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TRADE INFORMATION PACKET and WATER REPORT The United Arab Emirates (UAE)

San Diego, March 2011

Prepared by: Andreas Fried

The Author Always Appreciate Connecting on LinkedIn: http://www.linkedin.com/in/andreasfried

General Provision
This report was conducted by the World Trade Center San Diego (WTCSD). The scope of this report is to provide information about the United Arab Emirates (UAE). The report will not be, and should not be, considered as an opinion regarding a recommendation for, or the reasonableness of any specific business action. No representations or warranties are provided with respect to the results obtained from use of the analysis or surveys of this report. In no event shall the WTCSD be liable for consequential, special, direct, or indirect damages arising out of use of this material. To the best of our knowledge and belief, the statements contained in this report are true and correct. Information, estimates and opinions provided to us and contained in the report were obtained from the sources cited, and to the extent analyzed by us are believed to be true and correct. However, no representation, liability or warranty for the accuracy of such items is assumed by or imposed on WTCSD. Opinions in this report are the authors opinion, and are not the official opinion of WTCSD.

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Table of Contents
General Provision .......................................................................................................................................... 2 Introduction .................................................................................................................................................. 6 Why the UAE? ............................................................................................................................................... 7 Quick Facts .................................................................................................................................................... 8 Location......................................................................................................................................................... 9 The Emirates ............................................................................................................................................. 9 Geography and Climate .............................................................................................................................. 10 In numbers .............................................................................................................................................. 10 Natural Resources ....................................................................................................................................... 11 Oil and Gas .............................................................................................................................................. 11 Water ...................................................................................................................................................... 11 History ......................................................................................................................................................... 12 20th Century ............................................................................................................................................ 12 Demographic ............................................................................................................................................... 13 In numbers .............................................................................................................................................. 13 Religion ................................................................................................................................................... 14 Education .................................................................................................................................................... 15 Politics and Legislation ................................................................................................................................ 16 Political System ....................................................................................................................................... 16 The Emirs................................................................................................................................................. 17 Transition of Power ................................................................................................................................. 18 Legislation ............................................................................................................................................... 19 International Affiliation........................................................................................................................... 21 International Relations, Security, and Defense .......................................................................................... 23 Immigration............................................................................................................................................. 23 Defense ................................................................................................................................................... 23 International Relations ........................................................................................................................... 25 Infrastructure .............................................................................................................................................. 26 Transportation ........................................................................................................................................ 26 Telecom................................................................................................................................................... 27

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Energy ..................................................................................................................................................... 27 Economic Environment ............................................................................................................................... 29 Overview ................................................................................................................................................. 29 GDP development ................................................................................................................................... 30 Government Finances ............................................................................................................................. 31 Exchange Rate ......................................................................................................................................... 32 Interest Rates .......................................................................................................................................... 33 Financing ................................................................................................................................................. 33 Payments................................................................................................................................................. 35 Inflation ................................................................................................................................................... 35 Labor Market........................................................................................................................................... 36 Taxation................................................................................................................................................... 37 Investment Climate ................................................................................................................................. 37 Trade ........................................................................................................................................................... 40 U.S. Trade ................................................................................................................................................ 41 California Trade ....................................................................................................................................... 42 Services ................................................................................................................................................... 44 Trading With the UAE ................................................................................................................................. 45 Culture .................................................................................................................................................... 45 Business Customs.................................................................................................................................... 45 Business Travels ...................................................................................................................................... 48 Import and Export Procedures................................................................................................................ 49 Standards ................................................................................................................................................ 50 Intellectual Property Rights .................................................................................................................... 50 Sales & Marketing ................................................................................................................................... 51 Organizations and Information Sources ................................................................................................. 52 Fairs and Trade Shows ............................................................................................................................ 54 Market Entry Strategies .............................................................................................................................. 55 UAE Water Industry .................................................................................................................................... 57 Quick Facts .............................................................................................................................................. 58 Water in the UAE .................................................................................................................................... 59 Groundwater ........................................................................................................................................... 60 Page 4 of 86
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Current Financial Situation ..................................................................................................................... 61 Government & Privatization ................................................................................................................... 62 Water Consumption ................................................................................................................................ 62 UAE Water Industry ................................................................................................................................ 63 Desalinization .......................................................................................................................................... 63 Wastewater............................................................................................................................................. 64 Agriculture .............................................................................................................................................. 66 Evaporation and Recharge ...................................................................................................................... 67 Current Projects ...................................................................................................................................... 69 Government Water Sector Organizations .............................................................................................. 75 Government Influence ............................................................................................................................ 79 UAE Water Companies ............................................................................................................................ 80 U.S. Companies Engaged in the UAE Water Sector ................................................................................ 81 Foreign Companies Engaged in the UAE Water Sector .......................................................................... 82 Further Contacts and Information .......................................................................................................... 83 Resources .................................................................................................................................................... 85

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Introduction
This report is an introduction to the United Arab Emirates (UAE) and its water industry. The report contains country-, trade-, and cultural facts, and an overview of the current political and economical climate in the UAE. The report is concluded with a study of the UAE water industry. The UAE, situated in the Persian Gulf, is a young country that came into being 1971, when the UK gave up its protectorate of the region. Seven emirates: Abu Dhabi, Ajman, Al Fujairah, Sharjah, Dubai, Ras al Khaimah, and Umm Al Quwain - merged to form the United Arab Emirates. Abu Dhabi, with a population of 900,000 people, is the capital. The emirate of Abu Dhabi covers almost 90% of the UAE and contributes almost 60% of GDP. Dubai is the biggest and most well-known city with a metro population of 3.4 million. The four smallest emirates have a total population of just 784,000 people. Therefore, this report will mostly focus on Dubai and Abu Dhabi. Whilst Abu Dhabi has resurfaced from the financial crisis due to rising oil prices, Dubai, and especially its property and estate industry, was hard hit by the financial crisis. Several ambitious projects in Dubai have been under financial pressure.

The red, green, white, and black UAE flag. Each of the four colors is representative of the Arabic world. Green stands for fertility, white for peace and neutrality, black for the oil wealth of the country and red represents the former flags of the Kharijite Muslims. All the four colors in the UAE flag together stand for Arabian unity.

The Peregrine Falcon is a national symbol for the UAE, and part of the countrys coat of arms. The text is United Arab Emirates in Arabic (Kufic) calligraphic form.

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Why the UAE?


The UAE is a wealthy nation with a lucrative and dynamic market that has long been recognized as the commercial and business hub of the Gulf and an entry market to the Middle Easts 800 million people and $5.6 trillion market. A member of the WTO since 1996, the UAE supports open trade and has stable trade relations with countries throughout the world. More than 28,000 Americans live in the UAE. The UAE is the United States largest export market in the Arab World, with $12.2 billion purchased of goods and services from the U.S. in 2009. There are over 700 U.S. companies stationed in the UAE. Transparency International ranks the UAE in the top quarter of the worlds least corrupt countries - and the least corrupt in the Arab world. The UAE's per capita GDP is not far below those of leading West European nations. The UAE hold the 7th largest per-country oil reserves.

The Burj Khalifa at 2,717 ft is the tallest building in the world. A part of the $20 bn. reconstruction of downtown Dubai, it is a testament to the bold ambitions of the emirate.

The same Dubai area in 1990 and 2003; in just 13 years the development has been enormous.

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Quick Facts
Name: Population: Capital: Size: Language: Government: United Arab Emirates 5 million Abu Dhabi 83,600 sq km (97% desert); slightly bigger than Maine. Arabic; English is widely understood. Federation of seven emirates. The Supreme Council, comprising the seven emirs, elects the president from among its members. On the death of his father in November 2004, Head of State: Sheikh Khalifa bin Zayed al-Nahyan became ruler of Abu Dhabi and was elected president of the UAE. The Council of Ministers (cabinet), led by the prime minister, is appointed by the Supreme Council of Rulers. Each state is represented by at least one minister, with senior posts allocated to the larger emirates. The Council of Government: Ministers initiates legislation for ratification by the Supreme Council of Rulers, which is also a policymaking body and meets formally about once a year. The latest cabinet reshuffle was in February 2008. Based on a dual system of sharia and civil courts; Legal system: has not accepted compulsory ICJ jurisdiction. Religon: 96 % Islam (majority Sunni, around 16% Shia). UAE dirham (Dh) = 100 fils. The dirham is pegged to the US dollar at a rate Currency: of Dh3.67:US$1. GDP: $200 billions (2010 est) GDP/Capita (PPP)*: $40,200 (2010 est) Internet domain: .ae Time: 4 hours ahead of GMT (9.00 am in CA is 10.00 pm in UAE) Measures: Metric system Islamic holidays (dates are approximate): Mawlid al-Nabi (the birthday of the Prophet, February 15th 2011); Eid al-Fitr (end of Ramadan, August 30th 2011); Eid al-Adha (Feast of the Sacrifice, November 6th 2011); Al Hijra (Islamic New Year, November 26th 2011) Public Holidays: Fixed secular holidays: January 1st (New Years Day); August 6th (Accession of Sheikh Zayed, the late ruler of Abu Dhabi Abu Dhabi only); December 2nd (UAE National Day)
* shows GDP on a purchasing power parity basis.

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Location
The UAE is located at the north tip of the Arabian Peninsula. It borders to Saudi Arabia in the south, Oman in the east, Qatar in the west. It has maritime boarders with Iran, Bahrain, Kuwait, and Iraq. Abu Dhabi and Dubai have large ports and global-reaching airports.

Topographic map of the UAE. The country is very flat except for the north eastern Al-Hajar al-Gharbi Mountains.

The Emirates
The UAE is made up of seven emirates: Dubai (34% of population), Abu Dhabi (33%), Sharjah (19%), Ajman (5%), Ras al-Khaimah (5%), Fujairah (3%), and Umm al-Qaiwain (1%).

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Geography and Climate


The first thing that will hit a UAE visitor is the heat. The coastal plain has a hot and dry climate and numerous salt marshes; farther from the coast a dry, barren desert-like steppe takes over. Only the eastern edge has greater heights. Due to the dry climate the vegetation is very sparse and confined to the oases and dry river valleys. Average summer (July-August) high temperature is 118 F and average winter (January-February) low is 50-57 F. The average annual coastland rainfall is 4.7 in.

A yearly climate overview for Dubai.

The weather chart during much of the year shows a ridge of high pressure extending southwards into central Saudi Arabia with lower pressure over the eastern Gulf. Prevailing light to moderate northwesterly winds, known by their Arabic name shamal, meaning north, are associated with mid-latitude disturbances. Along the western coastal plain, sea breezes tend to dominate with light south-southeasterlies at night being replaced by moderate north-westerly during daytime. This pattern changes on the east coast where the proximity of the mountains results in gusty and less predictable wind shifts. A good strong blast of northerly shamal is usually preceded in the UAE by strong southerly winds, raising desert sands and reducing visibility. The shift to northerly winds may be quite sudden and can be accompanied by rain, thunder storms, or dust-storms.1

In numbers
The most vital geographic data:
Data UAE 3.56% 0.77% 2.27% 96.6% 720 76.3 0.2 (1997) 2.3 511 (2000) 23% 9% 68% US 0.97% 18% 0.21% 81.78% 223,850 77.8 3069 (1985) 477 1,600 13% 46% 41%

Land Use Arable land Permanent crops Other Irrigated land (sq km) Water Total renewable water resources (cu km) Freshwater withdrawal (cu km/yr) Per capita (cu m/yr) Domestic Industrial Agricultural

https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html

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Natural Resources
The UAE is more than most countries dependent on its oil reserves. The reserves rank 7th in the world:
Country Saudi Arabia Iraq Canada Iran Kuwait Venezuela United Arab Emirates Russia Kazakhstan Libya Nigeria United States Reserves 10bbl 467 180 179 138 104 99 98 60 47 41 36 21 Production 10bbl/d 9.7 3.5 2.1 4 2.6 2.7 2.9 9.9 1.4 1.7 2.4 7.5 Reserve life* years 127.5 142 188 95 110 100 93 17 93 66 41 8
2

Reserves, including crude. * Calculated as reserves / annual production.

Oil and Gas


Oil and gas are the most important natural resources. The federation has proven reserves of around 98bn barrels of oil (the fifth-largest in OPEC), which at current production rates would last for over 100 years. Natural gas reserves are estimated at 213trn cu ft (the fifth-largest in the world), although much of this is sour gas, which must be cleaned of sulfur before use. In addition, the country has commercial quantities of several important minerals including copper in Fujairah and Ras al-Khaimah, magnesium in Abu Dhabi and manganese in all the northern emirates. Recent oil production and price development:
1st Qtr Crude oil production (m barrels/day) Prices, Dubai Spot (US$/barrel) 2009 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2010 2nd Qtr 3rd Qtr 4th Qtr n/a 90

2,286.70 2,250.00 2,270.00 2,276.70 2,283.30 2,296.70 2,330.00 44.6 58.9 68.1 75.5 75.9 78 74

Water
Water shortages are an ongoing concern. The UAE has very limited rainfall or groundwater but has one of the highest levels of consumption per capita in the world (550 liters per person per day) in part a reflection of the subsidized prices that Emiratis pay. The authorities, therefore, have invested heavily in building and upgrading desalination plants and wastewater processing capacity. Peak water demand in Abu Dhabi was estimated to be around 690m gallons/day (gal/d) in 2008, according to the Abu Dhabi Water and Electricity Company. In Dubai, the Dubai Electricity and Water Authoritys peak demand for desalinated water stood at 239m gal/d in 2007, compared with a production capacity of 278m gal/d. (Groundwater wells in Dubai can only provide about 36m gal/d.)3

2 3

PennWell Corporation, Oil & Gas Journal, Vol. 105.48 (December 24, 2007) Economist Intelligence Unit, United Arab Emirates Country Profile

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History
The UAEs history is rooted in trade and tied to Islam, which came to the region in AD 630. Its location between Europe and the Far East attracted merchants from India and China. While Europeans sought control of the coasts, inland, the ancestors of the Bedouin made the sandy deserts of Abu Dhabi and Dubai their home. The town of Abu Dhabi became an important center. In the 19th century, the British signed a series of agreements with the individual emirates that resulted in the area becoming known as The Trucial States. They agreed not to dispose of any territory except to the United Kingdom and not to enter into relationships with any foreign government other than the United Kingdom without its consent. In return, the British promised to protect the coast from all aggression by sea and to help in case of land attack. The pearling industry thrived in 19th and early 20th centuries, providing income and employment to the people of the Gulf. Many inhabitants were semi-nomadic, pearling in the summer and tending date gardens in the winter. But the economic depression in the late 1920s and early 1930s, coupled with the Japanese invention of the cultured pearl, irreparably damaged the industry. Most UAE nationals are descended from two tribal groupings, the Qawasim and the Bani Yas, which emerged as leading powers in the region in the 18th century. The Qawasim, mainly land and sea traders, held sway over what is today Ras al-Khaimah and Sharjah, whereas the Bani Yas, who were more agricultural and pastoral, lived in what is now Abu Dhabi and Dubai.
The Fort of Fujairah

20th Century
Sheikh Rashid bin Saeed Al Maktoum (1912-1990), de facto Ruler of Dubai from 1939 to 1990, developed shipping to replace pearling revenues. In the early 1930s the first oil company teams conducted geological surveys. In 1962, the first cargo of crude was exported from Abu Dhabi. Massive programs of construction of schools, housing, hospitals and roads were undertaken. There was substantial immigration from Arab tribes in southern Iran during the late 19th and early 20th centuries, particularly to Dubai. At the beginning of 1968, when the British announced their intention to withdraw from the Arabian Gulf, Sheikh Zayed bin Sultan Al Nahyan (1918-2004), ruler of Abu Dhabi, acted rapidly to establish closer ties with the emirates. With Sheikh Rashid of Dubai, Sheikh Zayed called for a federation that would include not only the seven Emirates that together made up the Trucial States, but also Qatar and Bahrain. Agreement was reached between the rulers of six of the Emirates (Abu Dhabi, Dubai, Sharjah, Umm al-Qaiwain, Fujairah and Ajman), and the Federation to be known as the United Arab Emirates was formally established on 2 December 1971. The seventh Emirate, Ras al-Khaimah, acceded to the new Federation the following year.4

http://www.uae-embassy.org/uae/history and http://www.eiu.com/public/

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Demographic
Demographics are a tricky thing in the UAE. Due to the large inflow of immigrants, official numbers are somewhat unreliable. In 2010, the UAE's population was estimated at 4,975,593, of which fewer than 20% were UAE nationals or Emiratis, while the majority of the population was expatriates. The country's net migration rate stands at 21.71, the worlds highest. 23% of the population is non-Emirati Arabs and Iranians and the majority of the population, about 50%, is from South Asia. Approximately 1.75 million Indian nationals reside in the UAE, making them the single largest expatriate community in the country and a majority too. Other major groups include 1.25 million Pakistanis, and 600,000 Bangladeshis. Those from other parts of Asia (including the Philippines, Iran or Sri Lanka) comprised up to 1 million people. The rest of the population was from other Arab states. Thousands of Palestinians, who came as either political refugees or temporary employment, live in the UAE. There is a sizable population of people from Egypt, Somalia and Sudan who migrated to the UAE before its formation. After the formation of the UAE, rulers have been wary of too large an inflow of Arab immigrants, as Arab immigrants would be more prone to demand civil rights than non-Arabic expats. The UAE has attracted a small number of expatriates from developed countries in Europe, North America, Asia, and Oceania. More than 100,000 British nationals live in the country. The population of the UAE has a skewed sex distribution consisting of more than twice as many males as females. The 15 65 age group has a male/female sex ratio of 2.743. The UAE's gender imbalance is only surpassed by other Arab countries in the Persian Gulf region. About 88% of the population of the United Arab Emirates is urban.

In numbers
The key demographics:
Data UAE 5,0 m 3.56% 15.98 88% 21.71 2.2 76.3 20.4% 78.7%* 0.90% 80% 16% 4% 89.0% 12** 2.3% 99% 12 5.7% 70 1 World Ranking (UAE) 114 4 129 US 301,2 m 0.97% 13.83 82% 4.25 0.97 77.8 20.2% 67.0% 12.8%

Population Population Growth Birth Rate (births/1,000 population) Urban Population Migration (migrant(s)/1,000 population) Sex Ratio (male/female) Life Span Age Structure 0-14 15-64 65+ Religon Sunni Muslims Shia Muslims Other (Christian, Hindu) Education Literacy Avarage Years of Schooling (adults) Education Spending (% GDP)

* 73.9% of the population in the 15-64 age group is non-national (2010 est.) ** Expected years.

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Religion
96% of the permanent population of the UAE is Muslim. The majority is Sunni and about 16% are Shia. Sunni Islam is the largest branch of Islam. Sunni Islam is referred to as the orthodox version of the religion. The word "Sunni" comes from the term Sunnah, which refers to the sayings and actions of Muhammad that are recorded in hadiths. The foreign population includes Sunni and Shia Muslims, Hindus, and Christians.

