Year in Review | Diplomacy & Politics | Economy | Finance | Energy | Industry | ICT | Transport & Logistics | Real Estate & Construction | Health & Education | Tourism & Retail

thebusiness yearDubai2012

ISBN 978-1-908180-09-4

9 7 8 1 9 0 8 1 8 0 0 9 4

Dubai 2012

In this issue ECONOMY REVIEW BACK TO BASICS25—A renewed focus on trade, finance, and tourism is paying dividends

FINANCE INTERVIEW MORE THAN THE MONEY60—Abdulla Mohammed Al Awar on the growing role of the DIFC

INDUSTRY REVIEW GOOD TO GROW93—Heavy investments in industrial activity are giving Dubai a new edge

TRANSPORT & LOGISTICS INTERVIEW NO TIME TO REST130—HH Sheikh Ahmed Bin Saeed Al Maktoum on the success of Emirates Airlines

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Dubai2012

Dubai2012

FINANCE 5555 The Twin Zones - REVIEW: Banking

56 Y. Sudhir Kumar Shetty, COO of Global Operations at UAE Exchange - INTERVIEW

58HE Abdulrahman Saleh Al Saleh, Director General of the Department of Finance - INTERVIEW

60Abdulla Mohammed Al Awar, CEO of the Dubai International Financial Centre (DIFC) Authority - INTERVIEW

62Saeb Eigner, CEO of the Dubai Financial Services Authority (DFSA) - INTERVIEW

63 Rick Pudner, Group CEO of Emirates NBD - INTERVIEW

64Raghu Malhotra, Division President, Middle East & North Africa of MasterCard - INTERVIEW

65 By Your Side - FORUM: Private Banking

66 Rob Broedelet, Country Executive UAE at ABN AMRO - INTERVIEW

67 A Little Encouragement - ROUNDTABLE: International Banks

68 Something Different - Q&A: Local Banks

69 Just Add Liquidity - REVIEW: Capital Markets

70 Gary Anderson, CEO of Dubai Gold & Commodities Exchange (DGCX) - INTERVIEW

71 Find the Pool - Q&A: Local Exchanges

DIPLOMACY & POLITICS 1313 A Vision True - REVIEW

16HE Reem Al Hashimi, Minister of State & Managing Director of the Dubai World Expo 2020 Bid Committee- INTERVIEW

17 Don’t Stop Me Now - FOCUS: The UAE’s 40th Anniversary

18 Lord Green of Hurstpierpoint, Minister of UK Trade & Investment - INTERVIEW

19 HE Lee Myung-bak, President of the Republic of Korea - GUEST SPEAKER

21Francisco J. Sánchez, US Under Secretary of Commerce for International Trade - INTERVIEW

23Matías Mori, Executive Vice-President of Chile’s Foreign Investment Committee - INTERVIEW

24John Shimmin MHK, Minister for the Department of Economic Development of the Isle of Man Government - INTERVIEW

ECONOMY 2525 Back to Basics - REVIEW

30 The Way Forward - FOCUS: Strategic Plan

32HE Sheikha Lubna Bint Khalid Al Qasimi, Minister of Foreign Trade of the UAE - INTERVIEW

34HE Sami Al Qamzi, Director General of the Dubai Department of Economic Development - INTERVIEW

36 Fahad Al Gergawi, CEO of the Foreign Investment Office of Dubai FDI - INTERVIEW

37 Let’s All Come Together - ROUNDTABLE: Foreign Chambers

38Hamad Buamim, Director General of the Dubai Chamber of Commerce & Industry - INTERVIEW

40 Go Get ‘Em - Q&A: Business Development

42 Free for All - FOCUS: Free Trade Zones

44 Salma Ali Saif Saeed Bin Hareb, CEO of the Jebel Ali Free Zone (Jafza) - INTERVIEW

YEAR IN REVIEW 8

8His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice-President & Prime Minister & Ruler of Dubai - INSIDE PERSPECTIVE

10 The Dream Continues

In partnership with:Dubai FDI

13

30

55

46Mohammed Al Zarooni, Director General of the Dubai Airport Freezone (DAFZ) Authority - INTERVIEW

48Arif Obaid Al Dehail, CEO of the Ports, Customs, & Free Zone Corporation (Trakhees) - INTERVIEW

49 Khalid Bin Kalban, Managing Director & CEO of Dubai Investments - INTERVIEW

50 Malcolm Wall Morris, CEO of Dubai Multi Commodities Centre (DMCC) - INTERVIEW

51 Living Better - FORUM: Why Dubai?

52Mouayed Makhlouf, MENA Regional Director of the International Finance Corporation, World Bank Group - INTERVIEW

53 Mustafa Abdel-Wadood, CEO of Abraaj Capital Limited - INTERVIEW

54Samer Sarraf, Senior Vice-President & Country Head UAE of Amwal Al Khaleej - INTERVIEW

thebusinessyear

TRANSPORT & LOGISTICS 125125 In the Right Mode - REVIEW

130 HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman & Chief Executive of Emirates Airline & Group - INTERVIEW

132 Mohammed A. Ahli, Director General of the Dubai Civil Aviation Authority - INTERVIEW

134 Paul Griffiths, CEO of Dubai Airports - INTERVIEW

135 Upstairs, Downstairs - Q&A: Airlines

136 Habib Fekih, President of Airbus Middle East - INTERVIEW

137 Beyond the Sea - FOCUS: Port Expansion

138 Sultan Ahmed Bin Sulayem, Chairman of DP World - INTERVIEW

139 Never a Naysayer - Q&A: Logistical Solutions

140 Movers & Storers - ROUNDTABLE: Logistics

ENERGY 7979 Flip the Switch - REVIEW

80 Adnan H. Ghabris, CEO & Managing Director of NPS Energy - INTERVIEW

82Saeed Abdullah Khoory, CEO of the Emirates National Oil Company (ENOC) - INTERVIEW

84 Ahmad M. Bin Shafar, CEO of Empower - INTERVIEW

85Khamis Juma Buamim, Chairman of Drydocks World & Maritime World - INTERVIEW

86 Going Green - FOCUS: Dubai Green Economy Partnership

87 Adnan Sharafi, Chairman of the Emirates Green Building Council (EGBC) - INTERVIEW

88 Ivano Iannelli, CEO of the Dubai Carbon Centre of Excellence - INTERVIEW

89 Nasser H. Saidi, Chairman of the Clean Energy Business Council - INTERVIEW

90

Lord Marland of Odstock, Chairman of UK Trade & Investment’s Business Ambassadors’ Group & Minister of the Department of Energy & Climate Change of the UK - INTERVIEW

