a great emotional value of our consciousness. These ‘quick wins’ would provide visible results for the 2006 “ The new receiving process saved an estimated AED591m 22 AUTUMN 2009 THE ECONOMIC REVIEW . it was often open to debate.DEBRIEF Date farming The fruiTs of new labour processes A strategy that has improved farming practices and reduced government subsidies has radically transformed the date production industry in Abu Dhabi By Jonty Summers D Illustration by Neil Webb ates are inextricably linked with Arabian identity. “The environment is a dear part of our heritage. during his time as ruler of Abu Dhabi. Sheikh Zayed Bin Sultan Al Nahyan placed great emphasis on the sustainable propagation of agriculture.000 tonnes: 44. The misclassification of dates by weight or quality was estimated to be costing the government up to AED250m a year. Chairman of the Department of Municipal Affairs. The problem was that total output was 74. a new company – Al Foah – was established as part of the General Holding Corporation (GHC). The United Arab Emirates provides a fertile environment for date cultivation and. it became apparent that the date industry had structural flaws that needed to be addressed to enable it to flourish in the future. As a central tenet of Abu Dhabi’s policy agenda. the volume of dates had increased significantly. Furthermore. These centres supplied two independent factories capable of processing 30. The valuation of dates was also inaccurate. an agricultural specialist who had worked on palm-tree cultivation at Sheikh Zayed’s farms.000 date farms around Abu Dhabi. The Holy Koran mentions dates and date palms in no fewer than 17 Surahs. and we must take great care to exert every effort to protect it and protect our wealth. Sheikh Hamed approached ex-McKinsey consultant Dr Karim Mohyeldin Said – known for his ‘vigorous’ results-oriented approach – to be CEO of the new company. civilisation and future. In the years that followed. or packed as animal feed at a price of half a dirham per kilo. the government subsidy to the date farming industry had shot up to AED524m – a figure that was predicted to double by 2010. In 2001. The chairmanship was offered to Rashid Mubarak Al Hajeri.” he once reflected. Sheikh Mohamed Bin Zayed Al Nahyan had encouraged the 17-member Executive Council to get the most out of the dirham and outsource and privatise where appropriate. By 2005. wastage could be minimised. By 2005. Executive Council member Sheikh Hamed Bin Zayed Al Nahyan. which meant that their harvest was often spoiled. Burgeoning subsidies were achieving none of these goals. This situation presented the leadership of Abu Dhabi with a number of problems. As the muarfeen’s decision had a major impact on the farmer’s profit from his harvest. As a result. a government holding company for diversified non-oil industries. the UAE accounted for 6% of the world’s date production.
name and packaging for each market.” Key markets are south-east Asia. by the beginning of the 2006 harvest. europe and the us. logistics and research and development. Products in the pipeline include sweets for Japan. and the processes completely re-engineered and standardised for storing.harvest. the food division’s task is equally ambitious: to take uAe dates global.1m to AeD4. previously. Average time in the dock was 29 minutes. the heritage and tourism division aims to leverage the importance of the date palm by way of a ‘date palm destination’. the yields of higher-grade dates increased more than six and a half times in 2005-2007. the redesigned receiving process saved an estimated AED591m. Profits rose from AED39m in 2006 to AED55m in 2007. said: “We need to find the correct positioning. ProMotiNg A PreMiuM brAND Designing a premium brand with the potential to develop globally is a priority. product. accounting and packaging. and food. THE ECONOMIC REVIEW AUTUMN 2009 23 The paTh To conTinued TransformaTion More equitAble subsiDy DistributioN until 2006. The priorities comprised consolidating the number of receiving centres to eight. subsidy to larger farms was reduced by 50% and that of the smaller farms raised by 50%. the largest 1% of farms received 49% of the subsidy. The results were impressive: 95% of arrivals were processed on the same day. . Automated handling and sorting systems had been installed. revenues quadrupled – from AeD1. the smallest farms (51% of the total) received only 10%. proposition. from 126 tonnes to 832 tonnes. CreAtiNg A WorlD-ClAss orgANisAtioN structuring the future organisation has involved the creation not only of divisions for agriculture. Restructuring the receiving centres was the most pressing priority.3m. the date industry is ripe for global growth. Marketing expert ghada fikry. workers and traders – in addition to many challenges in construction and the final roll-out of the facilities. dry snacks for China and date honey for india. Profit through quAlity With the introduction of a quality initiative. energy bars for the us. Ready for harvest Despite the ambitious six-month timeframe. and one that was subject to strong resistance from farmers. introducing policies to ensure correct classification of dates. Ensuring these would be ready in time for the 2006 harvest was an enormous undertaking. increasing capacity to eliminate waste and establishing management structures to support the transformation. installing advanced processing capabilities. it took three to five days. From 2006 to 2007. hired by Al foah to lead this area. but also heritage and tourism. driven by process efficiency and improvement in quality. The success of lean production systems was matched by the financial results. the centres were ready. With the transformation complete.