The UAEs constitution declares that Islam is the official religion. Muslims are expressly prohibited from converting to other religions, but conversion by non-Muslims to Islam is viewed favorably. During Ramadan, all residents and visitors are required to abide by restrictions imposed on Muslims. Islamic studies are mandatory for citizen children attending public schools and for Muslim children attending private schools. Religious instruction in non-Muslim religions is not permitted in public schools. According to the U.S. Department of State, non-Muslim religious leaders within the UAE and outside the country refer to it as one of the most liberal and broad-minded countries in the region in terms of governmental and societal attitudes toward allowing the unfettered practice of other faiths. The UAE government generally follows a policy of tolerance toward non-Muslim religions and, in practice, does not interfere very much with their religious activities. However, the government does prohibit nonMuslims from proselytizing or distributing religious literature under penalty of criminal prosecution, imprisonment, or deportation, deeming such behavior to be offensive to Islam.5

http://www.globalsecurity.org/military/world/gulf/uae-religion.htm

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Education
Education has increasingly been a priority in the UAE, with a particular focus on providing Emirati citizens with the skills that will enable them to participate in the private sector. Education spending was US$4.6bn in 2008 and is generally by far the largest item in the federal budget. About half the schools are government-run and, although expatriates can enroll, state education is free only for citizens. Most children of expatriates study in private schools that use the language and curricula of their home countries. The UNESCO put the adult literacy rate at 89% in 2007, up sharply from 77% in 2003 and 43% in 1975. As a result of high funding, the UAE has one of the lowest pupil/teacher ratios in the world, although the quality of education is variable. Most teachers at all levels of the educational system are expatriates. The UAE has so far attracted 20 international partners to open local campuses, most notably the Sorbonne and the New York University.6
University Abu Dhabi Men's College Fujairah Women's College Abu Dhabi Women's College Gulf Medical College, now Gulf Medical University Abu Dhabi University Hamdan Bin Mohammed e-University Ajman University of Science and Technology Heriot-Watt University Dubai Al Ain Men's College Higher Colleges of Technology Al Ain Women's College Ittihad University Al Ghurair University INSEAD Business School - Abudhabi American University in the Emirates Khalifa University of Science, Technology and Research American University of Asia London Business School American University in Dubai NYU Abu Dhabi American University of Sharjah Ras Al Khaimah Men's College Birla Institute of Technology & Science, Pilani - Dubai Ras Al Khaimah Women's College Birla Institute of Technology International Centre, Ras Al Khaimah RAK Medical & Health Sciences University - College of Dental Sciences British University in Dubai - BUiD Rochester Institute of Technology Canadian University Of Dubai Sharjah Men's College Cass Business School Sharjah Women's College CERT (Centre of Excellence for Applied Research and Training) Skyline College Sharjah Dubai Medical College for Girls Syracuse University Dubai Men's College United Arab Emirates University Dubai Women's College University of Sharjah Etisalat University College University of Wollongong in Dubai Fujairah College Zayed University Fujairah Men's College

List of universities in the UAE.

Economist Intelligence Unit, United Arab Emirates Country Profile

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Politics and Legislation


Political System
Political parties are not allowed in the UAE. Politics of the United Arab Emirates takes place in a framework of a federal, presidential, elected monarchy. Administratively, the UAE is a federation of seven emirates, each with its own ruler. The pace of local government reform in each emirate is set primarily by the ruler. Under the provisional constitution of 1971, each emirate reserves considerable powers, including control over mineral rights (notably oil) and revenues. In this milieu, federal powers have developed slowly as each Emirate already had its own existing institutions of government prior to the countrys official foundation. The constitution separates powers into executive, legislative, and judicial branches (both Emirate and Federal level).7 Current Government The current government consists of the following key persons (selection): Position
President: Prime minister & vice-president:

Name
Sheikh Khalifa bin Zayed al-Nahyan (Abu Dhabi) Mohammed bin Rashid al-Maktoum (Dubai)

Deputy prime minister & interior minister: Saif bin Zayed al-Nahyan Deputy prime minister: Federal National Council affairs: Foreign affairs: Defense: Economy Sultan: Energy: Environment & water: Finance: Foreign trade: Higher education & scientific research: Justice: Public works & housing: Mansour bin Zayed al-Nahyan Mohammed Anwar Gargash Mohammed Anwar Gargash and Abdullah bin Zayed al-Nahyan Mohammed bin Rashid al-Maktoum bin Said al-Mansouri Mohammed bin Dhaen al-Hamli Rashid Ahmed bin Fahad Hamdan bin Rashid al-Maktoum Lubna al-Qasimi Nahyan bin Mubarak al-Nahyan Hadef bin Juaan al-Dhaheri Hamdan bin Mubarak al-Nahyan
8

7 8

http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ae0052) http://www.state.gov/r/pa/ei/bgn/5444.htm#gov

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The Emirs
The seven emirates are run by royal emirs, also referred to as Sheikhs (Sheikh is a title for a religious scholar which is used in Muslim countries), whilst emir is the correct title of nobility. An introduction to Muslim names; the first part (Mohammed) is the given name (as a Muslim you should choose a given name with righteous meaning), the second part (bin Rashid) means son of Rashid, and the third part (Al Maktoum) is the surname, based on occupation, geographic home area, or descent (tribe, family). Dubai Al Maktoum Al Maktoum is the family name of the ruling dynasty of the emirate of Dubai. The Al Maktoum family is a branch of the Bani Yas tribe (a lineage the family shares with the Al Nahyan dynasty of Abu Dhabi), a powerful Bedouin clan from the interior. The Al Maktoum family descends from the Al Bu Falasah (now known as Al-Falasi) section of the Bani Yas, a highly respected and authoritative tribal federation that was the dominant power throughout most of what is now the United Arab Emirates. In 1833, about 800 members of the Bani Yas tribe, under the leadership of Maktoum bin Butti, took over the emirate of Dubai and established the Al Maktoum dynasty in the emirate. Sheikh Mohammed bin Rashid Al Maktoum (Sheikh Mohammed), born 1949, is the Prime Minister and Vice President of the UAE, and absolute monarch of Dubai. Sheikh Mohammed has 21 officially acknowledged children. Al Maktoum, his sons, and his daughters are known to be avid enthusiasts of traditional Arabic poems and arts, as well as sports, especially thoroughbred horse racing. They also take part in projects to aid developing countries such as Jordan, Egypt, Palestine and Yemen. In June 2010, Al Maktoums net worth was believed to be $12.3 billion, having lost $6 billion from 2008 to 2009. The Palm and World island projects in particular, two pet projects of Al Maktoum, had cost over $80 billion in construction and had seen property prices fall over 50%.9

Mohammed bin Rashid Al Maktoum (Sheikh Mohammed).

http://www.forbes.com/2009/06/17/monarchs-wealth-scandal-business-billionaires-richest-royals.html

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Abu Dhabi Zayed bin Khalifa Al Nahyan Sheikh Zayed bin Khalifa Al Nahyan (18401909) was the grandfather of Sheikh Zayed bin Sultan, first president of the United Arab Emirates. Sheikh Zayed the elder was made Ruler of Abu Dhabi after the deposition of his cousin, Sheikh Said bin Tahnun, in 1855. He ruled for 54 years, until his death in 1909. Sheikh Zayed bin Sultan (1918 2004), the principal architect of UAE was the ruler of Abu Dhabi and president of the UAE for over 30 years (19712004). His son, Sheikh Khalifa bin Zayed bin Sultan Al Nahyan (born 1948; referred to as Sheikh Khalifa) is the current President of the UAE and emir of Abu Dhabi. Sheikh Khalifa is known for his interest in sports traditional to UAE, chiefly horse and camel racing. He is generally regarded as a pro-Western modernizer. Sheikh Khalifas brother, Sheikh Mansour bin Zayed bin Sultan Al Nahyan, is the owner of British football (soccer) team Manchester City. Sheikh Mansour has spent over $2 billion on Manchester City, and has been ranked by The Times-newspaper as the 6th most powerful man in sports. Sheikh Khalifa and his family control the Abu Dhabi Investment Authority (ADIA), the worlds largest sovereign wealth fund and second largest institutional investor (after the Bank of Japan). The ADIA is believed to have assets of around $400-600 billions.

Khalifa bin Zayed Al Nahyan with then President of Russia Vladimir Putin on 10 September 2007.

Transition of Power
Historically, emirates in the Middle-east have been know for coup d'tats and sudden power transitions. But transitions of power in Abu Dhabi, Dubai and at a federal level have been smooth, and the Emirs are popular. In November 2004 Sheikh Zayed, who had been ruler of Abu Dhabi since 1966 and president of the UAE since its formation in 1971, died. His eldest son, Sheikh Khalifa, succeeded him as ruler of Abu Dhabi and was elected president of the federation by the Supreme Council of Rulers within a few hours of Sheikh Zayeds death being confirmed. The smooth transition largely dispelled fears that interemirate rivalries might threaten to destabilize the federation. A similarly smooth transition of power happened in Dubai in January 2006, following the death of Sheikh Maktoum bin Rashid Al Maktoum, its ruler since 1990, with the succession of his younger brother, Sheikh Mohammed, as both emir of Dubai and prime minister of the UAE. These smooth transitions contrasted with the fractious family rivalries that have sometimes resulted in forceful contests for leaderships in some of the smaller emirates, such as Ras al-Khaimah. Page 18 of 86
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The political scene will remain broadly stable in the forecast period. The president of the UAE and the ruler of Abu Dhabi, Sheikh Khalifa bin Zayed al-Nahyan, has the backing of the ruling families in the other six emirates, including the ruler of Dubai and prime minister of the UAE, Sheikh Mohammed bin Rashid Al Maktoum. Sheikh Khalifa also enjoys the support of his half-brother and designated crown prince, Sheikh Mohammed bin Zayed al-Nahyan, a younger, more dynamic figure, whose influence over policymaking is increasing. The UAE has no formal legal structure for determining seniority, but strong family ties between Abu Dhabi and Dubai should ensure smooth political transitions in the future. Power will remain concentrated within the large ruling families, although relations within these families are sometimes fractious. Sheikh Khalifa and Sheikh Mohammed bin Rashid are both young for Gulf rulers and are therefore expected to remain in power throughout the forecast period. Both have crown princes named as next in line, and there is little risk of problems with the succession processes when they are eventually required. In the smaller northern emirates, there is always a small risk of power struggles.10

Legislation
The UAE uses coded (civil) law, as opposed to the (precedent based) common law practiced in the U.S. There are also some elements of Islamic Sharia law in use in the UAE. The Judicial System The Federal UAE courts, similar to the courts in most of the countries in the Middle East, are organized to form two main divisions; civil and criminal; and are also generally divided to three stages of litigation namely courts of First Instance, Appeal and the Federal Supreme Court. The jurisdiction of the third division, the Shariah courts, which initially was to review matters of personal and family affairs (moral), was expanded in certain Emirates such as Abu Dhabi to include serious criminal cases, labor and other commercial matters. Important cases with a security aspect are referred to special courts. There is no independent judiciary in the UAE. The Ministry of Justice appoints judges to the federal courts, while judges in Abu Dhabi, Dubai and Ras Al Khaimah are appointed by the respective rulers of those emirates. The majority of judges are non-Emirati. Each emirate applies federal law in its own court system. Sharia law is applicable to both Muslims and non-Muslims, but is focused primarily on family, inheritance and personal status matters. Courts will interpret statutory law and Sharia law in deciding cases. Commercial disputes involving foreign parties tend to come before the civil courts in the federal system; a panel of three judges ordinarily hears commercial disputes. The Constitution When the seven emirates formed the Federation, they agreed a Provisional Constitution which provided the legal framework for the Federation. The Constitution provided for the establishment of the Supreme Council of the Rulers of all the Emirates as the foremost authority in the Federation and a Council of Ministers as the Executive Branch of the Federation. The Federal Government is entrusted with the task of promulgating legislation concerning and regulating the principal and central aspects of the Federation. These include foreign affairs, defense, security, the federal judicial system, federal finance
10

Economist Intelligence Unit, United Arab Emirates Country Report February 2011.

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and loans, postal and communication services, federal public works, civil aviation, education, public health, currency, electricity services, nationality and related matters, management of federal possessions, census and federal information. As a Muslim country, one of the fundamental principles enshrined in the Constitution provides that Islamic Law (Sharia) is the main source for legislation in the UAE. Sharia Law Historically the legal systems of the Middle Eastern Islamic Arab countries were based on Islamic Law (Sharia). Sharia (religious) Courts formed the judicial cornerstone of these countries. The modernization of the majority of the legal systems in these countries at the beginning of the twentieth century, led to the establishment of Civil Courts which were generally granted the competence to review civil transactions as well as commercial and other types of disputes. Separate Criminal Courts were also established. Matters of personal status such as marriage, divorce, custody and inheritance remained with the Sharia Courts whose judges were trained in Islamic Law and Jurisprudence. Some Islamic Arab countries such as Saudi Arabia maintained their legal systems which were, and still are, based on Islamic Law. Their judiciary is organized on the basis of the Sharia Courts. In the UAE the establishment of the Civil and Criminal Courts resulted in diminishing the role of the Sharia Courts. Nevertheless, the competence of the Sharia Courts in some Emirates, particularly Abu Dhabi, was substantially expanded later on to include, in addition to matters of personal status, all types of civil and commercial disputes as well as serious criminal offences. Therefore, in addition to the Civil Courts, each of the seven Emirates maintains a parallel system of Sharia Courts which are organized and supervised locally.11 Disputes There have been a few substantial investment disputes during the past few years involving U.S. or other foreign investors and government and/or local businesses. There have also been several contractor/payment disputes, with the government as well as local businesses. Dispute resolution can be difficult and uncertain.12 Different parts of the local judiciary also have broad jurisdiction to hear cases that involves contractual disputes regarding their area of competence in the UAE, regardless of forum clauses. The exception to this is international arbitration clauses, these are generally upheld.13

11 12

http://gulf-law.com/uaecolaw_content.html http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm 13 http://www.clydeco.com/knowledge/articles/litigation-and-dispute-resolution-in-the-uae-better-the-devil-youknow-not-always.cfm

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International Affiliation
The UAE are affiliated with the following organizations:
Aid Arab Fund for Economic and Social Development International Red Crescent Movement International Development Association International Fund for Agricultural Development UN UN Industrial Development Organization Business/Trade International Organization for Standardization Organization of Arab Petroleum Exporting Countries OPEC UN Conference on Trade and Development Universal Postal Union World Customs Organization World Federation of Trade Unions World Intellectual Property Organization WTO Finance Arab Bank for Economic Development in Africa AMF International Bank for Reconstruction and Development The World Bank IMF Multilateral Investment Guarantee Agency Political G-77 Gulf Cooperation Council Islamic Development Bank Inter-Parliamentary Union Arab League Non-Aligned Movement Organisation of the Islamic Conference Other UN Food and Agriculture Organization IAEA ICC ICCt (signatory) International Labour Organization International Maritime Organization International Mobile Satellite Organization Interpol International Telecommunications Satellite Organization International Telecommunication Union UNESCO WHO

In April 2004, the UAE signed a Trade and Investment Framework Agreement with Washington and in November 2004 agreed to undertake negotiations toward a Free Trade Agreement with the U.S., However, in 2007 the Bush administration put talks on hold, stating the UAE labor laws and human rights issues as partial reason for postponing further talks.14 The Gulf Cooperation Council (GCC) The Gulf Corporation Council (GCC) was formed in 1980, and is a political union between Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. Yemen is in-process to become a member by 2016. The GCC encompasses 39 million people and has a combined GDP of $900 bn. Among the stated objectives are: formulating similar regulations in various fields such as economy, finance, trade, customs, tourism, legislation, and administration; fostering scientific and technical progress in industry, mining, agriculture, water and animal resources; establishing scientific research centers; setting up joint ventures; unified military presence under The Peninsula Shield (deterrent and aggravation response force); encouraging cooperation of the private sector; strengthening ties between their peoples; and establishing a common currency by 2015.15

14 15

http://www.ameinfo.com/142461.html http://www.gcc-sg.org/

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Significant progress has been made in regional economic integration: The GCC countries have unrestricted intraregional mobility of goods, labor, and capital; regulation of the banking sectors is being harmonized; and in 2008 the countries established a common market. Further, most of the convergence criteria for entry into the monetary union have already been achieved. In establishing a monetary union, however, the GCC countries must decide on the exchange rate regime for the single currency. The countries use of a U.S. dollar peg as an external anchor for monetary policy has so far served them well, but rising inflation and differing economic cycles from the United States in recent years have raised the question of whether the dollar peg remains the best policy.16 The GCC countries stood united during the North African and Middle East upheaval. On the 10th of March, a joint aid package of $20 billion to Bahrain and Oman was agreed. The job-generating measure will give $10 billion to each country in order to upgrade their housing and infrastructure over 10 years. Saudi Arabia and the UAE are also planning to spend billions of dollars to improve the living standards of their poorer citizens and are equally anxious to put a lid on unrest in their neighbors. Voices have even been raised that following continuous unrest, Saudi Arabia could take control of Bahrain in order to quell the unrest. The resent unrest has increased the GCC cooperation, and the GCC-countries have increasingly been speaking with one voice in regards to foreign affairs; e.g. when criticizing the Libyan regime.17

The logo for the 2010 UAE chairmanship of the GCC.

16 17

Mohsin S. Khan: The GCC Monetary Union: Choice of Exchange Rate Regime

http://www.khaleejtimes.com/DisplayArticle09.asp?xfile=data/middleeast/2011/March/middleeast_March192.xm l&section=middleeast

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International Relations, Security, and Defense


Immigration
Before 1970, the local population was tiny (estimated at 86,000 in 1961) and lacked most of the technical skills needed for a modern society. The commercial production of oil triggered the importation on a large scale of mostly male foreign laborers. The latter factor has generated a dependence on expatriate labor; the UAE has become a multiethnic society, and Emirati nationals account for only about 20 percent of the population. This has created an umbalanced population composition in favor of males.18 After the UAEs independence, personnel for the Union Defense Forces and separate emirate forces were recruited from several countries of the region, but soon enlistments from Oman and Yemen were curtailed out of fear that personnel from these areas might spread dangerous revolutionary doctrines. This is one example of how the UAE leaders have tried to curtail population infusions that could be potentially harmful to the states stability.19 Although there have been some strikes and protests about employment conditions for low-wage workers, there is little sign of any organized political opposition from among immigrant groups. Most have better economic opportunities in the UAE than in their home countries, and so have little incentive to try to change the system, particularly as they risk deportation and the loss of their income (which often supports whole families in the country of origin). The security forces keep a close eye on the foreign community, and have made it clear that they will not tolerate intercommunal tension or political activity of any kind.20 So far, the recent Middle-east unrest has not spread to the UAE.

Defense
As the largest in territory, the most populous, and by far the richest of the emirates, Abu Dhabi has borne the brunt of funding the federation's military establishment. A major step toward unification of forces occurred in 1976 when Abu Dhabi, Dubai, and Ras al Khaymah announced the merger of their separate armed forces with the UDF. Sharjah had previously merged its police and small military units into the UDF. In 1997, the union was further strengthened when Dubai disbanded its armed forces and integrated them into the federal General Headquarters, which are based in Abu Dhabi. The UAE is nearing the end of a 10-year, US$15 billion program to modernize its armed forces, upgrade its defense capabilities, and acquire modern technology. As a result of these efforts, the country is considered the most rapidly developing military power in the Gulf region. The UAE military consists of an army, navy, and air force. In 2004 total active troops were estimated at 50,500 personnel: army, 44,000; navy, 2,500; and air force, 4,000. Estimates in 2005 raised the total to 59,000 personnel. The UAE's military is an all-volunteer, all-male force, of which an estimated 30 percent are expatriates.