91 It’s Easy Being Green - FORUM: Green Technology

92Nabil A. Habayeb, President & CEO of the Middle East & North Africa for General Electric - INTERVIEW

INDUSTRY 9393 Good to Grow - REVIEW

94 Anne Ruth Herkes, State Secretary, German Federal Ministry of Industry & Technology - GUEST SPEAKER

98 Abdulla J.M. Kalban, President & CEO of Dubai Aluminium (DUBAL) - INTERVIEW

100 Coming Together - ROUNDTABLE: Local Industry

101 In the Same Neighborhood - FOCUS: Dubai Industrial City

102 Abdulla Bel Houl, Managing Director of Dubai Industrial City - INTERVIEW

103 The Perfect Fit - FORUM: Auto Retailers

104 Top of the Line - FOCUS: Automobile Industry

106 K. Rajaram, CEO of Al Nabooda Automobiles - INTERVIEW

107 Check It Out - FOCUS: FMCGs

109 Tarek El Sakka, General Manager of Dubai Refreshments - INTERVIEW

110 Jamal Al Ghurair, Managing Director of Al Khaleej Sugar - INTERVIEW

111 Yves Manghardt, Chairman & CEO of Nestlé Middle East - INTERVIEW

ICT 113113 An Apt Success - REVIEW

116 HE Mohamed Nasser Al Ghanim, Director General of the Telecommunications Regulatory Authority (TRA) - INTERVIEW

118 Eesa M. Bastaki, CEO of the ICT Fund - INTERVIEW

119 Osman Sultan, CEO of Emirates Integrated Telecommunications Company PJSC-du - INTERVIEW

121 Join the Cloud - ROUNDTABLE: IT Infrastructure Development

122 Across the Board - Q&A: Global IT Solutions

123 Stirring Interests - FORUM: IT & Media

79 101

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125

72 Making the Most of It - FORUM: Capital Markets Development

73 Premium Market - REVIEW: Insurance

74 Michel Khalaf, President of Europe, Middle East & Africa for MetLife - INTERVIEW

76 Keep It Safe - FORUM: Insurance

78 Ahmad Al Kazim, Managing Director of ASCANA - INTERVIEW

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REAL ESTATE & CONSTRUCTION 141

141 Quality Does Count - REVIEW: Real Estate

146 Marwan Ahmed Bin Ghalita, CEO of the Real Estate Regulatory Agency - INTERVIEW

148 Nicholas Maclean, Managing Director of CBRE Middle East - INTERVIEW

149 Live & Belong - Q&A: Local Majors

150 Mohamed Alabbar, Chairman of Emaar Properties - INTERVIEW

151 Take My Advice - Q&A: Consultants

152 Build Me Up - ROUNDTABLE: Real Estate Outlook

153 Strong Recovery - FORUM: Management

154 The Top Out - REVIEW: Construction

156 Danny Lubert, Joint Chairman of The First Group - INTERVIEW

157 Design Front - FORUM: Construction Engineering

158 On the Rise - ROUNDTABLE: Materials

HEALTH & EDUCATION 159159 Filling the Gaps - REVIEW: Health

160 David Hadley, CEO of EHL Management Services - INTERVIEW

162HE Qadhi Saeed Al Murooshid, Director General of the Dubai Health Authority - INTERVIEW

164 Thomas J. Murray, CEO of American Hospital Dubai - INTERVIEW

166 Dr. Ayesha Abdullah, Managing Director of Dubai Sciences Cluster - INTERVIEW

167 Heal Me - FORUM: Private Health Care

168 Leading the Region - Q&A: Medical Technology

169Abboud Bejjani, Regional Director, Middle East, Africa, & Pakistan at Abbott Laboratories S.A. - INTERVIEW

170 Rashad Hassan Al Moosa, Joint Managing Director & Partner of Gulf Drug - INTERVIEW

171 Engineering Innovation - ROUNDTABLE: DuBiotech

172 Top of the Class - REVIEW: Education

175

Dr. Abdulla Al Karam, Chairman of the Board of Directors & Director General the Knowledge & Human Development Authority - INTERVIEW

176Dino Varkey, Group Executive Director & Board Member of GEMS Education - INTERVIEW

177 The Key to Knowledge - Q&A: Local Educators

178 On Campus - Q&A: Business Schools

TOURISM & RETAIL 179179 Setting the Record Straight - REVIEW

184Khalid A. Bin Sulayem, Director General of the Department of Tourism, & Commerce Marketing - INTERVIEW

186 Salah Al Qassim, Advisor to the Dubai Culture & Arts Authority - INTERVIEW

189 Gerald Lawless, Executive Chairman of Jumeirah Group - INTERVIEW

190 In the Fast Lane - Q&A: Business & Leisure Hotels

192Sami Nasser, Vice-President of Operations at Sofitel Middle East, Egypt, & Indian Ocean - INTERVIEW

193 Come Stay with Me - Q&A: Luxury Hotels

194 Equine to a Tee - Q&A: Golf & Racing

196 Shopping Paradise - FOCUS: Retail

198 Laila Suhail, CEO of Dubai Events & Pro-motion Establishment (DEPE) - INTERVIEW

199 Colm McLoughlin, Executive Vice-Chair-man of Dubai Duty Free - INTERVIEW

200 Anurag Agrawal, Managing Director of Canon Middle East - INTERVIEW

201 Anan Fakhreddin, CEO & Member of the Board of Damas - INTERVIEW

202 That Little Something - Q&A: Luxury Retail

EXECUTIVE GUIDE 203203 The Set Up - REVIEW: Legal

208Mahmud P.K. Merali, Managing Partner of Merali’s (formerly Baker Tilly Merali’s) - INTERVIEW

209 Number Crunch - REVIEW: Accountancy

212 Be In the Know - ROUNDTABLE: The Ins & Outs of Setting Up Shop

213 When in Dubai...

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ISBN 978-1-908180-09-4

PublisherRupert Smith

Managing DirectorAyşe Hazır Valentin

Editorial DirectorJason J. Nash

Regional DirectorPeggy Rosiak

Regional EditorLeland Rice

Country ManagerBetül Çakaloğlu

Country EditorJohanna Cronin

Assistant Country ManagersAndreea CruceanuSimona Romeo

Sub-EditorsPeter HowsonEmily MallisTyler MattiaceEric A. Edwards

AnalystsMatthew CarrollPeter Speetjens

TranscribersLars Larsson Attila PelitJared Wall

Advertising ManagerCaroline Miller

Creative DirectorGenee Presta

Cover IllustrationPınar du Pre

Operations ManagerSerpil Yaltalıer

Operations AssistantSemiha Elkıran

Circulation & Marketing DirectorAmy Burtin

Printing: Apa Uniprint

Production: The Business Year78 York StreetLondon W1H 1DPT +44 (0)207 692 8335F +44 (0)207 692 8336info@thebusinessyear.comwww.thebusinessyear.com

The Business Year is a tradename of Wildcat Publishing Inc.Copyright The Business Year International Inc. 2012. All rights reserved.