Standard & Poor’s th 0 10 20 30 40 50 60 70 80 Percentage of total GDP Source: SCAD Abu Dhabi is home to the world’s sixth-largest proven oil reserves of around 98 billion barrels.571 90.006 7.6725 239.5 Manufacturing 9.0 % change 10 5 0 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 00 20 300 200 100 -5 Real GDP growth (% change) 24 AUTUMN 2009 THE ECONOMIC REVIEW 6 Sources: SCAD.288 -33. business services 7.906 77.60 13. It is also the world’s 10th-largest oil producer.6 Construction 5.9 85.213 176.726 Consumer Price Index (av. % change)* Three-month interbank deposit rate (av) Exchange rate AED: $US (av) 3.2 Financial institutions 5.572.4 98.7 Trade.6 2.0 2.278 Abu Dhabi’s strong economic fundamentals.4 2.82 3. and its climb up the World Bank’s index on ease of doing business.8 1.88 .54 96.831 22. are attracting more and more investors Total exports and re-exports (FOB) (in $USm) Total imports (FOB) (in $USm) Net trade in services (in $USm) Current account balance (in $USm) * Latest figure available for UAE CPI for the first half of 2009 GDP growth 20 600 500 Sectoral distribution of GDP Nominal GDP (in AEDbn at current prices) 15 400 in AEDbn Oil and gas 63. Source: Ministry of Economy 2009 the right place to do business Proportion of population of working age (%) Unemployment rate (%) Oil production (in million bpd) (estimate) Abu Dhabi oil production as % of UAE total Crude oil exports (in $USbn) Average oil export price ($US per barrel) Natural gas exports (in 000s metric tons) (estimate) Abu Dhabi gas exports as % of UAE total (estimate) 0.DATABANK Abu Dhabi economic indicators Abu Dhabi selected economic indicators 2008 GDP (in $USm) GDP per capita (in $US) Real GDP growth (%) Population 141.0 Government and others 9. real estate.
000 80. Source: WEO 2009 database. Source: Jones Lang LaSalle Investor Sentiment Survey.006 67.204 90.988 Luxembourg Norway Qatar Abu Dhabi Switzerland Ireland United States Kuwait Singapore New Zealand Bahrain Saudi Arabia Oman Revenue generator: Dolphin Energy gas station.345 18.000 (US$) Residents of Abu Dhabi enjoy 0% Personal Income Tax and VAT.Investors’ choice of the strongest-performing real-estate markets in MENA* Dubai 11% • • Levant 5% Abu Dhabi 26% 33 3 • Saudi Arabia 25% • • • • Qatar 19% • • North Africa 4% Bahrain 6% Kuwait 2% Oman 2% * For the next 12-24 months The UAE jumped nine places to 33 in the World Bank’s 2009-2010 Ease of Doing Business Index. 2008 THE ECONOMIC REVIEW AUTUMN 2009 25 .000 40.062 93. gas and foreign banks).044 95.859 45.000 100.972 30.920 38. Abu Dhabi Abu Dhabi ranked third in Foreign Direct Investment magazine’s 2009 ‘Middle East Cities of the Future’ ranking.000 120. IMF UAE has the largest number of FDI projects in the GCC region (both as source and destination) World as destination Partner region/economy Bahrain Kuwait Oman Qatar Saudi Arabia UAE * First quarter of 2008 only 2003 2 14 1 3 14 49 2004 5 15 1 12 20 41 2005 2 16 13 20 107 2006 12 45 23 60 222 2007 13 26 4 11 42 123 2008* 7 12 1 5 9 57 World as source Partner region/economy Bahrain Kuwait Oman Qatar Saudi Arabia UAE 2003 24 7 11 22 32 146 2004 17 21 14 27 37 156 2005 28 12 14 24 57 231 2006 52 24 41 48 103 294 2007 31 8 14 28 49 277 2008* 9 7 5 16 20 86 Source: World Investment Report. March 2009 Benchmarking Abu Dhabi globally: GDP per capita (2008) 113.000 60.049 27.385 61. except in limited sectors (oil. signalling the GCC’s biggest improvement. which features investment targets.248 19. 0% 0 20. Corporate Tax is also 0%.810 46.