18 19

http://www.everyculture.com/To-Z/United-Arab-Emirates.html http://www.globalsecurity.org/military/world/gulf/uae-mil.htm 20 Economist Intelligence Unit, United Arab Emirates Country Profile

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The United States remains central to the UAEs defense policy. A defense pact with the United States, agreed to after the 1991 Gulf War and signed in 1996, allows the United States to preposition some troops and equipment in the UAE and affords it some rights to use air bases in the emirates. In 2004 the UAE and the United States signed a US$6.4 billion contract for the delivery of 80 F16E/F Desert Falcon combat aircraft to the UAE air force. The U.S., Britain, and the UAE share an air force base in the UAE, and UAE-personnel occasionally train in the U.S. Despite the significance of the military relationship with the United States, the UAE has sought diversification in the procurement of weaponry. France remains a primary source of military materiel. Military and Terrorist Threats The UAE is concerned by the military threat posed by Iran, given Irans unilateral seizure of disputed islands in the Strait of Hormuz, its possession of intermediate-range ballistic missiles, and its suspected development of a nuclear capability. The UAE is not considered to be as vulnerable as Saudi Arabia to the threat from al Qaeda and other militant Islamist groups, as these groups do not have a base of operations or support in the emirates. There are, however, security concerns because of the general volatility of the Gulf region, the repeated terrorist attacks in Iraq, the size and mobility of the UAEs large, predominantly Muslim expatriate population, and the countrys pro-Western and liberal business environment. UAE officials are concerned about the deteriorating situation in Iraq, as well as the threat of further U.S. military action in the region, particularly against Iran, and the impact such an action would have on the UAEs unpopular pro-Western stance.21

There is no organized political opposition either on a federal level or to the various ruling families within the individual emirates. Like many of its Gulf neighbors, the UAE has been concerned about the rise of hard-line Islamist groups in the region and, although there have been no significant incidents of terrorism in the emirates to date, the government keeps a close eye on developments.22

21 22

http://www.globalsecurity.org/military/world/gulf/uae-mil.htm Economist Intelligence Unit, United Arab Emirates Country Profile

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International Relations
Iran is resented for occupying three strategically located islands which the UAE claim sovereignty of. Relations with Iran were tense after the UAE supported Iraq in the final stages of the Iran-Iraq war in the 1980s and after Iran took full control of the disputed islands, which it had previously administered jointly with the respective emirates.23 On the other hand, Iran is a major trading partner and source of investment, particularly as Iran channels much of its trade through Dubai (which has hundreds of thousands of Iranian residents) to circumvent U.S. sanctions. Billions of dollars worth of U.S. goods are repacked and shipped for Iran every year. This murky trade operates under the public radar, but its existence is well known in the UAE, which does not impose inspections to any great degree on its local shippers.24

23 24

Economist Intelligence Unit, United Arab Emirates Country Profile http://www.portfolio.com/news-markets/international-news/portfolio/2008/08/13/US-Trades-With-Iran-ViaDubai/

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Infrastructure
Transportation
Rails There are no railways in the UAE. Dubai has a newly built metro network (currently 2 lines covering almost 50 stations). The $7.6 bn. project provides Dubai with the worlds most modern metro system.

The interior of a train of the driverless, fully automated metro network.

Roads The road network is extensive and of good quality in the major urban areas, particularly Abu Dhabi and Dubai, although peak-time congestion in Dubai has become a serious problem and congestion can be worse than in London. In an effort to reduce congestion, the Dubai government has introduced a toll system (Salik) on Sheikh Zayed Road, the main road running through Dubai, and further tolls are expected. The road system is not as extensive in the poorer northern emirates, but investment is ongoing and provision is steadily improving. Maritime The UAEs maritime infrastructure has been highly developed for decades, but is having to expand its capacity rapidly to handle the growing volume of trade. In addition to the two major facilities in Dubai, Jebel Ali and Port Rashid, Sharjah city has a port and the emirate has another in its Khor Fakkan enclave in the Sea of Oman. Dredging work has also been carried out at the nearby Fujairah port in a bid to boost traffic. In spite of a long-term expansion project, Abu Dhabis main port, Mina Zayed, is becoming overstretched and a replacement terminal, Khalifa Port, is being constructed at Taweelah, 30 km north of Abu Dhabi city, where trade is scheduled to shift in 2011. Dubais ports have top-class facilities and can service the largest container vessels that dominate the major shipping lanes.25

25

http://www.uae-shipping.net/

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Air The UAE has become a regional and global hub for air transport; both passengers and freight; because of its strategic location between Europe, Asia and Africa and the immense public investment in airlines and airport infrastructure. There are frequent flights from the UAE to the worlds major destinations. Dubai International Airport, 2.5 mi from Dubai, is currently processing 47m passengers in 2010 (4 th busiest in the world). Al Maktoum International Airport in Dubai, with six runways and currently expanding, was opened in July 2010. Located 25 mi away at Jebel Ali, it is part of the Dubai World Centre logistics complex and will handle 12m t/y of cargo and 120m passengers/y when complete, more than any airport in the world. Currently one runway is in use for cargo traffic, passenger traffic is due to commence in late March 2011. Abu Dhabi International Airport has expanded rapidly and is estimated to handle 12m passengers in 2011. One additional terminal is projected to open in 2012; this would double the airports capacity. There are international airports in four other emirates, the most significant being Sharjahs, which processed 4m passengers in 2007, and even tiny Ajman is beginning to build an international airport, due to open in 2011. The dominant airline is Emirates, which was founded by the Dubai government in 1985. It is now the worlds sixth-largest airline, by number of international passengers. Etihad Airways was launched by the Abu Dhabi government as recently as 2003; it presently operates 47 international destinations.26

Telecom
A state monopoly was disbanded in 2006. The previous monopoly company, Etisalat, is now the largest carrier in the Middle East, and the 12th largest carrier in the world. Moreover, the Telecommunication Regulatory Authority (TRA) still has great authority; material deemed offensive, or "inconsistent with the religious, cultural, political and moral values of the United Arab Emirates", is usually blocked, as well as pornography, dating, and gambling sites. For commercial reasons, there is also a total ban on internet telephony (VoIP).27 Many of these restrictions though are easily circumvented. The UAE had 10.6 m cellphones and 3.5 m internet users in 2009. The country caller prefix is +971 the internet country code is .ae.28

Energy
Energy demand is growing rapidly across the UAE, driven by subsidized power charges, the construction boom, energy-intensive industries (such as aluminum smelting and petrochemical production) and population growth. Peak demand occurs over the hot summer months when air-conditioning is used extensively and demands for water; which is almost all produced by desalination; also peaks. Yearly demand increases 10-15%. Abu Dhabi has been building its capacity through independent water and power projects (IWPPs), in each of which it holds a 60% stake and a private-sector developer holds 40%: seven have been completed so far, and a contract to build the eighth, with a 1.5-gw capacity, was awarded to Gaz de France Suez in July 2008. Dubai has developed its power and water generation capacity without private-sector involvement, although it has expressed some openness to consider this in the future. Shajah also manages its own generation, while the northern emirates are supplied by
26 27

www.abudhabiairport.ae, http://www.dwc.ae/dwc.html http://opennet.net/studies/uae 28 https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html

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Federal Electricity and Water Authority (FEWA). In late 2007 the Federal National Council approved a plan to part-privatize FEWAs assets in order to attract investment for expansion. As electricity demand is expected to increase dramatically over the next decade, meeting it has become a policy priority. Almost all of the UAEs existing and planned generation capacity is based on gas. Although Abu Dhabi has significant gas reserves (mainly sour gas, contaminated with sulfur), which it is looking to develop further, it is unlikely to be able to produce enough to meet its own demand. The UAE produced and consumes about the same amount of gas (5 bn. cu ft/day). Around 1 bn. cu ft/d of the UAEs production is exported. Therefore the UAE has had to look to its neighbors to meet the growing shortfall in gas. Demand projections suggest that imports will be insufficient in the medium term as the population continues to expand, and therefore the UAE has been looking at alternative sources of electricity.29 Abu Dhabi is planning on installing solar and wind capacity, as part of its $22 bn. Masdar City project, and has invited bids for the construction of a 100-mw solar plant. Another source could be nuclear power, and the UAE signed a nuclear co-operation deal with France, which envisages two 1.6-gw power stations being built by French firms.30

29 30

Economist Intelligence Unit, United Arab Emirates Country Profile http://www.masdarcity.ae/en/index.aspx

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Economic Environment
Overview
The UAE has an open economy with a high per capita income and a sizable annual trade surplus. Successful efforts at economic diversification have reduced the portion of GDP based on oil and gas output to 25%. The number is somewhat misleading though, as a large portion of public spending is fueled by oil money, and oil-related activities still accounts for a large portion of GDP. The UAEs Free Trade Zones - offering 100% foreign ownership and zero taxes - are helping to attract foreign investors. The global financial crisis, tight international credit, and deflated asset prices slowed GDP growth in 2010. UAE authorities tried to blunt the crisis by increasing spending and boosting liquidity in the banking sector. The crisis hit Dubai hardest, as it was heavily exposed to depressed real estate prices. Dubai lacked sufficient cash to meet its debt obligations, prompting global concern about its solvency. The UAE Central Bank and Abu Dhabi-based banks bought the largest shares. In December 2009 Dubai received an additional $10 billion loan from the emirate of Abu Dhabi. The economy is expected to continue a slow rebound. Dependence on oil, a large expatriate workforce, and growing inflation pressures are significant long-term challenges. The UAE's strategic plan for the next few years focuses on diversification and creating more opportunities for nationals through mandatory Emirateborn parts of workforces, improved education, and increased private sector employment.31

The 2010 GDP and GDP/capita in comparison with other Middle Eastern countries.

31

https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html

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GDP development
The Economist Intelligence Unit (EIU) has revised up their 2011 growth forecast to 3.5% (from 3.1% previously) owing to an upward revision in oil prices and production. Real GDP growth in the UAE is forecast to average 5% in 2011-15, slightly lower than the estimated rate of 5.2% in 2006-10, but respectable by international comparison.32 The Abu Dhabi Chamber of Commerce estimates that the Abu Dhabi non-oil economy will grow 5.1% in 2011. This is due to increased activity in the private sector.33 In the other side of the spectrum, investment bank EFG-Hermes Holding SAE lowered its forecast from 3.4% to 2.9% on fewer expected projects in Abu Dhabi and slower spending in Dubai.34 The EIU conclude that the diversification program will boost the output of the industrial sector, with some major projects expected to come on stream in the forecast period. However, the UAE will continue to rely heavily on the hydrocarbons sector. Higher oil prices in the wake of the current regional turmoil will boost the economy, but the prospect for an increase in oil production is limited. Production will increase at a faster pace over the remainder of the forecast period. High government spending, especially in Abu Dhabi, and improved consumer confidence will help to boost private consumption. Expenditure on infrastructure projects will facilitate non-oil exports towards the end of 2012 as some projects near completion. An almost tax-free environment, good infrastructure and the opportunity to save will lead to a return to high levels of growth in the immigrant workforce in the forecast period, after a fall in the expatriate population in 2009. If oil prices fall, the Abu Dhabi government will be able to draw on its vast overseas investments to sustain public spending. The services sector will also register solid growth, especially in the second half of 2012. In the near term, government and oil-related services will continue to expand. In addition, Abu Dhabi will continue to invest in real estate and will also expand its tourism and infrastructure sectors, albeit at a more reasonable pace than originally planned in its long-term strategic plan. Other emirates such as Sharjah and Ras al-Khaimah are also developing tourism. The outlook for financial services, however, remains uncertain in spite of Dubai World securing agreement for its restructuring proposal. The EIU forecast for real GDP growth:35

32 33

Economist Intelligence Unit, United Arab Emirates Country Report February 2011 http://www.ameinfo.com/252709.html 34 http://www.bloomberg.com/news/2010-10-14/u-a-e-2011-growth-forecast-cut-to-2-9-at-efg-hermes-onslower-spending.html 35 Economist Intelligence Unit, United Arab Emirates Country Report February 2011

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Government Finances
Government Debt The government debt is at a reasonable level. There have been suggestions to increase the federal lending further, in order to provide liquidity to the regional bond market. The external debt (public and private debt to non-residents) is at 56% of GDP and rank 33 in the world. The public debt in 2010:
World Rank 29 35 36 61 76 88 114 121 122 129 Country Jordan Bahrain United States United Arab Emirates Yemen Syria Saudi Arabia Kuwait Qatar Oman Debt (% of GDP, 2010 est.) 61.4 59.2 58.9 44.6 39.1 29.8 16.7 12.6 10.3 4.4

Government Finances Economic Outlook The global financial crisis, tight international credit, and deflated asset prices slowed GDP growth in 2010. UAE authorities tried to blunt the crisis by increasing spending and boosting liquidity in the banking sector. The crisis hit Dubai hardest, as it was heavily exposed to depressed real estate prices. Dubai lacked sufficient cash to meet its debt obligations, prompting global concern about its solvency. The UAE Central Bank and Abu Dhabi-based banks and the emirate of Abu Dhabi had to bail out Dubai state-owned companies with bond purchases and loans.36

The basic economic indicators forecasted for the UAE.


36

https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html

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Abu Dhabi has not remained immune to Dubais debt crisis. The government extended US$20 bn. in financial aid to Dubai 2010 and has had to do the same for Aldar Properties, Abu Dhabis largest property developer. Aldar concluded a US$5.2 bn. aid package from the Abu Dhabi government in January as it has been severely hit by the downturn in the real estate market. Nevertheless, Abu Dhabi will invest heavily in real estate, tourism and services projects, although some projects will be delayed or scaled back. The UAE will also aim to recapture foreign investment that took flight when Dubais debt problems surfaced last year. New laws to stimulate both domestic and foreign investment in the private sector have been at the draft stage for some time and are facing domestic opposition. The foreign business community and the UAEs counterparties in free-trade negotiations have argued that the limit of 49% on foreign ownership of companies in most sectors outside of free zones should be lifted, a view taken under consideration by the UAE. Fiscal policy will remain expansionary during the next five years, with expenditure projected to increase considerably to support the diversification program. However, the new public debt law, which was approved in 2010, limits the amount of debt financing for federal infrastructure projects to 15% of total public debt. It also limits total public borrowing by the federal government to 25% of GDP or US$54.5 bn., whichever is smaller. The law aims to establish a legal framework for federal debt issuance in order to deepen the local bond market. Much of the increase in spending will come from Abu Dhabi, as Dubai will concentrate on repaying its debt. Although Dubai World (DW), one of three major stateowned companies in Dubai, concluded restructuring talks with creditors in 2010, further restructurings will put pressure on the federal budget as Abu Dhabi may be required to provide additional support for other Dubai government-related entities. The UAE is expected to maintain its attractive tax environment, which will enable it to keep its competitive edge and draw in foreign investment. To bridge the funding gap, the government is likely to increase charges for transport and public services in an effort to augment revenue. EIU estimate that the federal budget will remain in surplus in 2011-12 at an average of 2.3% of GDP, but forecast that it will move into deficit in 2013-15, with the shortfall averaging 1.8% of GDP. As Dubai resolves its debt problems, government debt (domestic and external) is expected to fall from an estimated 45.6% of GDP in 2010 to 27.6% of GDP in 2015.37

Exchange Rate
The Dirham Since November 1997, the dirham has been pegged to the 1 U.S. dollar = 3.6725 dirham, which translates to approximately 1 dirham = 0.272294 dollar. This means, that as long as the UAE central bank can maintain their currency regime, the dirham will move in tandem with the dollar. It also means that other economic indicators, such as inflation (regulation) and interest rates will have to move in tandem with U.S. Federal Reserves moves. This has previously led to unrest among guest workers, as a weakening dollar (and weakening dirham) reduces the guest workers currency remittance (to the guest workers countries of origin).38

37 38

Economist Intelligence Unit, United Arab Emirates Country Report February 2011 http://www.forexexaminer.com/currency-peg-blamed-for-uae-unrest-financial-timesforex-news/

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In 2009, the UAE withdrew from the GCCs common currency project, which planned to launch a pan Gulf-peninsula (with Saudi Arabia, Kuwait, Bahrain, and Qatar) monetary union in 2010. Allegedly, the UAE withdraw over disagreement with the Saudis over where the new common central bank should be headquartered.39 The common GCC currency has been planned for 30 years, and introduction is now tentatively pushed back to at least 2015.40 There are no restrictions or delays on the import or export of either the UAE Dirham or foreign currencies by foreigners or UAE nationals. Travelers entering the UAE must declare currency amounts of more than $10,000.41 Generally, the dirham is secure and freely convertible. There are no restrictions on profit transfer or capital repatriation.42

Interest Rates
Monetary policy will continue to focus on protecting the banking sector and increasing liquidity in 2011, but the Central Bank of the UAE will also monitor inflation closely. It announced, in early October 2010, a one-month extension to the temporary repo (repurchase) rate of just 1%, in order to increase liquidity in the financial system. However, the repo rate remains at 1%. UAE rates have to track US interest rates broadly because of the currency peg - which discourages savings, as real interest rates are close to zero.

Financing
The UAE has 28 foreign banks from several countries and 24 local banks. Foreign and local banks have established 149 and 738 branches respectively in the UAE (as of 2009). Major banks are:
National Bank of Abu Dhabi Abu Dhabi Commercial Bank ARBIFT Union National Bank National Bank of Dubai Commercial Bank of Dubai Dubai Islamic Bank PJSC Emirates Bank International National Bank of Bahrain Rafidain Bank Arab Bank PLC Banque Du Caire El Nilein Bank National Bank of Oman Calyon Bank Bank of Baroda United Bank Limited Doha Bank Banks (UAE-based) United Arab Bank PJSC Invest Bank PLC National Bank of R.A.K. Commercial Bank International National Bank of Fujairah PSC National Bank of U.A.Q. First Gulf Bank Abu Dhabi Islamic Bank Banks (international) BNP Paribas Janata Bank HSBC Bank Middle East Arab African International Bank BLC Bank (France) S.A. Al Ahli Bank of Kuwait Barclays Bank PLC Habib Bank Limited Samba Financial Bank Emirates Islamic Bank Mashreq Bank PSC Sharjah Islamic Bank Bank of Sharjah PSC Dubai Bank Noor Islamic Bank Al Hilal Bank Ajman Bank Habib Bank AG Zurich Standard Chartered Bank CitiBank N.A. Bank Saderat Iran Bank Meli Iran Blom Bank France Lloyd Bank TSB ABN-Amro Bank National Bank of Kuwait

39 40

http://www.ameinfo.com/197435.html http://www.meed.com/sectors/economy/government/special-report-gcc-euro-crisis-has-lessons-for-plannedgcc-currency-union/3007700.article 41 http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm 42 Luxemburg Ministry of the Economy and Foreign Trade: Market Entry Guide to the UAE.

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Abu Dhabi and Dubai each have a stock exchange. 39 out of 66 stocks on the Abu Dhabi stock exchange and 40 out of 62 stocks on the Dubai stock exchange are open to foreign investment. Ministry of Economy and Planning rules allow foreign investment up to 49 percent in companies on the stock market; however, company by-laws in many cases prohibit or limit foreign ownership. From power and desalination complexes through petrochemical plants, gas development, and transportation projects, the role of the private sector in large-scale projects is becoming more varied and important. Major international and local banks are behind these projects advising and arranging for the major part of the financing, exceeding 75 percent on some of the independent water and power projects. The proportion of financing and the transaction leadership is steadily shifting towards local and regional banks.43 Due to the high-influx of foreign and local investors, financing is plentiful in the UAE also for small-scale projects. Term loans are the most common option, followed by working capital finance and bank guarantee/Letter of Credit.44 Capital Markets GCC capital markets are still embryonic, with local, liquid corporate debt and mortgage backed securities markets almost nonexistent. The regional stock exchange market cap relative to GDP is extraordinarily high, with the UAE, Qatar, Bahrain and Kuwait at 130-200 per cent, a significant premium to the international averages. This metric is misleading because only a small fraction of the GCC market cap is actually traded on the stock exchange. Since the free floats in the regional exchanges are significantly below those in the West and the major emerging markets and governments own the domestic banking system, it is no wonder that GCC financial markets exhibit some of the highest volatility in the world and the money supply fluctuations can and do trigger spectacular bull or vicious bear markets. After all, the 2005-06 stock market correction in the GCC proved that high economic growth or record oil prices are no insurance against 50-70 per cent meltdowns in the stock market in a mere six to eight months. With the expansion of Qatar and Abu Dhabi, the GCC does not have a liquid, continuous sovereign debt yield curve. This is because higher oil prices have meant budget surpluses and obviated the need to borrow funds in the international capital markets. Yet while the GCC is a net exporter of capital, its foreign liabilities have surged at a phenomenal rate. For example, UAE banks have borrowed more than $50 billion, up six-fold since 2002, from the international money markets to finance the increase in size of their domestic loan book. This is the linkage between the financial crisis and the pricing of bank risk in the UAE. Property speculation, rent and wage spirals and the dollar peg are the main reasons for the GCCs inflation dilemma. The lack of deep, liquid domestic money and bond markets only contributes to the GCCs inflation surge since they do not restrain the rapid growth of the money supply. Rapid money supply growth contributes to the casino finance zeitgeist that destabilizes the banking systems of the GCC. The financial crisis was a wakeup call for GCC financiers.45

43 44 45

DOC: Country Commercial Guide for U.S. Companies http://www.dubaicompanyformation.net/tag/business-financing-in-small-uae/

http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/opinion/2008/February/opinion_February48.xml &section=opinion&col=

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Payments
Payment is generally slower in the UAE than the U.S. and EU.46 During the recent downturn in Dubai, contractors came under increasing pressure as more developers suspend projects or renegotiate tendered prices. Projects that seem to be hardest hit appear to be the mixed-use residential and leisure schemes, where demand has fallen significantly, owing in part to the inability of investors and buyers to get credit. During the crisis several large estate projects where halted or scaled back, whilst most infrastructure projects where continued uninterrupted.47 Business is based on relationships; a number of contractors only enter into contracts with employers where the two have a proven business relationship. You may be able to negotiate an advance payment from your client to ensure they can mobilize and, if appropriate, commence design. But most export to the UAE is most often facilitated by a Letter of Credit (L/C). The most commonly used type of L/C include: Sight, Deferred Payment, and Revolving L/Cs. There is no default law protection regarding payment period in the Gulf Region. Instead, the payment period depends on what you negotiate with your client. While a payment period of two months is common in the UAE, you should aim to get it cut down in your contract to about a month.48 Credit ratings on corporations can be obtained by Standard & Poors (http://www.standardandpoors.com/home/en/us) or Moodys (http://www.moodys.com/). State owned Emcredit (http://www.emcredit.com/en/default.aspx) is a local alternative for credit ratings and credit reports. The government is also launching an agency for private credit rating during the first half of 2011.49

Inflation
The EIU estimates that inflation averaged 0.9% in 2010. Inflation is forecast to average 2.2% in 2011-15, well below the highs of 2005-08, due to a fall in housing costs.50

The EIU forecast of CPI.