No part of this publication may reproduced, stored in a retrievable system or transmitted in any form or by any means, electronic, mechanical, photocopied, recorded or otherwise without prior permission of The Business Year International Inc.

The Business Year International Inc. has made every effort to ensure that the content of this publication is accurate at the time of printing.

The Business Year International Inc. makes no warranty, representation or undertaking, whether expressed or implied, nor does it assume any legal liability, direct or indirect, or responsibility for the accuracy, completeness or usefulness of any information contained in this publication.

1

8 DUBAI

thebusinessyear

HH Sheikh Mohammed Bin Rashid Al MaktoumINSIDE PERSPECTIVE

Dubai & the Emerging WorldHis Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice-President & Prime Minister & Ruler of Dubai.

1 His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President & Prime Minister & Ruler of Dubai2 Dubai contributes to global cooperation by hosting a variety of international events, such as the World Economic Forum

The future always surprises us. We cannot predict it, but we do have a responsibility to look ahead and trace its outlines, as well as the opportunities and challenges it will present. In 2050, our young nation, the United Arab Emirates, will be almost exactly twice as old as it is today. Forty years of foresight and strenuous hard work by our people and our country have led to our achievements and laid the foundations for our global po-sition today and a prosperous future. Dubai and the UAE sit at the intersec-tion of one of the most transformative mo-ments in geo-economic history in more than a century: the gradual but inevitable shift of the economic center of gravity from the West to emerging markets and the rise of new trade markets. Between now and 2050, emerging markets will be the main engine of global

economic growth. In this new world, trade flows will be infinitely more connected than ever before, and goods, services, and people more mobile than at any time in the past. Here in Dubai and the UAE, we see these trends as positive. While we recognize the profound importance of safeguarding our identity and traditions—keeping sight of who we are and where we come from—we embrace the possibilities the future presents for our people, our city, and our country. Standing at the center of trade between the Middle East and Asia linking Latin America, Africa, and beyond, Dubai is shaping and catalyzing this new world of trade and investment flows. Trade is important, of course, but we also recognize the importance and re-silience of a knowledge-based economy as a key driver of sustainable growth and opportunities. We continue to invest not just in hard infrastructure but also in soft infrastruc-ture; our education, our healthcare, and a culture that promotes the research and development of new ideas. Based on our vision of the new world,

Dubai and the UAE sit at the intersection of one of the most transformative moments in geo-economic history.

we are equally committed to building a sustainable environment that supports the growth of our economy. Our Green Economy Initiative an-nounced earlier this year reaffirms our commitment to diversify energy sources and preserve the environment whilst strengthening our competitive position. Through this initiative, we aim to be-come a world-leading center for the ex-port and re-export of green products and technologies. While there are many routes to suc-cess, here in Dubai, we are seizing the economic, cultural, and scientific oppor-tunities represented by the future, forging new connections, and positioning Dubai for growth across this decade and the ones that follow. ●

2

DUBAI 9

Dubai2012

The Dream ContinuesYEAR IN REVIEW

ARABIAN GULF

QATAR

IRAN

SAUDI ARABIA

UNITED ARAB EMIRATES

Abu Dhabi

SHARJAHAJMAN

UMM AL QUWAIN

DUBAI

10 DUBAI

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Dubai’s high standard of living and dynamic society makes it a secure Middle Eastern des-tination. Largely located along the western coast of the UAE, Dubai is now home to more than 2 million people. The expatriate popula-tion of the city that is drawn from all corners of the world helps to drive the local economy and contribute much to the lifeblood of this thriving metropolis. The success of Dubai’s economic develop-ment is attributable not to its hydrocarbon re-serves, but to its growing status as a trading hub for the Gulf and beyond. Dubai’s total revenues from oil and gas account for less than 2% of the Emirate’s GDP, and form just 2% of the UAE’s total gas revenues. In order to provide for the long-term future of Dubai, the diversification of the local economy was long ago recognized as being vital to its success. The construction boom that resulted from Dubai’s ambition to become a tourism and trading destination to ri-val any major city in the world has been in part complemented by its swiftly developing finan-cial sector. In 2011 the GDP of Dubai grew by 3.4%, reaching $84.7 million, indicating that the Emirate is showing signs of recovery following the challenging 2008-2010 period. Regional political uncertainty has served to bolster the recovery in 2012, with rising oil prices boost-ing the UAE’s economy, while the security of Dubai’s infrastructure is attracting trade, hos-pitality, and financial investment into the city. Dubai has historically been an important re-gional emporium, and the city’s Jebel Ali Port is one of the world’s largest trading hubs. The Dubai International Financial Centre (DIFC) is an offshore free zone designed to make Dubai a world-class financial hub and has helped strengthen investment in the finance sector. The DIFC operates under a unique legal and reg-ulatory framework, and businesses operating in the “city within a city” can be wholly owned by foreign entities and benefit from zero income and profits tax. Other free zones attracting foreign investors to Dubai include Dubai Inter-net City, home to giants such as Microsoft and IBM, and Dubai Media City, where CNN, BBC, and Reuters all have offices. Dubai Healthcare City, in collaboration with DuBiotech, was es-tablished to be a center for world-class medical practice and research excellence and is attract-ing investments from a number of different pri-vate clinical practices. Tourism has long been and looks set to re-main one of the key strengths of Dubai’s econ-omy. A 2011 report from CBRE indicated that Dubai is now on par with London as the most popular shopping destination in the world. Dubai Duty Free is the largest retailer in the ››

STRAIT OF HORMUZ

GULF OF OMAN

IRAN

OMAN

OMAN

FUJAIRAH

RAS AL KHAIMAH

AL AIN

DUBAI 11

Dubai2012

LENGTH OF LAND BORDERS (UAE)867 km

AREA4,114 km2

LOCAL GOVERNMENT STRUCTURE (UAE)Seven Federal Emirates

TOTAL POPULATION2 million

LIFE EXPECTANCY (MALE / FEMALE - UAE)77 / 79

GDP (NOMINAL 2011)$84.7 billion

UNEMPLOYMENT RATE (JUNE 2012)4.60%

INFLATION RATE (JUNE 2012)1.83%

CURRENT ACCOUNT SURPLUS (UAE)$112.7 billion

LEGISLATIVE POWER (UAE)40-member Federal National Council(8 from Dubai)