so to ” Illustration by Mark Dickson . What may make it harder for entrepreneurs. and this can be true worldwide. entrepreneurs are born and not made. How can Abu Dhabi encourage young entrepreneurs? To an extent. further entrepreneurs because the will and ability is there. Abu Dhabi is now very entrepreneurial. They need to have a spark and a passion. now one of the continent’s leading carriers. Does a collaborative and conservative approach make it harder for would-be entrepreneurs? Looking at Dubai and some of the initiatives in Abu Dhabi. help to diversify the economy. is the conservative approach of central governments towards private enterprise. and any start-up business will always benefit from a favourable tax regime. and so the government is showing the way for private enterprise. including Abu Dhabi. I have always thought that good entrepreneurs can spot an opportunity to provide consumers with what they want. This hotel will be the first of a number in the region.IN CONVERSATION Stelios Haji-Ioannou calling all high flyers Stelios Haji-Ioannou turned Europe’s airline industry upside down when he launched easyJet. It appears that there is an understanding that oil wealth will not last forever. so business education is also important. the first easyHotel should open in Dubai. Is Abu Dhabi entrepreneurial? From what I have seen. and there are many cross-border opportunities available for people with the ideas and capital to put them in place. People may also have fantastic ideas but not the business know-how to put them into practice. But a few trailblazing private personality-led businesses could really open the floodgates to “ A few trailblazers could really open the floodgates to further entrepreneurs encourage them governments worldwide need to give them an opportunity to succeed. there are clearly no barriers in the way of local entrepreneurs. importantly. He says Abu Dhabi has the potential to produce similar success stories What business interests do you have in the Middle East? The Middle East is clearly a very exciting and growing market for businesses. The United Arab Emirates’ ‘build it and they will come’ gamble shows that the whole country is based on an entrepreneurial spirit. Working on new ideas as an example to others is pure entrepreneurialism. Does Abu Dhabi need to be entrepreneurial. What is certain is that Abu Dhabi and the GCC are currently very exciting places. On an economic level they are the ones who create jobs and. I’m very keen on helping environmental causes where I can. prices will be as low as $80 a night to stay in the Jebel Ali Free Zone. and so am pleased to see the development of the green city [Masdar City] in Abu Dhabi. and I have been looking to enter the area for some time. Private enterprise can be encouraged through allowing free-market competition without subsidies for state-run businesses. In contrast to the expensive luxury hotels. Every time I head to the GCC there seem to be new state-of-theart facilities and world-leading technology parks. Stelios Haji-Ioannou was speaking to Charles Orton-Jones. bearing in mind its huge oil wealth? All countries benefit from entrepreneurs. This year. and that new initiatives are 26 AUTUMN 2009 THE ECONOMIC REVIEW now needed. Entrepreneurs are those who are unable to work for others.
The Abu Dhabi Council for Economic Development is a statutory body. The views expressed in this publication are not necessarily those of the Abu Dhabi Council for Economic Development. Richard Rivlin T: +44 207 631 1155 E: firstname.com W: www. cooperation and engagement between the public and private sectors of the emirate of Abu Dhabi. . copying or extraction by any means of the whole or part of this publication must not be undertaken without the written permission of the publisher. Abd Al Majeed Al Heeti Chief economist Dr. to facilitate economic diversification and growth through creating greater understanding.surname@bladonmore. Hoe Ee Khor Translation Dr. ADCED thanks its employees: Khawla Ahmed Al Qemzi Abeya Mokhtar Amna Sale Bin Hraiz Mariam Sultan Al Mehairbi Hamda Khalifa Al Kindi Abeer Sulaiman Al Jassim Mariam Ibrahim Al Mahmoud Salwa Fadhel Special thanks to: Sultan Sooud Al Qassemi Majid Julfar Production Youcef Azrgui Chief editor Dr. Mohanad Hage Ali Art director: Owen Thomas Production manager: Andrew Miller Publisher: Jonty Summers Senior account manager: Julian Daniels Directors: David Ladds.ae Published by Bladonmore Editor: Eila Rana Managing editor: Sean Kearns Sub-editors: Lynne Densham. established in May 2006.bladonmore.com Reproduction. Hadi Al Taie Coordination Khalifa Salem Al Mehairi Publications director Mohamed Al Qubaisi Abu Dhabi Council for Economic Development PO Box 44484 Abu Dhabi UAE T: +971 2 418 9999 F: +971 2 418 9988 E: info@adced.The Economic Review is the newsletter of the Abu Dhabi Council for Economic Development.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.