46 47

DOC: Country Commercial Guide for U.S. Companies http://online.wsj.com/article/SB10001424052748703408604576164703521850100.html?KEYWORDS=dubai 48 http://www.building.co.uk/news/seven-ways-to-get-paid-in-dubai/3133997.article 49 http://www.reuters.com/article/2010/12/06/us-emirates-credit-idUSTRE6B53RJ20101206 50 Economist Intelligence Unit, United Arab Emirates Country Report February 2011

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Labor Market
Unemployment in the UAE has risen to above 4%. Expats account for 85% of the labor force.

The UAE central bank unemployment data.

51

This figure does not account for the number of illegal expatriates entering the labor market on constant basis. Therefore the actual unemployment rate might be higher. Due to the increase in population and the expansion in the number of national graduates from universities and high schools, unemployment among nationals became an acute problem in recent years. The table below shows unemployment rate by sex for nationals and non-nationals for the seven Emirates of the UAE by mid 2003. It indicates that the UAE unemployment rate for nationals stands at 10.4 percent, while the total unemployment rate (nationals and non-nationals) is 2.8 percent. It also indicates that the unemployment rate is higher in the case of females. It is 16.5 percent among female compared to 8.4 percent for male.52

Labor policy will continue to focus on the increased involvement of Emiratis in the private sector. The government recently amended the sponsorship system to allow all workers, skilled and unskilled, to leave their employers if contractual arrangements or other employment standards were not met. At the same time, the government also announced that UAE nationals should make up a minimum of 20% of a companys workforce, irrespective of sector. These amended rules came into effect from 2011. The economy will remain dependent on immigrant labor in the long term.53 Trade unions do not exist. In the case of a dispute between an employer and an employee the Ministry of Labor and Social Affairs will
51 52

http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=AED Reem M. Albuainain: Unemployment Rate In the United Arab Emirates: The case of Abu Dhabi 53 Economist Intelligence Unit, United Arab Emirates Country Report February 2011

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initially act as an adjudicator in an effort to resolve matters. If a party wishes to appeal any decision taken, it can take its case to court. Strikes and lockouts are forbidden.54 Labor Cost The labor cost in the UAE has risen with the economic development, but salaries are not that lucrative as they once were. A business development manager (with 5 years experience) who speaks both English and Arabic make on average $6,400 per month. A civil engineer makes around $3,500.55 Median salaries are slightly higher in Abu Dhabi than in Dubai, and around double those of other Emirates.56 Note that the UAE has no income or sales tax. But in general, the salaries have not grown in the same rate as cost of living the last decade. Unskilled service wages are very low, around $0.5-2 per hour.57 But with tip included, many guest laborers in service professions support extended families in their home countries with what they earn in the UAE. People from neighboring countries consider themselves fortunate to get a job in the UAE.58 The government has worked to increase labor rights and safety. Since 2005 there is a prohibition of outdoor work between 12:30 and 3:00 p.m. during the hot summer months (mid-day break-rule).59 The very fact that the UAE is 85 percent expatriate makes the concept of salary different to most countries in that people's needs are somewhat different, and it would be safe to say that that work is more transient than permanent.60

Taxation
The UAE has no corporate, income or sales/VAT tax. Earnings remitted to the U.S. (parent) are subject to U.S. taxation.

Investment Climate
Free zones The Jebel Ali Free Zone in Dubai (http://www.jafza.ae/) being the first Free Zone in the country has created the benchmark for regulations & incentives. Started in 1985, its rapid growth has also provided a powerful economic inspiration to the other Emirates, which have set up their own Zones to attract investment. Jebel today include 120 Fortune 500 companies and offers a set of products and services such as: business centers, ready to use offices, warehouses, factories, and infrastructure ready plots. In addition the one stop shop services provide registration and licensing of
54 55

Luxemburg Ministry of the Economy and Foreign Trade: Market Entry Guide to the UAE. http://www.payscale.com/research/US/State=Dubai/Salary 56 Luxemburg Ministry of the Economy and Foreign Trade: Market Entry Guide to the UAE. 57 http://www.grapeshisha.com/typical-Dubai-salaries.html 58 http://www.escapeartist.com/efam/69/Living_In_The_UAE.html 59 www.uae-embassy.org 60 http://www.grapeshisha.com/typical-Dubai-salaries.html

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companies, sponsorship and issuing of work permits for employees. With the number of zones increasing, their impact on the UAE economy has deepened. UAE Free Zones are home to around 10,000 companies. The zones are part of Economic Zones World (EZW), which is the global developer and operator of economic zones, technology, logistics and industrial parks (http://www.ezw.ae/). Openness to foreign investment At present, the regulatory and legal framework favors local over foreign investors. There is no national treatment for investors in the UAE, and foreign ownership of land and stocks is restricted. The UAE maintains non-tariff barriers to investment in the form of restrictive agency, sponsorship, and distributorship requirements. In order to do business in the UAE outside one of the free zones, a foreign business in most cases must have a UAE national sponsor, agent or distributor. However, the UAE government is opening up its trade sectors in line with its WTO obligations. The UAE has been suspended from U.S. OPIC insurance programs since 1995 because of the UAE's lack of compliance with internationally recognized worker rights standards, particularly laborers' rights to association and collective bargaining.61

Financial standard compliance ranking of the UAE.

62

FDI The UAE has attracted more than US$51 billion in foreign direct investment (FDI) in 2005-2008 to maintain its position as the second largest FDI destination in the Arab region, according to official data. In 2008, the UAE accounted for around 14.2 per cent of the total FDI of about US$96.48bn pumped into the Arab World, showed the figures by the Inter-Arab Investment Guarantee Corporation (IAIGC). The UAE was ranked second after Saudi Arabia in the region in terms of FDI. In 2008 a new department for foreign investment at the Ministry of Economy was created, which facilitate foreign investments in the UAE.

61 62

http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm http://www.estandardsforum.org/united-arab-emirates/standards

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100% foreign ownership is allowed in certain sectors (education, health, professional services and computer-related services), whilst other companies established in the UAE are required to have a minimum of 51 percent UAE national ownership. The UAE also restricts foreign ownership of land, with rules varying from emirate to emirate. All free zones provide 100 percent import and export tax exemption, 100 percent exemption from commercial levies, 100 percent repatriation of capital and profits. Government Contracts Supplier, contractor, or tenders for federal projects must either be a UAE national or a company in which UAE nationals own at least 51 percent of the share capital or foreign entities represented by a UAE distributor or agent. Foreign companies wishing to bid for a federal project must, therefore, enter into a joint venture or agency arrangement with a UAE national or company. Federal tenders must accompany a bid bond in the form of an unconditional bank bond guarantee for 5 percent of the value of the bid. If goods and services are not available locally then UAE federal government entities often tender internationally. Expropriation Foreign investors have not been involved in any expropriations in the UAE in recent years. There are no set rules governing compensation if expropriations were to occur, and individual emirates probably would treat this differently. In practice, authorities in the UAE would not expropriate unless there was a compelling developmental or public interest need to do so, and in such cases compensation would likely be generous.

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Trade
The U.S. and the UAE currently share one of the fastest growing commercial and trade partnerships in the world, which is highlighted by the dramatic rise in U.S. exports and FDI flowing into the Middle East growing from $3.6 billion in 2002 to $15.7 billion in 2008. The UAE has emerged as Americas largest export market in the Middle East.

The UAE major import and export partners. 2009 Eurostat data.

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U.S. Trade
The 2010 U.S. Census Bureau data shows that import to the U.S. was $1,145.0 million (ranked 72nd amongst imports by nation) and export from the U.S. at $11,638.3 million (ranked 21st). Hence, then U.S. has a $10,493.3 million trade balance surplus towards the UAE. In relative terms, this is the U.S largest trade balance surplus. This highlights the UAEs role as a huge net importer; the UAE imported more worth of oil drilling equipment from the U.S. than the value of U.S. import of UAE oil.
ITEM 336--TRANSPORTATION EQUIPMENT 333--MACHINERY, EXCEPT ELECTRICAL 334--COMPUTER AND ELECTRONIC PRODUCTS 325--CHEMICALS 339--MISCELLANEOUS MANUFACTURED COMMODITIES 335--ELECTRICAL EQUIPMENT, APPLIANCES & COMPONENTS 111--AGRICULTURAL PRODUCTS 332--FABRICATED METAL PRODUCTS, NESOI 311--FOOD MANUFACTURES 990--SPECIAL CLASSIFICATION PROVISIONS, NESOI 324--PETROLEUM & COAL PRODUCTS 331--PRIMARY METAL MFG 326--PLASTICS & RUBBER PRODUCTS 327--NONMETALLIC MINERAL PRODUCTS 920--USED OR SECOND-HAND MERCHANDISE 322--PAPER 315--APPAREL MANUFACTURING PRODUCTS 112--OTHER ANIMALS 337--FURNITURE & FIXTURES 323--PRINTED MATTER AND RELATED PRODUCTS, NESOI 316--LEATHER & ALLIED PRODUCTS 314--TEXTILE MILLS PRODUCTS 321--WOOD PRODUCTS 313--TEXTILES & FABRICS 312--BEVERAGES & TOBACCO PRODUCTS 910--WASTE AND SCRAP 212--MINERALS & ORES 114--FISH, FRESH/CHILLED/FROZEN & OTHER MARINE PRODUCTS 113--FORESTRY PRODUCTS, NESOI 511--NEWSPAPERS, BOOKS & OTHER PUBLISHED MATTER, NESOI 211--OIL & GAS TOTAL 2005 2006 2007 2008 2009 2005-2009 Change 4,250,682,127 5,529,656,684 4,310,676,933 5,549,818,222 4,811,741,114 -1,849,977,041 1,101,917,476 1,399,806,056 1,787,375,488 2,636,519,814 1,867,521,056 34,405,205 549,012,936 818,400,390 1,170,898,213 1,199,002,507 1,265,032,889 762,229,745 356,329,738 377,682,724 515,926,366 606,352,008 679,570,671 416,006,569 374,808,494 433,464,895 499,474,861 870,227,697 647,079,866 227,796,342 186,991,909 272,841,828 339,966,551 554,310,851 475,656,306 345,344,217 101,124,995 168,770,360 244,913,649 230,139,954 424,659,847 341,419,227 164,279,562 224,601,347 259,484,213 386,691,993 405,902,767 327,080,278 113,805,593 114,754,549 181,223,942 281,641,730 286,934,938 185,987,691 145,952,024 175,033,176 229,888,633 413,337,484 286,886,848 170,311,127 44,919,302 39,240,953 48,855,485 71,708,541 216,613,276 37,466,862 359,932,080 290,483,785 603,332,172 806,036,872 185,301,813 -15,230,054 55,432,851 67,330,904 110,776,631 159,813,497 111,109,587 97,981,935 38,719,608 52,020,724 65,705,516 87,909,987 75,026,602 23,369,281 15,154,933 23,254,560 68,039,259 100,674,680 69,485,705 29,308,070 39,184,474 37,625,934 49,716,460 68,074,904 63,519,459 52,448,676 18,458,688 31,149,804 46,296,535 67,224,603 58,437,655 42,896,001 60,642,375 51,251,646 27,272,438 62,808,745 56,464,363 -10,200,145 35,455,504 37,261,478 53,188,940 69,147,852 52,648,609 33,517,571 18,933,915 26,090,632 31,341,740 38,962,798 38,728,397 17,333,370 10,834,093 15,876,975 21,994,174 31,688,088 28,336,063 16,473,677 14,678,314 21,134,280 26,559,949 31,164,148 21,317,446 15,903,890 10,615,702 12,221,668 19,093,094 31,293,777 18,168,289 11,321,855 9,205,416 9,844,463 11,756,838 13,062,358 16,545,977 8,306,543 25,932,476 27,547,710 30,179,511 19,555,915 14,950,530 -6,964,288 5,555,829 6,658,164 18,418,426 11,039,852 13,491,146 29,468,261 4,657,414 5,999,957 2,140,212 6,790,197 10,871,791 6,323,130 2,335,826 3,386,466 4,523,434 5,298,542 3,738,749 1,897,114 1,989,338 2,240,430 5,062,865 5,827,118 3,596,643 7,039,753 1,873,962 1,200,345 2,523,775 1,139,318 1,338,647 2,060,565 110,403 183,592 42,385 134,391 186,308 -21,437 8,119,527,357 10,277,016,479 10,786,648,688 14,417,398,443 12,210,863,357 1,361,303,990
63

The DOCs ITA U.S. export statistics to the UAE, per sector.

As the chart above indicates, the export of civilian aircrafts and passenger cars were the major sector of export, while machinery and electronics and computer products also represented areas with significant export to the UAE. In relative terms, goods export in the waste and scrap-category has increased in recent years.

63

http://www.trade.gov/mas/ian/tradestatistics/index.asp

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Fast-growing sectors American shipments of fuel oil to UAE spiked by a 114.6% increase in 2008, followed by 9 other product categories with triple-digit increases of at least 176.5%. Fuel oil Aircraft launching gear including parachutes Non-farm tractors and parts Manufactured wood supplies Copper Artillery, guns, missiles and tanks Agricultural machinery and equipment Primary synthetic rubber Railway transportation equipment Vegetables $14.9 million, up 114.6% $8.7 million, up 519.7% $72.5 million, up 511.1% $10.4 million, up 354.8% $3.1 million, up 239.5% $53 million, up 209.5% $100.6 million, up 203.3% $11.8 million, up 184.6% $9.7 million, up 184% $27.1 million, up 176.5%.

Sector Recommendations Although oil and gas production will remain the backbone of the UAE economy for years to come, the non-oil sector of the economy is growing at a rapid pace. Major growth areas include: aircraft & parts, security and safety equipment; IT equipment and services; medical equipment, services and supplies; architecture, construction, and engineering services; building products; air conditioning and refrigeration equipment; environmental and pollution control equipment; and sporting goods and equipment. Water and power projects continue to offer considerable opportunity due to the UAEs unquenchable thirst for water and electricity.64

California Trade
Yearly California world export equals 6.3% of the $1.89 trillion gross state product (GSP) in 2009 (down from 8% in 2008). This is very low compared to nation states, a testament to the significant U.S. intracountry trade. Value When looking at the California export country-by-country, the UAE rank by far highest among Middle Eastern and North African countries. The UAEs import of Californian goods and services is around 10% of Chinas import from California.

64

DOC: Country Commercial Guide for U.S. Companies

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Partner World China United Arab Emirates Saudi Arabia Kuwait Jordan Lebanon Qatar Iraq Oman Bahrain

2005 2006 2007 2008 2009 Total $ 116,689,901,804 $ 127,770,793,810 $ 134,318,906,761 $ 144,805,748,349 $ 120,079,965,765 $ 643,665,316,489 $ 7,821,342,315 $ 9,970,700,069 $ 10,566,024,437 $ 10,981,739,113 $ 9,744,452,187 $ 49,084,258,121 $ $ $ $ $ $ $ $ $ 1,141,970,612 232,289,603 87,343,031 73,723,286 52,242,107 37,456,744 34,461,006 20,954,959 20,019,249 $ $ $ $ $ $ $ $ $ 942,359,751 315,128,462 113,702,840 72,361,092 62,781,934 61,067,842 62,958,456 38,567,035 37,138,263 $ $ $ $ $ $ $ $ $ 947,945,033 435,392,453 179,518,487 135,818,994 82,023,367 92,157,216 69,297,962 140,657,211 38,945,436 $ $ $ $ $ $ $ $ $ 1,156,414,895 635,175,361 185,472,476 158,230,672 191,472,500 120,880,419 51,424,707 70,945,352 57,969,461 $ $ $ $ $ $ $ $ $ 1,149,504,162 597,694,331 190,499,587 249,472,237 251,848,928 103,069,999 99,403,298 40,429,576 45,889,294 $ $ $ $ $ $ $ $ $ 5,338,194,453 2,215,680,210 756,536,421 689,606,281 640,368,836 414,632,220 317,545,429 311,554,133 199,961,703

California export to the Middle East.

Products The export from California in terms of sector focuses on agricultural products. As the UAE has almost no agricultural production of its own, food is a major import sector. Californias strong IT/electronics sector also is a major exporter to the UAE.
SECTOR 111--AGRICULTURAL PRODUCTS 334--COMPUTER AND ELECTRONIC PRODUCTS 336--TRANSPORTATION EQUIPMENT 333--MACHINERY, EXCEPT ELECTRICAL 339--MISCELLANEOUS MANUFACTURED COMMODITIES 325--CHEMICALS 335--ELECTRICAL EQUIPMENT, APPLIANCES & COMPONENTS 311--FOOD MANUFACTURES 315--APPAREL MANUFACTURING PRODUCTS 910--WASTE AND SCRAP 326--PLASTICS & RUBBER PRODUCTS 332--FABRICATED METAL PRODUCTS, NESOI 316--LEATHER & ALLIED PRODUCTS 337--FURNITURE & FIXTURES 920--USED OR SECOND-HAND MERCHANDISE 990--SPECIAL CLASSIFICATION PROVISIONS, NESOI 331--PRIMARY METAL MFG 327--NONMETALLIC MINERAL PRODUCTS 322--PAPER 112--OTHER ANIMALS 312--BEVERAGES & TOBACCO PRODUCTS 323--PRINTED MATTER AND RELATED PRODUCTS, NESOI 314--TEXTILE MILLS PRODUCTS 113--FORESTRY PRODUCTS, NESOI 212--MINERALS & ORES 313--TEXTILES & FABRICS 511--NEWSPAPERS, BOOKS & OTHER PUBLISHED MATTER, NESOI 321--WOOD PRODUCTS 324--PETROLEUM & COAL PRODUCTS 114--FISH, FRESH/CHILLED/FROZEN & OTHER MARINE PRODUCTS TOTAL $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2005 66,588,843 124,837,943 775,631,762 50,527,158 24,136,181 20,139,042 10,154,106 8,496,650 10,201,650 109,516 1,489,314 7,713,842 2,871,550 1,173,064 1,195,920 8,167,044 2,849,993 3,548,073 1,010,129 16,913,321 1,865,029 580,550 852,042 72,472 12,531 285,694 289,666 76,489 124,386 27,965 1,141,970,612 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2006 90,043,600 180,923,890 437,808,752 63,412,147 45,735,319 24,677,107 28,925,550 11,969,068 15,709,641 150,604 4,016,531 12,798,845 4,100,340 1,741,339 1,088,926 6,806,074 3,567,920 2,695,708 1,811,971 291,876 1,347,549 619,770 985,527 11,245 31,015 141,589 241,454 137,595 317,025 251,774 942,359,751 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 2007 111,448,506 413,298,606 110,671,993 82,388,597 55,300,032 36,417,754 26,593,709 21,043,483 25,002,238 1,941,865 7,951,655 16,963,061 7,622,387 3,411,840 2,775,454 10,058,882 3,596,624 4,462,014 1,001,859 259,352 2,400,722 665,865 1,356,235 37,734 372,869 364,206 193,302 133,048 211,141 947,945,033
65

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2008 117,577,014 279,270,524 211,038,940 157,190,995 113,051,058 48,221,853 35,355,351 31,047,819 38,030,429 974,421 16,473,347 31,688,880 11,373,978 7,346,763 5,786,536 4,871,372 6,603,286 5,159,622 2,194,723 12,740,666 2,407,985 3,697,035 2,564,762 25,715 40,148 1,031,023 213,626 1,714,267 8,455,808 266,949 1,156,414,895

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2009 244,251,494 281,426,150 185,075,155 158,330,005 54,177,338 45,481,414 22,154,752 42,500,551 29,801,563 4,777,348 17,649,448 15,581,749 7,523,944 4,559,122 5,115,116 6,302,381 4,319,471 6,907,247 1,112,656 5,063,932 2,079,908 1,627,118 754,922 288,881 224,949 866,040 265,159 655,880 300,113 330,356 1,149,504,162

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2010 380,736,586 365,779,096 226,024,664 68,013,863 58,837,820 48,406,318 38,552,674 35,258,991 28,465,002 27,718,850 16,239,935 13,886,210 11,202,830 8,978,402 6,845,490 6,288,874 4,943,383 3,454,707 2,036,250 1,949,697 1,572,364 1,156,053 907,105 677,613 585,690 550,533 447,159 336,866 318,718 260,687 1,360,432,430

California export by sector.