RULERHH Sheikh Mohammed Bin Rashid Al Maktoum

POLITICAL STRUCTUREConstitutional Monarchy

Exchange RateAED vs. USD

Source: OANDA

Source: Dubai Statistics Centre

2Q 2

011

3Q 2

011

4Q 2

011

1Q 2

012

2Q 2

012

3.6728

3.6726

3.6724

3.6722

3.6720

3.6718

3.6716

3.6714

2007 2008 2009 2010 2011

86

85

84

83

82

81

80

79

78

77

76

GDP (constant prices)in USD billions

Source: US Census Bureau

Age Pyramid (2012)in millions, according to age group

FEMALEMALE100+95-9990-9485-8980-8475-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-145-90-4

00 1.2 2.4 3.6 4.8 66 4.8 3.6 2.4 1.2

The Dubai government continues to direct considerable energy into the diversification of the local economy.

world, and there are over 70 shopping malls in the city. It is estimated that by 2015 Dubai will attract 15 million tourists yearly. The hotel industry has reported strong occupancy rates in 2011 and 1H2012, and it was far less affected by the global financial crisis than the real estate market. Following the opening of the new Green Line metro extension in 2011, UAE Vice-President and Prime Minister and Ruler of Dubai HH Sheikh Mohammed Bin Rashid Al Maktoum symbolically took to the lines in an effort to encourage residents and tourists alike to make use of the city’s advanced transportation in-frastructure. The drive to encourage the use of public transport in the city is also part of the wider UAE government’s increase in diplomatic engagement concern-ing climate change issues. In 2009 the UAE won the bid to host the headquarters of the International Renewable Energy Agency, and it continues to promote re-search and investment in the UAE for renewable energy sources. The Dubai government continues to direct considerable energy into the diver-sification of the local economy, and while the real estate sector is fighting hard to show signs of recovery, the wider economy is expected to show healthy growth of 4.5% in 2012. There are sizeable investments being directed into infrastructure, including road, rail, airport, and civil aviation development. Investments in these areas are set to make up a total of 43% of the government budget. The Dubai World Central’s Al Maktoum International Airport also began passenger opera-tions in 2011 and is expected to have a capacity of 5 million passengers a year by 2017. Dubai has benefited from increased trade with markets across South and West Asia, and this trend looks set to continue over the medium term. A drop in investor confidence in the greater Middle East has also served to strengthen Dubai’s economy over 2011, and as long as the market remains stable, business-friendly, and convenient to access, it will continue to draw in investors looking to serve the surrounding regions from a reliable base of operations. All these indica-tors are supportive of Dubai’s bid to host the 2020 World Expo, which will attract even more attention to the achievements of the past half century. ●

12 DUBAI

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DIPLOMACY & POLITICS

REVIEW

INSIDE 13 A Vision True - REVIEW | 16 HE Reem Al Hashimi, Minister of State & Managing Director of the Dubai World Expo 2020 Bid Committee - INTERVIEW | 17 Don’t Stop Me Now - FOCUS: The UAE’s 40th Anniversary | 18 Lord Green of Hurstpierpoint, Minister of UK Trade & Investment - INTERVIEW | 19 HE Lee Myung-bak, President of the Republic of Korea - GUEST SPEAKER | 21 Francisco J. Sánchez, US Under Secretary of Commerce for International Trade - INTERVIEW | 23 Matías Mori, Executive Vice-President of Chile’s Foreign Investment Committee - INTERVIEW | 24 John Shimmin MHK, Minister for the Department of Economic Development of the Isle of Man Government - INTERVIEW

The flag of the UAE was adopted on December 2, 1971. The colors of red, black, green, and white symbolize the unity of the Arab nations.

u Dubai’s leadership platform has offered the stability needed for the Emirate to take a principal political and economic role in the region.

A Vision True

A vibrant world city and regional hub, Dubai is poised to play a critical role in the 21st century. The Emirate is the largest by population and fastest growing in the UAE. Over the last cen-tury, Dubai evolved from a small fishing village known for the pearl trade to a thriving energy producer. Today, Dubai has invested its wealth from oil and gas in economic development and transformed itself into a center in the Gulf re-gion for shipping, ICT, media, and services. With its focus on infrastructure development, including the construction of the world’s tall-est building and largest airport terminal in the world, the Emirate has also established itself as a regional leader in commerce, transportation, and tourism, providing extraordinary stan-dards of quality and a world-class experience to increasing numbers of tourists and business elites. Boasting some of the world’s most luxu-rious hotels and serving as a regional headquar-ters for major technology, financial, and media multinationals, Dubai has successfully lever-aged its location and unique cosmopolitan mix of nationalities. Known as the “City of Gold,” due to its robust gold market, Dubai offers lei-sure and business travelers unparalleled ameni-ties such as the opportunity to stay in one of the world’s few seven-star hotels or fly in style on one of Emirates’ new Airbus 380s.

UAE GOVERNMENT STRUCTUREGoverned as a federation of constitutional mon-archies since its independence from the UK in 1971, the UAE includes Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain. The government of the UAE ››

Image: Mohammed Nairooz

Dubai2012

13

is guided by a federal constitution that estab-lishes the privileges and duties of the executive, legislative, and judicial branches of the national government as well as reserving substantial powers and autonomy for the governments of the individual emirates. The balance of power between the emirates at the national level cor-responds to the size and influence of each emir-ate, with Abu Dhabi and Dubai assuming the largest share of leadership responsibility. As the capital city of the UAE, the ruler of Abu Dhabi has served as the President since the country’s formation, with the ruler of Dubai serving as the Prime Minister and Vice-President. The constitution of the UAE also establishes the rights, freedoms, and duties of Emirati citizens and gives the federal government responsibil-ity for foreign policy, international economic policy, and national security. HH Sheikh Mohammed Bin Rashid Al Maktoum is the Ruler of Dubai as well as Prime Minister and Vice-President of the UAE, posi-tions that he has held since 2006 following the death of his older brother, Sheikh Maktoum Bin Rashid Al Maktoum. Sheikh Mohammed is also a member of the UAE’s Supreme Coun-cil of the Union, the highest executive body in the UAE, consisting of the rulers of each of the seven emirates. The UAE’s Supreme Council is responsible for formulating and implement-ing national policies regarding budget and fiscal policy, national security policy, and in-ternational agreements and treaties. Dubai, along with Abu Dhabi, maintains a veto on the

Council. Decisions are made by a majority vote, except for certain substantive issues requiring a minimum of five votes, including the vote of Dubai and Abu Dhabi. In 2011, the UAE held parliamentary elec-tions to fill 20 positions on the Federal National Council, the primary legislative and advisory body for the federal government. With the goal of promoting increased political participa-tion, the government of the UAE expanded the electoral college to more than 129,000 eligible voters, up from approximately 6,500 in 2006. A total of 469 candidates contested the election, including 85 female candidates. Four elected representatives and an additional four rep-resentatives appointed by the ruler represent Dubai in the 40-member body.