65

http://tse.export.gov/TSE/

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Services
The sector for import of services to the UAE is heavily dominated by transportation, construction, financial, and travel services. High product quality, reliability, training, and after-sale service continue to be attractive features for U.S. service exports. The UAE imported $42,733.0 million worth of services in 2008 ($25,478 million in transportation-category and $13,287 million in travel-category), and exported services worth $8,958.0 million.66 As the UAE is not a member of the OECD, no service-import/export statistics between the country and the U.S. is available.

66

http://unstats.un.org/unsd/servicetrade/

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Trading With the UAE


The UAE, although an attractive market for a wide variety of products, can be a difficult place for American firms to do business. It is not a market for the first-time exporter. The legal system protects local entities. Foreign companies find it difficult to legally dismiss a non-performing local agent without protracted litigation, and it is difficult, if not impossible, to sell without a local agent. Payments tend to be slower than in the US and Europe. In the Middle East, personal relationships are essential when conducting business. Maintaining a local presence offers distinct advantages. Local business and government officials prefer to deal with someone they know and trust.67

Culture
Some cultural highlights to consider in the UAE are: Culture is very much tied to religion. Male dominated society. Women hold the power in the home. Family unit is very important; families are big and people tend to live close to relatives. Generations will often live together in the same house. Family and friendship ties are more important than meritocracy. Family and tribal background is very important influential families and tribes have a lot of clout in many parts of the UAE society. Muslim Customs As a Muslim country, some of the basic Muslim customs you should now of are: Dietary: In Islam, forbidden items include pork and all its products; animals improperly slaughtered (has to be slaughtered in Halal-tradition); alcoholic drinks, including all forms of intoxicants; carnivorous animals; birds of prey; and any food contaminated with any of these products. Liquor: Is strongly prohibited. Gambling: Is strongly prohibited. Interest: A common misperception is that interest is prohibited in Islam, which is not the case. But usury (interest) is prohibited.

Business Customs
Meeting & Greeting Status is important and must be recognized by using the correct title when addressing someone. It is customary to use Sheikh (chief) (or Sheikha for a woman), Sayed (Mr.), Sayeda (Mrs.). Arabs generally address people by their first names, so John Smith will be addressed as Mr. John (or Mr. Mohammed in the reverse situation). It is important to greet and acknowledge the most senior person in the room first. When doing business in the Middle East, handshakes are always used and can last a long time. Etiquette
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recommends that one waits for the other to withdraw their hand first before doing the same. For a man introduced to a woman, it is advisable to wait and see if a hand is extended. Particularly in public, Muslim women are unlikely to shake a mans hand. A Western woman introduced to a Muslim man might also wait to see if he offers his hand. Always use the right hand. Among Muslims, the left hand is reserved for bodily hygiene and considered unclean. The right hand should be used for eating, shaking hands, or handing over an item. Do not be surprised if your hand is held while you are led somewhere. Holding hands among men is common and does not carry the same connotations as it does in the West. Many people in the Middle East claim a more modest area of personal space than is usual in the West. Accordingly, it can seem rude for an individual to step away when another individual is stepping closer. Special respect is paid to older people in many circumstances. This can include standing when older people enter a room, always greeting older people first, standing when speaking to ones elders, and serving older people first at a meal. Gifts In terms of gift giving, something personal can be a very meaningful touch. It would be appropriate, although not expected, to present a small or token gift to an individual to whom one is being introduced, say for example a book one has written or very much enjoys, a special company memento, or something related to ones background or hobbies. However, it is not advisable to give a pen or a clock just for the sake of providing a gift. Very senior leaders may or may not provide a gift although it would not be required for one to provide a gift in return.68 Gender & Attire Men should avoid touching and prolonged eye contact with Muslim women. It is considered improper to inquire about a mans wife or daughter. It is polite to ask about family or health, but never specifically about any female members. Family life that involves female members is kept extremely private. The modesty of ones personal attire is important in the Middle East. Men and women should wear very non-revealing clothes (covering shoulders, arms and legs, and closed-toe shoes) to avoid offending locals. When visiting religious sites, women must also cover their hair. In some circumstances shoes should be removed, such as at the entrance to religious sites. It is acceptable to wear a bikini/swimming costume or swimming trunks for men on the beach, but it is an arrestable offence to go topless or wear a thong. Swimming attire is fine for the beach under these rules, but it is not acceptable once you leave the beach; don't walk around the streets in a bikini.69 Relationship In the Middle East, doing business revolves much more around personal relationships, family ties, trust and honor. It is therefore important that business relationships be built on mutual friendship and trust. As a consequence of this, if you have friends or contacts in the right places, rules may be bent or things may be done more quickly. The system works on the basis that favors are reciprocated and never forgotten. Initial meetings are all about relationship-building; building trust and establishing compatibility. One should engage in conversation and try to get to know the person with whom one is
68 69

http://www.usuaebusiness.org/index.cfm?fuseaction=section.home&id=61 http://gulfnews.com/news/gulf/uae/general/mind-your-language-behaviour-and-dress-in-the-uae-1.118951

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doing business. Age, money, and family connections are all key determining factors of a persons status. Who you are is usually more important than what you have achieved. It is therefore not uncommon to find many members of one family working for the same company. In conversation, it is always good to ask about the health and well being of a counterparts family. How many children? (Do not ask how many wives!) What are the children doing? Where have they studied or about to study? Taking interest in a counterparts family is an important way of building early trust and connection. Meetings & Negotiations Emiratis are not too punctual, but expect you to be. Meetings could be interrupted by calls from family members, as family is very important in the UAE. When holding business meetings in the UAE, some foreign businesspeople suggest holding the meeting in the lobby of an international hotel rather than in an office. The advantage of this is that there will be fewer people wandering in and out of the meeting. Also, your counterparts willingness to come to you demonstrates a true interest. You will also have access to refreshments that may be more to your taste.70 Government offices open at 7:30 am Sunday through Thursday, closing at 2 p.m. for the day. Local businesses often close from 1:00 p.m. until 4:30 or 5:00 p.m. and then reopen for several hours. Visitors should plan appointments around these timings, as UAE businesspeople may not adjust their schedules in order to meet during their closing time. Private UAE companies close Friday and Saturday afternoon. Business meetings are rarely, if ever, held on Friday or Saturday afternoon, which UAE nationals value as family time.71 Religion Insulting Islam or the prophets is a serious offense. It is also illegal to bring in artifacts that offend Islam. Muslims follow the doctrines of the Koran, which forbids consumption of alcohol, pork products, and shellfish. It is best not to consume these in the presence of government or religious officials. It is also prohibited to drink alcohol in public. Muslims pray five times a day. You will likely hear the calls to prayer, which occur roughly between dawn and sunrise, about half an hour after mid-day, midafternoon, right after sunset, and an hour and a half after sunset. Other People in the Middle East may communicate with a vocal emphasis, volume and body language that others might associate with being angry or upset. Responding to anger or seriousness with light laughter or a smile is common, and does not mean youre not being taken seriously.72 Kissing in public and public displays of affection is frowned upon. Homosexuality and indecent gestures could land you in jail.73 Useful Expressions The customary greeting is As-salam alaikum (peace be upon you) to which the reply is Wa alaikum as-salam (and upon you be peace). Goodbye is Ma salamaa Please is Min Fudlek and thank you is Shukran
70 71

http://www.cyborlink.com/besite/uae.htm DOC: Country Commercial Guide for U.S. Companies 72 http://www.usuaebusiness.org/index.cfm?fuseaction=section.home&id=61 73 http://gulfnews.com/news/gulf/uae/general/mind-your-language-behaviour-and-dress-in-the-uae-1.118951

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Inshallah means God willing and is a common response when agreeing on next steps or a particular course of action. Saying "Bismillah" (in the name of God) before eating and drinking. Saying "Alhamdulillah" (all gratitude is for only God) when sneezing and responding with "Yarhamukallah" (God have mercy on you).

Business Travels
Police For police matters, contact the Dubai (http://www.dubaipolice.gov.ae/) or Abu Dhabi (www.adpolice.gov.ae/en/) police. The UAE police force have had problems with corruption, and government officials have been trying to address this issue.74 The emergency number is 999.75 Entering the UAE US citizens must present a valid passport at the port of entry as well as a 14-day transit visa or 30-day tourist visa. Visas are easy obtainable except for Israeli nationals or visitors with Israeli stamped passports. Your luggage may be searched by customs for illegal or offensive material.76 Visas and expenses One year work visas cost around $3,000. Investor visas cost $450-$1,500 and are valid for 3 years. Note that 7-8 days are required for visa stamping. The authorities have slashed 6-month work permit fees and employment fees (now around $100) by up to 95% in 2011. Fees for hiring Emiratis and CCG-nationals have been completely removed. Overall expatriate expenses are comparable to Western countries. The housing expenses are around $7,000 per accommodation (studio flat) and a car cost around $18,000 for a medium size vehicle. Food and accommodation costs are generally higher, whereas cars and electronics are cheaper.77 Entertainment Abu Dhabi and Dubai has a lot to offer the business traveler. Leisure activities include health clubs and spas, desert safaris, motor racing, golf, horseback riding, ice skating, skiing, sandbording, water sports, yachting, and as spectator you could watch all classical British sports and most forms of motor racing. The UAE also has world-class shopping (the worlds largest mall, Dubai Mall, with 1,200 stores), and very generous tax-free rules. Dubai was the 8th most visited city in the world in 2007. Abu Dhabi has fewer attractions, but is lusher than Dubai and offers more traditional culture.78 Although the official picture is a promiscuous one; Dubai is unofficially known as the party and prostitution capital of the Middle East. Mainly Russians and other Middle eastern come to Dubai to party.79

74

http://gulfnews.com/news/gulf/uae/general/dubai-police-chief-promises-zero-tolerance-on-corruption1.523573 75 http://travel.state.gov/travel/cis_pa_tw/cis/cis_1050.html#crime 76 http://www.asiatravel.com/uae/visa.html 77 http://www.freezonesuae.com/faqs.htm 78 Terry Carter, Lara Dunston: Dubai 79 http://www.escapeartist.com/efam/58/Nightlife_in_Dubai.html

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Import and Export Procedures


Tariffs and Import Taxes GCC states formally implemented a single import tariff of 5 percent (calculated on CIF value) on most goods January 1, 2003. Companies located in multiple Free Zones are exempt from the tariff on imports and re-exports that do not leave the zones. Import Licenses and Trade Barriers Before you import goods to the United Arab Emirates you should find out what rules apply to your particular goods. In order to import certain commodities, e.g. foodstuffs or textiles, you may have to present a permit or a health certificate. Other examples of goods for which permits are required are arms, hypodermic syringes and needles, animals and plants of endangered species, wine and spirits.80 An import license is generally not required unless a place of business is set up in the UAE. In other words, foreign businesses exporting to the UAE but without a regular or continuing business presence in the UAE do not need a license. Licenses available include trade licenses, industrial licenses, service licenses, professional licenses, and construction licenses. In order to do business in the UAE outside of one of the free zones, a foreign business must have a UAE national sponsor, agent, or distributor in compliance with the Commercial Agency Law. To bid on federal projects, a supplier or contractor must either be a UAE national or a company in which UAE nationals own at least 51 percent of the share capital. Federal tenders must be accompanied by a bid bond in the form of an unconditional bank guarantee for five percent of the value of the bid.81 JAFZA, the Jebel Ali Free Zone in Dubai (http://www.jafza.ae/), managing authority authorizes three types of licenses: a general license, a specific license, and a national industrial license. The licenses are valid while a company holds a current lease from the free zone authority and are renewable annually as long as the lease is in force. The special license is issued to companies incorporated, or otherwise legally established, within the free zone or outside the UAE. In such cases, no other license is required, and the ownership of the company may be 100 percent foreign. A company with a special license can only operate in the JAFZA or outside the UAE, but business can be undertaken and sales made in the UAE through or to a company holding a valid Dubai Economic Department license. However, a company with a special license can purchase goods or services from within the UAE.82 Parallel Import The UAE is trying to address piracy, and is the most active Middle Eastern country in this regard. In 2009, 6 foreign nationals were jailed due to illegal parallel import of DVDs, this was the first case were parallel import lead to a conviction in the Middle East. But the grey market in the UAE is still huge, and customs controls somewhat lax.83

80 81

http://www.schumachercargo.com/articles/shipping-to-uae.html http://fedex.com/us/international/irc/profiles/irc_ae_profile.html#C09 82 http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm 83 http://www.english.globalarabnetwork.com/200910123115/Related-news-from-UAE/uae-sees-firstimprisonment-for-parallel-imports-in-the-middle-east.html

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Import Documentation The documents required from the exporter include a commercial invoice, a bill of lading, and other special certifications as may be necessary. There are no stipulations as to the form of commercial invoices, bills of lading, or other shipping documents. Goods that are liable to duty and are shipped on consignment should be accompanied by an invoice as though they had been sold. Shipping documents may be made out in the English language. The standard bill of lading (or an airway bill) suffices for shipment to the UAE. The exact process can be found at: http://new.dubaitrade.ae/en/knowledgecentre/processes-a-procedures/216-diagram-of-import-process-for-dtp. Labeling and Marking Labeling and marketing requirements are only applicable for food products.84 Corruption There is no evidence that corruption of public officials is a systemic problem; however, in 2008, UAE authorities investigated several high-profile corruption cases. Several senior Emirati and foreign nationals were dismissed and detained. The UAE has signed the UN anti-corruption convention.85

Standards
The UAE uses the metric system and products for sale in the UAE should be adapted to it whenever possible. U.S. exporters not using the metric system have a disadvantage in world markets since overseas buyers are reluctant to accept products that are non-metric. Electronic equipment also runs on different voltage (220V instead of US 120V) and electrical frequency (50 Hz instead of U.S. 60 Hz).86

Intellectual Property Rights


The UAE government continues to lead the region in protecting intellectual property rights (IPR). Although the UAE is the leader in the region at enforcing intellectual property rights and the Emirate of Dubai is very pro-active in enforcement, many stakeholders believe that the government could do more to fight piracy in the other emirates and to deal with the problems of transshipping of counterfeit goods. In 2008, the UAE launched several campaigns against piracy and seized and destroyed thousands of pirated auto spare parts, perfumes, air fresheners, electrical devices, sport equipment, medicines, movies and music discs. The value of seized pirated goods in 2007 amounted around $800 million. The UAE's Trademark Law, issued in July 2002, confirms that the UAE will follow the International Classification System and that one trademark can be registered in a number of classes. The law provides that the owner of the registration shall enjoy exclusive rights to the use of the trademark as registered and can prevent others from using an identical or similar mark on similar, identical or related products and services if it causes confusion among consumers.87

84

http://www.globaltrade.net/international-trade-import-exports/f/business/text/United-Arab-Emirates/Legaland-Compliance-Labeling-and-Marking-Requirements-in-U.A.E.html 85 http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm 86 http://metricviews.org.uk/2010/01/will-the-european-commission-challenge-us-labelling-rules/ 87 http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm

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Sales & Marketing


The commercial tradition of the UAE is that of the middleman or trader acting as a conduit for goods from large manufacturers to South Asia, the Gulf, and East Africa. Today, with Dubai emerging as the hub of the Gulf, the UAE still serves those traditional markets along with those of North, South, West, and Central Africa, and the rest of the Middle East. The business style prevalent is one that puts an emphasis on personal relationships and perceptions of integrity. Traditional approaches to business are beginning to change. There is a growing emphasis on quality, after-sales service, and maintenance requirements and costs. A new trend of impersonal businessman/consumer has changed some of the business style. However, it does not yet represent the dominant practice. Personal relationships, particularly when UAE nationals are involved, still predominate. Since these relationships take time to nurture, U.S. firms are advised to invest time in the market with preferably a local presence or at least very frequent trips. This is not an activity that can be done long-distance. Face-to-face contact is essential. In addition, U.S. firms should seek a local sponsor, agent, or partner with sufficient access and influence in those circles most relevant to that particular business. In addition to personal relationships, price remains most often the dominant-buying factor. For U.S. firms selling to traders, which are the dominant business type in the UAE, there is no substitute for price. Government procurement also places heavy emphasis on selection of the low bidder, as long as the lowest price bidder is compliant with all technical specifications. Even though the UAE is relatively less conservative than some other Gulf States and English is widely spoken, sensitivity to local traditions and Islamic beliefs is essential. The use of Arabic in packaging and advertising is both desirable and effective (and sometimes mandatory) in marketing consumer goods. U.S. manufacturers and exporters enjoy an excellent reputation for product technology, quality and durability and the U.S. market share is expected to increase. U.S. companies face tough competition from European and Asian companies in the UAE, who generally have a larger presence in the region and/or offer comparable products and services at very competitive prices. Providing after-sale maintenance services is essential and U.S. companies are advised to establish a presence in the UAE to be able to compete. In general, U.S. companies with a manufacturing presence in the UAE or in any of the GCC countries are most likely to be able to compete in the UAE market, given the relatively low cost of production compared to other places.88

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Organizations and Information Sources