DUBAI MUNICIPAL GOVERNMENTSince 1833, Dubai has been under the leader-ship of the Al Maktoum family. The local gov-ernment of Dubai, or the Dubai Municipality (DM), was established in 1954 by Sheikh Rashid Bin Saeed Al Maktoum. Today, the Dubai Mu-nicipality is chaired by Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, and brother of Sheikh Mohammed Bin Rashid Al Maktoum. The DM oversees local government entities such as the Roads Department, Planning and Survey Department, Environment and Public Health Department, and Financial Affairs De-partment. Sheikh Hamdan also serves as the Finance Minister of the UAE, and has led UAE delegations to the IMF and OPEC. Two of Sheikh Mohammed’s sons, Sheikh Hamdan Bin Mo-hammed Al Maktoum, who is the Crown Prince of Dubai, and Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, assist their father and uncle with the administration of DM as deputy rulers of Dubai. The Crown Prince also serves as the Chairman of the Dubai Executive Council and head of the Mohammed Bin Rashid Estab-lishment for Young Business Leaders. Sheikh Maktoum, Sheikh Hamdan Bin Mohammed’s brother, serves on the boards of several media and technology companies in Dubai as well as working closely and traveling with the Presi-dent and Prime Minister of the UAE on foreign trips. Another key royal family member and leader in municipal public affairs is Sheikh Ahmed Bin Saeed Al Maktoum, Sheikh Mohammed’s youngest brother and chairman of Dubai World. Sheikh Ahmed has been a business leader in Dubai for more than 25 years as well as serv-ing as Second Vice-Chairman of the Dubai Executive Council and Chairman of the Dubai Supreme Fiscal Committee.

INTERNATIONAL AIDDubai not only uses its economic wealth for business and trade, but also for international aid. In 2007, Dubai launched the Dubai Cares platform, a philanthropic organization with the aim of contributing to the UN Millennium De-

In 2007, Dubai launched the Dubai Cares platform, a philanthropic organization with the aim of contributing to the UN Millennium Development Goals.

Image: Official US Navy Imagery

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velopment Goals aimed at reducing poverty in developing countries through improving edu-cation levels and gender equality. The primary focus of Dubai Cares is to improve classroom conditions and the quality of education in poor and developing countries. Although the pro-gram originally aimed to raise AED200 million, contributions far exceeded this target, totaling more than AED1.7 billion, or some $463 million. Dubai Cares has partnered with other inter-national NGOs and aid organizations such as the Melinda and Bill Gates Foundation, Care International, Medecins Sans Frontieres, Ox-fam, Partnership for Child Development, Plan International, Room to Read, Save the Children, UNICEF, UNRWA, WaterAid, and the World Food Program. The organization shares the view of the UN Millennium Development Goals that education is the best way to lift societies out of poverty and is working to achieve universal primary ed-ucation and significant improvements in equal gender access to education by providing aid to more than 7 million students in 28 countries. Describing his country’s humanitarian efforts on his website, Sheikh Mohammed says, “our aid has humanitarian objectives only; it is never governed by politics or limited by the geogra-phy, race, color or religion of the beneficiary. We provide humanitarian capital and are a ma-jor relief station for the poor; we do not hesitate to help and support the brother, the ill-fated friend, or the needy wherever they are. This is our message to the world, and this is the United Arab Emirates.” Dubai is also playing an increasingly im-portant role in the world of global sports and horse racing. Thanks to the support of Sheikh Mohammed and his love for sports, Dubai now hosts numerous international competitive events, including the Dubai Tennis Champion-ships, the Dubai Desert Classic golf tournament, the Dubai Rugby Sevens, and the Dubai World Cup. The Dubai World Cup, established in 1996, has a $10 million purse for the winner, making it the world’s most valuable horse-racing prize. An accomplished athlete and horseman him-self, the Ruler of Dubai strongly supports the development of Dubai as an international sports destination and hopes to increase the sports of-fering in the coming years.

FOREIGN RELATIONSIn the realm of international affairs, the UAE maintains cordial relations with neighboring countries and projects its stability and focus on economic development internationally. Despite the difficulties faced in the Gulf region over the past few decades, including the Iran-Iraq war, the occupation of Kuwait, and the US invasion of Iraq, Dubai and the UAE have managed to steer clear of conflicts and maintain stability during difficult periods of regional turmoil. In an interview with TBY, Reem Al Hashimi, Min-ister of State, emphasized that the UAE has “a

positive and extremely open relationship with all countries around the world.” While the UAE maintains good relations with the US and the West, Foreign Minister Sheikh Abdullah Bin Zayed Al Nahyan has made the case for expanding relations with rising eco-nomic powers. He said in a recent speech that the UAE “look[s] forward to bolstering our rela-tions with fast growing countries, such as India, Russia, China, Brazil, and South Africa.” Look-ing forward, Dubai hopes to bolster its profile yet further with its bid to host the World Expo 2020. Supporters of Dubai’s candidacy argue that the Emirate is a crossroads of culture and ideas, and that its geography and rapidly devel-oping infrastructure make it a central location to bring together countries from the north, south, east, and west. When looking at the Emirate’s ambitious growth over the past five decades, it is easy to understand how it has developed into a central part of the global economy. ●

1 HH Sheikh Mohammed Bin Rashid Al Maktoum receives US Secretary of the Navy Ray Mabus in April 20122 HH Sheikh Mohammed Bin Rashid Al Maktoum and HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman & Chief Executive of Emirates Airline & Group3 A group of officers from the Elite Dubai Police Special Task Force parade at the “March For Peace” event organized in 2012 in Zabeel, Dubai

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2Image: World Economic Forum

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INTERVIEWHE Reem Al Hashimi

1 Reem Al Hashimi, Minister of State and Managing Director of the Dubai World Expo 2020 Bid Committee

BIOGRAPHYReem Al Hashimi was sworn in as Minister of State in the Cabinet of the UAE in February 2008. She is also the Managing Director of Dubai’s World Expo 2020 executive body. She has experience in international affairs, beginning her career as a Commercial Attaché and, subsequently, as Deputy Chief of Mission at the UAE Embassy in Washington, DC. She completed her undergraduate studies at Tufts University, where she earned BA degrees in International Relations and French. She also holds a Master’s Degree from Harvard University.

To have 200 different nationalities that live and work here shows that we are very open to the world.

Show & TellTBY talks to Reem Al Hashimi, Minister of State and Managing Director of the Dubai World Expo 2020 Bid Committee, on the Emirates preparations to bring the exposition to the UAE.