Dubai World Trade Center (http://www.dwtc.com/) Abu Dhabi World Trade Center (http://www.wtcad.com/) Dubai Customs (www.dxbcustoms.gov.ae) Abu Dhabi Customs (www.auhcustoms.gov.ae) Emirates Authority for Standardization and Metrology (ESMA) P.O. Box 2166, Abu Dhabi, UAE, Phone: +971 2 671 1110, Fax: +971 2 671 5999, Email: uaetbt@esma.ae Contact: Mr. Walid Bin Falah Al Mansouri, Director General Emirates Standardization Department P.O. Box 2166, Dubai, UAE, Phone: +971 2 676 3743, Fax: +971 2 671 5999, Email: uaetbt@esma.ae, Contact: Mr. Ali Omar, Director Emirates National Accreditation system (ENAS) P.O. Box 48666, Dubai, UAE, Phone: +971 4 295 1737, Fax: +971 4 294 4428, Email: accreditation@esma.ae, Contact: Mr. Abdula Hamid Alwan, Director Emirates Conformity & Assessment Scheme P.O. Box 48666, Dubai, UAE, Phone: +971 4 295 1626, Fax: +971 4 294 4428, Email: basim@esma.ae, Contact: Eng. Basim Zayer US Department of Commerce (http://www.buyusa.gov/uae/en/) has extensive information on trade and also facilitates contacts with UAE organizations. US Embassy in Abu Dhabi (http://uae.usembassy.gov/) Senior Commercial Officer: Christian Reed, US Embassy, Commercial Section, P.O. Box 4009, Abu Dhabi, Tel: (971-2) 414-2665, Fax: (971-2) 414-2228, E-mail: abu.dhabi.office.box@mail.doc.gov US Consulate in Dubai (http://dubai.usconsulate.gov/) US Department of Commerce (http://www.buyusa.gov/uae/en/) US Government Trade Related Contacts in Washington, D.C. UAE Desk Officer: Tyler Hoffman, International Trade Administration, US Department of Commerce, 14th St. & Constitution Avenue, N.W., Washington, D.C. 20230-0001 Tel: (202) 482-3742, Fax: (202) 482-0878, Email: tyler_hoffman@ita.doc.gov UAE Embassy in US (http://www.uae-embassy.org) 1255 22nd Street, N.W., Suite 700, Washington, D.C. 20037, Tel: 202-243-2400, Fax: 202-243-2432 Abu Dhabi C.O.C. (http://www.abudhabichamber.ae/English/Pages/Default.aspx) National US Arab Chamber of Commerce (http://www.nusacc.org/) 1100 New York Ave., N.W., East Tower, Suite 550, Washington, D.C. 20005, Tel: 202-289-5920 Fax: 202-289-5938, Email: info@nusacc.org American Business Council of the Gulf Countries (ABCGC) (http://www.abcgc.us) 52 Court Street, Plymouth MA 02360, Ph:(508) 732-8920, Fax. (508) 732-8919 The American Business Council of Dubai and Northern Emirates (www.abcdubai.com) P.O. Box 37068, Dubai, UAE, Tel: 971-4-340-7566; Fax: 971-4-340 -7565, Email: amchamdx@emirates.net.ae The American Business Group of Abu Dhabi (www.abg-ad.com) P.O. Box 43710, Abu Dhabi, UAE, Tel: 971-2-671-1141; Fax: 971-2-671-1017, Email: abgroup@emirates.net.ae

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Federation Chamber of Commerce & Industry (http://www.fcci.gov.ae/) P.O. Box 3014, Abu Dhabi, UAE, Tel: 971-2- 621-4144; Fax: 971-2-633-9210, Email: fcciauh@emirates.net.ae Abu Dhabi Chamber of Commerce & Industry (www.adcci-uae.com) P.O. Box 662, Abu Dhabi, UAE, Tel: 971-2-621-4000, Fax: 971-2-621-5867, Email: services@adcci.gov.ae Dubai Chamber of Commerce & Industry (www.dubaichamber.ae) P.O. Box 1457, Dubai, UAE, Tel: 971-4-228-0000; Fax: 971-4-221-1646, Email: info.center@dcci.gov.ae Sharjah Chamber of Commerce & Industry (www.sharjah.gov.ae) P.O. Box 580, Sharjah, UAE, Tel: 971-6-554-1444; Fax: 971-6-554-1119, Email: scci@sharjah.gov.ae, Ajman Chamber of Commerce & Industry (http://www.ajcci.co.ae) P.O. Box 662, Ajman, UAE, Tel. 971-6-742-2177, Fax. 971-6-742-7591, Email: ajmchmbr@emirates.net.ae Fujairah Chamber of Commerce, Industry & Agriculture (http://fujairahchamber-uae.com) P.O. Box 738, Fujairah, UAE, Tel. 971-9-222-2400, Fax. 971-9-222-1464, Email: fujccia@emirates.net.ae Ras Al Khaimah Chamber of Commerce, Industry & Agriculture (http://www.rakchamber.com) P.O. Box 87, Ras Al Khaimah, UAE, Tel. 971-7-233-3511, Fax. 971-7-233-0233, Email: rakchmbr@emirates.net.ae Umm Al Quwain Chamber of Commerce & Industry P.O. Box 436, Umm Al Quwain, UAE, Tel. 971-6-765-1111, Fax. 971-6-765-5055, Email: uaqcci@emirates.net.ae Ministry of Environment & Water (http://www.moew.gov.ae) P.O. Box 213, Abu Dhabi, UAE, Tel. 971-2-449 5111, Fax. 971-2-449 5154, Email: archieves@maoew.gov.ae Ministry of Finance & Industry (http://www.uae.gov.ae/mofi) P.O. Box 433, Abu Dhabi, UAE, Tel. 971-2-672-600, Fax. 971-2-6768414, Email: fedfinem@emirates.net.ae Abu Dhabi Council for Economic Development(ADCED) P.O. Box 126666, Abu Dhabi, UAE, Tel: 971-2-691 3300, Fax. 971-2-691 3400, Email: info@adced.ae Abu Dhabi Water & Electricity Authority (http://www.adwea.gov.ae/) P.O. Box 422, Abu Dhabi, UAE, Tel. 971-2-694-3333, Fax. 971-2-694-3491 Environment Agency Abu Dhabi (http://www.ead.ae) P.O. Box 4553, Abu Dhabi, UAE, Tel. 971-2- 681 7171, Fax. 971-2-681 008 Dubai Electricity & Water Authority (http://www.dewa.gov.ae) P.O. Box 564, Dubai, UAE, Tel. 971-4-324-4444, Fax. 971-4-324-8111 Sharjah Electricity & Water (http://www.sewa.gov.ae) P.O. Box 135, Sharjah, UAE, Tel. 971-6-528-8888, Fax. 971-6-528-8000

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Fairs and Trade Shows


2nd Annual Arab Investment Summit 2011 (http://www.invsummits.com/home.html) U.S. Governments trade missions (http://www.export.gov/tradeevents/index.asp) UAE trade show list for 2011 (http://www.biztradeshows.com/unitedarabemirates/) UAE trade show list for 2011 (http://www.eventseye.com/fairs/c1_trade-shows_uae-unitedarab-emirates.html) UAE trade show list for 2011 (http://www.buyusa.gov/uae/en/19.html) 5-10 June 2011 official trade mission focus on transportation, energy, and infrastructure (http://trade.gov/trade-missions/mission-statements/transportation-and-energy-products-andservices-trade-mission-to-qatar-and-uae-june2011.asp)

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Market Entry Strategies


Market entry and administrative procedures are a streamlined process in the UAE. A City Mayors survey rated Dubai as 44th among the world's best financial cities in 2007. Dubai has ranked 1st in the Middle East in the Worldwide Centers of Commerce Index. The World Banks 2011 ranking for ease of doing business ranks the UAE nr 40 in the world (down from nr 37 in 2010):

Closing a Business Enforcing Contracts

Trading Across Borders


Paying Taxes Protecting Investors Getting Credit U.S. UAE

Registering Property
Dealing with Construction Permits Starting a Business

Ease of Doing Business Rank


0 20 40 60 80 100 120 140 160

The UAE on the other hand scores poorly on investor protection, financing, and contract enforcement.

89

Setting up a company in a Free Trade Zone (FTZ) The Free Zone Authority (www.jafza.ae/) assesses a companys requirements and their feasibility for starting a company in a through a questionnaire and a duly filled in license application is to be submitted. Provisional approval is given along with a specimen lease agreement; personnel documents for the license requirement are submitted. After the meeting of the company representative and the concerned authority to finalize the details of the project, actual documents are processed. A limited liability companies is restricted to trading and industrial activities, and civil business companies are established for practicing professional activities.90 Recruitment There are a large number of employment agencies, recruitment agencies, consultants and job agencies in the UAE, primarily online. A few of the larger and more well-known job search firms operating in Dubai include BAC Middle East, Clarendon Parker, IQ Selection, Kershaw Leonard and SOS Recruitment.
Top internet recruitment agencies websites Bayt.com Dubaidonkey.com Gulftalent.com Jobsindubai.com Dubizzle.com Jobtrackme.com Mawaride.com Monster.com Strategiy.com Jobs.theemiratesnetwork.com Classified ads Gulf News www.gulfnews.com/ Khaleej Times www.khaleejtimes.com/

89 90

http://www.doingbusiness.org/rankings http://www.rhsgroup.com/rhs_business_division/faq.htm

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Distribution The UAE, and especially Dubai, is a global distribution hub. The UAE has perhaps the worlds most developed logistics capabilities. Airports and ports in Dubai and Abu Dhabi have vast connections to the entire globe. The airline companies Emirates Airlines (Dubai) and Etihad Airlines (Abu Dhabi) are both backed with huge resources by their respective emirate. Emirates Airlines is among the worlds largest. All global logistics companies operate in the UAE, and comprehensive listing of local distributors can be found at: http://www.indexuae.com/Top/Business_and_Economy/Services/Distributors/1. Agents The UAE legal system distinguishes between the two forms of commercial agents- the registered and the unregistered commercial agent. Local companies prefer to work as registered agents for the law favors this arrangement. On occasion, local companies will accept to go the unregistered way based on good faith, but almost always prefer exclusivity. UAE law does not distinguish between an agent and distributor, referring to both as commercial agents. The Ministry of Economy and Commerce handles registration of commercial agents. Selection of the right agent continues to be an important decision. The best protection is serious research and due diligence prior to embarking on an agreement. Agreements with registered agents are not easily terminated, except with sufficient cause as determined by a government committee that has historically ruled in favor of the local agent. In most cases, compensation to a terminated agent is required even if the committee rules for the foreign firm. Only UAE nationals or companies wholly owned by UAE nationals can register with the Ministry of Economy and Commerce as local agents. The D.O.C. offers a matching service (http://www.export.gov/salesandmarketing/eg_main_018195.asp).91 Joint Ventures and Licensing In a joint venture profit and loss distribution can be arranged as desired even though UAE majority ownership is mandatory. Licensing of manufacturing processes is a growing market, especially with the UAE's desire to increase the quality and diversity of local production. The total market for industrial licenses remains relatively small due to the limited manufacturing done in the UAE. The majority of licensing in the UAE is done for fabricating and/or marketing of trademarked items.

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UAE Water Industry


This part of the report is a contemporary description of the United Arab Emirates (UAE) water industry. That roughly includes water resource management, irrigation services, water supply and sanitation services. According to a World Bank report, the Middle East has five percent of the world's population but only one percent of the water. The consulting firm Research and Markets estimate that over US$ 250 billion will be invested in the Gulf Cooperative Council (GCC) countries water and desalination projects, over the next 10 years. Water shortages are an ongoing concern. The UAE has very limited rainfall or groundwater but the worlds third largest per capita water consumer (550 liters per person per day) after the U.S. and Canada; in part a reflection of the subsidized prices that Emiratis pay. Peak water demand in Abu Dhabi is estimated to be around 690m gallons/day (gal/d). In Dubai peak demand for desalinated water stood at 239m gal/d compared with a production capacity of 278m gal/d. Groundwater wells in Dubai can only provide about 36m gal/d.92 Officials estimate that the emirates total consumption of water resources exceeds at least 25 times its natural recharge capacity. Dubai had a 6% month-on-month increase in water consumption in the summer of 2010. Conversion Measures 1 m3 = 220 Imperial Gallons (IG) 1 IG = 0.0045 m3 1 m3 = 264 Gallons (G) 1 G = 0.0038 m3 1 IG = 1.2 G Abbreviations and Acronyms ADWEA ADWEC DEWA ENG FEWA IWPP SEWA SWCC
92

1 Ha = 2.47 Acres 1 Acre = 0.405 Ha 1 Liter = 0.264 Gallons 1 G = 3.785 Liters 1 IG = 4.54 Liters

Abu Dhabi Water and Electricity Authority Abu Dhabi Water and Electricity Company Dubai Electricity and Water Authority Emirates National Grid Federal Electricity and Water Authority Integrated Water & Power Plant Sharjah Electricity and Water Authority Saline Water Conversion Corporation

STP

Sewerage Treatment Plant

Economist Intelligence Unit: UAE Country Report

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Quick Facts
Some basic figures for the UAE water segment:
Indicator UAE Socioeconomic indicators Population with access to improved drinking water (%), 2002 100 - Urban 100 - Rural 100 Percentage of population with access to improved sanitation, 2002 100 - Urban 100 - Rural 100 Water Resources Average precipitation (mm/yr), 19982002 78.0 Internal water resources - Surface water (1,000 million m3) 0.2 - Ground water (1,000 million m3) 0.1 Total internal water resources (1,000 million m3) 0.2 Total external water resources (1,000 million m3) 0.0 Total renewable water resources (1,000 million m3) 0.2 Per capita renewable water resources available (1,000 million m3) 0.1 Total renewable water resources (as % of total water use) 6.5 Water Withdrawls, 2002 Agricultural (1,000 million m3) 1.6 Domestic (1,000 million m3) 0.5 Industrial (1,000 million m3) 0.2 Total (1,000 million m3) 2.3 Virtual Water Virtual water imports in crops (1,000 million m3) 1.7 Virtual water imports in livestock (1,000 million m3) 2.5 Total virtual water (1,000 million m3) 4.2 Supplemental (desalinated and retreated and reused (1,000 million m3) 0.6 Water scarcity (%) 1,488.20 Water self-sufficiency (%) 35 Water dependency (%) 65 MENA Source

90 UNICEF-WHO database 96 UNICEF-WHO database 81 UNICEF-WHO database 76 UNICEF-WHO database 90 UNICEF-WHO database 57 UNICEF-WHO database 181.6 FAO AQUASTAT FAO AQUASTAT 153.1 FAO AQUASTAT 77.2 FAO AQUASTAT 198.7 FAO AQUASTAT 85.5 FAO AQUASTAT 284.3 FAO AQUASTAT 1.1 FAO AQUASTAT 133.0 FAO AQUASTAT 188.3 FAO AQUASTAT 17.5 FAO AQUASTAT 7.9 FAO AQUASTAT 213.8 FAO AQUASTAT 57.8 Chapagain and Hoekstra 2003 14.4 Chapagain and Hoekstra 2003 74.4 Chapagain and Hoekstra 2003 4.8 Chapagain and Hoekstra 2003 Chapagain and Hoekstra 2003 Chapagain and Hoekstra 2003 Chapagain and Hoekstra 2003

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Water in the UAE


In the UAE, supply of water usually comes from desalinated water and water wells. There has also been an increase in wastewater treatment facilities. Groundwater has traditionally sustained families, livestock and farms through wells that lead into spring-fed aflaj irrigation systems. In 2003 the current Ministry of Environment and Water reported that 76,556 wells were in use throughout the UAE. Many of the wells and springs that bring up the ancient water deep beneath the earth have run dry over time. Aquifers - which are an underground layer of water-bearing permeable rock or unconsolidated materials - are being emptied of their natural fresh water. The usage by sector in the Abu Dhabi Emirate is 83 percent used for irrigation (agriculture, forestry and amenities), 15 percent for public purposes and less than 2 percent for industrial purposes. To save water the government has constructed 114 dams to store a capacity of 118 million cubic meters of water. It is estimated that 19.2 million cubic meters of water per year is needed to feed the aquifers with fresh water. Desalination produces 1.3 billion cubic meters of fresh water to meet the needs of the population and industry. Around 400 million cubic meters of water is produced from treated grey-water to irrigate parks. The UAEs heavy depletion of natural aquifers has forced it to use alternative methods of accumulating water. In the UAE as a whole, desalinated water accounts for 80% of total water consumption and the UAE produces 14% of global desalinated water. The UAE has emerged as the Middle East and North Africa (MENA) regions second largest producer of desalinated water, after Saudi Arabia. Other alternative methods to increase the groundwater recharge, is the construction of dams. There are currently about 35 dams and embankments throughout the UAE region with a total storage capacity of 80 million m. While most of these dams are basically built for recharging purposes, they also provide protection against damage caused by flash floods. Abu Dhabis water consumption is increasing at a rapid rate, Abu Dhabi Water and Electricity Company (ADWEC) notes that water demand increased annually by 8.1% in 2009. The company is anticipating robust long-term demand growth, with 2015 demand expected to reach 1.06bn g/d, rising to 1.28bn g/d by 2025. There has been an increasing insight among UAE and Emirate water sector officials that increased supply is not enough. Recently efforts have been made to promote reduced water usage among residents. The Emirates Wildlife Society in association with the World Wide Fund for Nature has launched a water campaign urging residents to adopt simple tips to reduce their water wastage; just a few simple changes could save each household up to 46 per cent, or 252 liters of water per person. In June 2010, Abu Dhabis main water regulator, the Regulation and Supervision Bureau (RSB), announced new trade effluent control regulations aimed at controlling effluent and boosting recycling of water. Companies will now face restrictions on the amount of wastewater they can discharge. Another area where Abu Dhabi is focusing resources is in the storage of desalinated water, through the optimization of the existing water supply network and fostering storage. The award of a new $430 million contract to a Lebanese/Korean consortium in late 2010 to build a major storage facility in Liwa is a sign of this new strategic push. In the Western Region, where Liwa is located, the aim is pump large volumes of desalinated water into the aquifer. Similarly in Dubai, construction is under way of a potable water reservoir in Mushrif with a 415 million gallon capacity.