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TBY What are the main strengths of Dubai as a possible location for the World Expo 2020?REEM AL HASHIMI Dubai’s commitment to host the World Expo is really about placing Dubai as a location where culture, ideas, and people from all around the world can come together to share and contribute their thoughts and add meaning and value to the environment and world around them. We believe that Dubai has many factors that make it a particularly good candidate, with the first being its geographic positioning. We have a very good position between East and West and have very strong rela-tions with countries in the south. Histori-cally, both in the last 40 years as the UAE and long before, we have always been a kind of hub. This is a place where people from all over have passed through. Sec-ondly, we feel we have some incredible infrastructure, from our airport to roads to ports to the metro; we have everything necessary to facilitate the flow of millions of people who will have to come through. The third important quality that Dubai has is the fact that it is already a mini expo with more than 200 nationalities living here and showcasing their nationalities, art, and culture. To have 200 different nationalities that live and work here is something very special and shows that we are very open to the world. I think our fourth strength is that this is such a strong place for business. Some of the most important companies from around the world are here; 60% or 70% of the Fortune 500 companies have headquarters in Dubai.

What is the idea behind the “connecting minds, creating the future” theme?The UAE is a responsible global citizen. We look at the world around us and real-ize there are challenges out there; we then try to address them. This notion of global citizenship is very important for Dubai and for the UAE in general. We believe that “connecting minds, creating the future” is the right theme as we feel that through do-ing that we can address global challenges. What we have done is looked at the global challenges in the world today and what they may be in 2020. Some will be energy security, employment generation for the youth, integration, the empowerment of women, climate change, and the efficacy of aid programs. What we see today may be exacerbated by 2020 and we want our theme to address these global challenges and help to provide solutions for them.

What motivated the choice of the large plot by the new Al Maktoum Airport as the proposed location for the event? Expo 2020 is really a national project that involves the support of all of the Emirates and, obviously the Prime Minister. We felt that having a site that is located half an hour from Abu Dhabi’s airport and 40 minutes from Dubai’s airport will allow us to capitalize on the strengths of both cit-ies. It is also connected to the Al Maktoum International Airport through a seam-less corridor and to Dubai’s ports. We see this connection with the new ports and airports as one large web of connectivity. The 400-hectare site will be best leveraged because it is connected to such important logistics and transportation nodes.

How important is Dubai’s role in terms of the development of the new Silk Route?Our role as a hub has dated back to the early 19th and 20th century. We have evi-dence of people who have come through Dubai to East Africa and Europe to Asia and East Asia. This is something that is very in-tegral to us as a fact of history. With Dubai, we have that historical merit, and the city is built upon it. Dubai is also very keen to become more modern and efficient, em-bracing new technology and new ways of doing things. We see ourselves as very much a part of the new Silk Route. There are more than 200,000 Chinese people who live in the UAE. We have over 4,000 Chinese companies based out of the Emir-ates. Every single day, you will see travel-lers here making that East to West journey and now, more and more, we see the South to North connections as well. In my daily interaction with colleagues in Africa and sub-Saharan Africa, I see that movement continuously. It is all happening in Dubai, primarily. ●

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FOCUS: The UAE’s 40th AnniversaryDon’t Stop Me Now

An inimitable social and economic story reached its 40th year in December 2011, as the UAE celebrated its anniversary with lavish festivity. The groundwork is now being laid for the next 40 years.Since its beginnings, the UAE’s growth arc has been underlined by the successful exploitation of oil wealth and a steadfast commitment to its economic foundations based on trade. On December 2, 2011, Dubai joined the 40th anniversary celebra-tions of the creation of the UAE in grand style with fireworks, parades, and music. The successor to the Trucial States Council that had been set up under the British protectorate system to coordinate investments from growing oil wealth, the UAE was formed after negotiations prompted by the British announcement of the end of its protectorate system. Dubai, which had already become a significant port under the British, thus joined Abu Dhabi, which had already begun pumping oil in the early 1960s, to convince the other sheikhdoms to join. While six agreed to unification on December 2, 1971, the sev-enth, Ras al-Khaimah, joined in 1972. The following boom, propelled by sig-nificant investment in its historic trade vo-cation, is credited to the late Sheikh Zayed Bin Sultan Al Nahyan, President of the UAE and ruler of Abu Dhabi, and Sheikh Rashid Bin Saeed Al Maktoum, Vice-President of the UAE and Ruler of Dubai. Between 1973 and 1980, increasing oil revenues were

pumped into large-scale cluster develop-ments in Dubai, including the World Trade Center, an extension of Port Rashid, and the Dubai Dry Docks. The Jebel Ali Port and Industrial Area, however, stands as the most significant economic development in Dubai’s history, evolving into the Jebel Ali Free Zone (Jafza) in 1985. With a combined investment of $2.3 billion, Dubai thus filled a gap in transshipment infrastructure that followed an explosion in imports into the GCC region caused by increasing oil revenues. Today then, under HH Sheikh Mo-hammed Bin Rashid Al Maktoum, Dubai, with significantly less carbon resources than Abu Dhabi, continues as a transship-ment hub as well as an expatriate haven. Emiratis form a minority of Dubai’s popu-lation, and the overall UAE, as a legacy of the drive to attract foreign skills to best exploit the nation’s resources. In a pro-gressive move, however, and in celebra-tion of the UAE’s 40th anniversary, Sheikh Khalifa Bin Zayed Al Nahyan, President of the UAE, granted the children of Emirati women married to foreigners the right to apply for citizenship. In another gesture, he also ordered pay raises of up to 45% for all federal government employees.

The celebration itself embodied the his-tory of the Emirates, under the “Spirit of the Union” slogan, and was a weeks’ long culmination of national pride and festiv-ity. With much to celebrate, Dubai now looks to carry its economy forward on the same growth arc, opening Dubai Maritime City, the latest addition to its maritime trade infrastructure portfolio between Port Rashid and Dubai Dry Docks. Equally, Jafza retains its significance today, with construction also underway to develop the South Zone. The zone already hosts 6,700 global companies, and contributes 20% to Dubai’s GDP. Jafza is also now home to Al Maktoum International Airport, which began cargo operations in 2010, to be fol-lowed later by passenger operations. Com-plementing Dubai International Airport, the hub is planned to become the largest airport in the world by freight handled, processing up to 12 million tons per year. The celebrations, then, were a keen re-minder of the origins of the city, and the Emirates at large, and poignant at a time when Dubai seeks to boost its traditional role as trade hub. ●

1 The UAE was established in 1971

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INTERVIEW

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Lord Green of Hurstpierpoint

1 Lord Green of Hurstpierpoint, Minister of UK Trade & Investment

BIOGRAPHYLord Green began his career with the Ministry of Overseas Development. In 1977, he joined management consultants McKinsey & Co Inc, with whom he undertook assignments in Europe, North America, and the Middle East. He joined HSBC in 1982 with responsibility for corporate planning activities and in 1985 was put in charge of the development of the bank’s global treasury operations. In 1992, he became Group Treasurer of HSBC Holdings and in 1998 he became Executive Director of the same bank. His is currently Minister of UK Trade and Investment.

The Eighth EmirateTBY talks to Lord Green of Hurstpierpoint, Minister of UK Trade & Investment, on upcoming events designed to bring companies in the UK and the UAE closer together.

There are some 4,000 British companies based in the UAE and 100,000 British nationals living there.

TBY You last visited in Autumn 2011. Why did the recent trade mission choose the UAE specifically? LORD GREEN In the current economic cli-mate, trade and investment have taken center stage as sources of sustainable growth, with governments and consum-ers no longer able to turn to debt to finance their spending. The UAE is a very impor-tant market for the UK. It is the 16th larg-est export market for the UK globally, and the number one market in the region. It is an exciting and growing market that UK companies are very keen to do business with. While our relationship is very strong, there is still more to do in order to build up business in the UAE and to encourage companies from the UAE to enter the UK market.

During your trip in 2011, many references were made to London as the “Eighth Emirate.” What is special about the investment relationship between the UAE and the UK?UAE companies have invested significantly in the UK, from the London Gateway, which will be London’s largest deep-sea port and logistics park, funded by DP World, to the London Array offshore wind farm. I welcome this investment, which brings great benefits to both sides. The UAE is also a popular destination for people from the UK. There are some 4,000 British companies based in the UAE and 100,000 British nationals living there. Many of them have been involved in the UAE’s de-velopment over the past decade, helping to make it the exciting, diverse regional hub it has become.

Dubai has emerged as a regional hub for in-vestment and business activities throughout the Middle East. What has made Dubai suc-cessful in this way?It is clear that in recent years the center of gravity in the global economy has shifted from west to east, and from north to south. Dubai has successfully positioned itself as a hub for the growing economies of the Mid-dle East and Africa. The vision of Sheikh Mohammed Bin Rashid Al Maktoum has diversified the country’s economy away from traditional oil and gas businesses into a finance, investment, and tourism hub.

In which industries and sectors do you see the most potential for greater commercial integra-tion between Dubai and the UK?There are many sectors where the UK and

the UAE already work closely together. Ties with the Lord Mayor of the City of London are very close. In terms of infrastructure, British companies are very active in the UAE and vice versa. There are also great opportunities for closer commercial inte-gration across all sectors, such as educa-tion, ICT, health care, energy, life sciences, and the creative industries. In autumn 2011, UK Trade & Investment will be invit-ing British companies to attend the “Big 5 2012” construction fair and trade show.

What is your outlook for UK businesses oper-ating in Dubai and for the region as a whole in the coming year?I am very positive about UK businesses in the UAE, not least because an increasing number of them are going out to test the waters. UK Trade & Investment in the UAE helped around 2,400 British companies in 2011, and this number has grown despite the global downturn—a sure sign that the market continues to offer exciting oppor-tunities and that UK SMEs are willing to take on the challenge. We are well on the way to achieving our aim of increasing bi-lateral trade to £12 billion by 2015—a good indication of the strong economic bonds that continue to exist between our two countries and the significant investment opportunities that lie ahead. ●

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HE Lee Myung-bakGUEST SPEAKER

Hold the DreamLee Myung-bak, President of the Republic of Korea, on a common vision for Dubai and Korea, growing trade relations, and the importance of working together to tackle climate change.

BIOGRAPHYLee Myung-bak was elected President of the Republic of Korea in 2007. Prior to entering politics he had a 27-year career with Hyundai Group. He joined the company in 1965 and just five years later, at the age of 29, he became a company director. By age 35 he was Korea’s youngest CEO ever. Upon retiring as chairman of the company in 1992 he successfully ran for two consecutive terms in the Korean National Assembly before becoming Mayor of Seoul from 2002 to 2007. He is a graduate of Korea University.

His Highness Sheikh Zayed Bin Sultan Al Nahyan was a pioneer and a true vision-ary. His indomitable will and steadfast leadership prepared the UAE for the fu-ture and accomplished what many simply considered impossible. We find such vi-sion and commitment still alive today in Dubai. Under the extraordinary leadership of His Highness Sheikh Mohammed Bin Rashid al Maktoum, Dubai has become the model for the 21st century. Man-made islands, waterways, and ultra-modern architecture harmoniously coexist with their natural surroundings. Dubai has suc-cessfully blended together modernity, the environment, and aesthetics. Dubai has al-ready taken steps to undergo another great transformation by making itself the model of what it means to be a green city in the 21st century. Dubai is a living testament of what human imagination, creativity, com-mitment, and able leadership can achieve. Korea also believes in realizing dreams. Korea was a country ravaged by decades of colonial rule followed by a devastating war that left the entire country in utter ruin. However, Koreans were able to transform

the country from one of the poorest in the world into a robust and dynamic country. Many thought that Korea was hopeless, but the Korean people believed in their dreams. We have also become a country that is now providing assistance to others. We successfully hosted the G20 Seoul Sum-mit, contributing to common prosperity and shared growth. For a country that was once sustained solely by outside help, it is a phenomenal achievement that we are proud of. And the reason we achieved such growth was because we believed in our dreams and worked to make them happen. Our two countries share a common spirit, and we have built an important and successful economic partnership. Trade between the UAE and Korea reached $22.1 billion in 2011. Today, Korea is the world’s seventh largest exporting country, and the UAE is its largest export market in the Middle East. UAE exports to Korea rose 21.2% to $14.75 billion in 2011, and Korean exports to the UAE grew 32.4% to $7.26 billion. It is believed that UAE-Korea trade will grow by 21% in 2012 to a record $26.6 billion. South Korean firms are now im-portant participants in many key projects in the UAE, from nuclear power to infra-structure. UAE firms are increasing their role in Korea, entering partnerships to en-sure Korea’s energy security and running one of the country’s largest ports. As a young man, I devoted my life to making my country prosperous. That ››

Our two countries share a common spirit, and we have built an important and successful economic partnership.