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Groundwater
Today, fresh water is available only after 100 meters below ground level. Groundwater in the UAE is fast depleting because of prolonged drought conditions. About 80,000 wells including 13,000 in Abu Dhabi and 12,000 in Sharjah are at the risk of depletion and comprise high salinity, according to a scientific study conducted by the UAE University. About 40 per cent of wells in Fujairah and other Eastern Region are also affected, reported the 'Al Ittihad' newspaper. It is believed that scanty rainfall compared to previous years was the main reason for water depletion. Earlier, fresh water was available at six meters below ground level. As the UAE progressed, many industries and iron and steel plants also cropped up, which added pressure on the strategic reserve. Similarly, farmers have not changed to modern irrigation methods which can conserve and save water to a larger extend. Meanwhile, Abu Dhabi Food Control Authority (ADFCA) has warned of water shortage in 50 years if consumption by agricultural sector in the UAE continues at this pace without steps taken to conserve groundwater. The farms consume about 1.5 billion cubic meters of water annually, accounting for 52 per cent of total water consumption, according to the ADFCA. Water renewal is less than four per cent annually, which is a major challenge for the agricultural sector in Abu Dhabi, especially as rainfall does not exceed 100mm per year. ADFCA said it plans to educate farmers on reduced use of water so as to rationalize consumption in the next two years. About 95 per cent of farmers in Abu Dhabi depend on well water, while fresh water does not exceed one per cent, and not to mention the high rates of nitrates in the wells, ADFCA added. Irrigation efficiency in most of the farms is 30 per cent only because of wrong irrigation practices. There have been no incentives for farmers to change their irrigation practices either, as water has long been subsidized. ADFCA confirmed it aims to bring about a major shift in the agricultural sector in the emirate by 2013, a plan that includes environmental, social and economic development, apart from actively taking steps to help farmer rationalize water consumption. It said lack of cultivation of Rhodes grass in the Western Region would reduce water consumption for irrigation by more than 17 per cent at the emirate level. Of the total 23,682 farms, the cultivated area is 61,000 hectares.93

93

http://www.emirates247.com/news/emirates/groundwater-in-uae-depleting-fast-2010-10-24-1.308029

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Current Financial Situation


In a positive sign of growing confidence in the Dubai Inc government-owned corporation (GOC), DEWA issued a $1.0 billion five-year bond, the first greenback-denominated benchmark offering completed by a Dubai corporate since 2008 and the first time a Dubai parastatal has tapped the debt capital market since the Dubai World restructuring late in 2009. DEWA was reported, in Q3 2009, to be seeking a new loan in excess ofUS$1.0 bn., backed by export credit agencies. DEWA will stagger its developments as the emirate faced a sharp fall in expatriate population numbers in 2009-2010. In order to speed up project activity, in June 2009 DEWA sanctioned a cut in the bid bond for tenders exceeding $500 million, bringing it down from 5% to 2%. It also lowered the performance guarantee bond from 20% to 10%. Despite Abu Dhabis successful deployment of private-led development models, Dubai, Sharjah and the northern emirates have yet to adopt the IWPP template. However, in Q407 the government made the first moves to open up the northern emirates power and water sectors to private investment. Two of the largest projects that have been established in the UAE are the Jebel Ali sewerage treatment project and the Ajman sewerage plant project, with a combined project value of $340 million. Todays much weaker economic climate, poor investment flows and lower demand has resulted in delays and downscaling of projects, most notably in cash-strapped Dubai, but also, to some extent, in Abu Dhabi. This has raised fears among investors that some emirates might consider greater nationalization of the industry if major privately financed water projects encountered further delays. However, the success of some recent projects that had struggled to find funding initially, and signs of recovery in the global economy seems to have allayed such concerns for the moment. Dubai will proceed with its Hassyan 1 scheme as an IWPP, confirming that the tough economic climate could prove to be a trigger for economic reform.94 Work at Jebel Ali Sewage Treatment Plant The financial crisis and weak economic conditions have decreased demand and credit lines, which at one point threatened to force Abu Dhabi authorities to nationalize the whole water sector if the privately financed water projects had experienced further delays. But the recent rise in oil prices has put the UAE economy back on solid ground. Dubai has been hit hardest by the global economic downturn and the clutch of real estate developers that have driven the expansion of the states mega projects are now delaying, scrapping or downsizing their various schemes. The three major credit agencies downgraded DEWA to junk bond status due to uncertainty over the Dubai governments ability to support state-linked companies. In November 2010 Standard & Poors upgraded DEWA to BBB minus, the lowest investment grade status. The upgrade was due to a 2010 first-half result that was above expectations as well as DEWAs improved liquidity.95

94 95

http://www.zawya.com/projects/project.cfm/pid200307102504?cc http://www.thenational.ae/business/energy/s-p-raises-dewa-bond-issue-rating

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Government & Privatization


The UAEs water sector is organized along federal lines. Abu Dhabi Water & Electricity Authority (ADWEA) is the utility responsible for the supply of water in Abu Dhabi. In Dubai, Dubai Electricity & Water Authority (DEWA) operates the water and electricity sector. Sharjah Electricity & Water Authority (SEWA) is the authority with responsibility for the small emirates water and power supply. For the four northern emirates Ajman, Fujairah, Ras al-Khaimah and Umm al-Quwain, a single authority, the Federal Electricity & Water Authority (FEWA), is the water and power provider. ADWEA has also been the most active promoter of privatized water provision, with a series of independent water projects; ADWEA has built at least one new IWPP every year, besides expanding facilities. Despite Abu Dhabis successful deployment of private-led development models, Dubai, Sharjah and the northern emirates have yet to adopt the privatized project model. It has been hinted the Dubai government will soon issue two decrees that will end DEWAs monopoly and allow private companies into the industry. Whilst Privatization occupies the centre stage in the overhauling process of the power and water sector, the initiatives towards alternative energy sources in the form of solar and nuclear power has been considered a highlight of the regional power reforms.

Water Consumption
With the extremely high levels of water consumption, integrated management of water resources and on regulation rather than provision of services has been identified by local officials as more prudent. The UAE has seen some major advances, but on the whole, progress toward better management has been slow. Indeed, most countries in the world share the problem. Why has progress been so slow? One important reason is that countries have delayed tackling many important water reforms, such as reducing subsidies that encourage inefficient water use. Cheap drilling techniques, huge public sector projects that dammed and tapped into aquifers, and extensive irrigation have reduced renewable water resources and groundwater. Policies outside the water sector give farmers and businesses little incentive to use water well; it is not possible to tackle the problem through water sector reforms alone, all sectors and the whole water-cycle must be considered. For example, cropping choices are a key determinant of water use in agriculture (which accounts for some 85 percent of the MENA-regions water use) and they are affected far more by the price the farmer can get for those crops than by the price of irrigation services, which is typically a very small share of a farmers costs.96

96

The World Bank: Making the Most of Scarcity- Accountability for Better Water Management Results in MENA

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UAE Water Industry


The UAE production of water is approximately 510 million gallons per day of which 80 percent is desalinated seawater. An estimated $5.0 billion will be spent on improving water resources in the coming years because the need for water in general and desalinated water in particular, will triple to 713 million gallons per day by the year 2015. With Dubais water and power utility (DEWA) looking to follow ADWEAs private financing lead, the UAEs water sector stands an increased chance of attracting the kind of funding needed to meet the sharp uptick in demand that is expected over the next decade. Though the economic recession bit a chunk out of the countrys demand in 2008-2010, the historic trend is expected to resume with more vigor over the next four years. For 2011, a 7.4% increase in production is expected, a substantial increase on the previous year. By 2014, an additional 200mn g/d of water is expected to be in the UAE system the bulk of this new supply emanating from the expanded array of IWPPs from the ADWEA stable.97

Desalinization
The UAE is the Middle East and North Africas second-largest producer of desalinated water. The very energy intense desalinization process means a close linkage with energy supply in the UAE. The UAE in fact also has one of the fastest growing electricity sectors in the world. Electricity generation doubled between 1995 and 2003, reaching 50 terawatt/hour (TWh). The per capita electricity generation, in excess of 12,000 kilowatt-hours (kWh) is higher than the OECD average. Natural gas fuels over 99 percent of total electricity generation, the remainder being based on oil. Electricity generation in the UAE will continue to increase rapidly over the current decade, at 5.6 percent per year on average. Fuel requirements for desalination are expected to raise from 9 million tons of oil equivalent (Mtoe) in 2003 to 16 Mtoe, or nearly one-fifth of total primary energy demand in 2030. Desalinization-facilities have been built in connection to power stations. The scheduled Shuweihat S3 power plant is the first power plant built in recent years without a desalinization component.98 In 2003, International Power (IP) announced the successful conclusion of negotiations to finance the acquisition and expansion of the existing Umm Al Nar power and water desalination plant as part of Abu Dhabi's power and water privatization process. The IP-led consortium, which includes Tokyo Electric Power Company (TEPCO) and Mitsui, acquired a 40% equity interest in the facility from the Abu Dhabi Water and Electricity Authority (ADWEA) to form a new joint venture, the Arabian Power Company (APC). The remaining 60% of APC is owned by a holding company, itself wholly owned by ADWEA. The consortium also signed a 'take-or-pay' power and water purchase agreement with the Abu Dhabi Water and Electricity Company (ADWEC) to cover the entire output over a 23-year period. The new plant became operational in 2006. The total project cost was over $2.0 billion. Funding is a mix of nonrecourse project finance debt, shareholder equity and revenue from the operation of the existing plant.

97 98

http://www.researchandmarkets.com/research/258b8c/united_arab_emirates_water_report_q1_2011

http://www.uaeinteract.com/docs/Diab_bin_Zayed_Shuweihat_S3_to_increase_electricity_production_and_raise _foreign_investments_to_Dh65_billion/40044.htm

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Located on the Umm Al Nar Island, 12 miles to the east of Abu Dhabi city, the existing gas-fired plant has an installed power generation capacity of 2,400 MW and 170,000m/day Multi-Stage Flash Distillation (MSF) desalination capacity. It is the first facility in the Gulf region to use GE's Frame F turbine technology the GE9FA turbines. The inherent efficiency of MSF, combined with the relatively low maintenance demand of these plants makes them particularly suited to the large-scale applications required in the Middle East. Although reverse osmosis plants occur in greater numbers, over 85% of the world's desalinated water comes from MSF systems. Mitsui is the new plant EPC contractor, with Hitachi Zosen and Toshiba acting as principal sub-contractors. GE Power Systems have the 23-year service contract. White & Case were legal advisors to ADWEA during acquisition and Trowers & Hamlins acted for the IP Consortium. The turnkey contractor for the original plant was Doosan Heavy Industries (DHI). DHI used its own technology in the manufacture of the plant's Distribution Control System (DCS) and interface panels. Arabian Construction Company was the civil and structural steel contractor on the original plant. The site work, logistics and local fabrication was done by IHI UAE. Torishima supplied the pumps and Hyundi Heavy Industry the large-capacity motors.

Wastewater
Many Gulf States intend to double their spending in the wastewater sector in the coming decade. The UAE has taken significant steps to protect the environment. These include the establishment of several federal institutions for environmental protection, as well as adoption of programs by municipalities for better environmental practices. One of the focal points has been wastewater management. Nearly all of the wastewater in the Emirate of Abu Dhabi is treated. The treated water is used for landscaping or released into the sea. Although treated sewage effluent (TSE) is generally not viewed as safe for consumption and is often used in the UAE for landscaping, it is a potential source of water for a variety of critical agricultural, industrial, and other uses. The cost of treated effluent is approximately $0.66 per cubic meter (depending on its quality and on how much it costs to transport to end users) while water from desalination costs an estimated $2.27 per cubic meter. But because of a system of tariffs and subsidies in the UAE, economic comparisons between TSE, desalination, and groundwater are difficult to make. Therefore, the costs of TSE fall disproportionately on its potential end-users, making TSE seem more expensive than it really is. Officials are looking closely at TSE as part of their water strategies. They are setting up joint ventures with private stakeholders to develop the required infrastructure, operate and maintain the production facilities, and market the resulting water supplies. These joint ventures, which benefit from access to low interest rates and use high-leverage project financing schemes with debt ratios averaging 75 percent or more, can benefit from very attractive return on equity of 15 percent. 99

99

http://www.utilities-me.com/article-1059-a-renewable-resource/

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The Emirate of Abu Dhabi has formed Abu Dhabi Sewerage Services Company (ADSSC) with assets valued at $2.45 billion was founded in 2005. ADSSC will be building four treatment plants to handle increasing volumes of waste from development. An award is also pending for a program to supervise ADSSC's $1.1billion strategic investment program to upgrade Abu Dhabi's sewers. The main component of the program is a 45-kilometre sewer tunnel, from the northern part of Abu Dhabi Island to the mainland. The tunnel will relieve pressure on the existing system serving Abu Dhabi Island and will allow for the eventual removal of existing pumping stations. It is hoped the scheme will reduce operating costs. Other works planned as part of the program involve upgrading treatment plants at Mafraq and Zakher, and the rehabilitation and upgrading of major trunk sewers and pumping stations. The entire scheme is expected to take seven years to complete. Abu Dhabis Regulation and Supervision Bureau (RSB), has recently launched several important new regulations aiming at controlling all non-domestic discharges into the emirates sewage system and setting the standards of the recycled treated wastewater in Abu Dhabi.100 Residents of Abu Dhabi may soon have to pay sewerage charges in addition to their water and electricity bills to offset the subsidy coming from the government. The Drainage and Irrigation Department of Dubai Municipality has a sewage treatment plant in the Aweer area with a capacity for treating 330,000 gallons of sewage water per day used for irrigation of municipal parks and landscapes. The flow of effluent into this sewage treatment plant is increasing by up to 25 percent a year. It is now handling almost twice its original design capacity. The burden is also being increased by effluent trucked to Al-Awir from labor camps accommodating construction workers. Dubai is building membrane-based water treatment plants to cover the shortage. Residents of Dubai are paying sewerage charges. The Emirate of Sharjah has awarded a $540,000 turn-key contract for the construction of a sewage treatment plant at the housing complex within the Hamriyah Free Zone in Sharjah. This plant will be equipped to treat all sewage and wastewater within the complex at a capacity of up to 500 c/m of waste per day. The treated water will be later used for irrigation and landscaping. Residents of Sharjah are paying sewage charges. The emirate of Ajman has constructed $140.2 million sewerage, through a BOT contract with Ajman Sewerage (Pvt) Co. The plant is comprised of a main 49,000cm/day wastewater treatment plant on the outskirts of the city, 22 individual and for the most part underground pumping stations, and a 250 km pipeline network to connect properties to the system. Ajman population will be required to pay connection fees to the company for cost recovery. Two years ago The Emirates of Fujairah awarded to Tanqia (a local project developer largely owned by Infrastructure Capital Group and Mubadala Development Company) a $150 million contract to build and operate a sewage treatment plant (STP) and associated network under a 33-year concession. The Fujairah government, which will be paying the developer a fee for collecting and treating the wastewater, will be charging the population of Fujairah a sewage fee. Tanqia appointed a German consortium of Bilfinger & Berger and Passavant-Roediger to undertake the plant and network construction and will operate the project. Phase I includes a central STP of 16,000 cm/d built to serve 44,000 residents in the concession area, 16 pumping stations and installation of a 95 kilometers of network. Phase 2 calls for the secondary network to be extended by 81 kilometers and a further 11 pumping stations. On completion, 72,000, or 90 per cent of the concession
100

http://www.utilities-me.com/article-1059-a-renewable-resource/3/

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area's population will be served. A further 8,000 people will be linked to the network during the subsequent operating period. By 2013, the plant's capacity will be raised by another 8,000 cm/d and by the same amount again in 2027, effectively doubling the plant's start-up capacity.101 The GCC countries are investing heavily in TSE. From 2010 to 2016, approximately $60 billion is expected to be spent on expanding wastewater networks and treatment capacity.102

Agriculture
Agriculture accounts for only 3 percent of the UAE's GDP due to the federation's severe climatic conditions, although it accounts for 20 percent of all water consumed, much from rapidly-depleting natural water supplies or desalinization projects. The UAE's agricultural sector annually produces about 600,000 tons of produce. Because a high proportion of UAE nationals are employed in fishing and agriculture, these 2 sectors receive a disproportionate amount of federal and local funding. For political reasons, the UAE government will continue to encourage agricultural self-sufficiency but it is aware that this goal is unattainable in either the short-or long-term. Because the UAE protect cereal production, they inadvertently encourage large volumes of water to be used for low-value production.103

FOA stat for agricultural production in 2008.104 The UAE needs to boost investment in the agriculture sector, which can supply only 37 per cent of its annual food demand and makes it vulnerable to fluctuating prices. The UAE have sought to lease and
101 102

DOC: The UAE country report. http://www.utilities-me.com/article-1059-a-renewable-resource/3/ 103 http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/United-Arab-EmiratesAGRICULTURE.html 104 http://faostat.fao.org/

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buy farmland in developing nations in efforts to improve security of food supplies. It is extremely important for the UAE to start encouraging local and global production of food, said Alaa El-Din Moussa, a senior economic researcher at Abu Dhabis Department of Economic Development (DED). Its no longer a matter of having money, because in the future if there is a huge shortage of food, securing supplies even if you have money will get harder,.105

Evaporation and Recharge


United Arab Emirates has an arid climate with less than 100 mm/yr average rainfall. The low percentage of cloudy days and the high solar radiation over the region result in high evaporation rates. The total annual potential evaporation ranges from 2.5 m in the coastal areas to more than 4.5 m inland. Estimation of evaporation losses is very important in this region in particular where water ponds or pools are used for industrial, domestic or agricultural purpose. The UAE is classified as hyper-arid in regards to aridity zoning:

105

http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/business/2010/November/business_November555.xml& section=business

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Meteorological factors like wind velocity, air humidity and solar radiation largely affect the evaporation estimates. The yearly variations in evaporation rates106:

106

csem: Water Evaporation rate in Ras-Al-Khaimah, UAE

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Current Projects
The most recent water industry development in the UAE is a joint Abu Dhabi Water and Electricity Authority (ADWEA) and Federal Electricity and Water Authority (FEWA) project to supply electricity to buildings and shops belonging to citizens in the northern emirates as well as the construction of a 100 kilometer main water pipeline from Kalba, at the southern end of the UAE's East Coast, to Dibba, in the north, passing through the cities of Fujairah and Khor Fakkan. The project is estimated to cost $245 million, the pipeline will supply 23 million imperial gallons per day (MIGD), to Fujairah, 5 MIGD each to Khor Fakkan, Dibba and Kalba and 3 MIGD to Dhadnah. The project was instigated by the Abu Dhabi ruler Sheikh Khalifa bin Zayed Al Nahyan, after he made a trip in February 2011 to the Northern Emirates. The president also ordered ADWEA to supply FEWA with around 1,300 megawatts (MW) of power to meet projected demand. ADWEA has sp far constructed two water desalination and power generation projects in Fujairah at the cost of around $6.0 billion, through joint ventures with companies from Japan, Singapore and Britain.107 DEWAs new mega Hassyan power and seawater desalination complex, to be commissioned in 2014, will have a 1500MW power generation capacity and 120 million imperial gallons per day, or MIGD, of desalination capacity. DEWA will float a tender in March-April 2011. The Hassyan complex will be implemented on an independent water and power project basis. The project will help DEWA meet rising electricity and water requirements in Dubai and, through the involvement of the private sector, reduce its capital expenditure requirements.108 It has been hinted the Dubai government will soon issue two decrees that will end DEWAs monopoly and allow private companies into the industry. DEWA has been tapping the debt market to raise funds for several of its projects that are under construction to expand its capacity. In August 2010, the utility commissioned two units of the $250 million power generation and water desalination plant, M Station, one of the biggest projects with a capacity of 2000 MW and 140 gallons of desalinated water per day. DEWA has seven stations for power generation and water desalination, while M Station in Jebel Ali comprises 10 gas turbines and eight desalination units.109 ADSSC recently announced the award of two contracts. One contract, a joint venture of the UK's Biwater Group, Kuwait's Mohamed Abdulmohsin Kharafi & Sons and the local Al-Qudra Holding for two plants. This group will develop the 300,000-cubic-metre-a-day (cm/d) Al-Wathba plant in Abu Dhabi and the 65,000-cm/d Al-Saad facility in Al-Ain, under a build-own-operate-transfer contract. A French/Belgian joint venture of Veolia and Besix has been selected for a further two plants at Al-Wathba and Al-Saad, with the same capacity. Both groups will take a 40 per cent stake in project companies, which will then sign 25-year agreements with the government to develop the plants. Abu Dhabi Water & Electricity Authority will hold the remaining 60 per cent of the project firms indirectly.

107

http://www.gowealthy.com/gowealthy/wcms/en/home/news/economy/New-water-and-electricity-projectsgets-Dh5b.html
108

http://www.khaleejtimes.com/darticlen.asp?xfile=data/business/2011/February/business_February480.xml&secti on=business 109 http://oilandgasrecruiting.com/article_97.html

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Abu Dhabi & Al Ain Industry Wastewater Description The development of two wastewater treatment plants: a 300,000m3/d plant at Al Wathba in Abu Dhabi, and a 130,000m3/d facility at Al Hamah in Al Ain. 25-year BOOT. ADWEA will take 60% of the equity of the project company, while Veolia and Besix will hold equal shares of the remaining 40%. Status The banks arranging the debt for the project have put a bridging facility in place. Commercial signing of the facility took place in December 2009. Construction is scheduled for completion in mid-2011. ADWEA awarded the contract to a consortium of Veolia AMI and Besix in July 2008. Client ADWEA Developer Veolia AMI and Besix. Abu Dhabi, DTS Industry Wastewater. Description The design and construction of a deep tunnel sewer to upgrade and augment sewage treatment capacity on Abu Dhabi Island. The program, which in addition to the sewer tunnel also includes associated works, is expected to take place over the next seven years. Status ADSSC received expressions of interest for the engineering, procurement and construction work on 7th August. Prequalification documents for the deep tunnel works were due to be sent out on 14 August. The tender for the first tunnelling contract is scheduled to be launched at the end of September. The contract will involve excavating a 15km tunnel with an internal diameter of five meters. It is expected that three design-build contracts for the tunnel will be awarded mid-2011. Client Abu Dhabi Sewerage Services Company (ADSSC)

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Developer CH2M Hill, MWH Global, and Parsons International. Abu Dhabi, Saadiyat Island WWTP Industry Waste water. Description To build the first phase of a 78,000m3/d wastewater treatment plant (WWTP) to serve Saadiyat Island, the natural island lying 500 meters off Abu Dhabi city. The plant will serve an expected population of around 150,000. The first phase covers a plant with a daily capacity of 19,500m3/d, a 24,100m3/d pumping station and a pipeline. Status The submission deadline on the tender for the first phase was at the end of October 2010. MBR is the specified technology. Construction of a smaller STP which will serve the Saadiyat Beach district, the islands main resort area, is already underway. Client Tourism Development & Investment Company (TDIC) Developer TBD Abu Dhabi, STEP Industry Wastewater. Description The design and construction of a deep tunnel sewer to upgrade the sewage treatment capacity on Abu Dhabi Island. The Strategic Tunnel Enhancement Program (STEP), which also includes associated works, is expected to be realized over the next seven years. Status Construction of the full STEP program has been awarded to Italian firm Impregilo, which won all three stages of the tunneling project. Work will start immediately, and is expected to be completed by 2014. The first stage involves excavating a 15km tunnel with an internal diameter of five meters. Client Page 71 of 86
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Abu Dhabi Sewerage Services Company (ADSSC) Developer Impregilo Dubai, Madinat al Arab STP Industry Wastewater. Description The larger of the two sewage treatment plants (256,024m3/d) to serve Madinat Al Arab, the first phase of the landmark Dubai Waterfront. A smaller 220,441m3/d STP will serve the Palm Jebel Ali. The project is structured as 30-year design-build-own-operate project. Status An expression of interest for the project was launched at the end of August. Nakheel is currently focusing attention on the tender of the Jebel Ali sewage treatment plant. A tender for the Madinat al Arab STP will follow at a later date. Client Nakheel Developer TBD Fujairah Industry Wastewater. Description Improve the quality of sewerage services by replacing existing truck-based arrangements with an integrated system dealing with liquid and solid waste. Offered as 33-year concession. Status The project has achieved financial close and a groundbreaking ceremony was held on 10 May 2010. Client Fujairah Water and Electricity company

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Developer TBD Mirfa Industry Desalinization etc. Description Privatization and extension of the Mirfa power and desalination complex in Abu Dhabi. The plant was commissioned in 1995/96 and has four 48MW gas turbines and three 5.4MIGD desalination units. In 2000, Italimpianti won a contract to install an additional 22.5MIGD of capacity. IWPP; under the model used in Abu Dhabi to date, the winning bidder takes a 40% stake in a project company which will implement the scheme. Status Although contract was awarded in 2000, the project was still in a pre-feasibility stadium as of late 2010. However, the project is not likely to include an extension of the facilitys water capacity. Fichtner (technical), HSBC (financial) and White & Case (legal) are advising the Abu Dhabi Water & Electricty Authority (ADWEA). Client ADWEA Developer Italimpianti Palm Jebel Ali Industry Desalinization etc. Description A new 220,441m3/d STP will serve the Palm Jebel Ali, the second of Dubai developer Nakheels Palm islands. Structured as 30-year design-build-operate (DBO). Status As of November 2010, two of the three shortlisted consortia Metito with Berlinwasser, and YTL Berhad with Wessex Water and Hitachi have withdrawn from the bidding process. The final shortlisted consortium comprises MMC Berhad with Gold Star and GE.

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Client Nakheel Developer TDB

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Government Water Sector Organizations


The UAEs water sector is organized along federal lines. Abu Dhabi Water & Electricity Authority (ADWEA) is the utility responsible for the supply of water in Abu Dhabi. In Dubai, Dubai Electricity & Water Authority (DEWA) operates the water and electricity sector. Sharjah Electricity & Water Authority (SEWA) is the authority with responsibility for the small emirates water and power supply. For the four northern emirates Ajman, Fujairah, Ras al-Khaimah and Umm al-Quwain, a single authority, the Federal Electricity & Water Authority (FEWA), is the water and power provider. ADWEA has been the most active promoter of privatized water provision, with a series of independent water projects (IWPPs); ADWEA has built at least one new IWPP every year, besides expanding facilities. The recent financial crisis and weak economic conditions have decreased demand and credit lines. Dubai was hit hardest by the global economic downturn and the clutch of real estate developers that drove the expansion of the states mega projects are now delaying, scrapping or downsizing their various schemes. DEWA has announced plans to invest more than $16 billion over the next five years to boost its power and water capacities. In 2009 DEWA successfully closed a US$1bn export credit agency (ECA)-backed financing facility in support of its ongoing capital expansion. Despite Abu Dhabis successful deployment of private-led development models, Dubai, Sharjah and the northern emirates have yet to adopt a full scale IWPP template. Dubais credit crunch has resulted in the three major credit agencies downgrading the DEWA due to uncertainty over the Dubai governments ability to support state-linked companies. This has forced the DEWA to find credit from non-government sources because it needs to continue to expand its services to a power customer base that increased by 13.5% last year. Therefore, the DEWA is looking for private investors to help expand its infrastructure with its increasing demand. This has proven to be much harder than anticipated as the DEWAs first experiment to use a private operator to meet its growing power needs has failed to generate sufficient funds to build a desalination utility complex in Hassyan, Jebel Ali. The desalination plant was intended to have a total capacity of 9,000 MW of power and 600 million gallons of water a day. Two companies, Iberdrola and Fisia Italimpianti, have already given bids towards funding the project but sources close to the project indicate that it is unlikely that the project will get the green light to proceed, given the fact that the prices of construction are too high and the bids were insufficient to cover the costs. However, despite the short term challenges, which will see the rate of water production increase slower than anticipated, the rate of capacity should increase in the longer-term as demand begins to rise again, along with investment levels. Abu Dhabi Water & Electricity Authority (ADWEA) ADWEA produces, transmits and distributes potable water, electricity and sewerage services throughout the Emirate of Abu Dhabi. It is a national organization wholly owned by the Abu Dhabi Government, maintaining a separate legal entity, as well as complete financial and administrative independence. ADWEA is split into four directorates; Planning and Development Directorate, Business Support Directorate, Privatization Directorate, and Projects Directorate, each one operates under certain basic responsibilities. The board works alongside its wholly owned private subsidiaries, which are involved in Page 75 of 86
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different activities in the water and electricity sector in the Emirate of Abu Dhabi. ADWEA is responsible for implementing government policy regarding water and electricity sector in the Emirate, including the ongoing privatization of the water and electricity sector in order to use water and energy resources more efficient. Abu Dhabi Water and Electricity Authority supplies electricity and potable water to a population of more than 1.5 million in the emirate of Abu Dhabi, over an area of 67340 sq. km. ADWEA and its subsidiaries anticipate possessing a leading position in the Gulf competing with pioneers involved in the water, electricity and sewerage sector worldwide. Ongoing efforts towards emiratization will continue by means of sponsoring students and recruiting Emirate graduates in various positions. ADWEA has been implementing a successful privatization program since its inception in 1998. Since then, nine projects have been implemented reaching a production of 823 Million Imperial Gallons of water daily and 13,427 megawatts, and thus turning the Emirate of Abu Dhabi to be the only selfsufficient city in the Middle East, facing no lack of energy or water, furthermore, providing certain production capacities to the Northern Emirates in the United Arab Emirates.110 ADWEA manages the affairs of following wholly-owned subsidiaries responsible for different activities in the water and electricity sector: Al Mirfa Power Company (AMPC) Abu Dhabi Water and Electricity Company (ADWEC) Abu Dhabi Transmission and Dispatch Company (TRANSCO) Abu Dhabi Distribution Company (ADDC) Al Ain Distribution Company (AADC) At present, ADWEA holds 60 per cent of equities in the following Independent Water and Power Produces (IWPPs): Emirates CMS Power Company (ECPC) Gulf Total Tractebel Power Company (GTTPC) Shuweihat CMS International Power Company (SCIPCO) Arabian Power Company (APC) Taweelah Asia Power Company (TAPCO) Emirates Semcorp Water & Power Company (ESWPC) Fujerah Asia Power Company (FAPC)
110

http://www.uaeinteract.com/docs/Diab_bin_Zayed_Shuweihat_S3_to_increase_electricity_production_and_raise _foreign_investments_to_Dh65_billion/40044.htm

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Shuweihat Web page: http://www.adwea.ae/eng/index.html Dubai Electricity & Water Authority (DEWA) The Dubai Electricity and Water Authority (DEWA) was formed on 1 January, 1992, by a decree issued by Ruler Sheikh Maktoum bin Rashid Al Maktoum to take over and merge the Dubai Electric Company and the Dubai Water Department that had been operating independently for several years until then. Both these organizations were established in 1959. Today DEWA employs a workforce of about 7,500 employees. The company is expanding in order to meet the ever growing demand for electricity and water. Recently the DEWA has been partnering with private companies to assist in providing funds for its projects. Web page: http://www.dewa.gov.ae/default.aspx Sharjah Electricity & Water Authority (SEWA) The SEWA ownership was transferred from the private sector (Electricity & Water Supply Company) to the Government of Sharjah and it was renamed Sharjah Electricity & Water Authority (SEWA). It is a public body enjoying a financial and administrative independence providing services of electricity, water and natural gas to the residents of Sharjah Emirate. Its involvement in water includes develops the production of drinking water production and supply for its consumers and increasing demands, as well as planning and implementing expansions in future water projects. Web page: http://www.sewa.gov.ae/English/default.asp Federal Electricity & Water Authority (FEWA) The Federal Electricity and Water Authority (FEWA) is the body responsible for overseeing federal water and power utilities in the Northern Emirates. FEWA focuses on enhancing the infrastructure, which for obvious reasons are not at the same standard as in Dubai and Abu Dhabi. Large efforts are also being made by FEWA to promote water conservation. Web page: http://www.fewa.gov.ae/index_en.html Emirates National Grid (ENG) The ENG project was launched by the UAE Ministry of Energy in 2001 with the purpose of enhancing integration between the various electricity and water authorities in the UAE, each of which contributed Page 77 of 86
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proportionately to the capital investment required to build the ENG. Current and future trade in power between emirates is made possible by the Emirates National Grid. The ENG-project has the following funding and shareholder stake distribution: ADWEA share of 40% DEWA share of 30% FEWA share of 20% SEWA share of 10% The Project is managed and supervised by the Ministry of Energy in Dubai; the project is supervised by the Higher Committee, chaired by the Minister Energy, and attended by Chairmen/Managing Directors of the four Authorities. The project has strong support of the four Authorities involved as power shortage is a big problem in the UAE.

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Government Influence
The UAE is making considerable technical, policy, and institutional progress within the water sector. The UAE is home to some of the best hydraulic engineers in the world; managing sophisticated irrigation and drainage systems, and spearheading advances in desalination technology. Policies have shifted from direct provision of water supply services to regulation of services provided by independent or privately owned utilities. To implement the new policies, most governments in the GCC have established ministries that manage water resources and have staffed them with well-trained and dedicated professionals. Three significant factors influencing policies are: Influential lobby groups that were indifferent or opposed to water reforms have started to support them. For example, groups of irrigated farmers see opportunities for growing high-value crops for export, but they can only benefit from these opportunities if water services improve. New interest groups have formed. These include environmental organizations, businesses associated with tourism, and communities concerned about the health damage from bad water quality. Economic and finance ministries are being confronted with the rising costs of rehabilitating and maintaining such large infrastructure networks and are becoming more aware of the forgone opportunities when the infrastructure is not used well or maintained properly. A more holistic view of the entire water cycle has highlighted the total costs associated with water management.111 The first UAE water conservation legislation was introduced in 2009. Previously the regulatory statutes associated with water were handled on Emirate level.112

111 112

The World Bank: Making the Most of Scarcity- Accountability for Better Water Management Results in MENA http://www.arabianbusiness.com/new-water-conservation-law-for-uae-43871.html

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UAE Water Companies


All of the major UAE water companies are indirectly owned by their respective Emirates government. Some smaller players in the markets exist as well. Abu Dhabi Water and Electricity Company (ADWEC) The Abu Dhabi Water and Electricity Company (ADWEC) is a wholly owned subsidiary of the Abu Dhabi Water and Electricity Authority (ADWEA). ADWEC was established on 1/1/1999. The key role of the company is to act as a guarantor of the security of supply of electricity and water to consumers in the Emirate of Abu Dhabi. ADWEC is the single Buyer and Seller of electricity and water within the Emirate of Abu Dhabi. ADWEC procurers water and electricity from the Power and Water Producers on the basis of long term Power and Water Purchase Agreements (PWPA's) and sells it through Bulk Supply Tariffs (BST) sales agreement with the Distribution Companies (DISCO's). It is also responsible for preparing the long-term Demand Forecasts for electricity and water, purchasing of gas fuel, contracting for new capacity and financial settlements.

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U.S. Companies Engaged in the UAE Water Sector


Pentair Water Company Pentair Water Middle East No. 404, Al Buhaira Building Corniche Street, P.O. Box: 32789 Al Buhaira - Al Majaz - Sharjah, Dubai United Arab Emirates +971 (0)6 572 0552 Website: www.pentair.com Siemens Water Siemens LLX Al Otaiba Tower, Level 15 Sheikh Zayed 2nd Street Post Office Box 47015 Abu Dhabi, UAE Telephone: +971 (2) 63 93 666 Website: www.usa.siemens.com

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Foreign Companies Engaged in the UAE Water Sector


Many other foreign companies and local companies are operating in the UAE water market as project investors. Notable Companies include: GDF Suez Energy, involved in the Shuweihat 2 IWPP and the Fujairah 2 IWPP www.gdfsuez.com Fisia Italimpianti, involved in the Jebel Ali Desalination Plant and the Hamriyah Desalination Plant. www.fisiait.com Veolia Water, involved in the Ajman Desalination Plant and the Reem Island Sewage Treatment plant. www.veoliawater-middle-east.com Mubudala Company, involved in the Fujairah Sewage Treatment Plant, Barka IWPP, and the Power Island Water Project. www.mubadala.ae Marubeni Corporation, involved in the Shuweihat IWPP, Al Saad/ Alwathba Wasterwater Treatment Plants, and the Taweelah IWPP Water Projects. www.marubeni.com

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Further Contacts and Information


UAE Ministry of Foreign Trade- Washington D.C. Embassy of the United Arab Emirates 3522 International Court, NW Suite 400 Washington, DC, 20008 Phone (202) 243-2400 Fax: (202) 243-2432 Trade Office email: trade@uaeembassy-usa.org UAE Ministry of Environment & Water Abu Dhabi P.O Box:213 Telephone: 4495100-02-00971 Fax: 4495150-02-00971 Website: www.moew.gov.ae Email: info@moew.gov.ae UAE-US Business Council U.S.-UAE Business Council 505 Ninth Street, NW Suite 5010 Washington DC 20004 Email: info@usuaebusiness.org Telephone: +1.202.863.7285 Arab Water Academy (AWA)

PO Box 45553 Page 83 of 86


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Abu Dhabi United Arab Emirates Email: awa@awacademy.ae Telephone: +971 (2) 693-4742 Website : www.awacademy.ae Abu Dhabi National Energy Company (ADEC) Abu Dhabi National Energy Company PJSC P.O. Box: 55224 Abu Dhabi, UAE Email: info@taqaglobal.com Telephone: +971 (2) 691 4900 Website : www.taqa.ae Regulation & Supervision Bureau- Abu Dhabi Regulation & Supervision Bureau P.O. Box 32800, Abu Dhabi, UAE Email: bureau@rsb.gov.ae Water & Wastewater Email: water@rsb.gov.ae Telephone: +971 (2) 4439333 Website : www.taqa.ae

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Resources
https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html PennWell Corporation, Oil & Gas Journal, Vol. 105.48 (December 24, 2007) Economist Intelligence Unit, United Arab Emirates Country Profile Economist Intelligence Unit, United Arab Emirates Country Report February 2011. http://www.uae-embassy.org/uae/history http://www.eiu.com/public/ http://www.globalsecurity.org/military/world/gulf/uae-religion.htm http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ae0052) http://www.state.gov/r/pa/ei/bgn/5444.htm#gov http://www.forbes.com/2009/06/17/monarchs-wealth-scandal-business-billionaires-richestroyals.html http://gulf-law.com/uaecolaw_content.html http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm http://www.ameinfo.com/142461.html http://www.gcc-sg.org/ Mohsin S. Khan: The GCC Monetary Union: Choice of Exchange Rate Regime http://www.everyculture.com/To-Z/United-Arab-Emirates.html http://www.globalsecurity.org/military/world/gulf/uae-mil.htm http://www.portfolio.com/news-markets/international-news/portfolio/2008/08/13/US-TradesWith-Iran-Via-Dubai/ http://www.uae-shipping.net/ www.abudhabiairport.ae http://www.dwc.ae/dwc.html http://opennet.net/studies/uae http://www.masdarcity.ae/en/index.aspx http://www.ameinfo.com/252709.html http://www.bloomberg.com/news/2010-10-14/u-a-e-2011-growth-forecast-cut-to-2-9-at-efghermes-on-slower-spending.html http://www.forexexaminer.com/currency-peg-blamed-for-uae-unrest-financial-timesforexnews/ http://www.ameinfo.com/197435.html http://www.meed.com/sectors/economy/government/special-report-gcc-euro-crisis-haslessons-for-planned-gcc-currency-union/3007700.article http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm Luxemburg Ministry of the Economy and Foreign Trade: Market Entry Guide to the UAE. DOC: Country Commercial Guide for U.S. Companies http://www.dubaicompanyformation.net/tag/business-financing-in-small-uae/ http://online.wsj.com/article/SB10001424052748703408604576164703521850100.html?KEYW ORDS=dubai http://www.building.co.uk/news/seven-ways-to-get-paid-in-dubai/3133997.article Page 85 of 86
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http://www.reuters.com/article/2010/12/06/us-emirates-credit-idUSTRE6B53RJ20101206 http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=AED Reem M. Albuainain: Unemployment Rate In the UAE: The case of Abu Dhabi http://www.payscale.com/research/US/State=Dubai/Salary http://www.grapeshisha.com/typical-Dubai-salaries.html http://www.escapeartist.com/efam/69/Living_In_The_UAE.html www.uae-embassy.org http://www.grapeshisha.com/typical-Dubai-salaries.html http://www.estandardsforum.org/united-arab-emirates/standards http://www.trade.gov/mas/ian/tradestatistics/index.asp http://tse.export.gov/TSE/ http://unstats.un.org/unsd/servicetrade/ http://www.usuaebusiness.org/index.cfm?fuseaction=section.home&id=61 http://gulfnews.com/news/gulf/uae/general/mind-your-language-behaviour-and-dress-in-theuae-1.118951 http://www.cyborlink.com/besite/uae.htm DOC: Country Commercial Guide for U.S. Companies http://www.usuaebusiness.org/index.cfm?fuseaction=section.home&id=61 http://gulfnews.com/news/gulf/uae/general/mind-your-language-behaviour-and-dress-in-theuae-1.118951 http://gulfnews.com/news/gulf/uae/general/dubai-police-chief-promises-zero-tolerance-oncorruption-1.523573 http://travel.state.gov/travel/cis_pa_tw/cis/cis_1050.html#crime http://www.asiatravel.com/uae/visa.html http://www.freezonesuae.com/faqs.htm Terry Carter, Lara Dunston: Dubai http://www.escapeartist.com/efam/58/Nightlife_in_Dubai.html http://www.schumachercargo.com/articles/shipping-to-uae.html http://fedex.com/us/international/irc/profiles/irc_ae_profile.html#C09 http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm http://www.english.globalarabnetwork.com/200910123115/Related-news-from-UAE/uae-seesfirst-imprisonment-for-parallel-imports-in-the-middle-east.html http://www.globaltrade.net/international-trade-import-exports/f/business/text/United-ArabEmirates/Legal-and-Compliance-Labeling-and-Marking-Requirements-in-U.A.E.html http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm http://metricviews.org.uk/2010/01/will-the-european-commission-challenge-us-labelling-rules/ http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm http://www.doingbusiness.org/rankings http://www.rhsgroup.com/rhs_business_division/faq.htm http://www.clydeco.com/knowledge/articles/litigation-and-dispute-resolution-in-the-uaebetter-the-devil-you-know-not-always.cfm http://www.khaleejtimes.com/ Page 86 of 86
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