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1 Lee Myung-bak, President of the Republic of Korea

Image: IAEA Imagebank

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was my dream. Later, when I became Mayor of Seoul, I worked hard to real-ize another dream of mine, which was to make Seoul a green metropolis; a city to be truly proud of and comfortable to live in. A long time ago, there used to be a stream that flowed through the heart of Seoul, but it was covered up and left to fester. I got rid of the concrete expressways and the cov-ering that had been in place for decades. I restored the stream to let it breathe again. Today, the silver fish, which are known to live only in the cleanest waters, have re-turned. When I became President in 2008, my dreams for Korea continued to grow. As we celebrated our 60th anniversary of the founding of the nation, I put forth a new vision. Our “Low-Carbon Green Growth” vision is our answer to the future. We believe that protecting the environ-ment and attaining sustainable growth can go together. Our Framework Act on Low-Carbon Green Growth is the first of its kind in the world. We are investing over 2% of our GDP into green technology, and are pleased to be able to share our knowl-edge and expertise with the UAE. South Korean nuclear energy professors have taken up posts at Khalifa University, and Emirati engineering students have visited Seoul to learn about the nuclear industry. A South Korean Green Economy agency is also working in Masdar City. Climate change is undoubtedly the defining chal-

lenge of our time. However, we consider this challenge as an historic opportunity. Our Green Growth initiative is revolution-izing the way we think, and the UAE is also thinking creatively to seize this historic opportunity. When we look at the nuclear power plant in Abu Dhabi, the renewable energy project in Masdar, and Dubai’s construc-tion of an eco-friendly, high-tech city of the future, I applaud the UAE’s vision and foresight. For a country with one of the world’s largest oil reserves, I know it took courage and vision for it to make this deci-sion to prepare for the post-oil era. And this is why Korea is proud to be the UAE’s partner in this endeavor, a journey to create a better, cleaner future for all. Climate change cannot be addressed by a few countries. It is a global challenge that requires a global solution. It must involve our developing partners as well as the advanced countries. This is why Korea launched the Global Green Growth Insti-tute (GGGI) in June 2010, for which the UAE will be its strategic partner. The regional office for the GGGI in the UAE will act as a hub for the Middle East and North Africa. This institute will be focused on finding workable solutions and bringing genuine change. Our responsibility is to work to-gether to make this world a better place, for ourselves and for our children. Let us show the world the power of dreams. ●

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2 South Korean President Lee Myung-bak waves to the crowd

For a country with one of the world’s largest oil reserves, I know it took courage and vision for it to make this decision to prepare for the post-oil era.

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BIOGRAPHYFrancisco J. Sánchez is the Under Secretary of State of Commerce for International Trade, leading the International Trade Administration (ITA) that assists in the development of US trade policy in the global economy. As a senior policy advisor to President Obama during the 2008 campaign, Sánchez served as the Chairman of the National Hispanic Leadership Council and also provided policy support on issues pertaining to Latin America. Sánchez now brings his wide range of experience in both federal and state government as well as in the private sector to his leadership position at ITA.

1 Francisco J. Sánchez, US Under Secretary of Commerce for International Trade

Francisco J. SánchezINTERVIEW

The Priority HubTBY talks to Francisco J. Sánchez, US Under Secretary of Commerce for International Trade, on the trade relationship between the US and the UAE.

TBY Why did the current trade mission choose Qatar and the UAE specifically?FRANCISCO J. SÁNCHEZ We chose Qatar and the UAE for three main reasons. First, both countries are investing heavily in in-frastructure and transportation, to the tune of $300 billion combined. Second, both countries have strong economic growth projections during the short, medium, and long term. Third, these countries have his-tories as profitable markets and business hubs for many American companies. Since the beginning of this administration, these markets have been some of our top priori-ties. In addition to my trips to the region, our Assistant Secretary for Market Access and Compliance, Michael Camuñez, and our Assistant Secretary for Trade Promo-tion, Suresh Kumar, have also visited both countries in order to promote further trade and investment.

The Gulf has been identified as a priority mar-ket for the US. What factors went into this calculation, and specifically what makes the region as a whole stand out?The Gulf is showing strong economic growth projections in the short, medium, and long term. Additionally, US compa-nies face increased competition from East Asian, South Asian, and European busi-nesses in the region. Thus, it behooves the US government to increase its work in as close collaboration as possible with our private sector, which is competing against foreign firms. The US government has al-ways been dedicated to its relationships with the Gulf, and our private sector has

always been active in the region. Presi-dent Obama’s National Export Initiative provides us a platform to show the Gulf that our government and private sector are each, and together, committed to the region and our continued economic and commercial relationships. As a region, what stands out is the vision for the future that the governments of the Gulf countries have taken. They see the need and oppor-tunity for economic diversification. While oil and gas is, and will continue to be, an important sector—one in which we have been and will continue to be involved—many of the regions have a vision to in-vest in their people by investing in health, education, and new technologies, all using environmentally sound strategies, and we have competitive advantages in each of these areas.

Historically, what has the trade relationship been like between the US and the UAE, Dubai specifically, and what key developments have you witnessed?The US-UAE trade relationship is marked by the same characteristics as are our po-litical, military, and strategic relationship: friendship, dedication, and collaboration. US-UAE trade has almost quadrupled in the last decade from $3.3 billion in 2000 to $12.8 billion in 2011. Each year, the UAE is the largest, or one of the largest, destina-tions for US exports in the Middle East and North Africa. While the energy sector is still a major contributor to the UAE’s GDP, and our companies have been and will continue to be very active in that sector, our trade relationship has expanded into consumer products, services, and almost anything else you can think of. Today, US companies are already active in the coun-try’s moves into renewable energy, edu-cation, and other activities undertaken to diversify its economy and provide greater opportunities for its population. In regard to Dubai specifically, we have been a part-ner in the Emirate’s impressive growth since the beginning. Our trade relationship with Dubai has continued to mature.

In which industries and sectors do you see the most potential for greater commercial integra-tion between Dubai and the US?I never like to limit the products or services that I cover when I speak about opportuni-ties for US–UAE commercial integration. We shouldn’t limit our imagination. Al-ready one has seen American companies ››

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participate in Dubai’s impressive growth across many sectors; from energy to wa-ter, from glass to coffee outlets, from au-tomobiles to speedboats and yachts, and from shoes and clothing to jewelry. For in-stance, Pottery Barn opened its first Mid-dle East store in Dubai, to take advantage of the Emirate’s purchasing power. Addi-tionally, the UAE is a top destination for US SMEs; from 2007-2008, the UAE was one of the markets with the largest percent-age increases in SME exports to the world. Today’s global economy is so diverse and changes so quickly, that it is almost im-possible for anyone to say what is going to be hot tomorrow. Rather than naming a specific sector, I can say that commercial integration between Dubai and the US is going to be based on products, services, technologies, and individuals that are ded-icated to mutually beneficial commercial relationships that help create knowledge and economic return for both sides.

Would you say there are any further regulatory changes needed to attract more businesses to Dubai?In a global economy that is as fluid and competitive as the one in which we oper-ate, there is increasing pressure on nearly all governments to ensure their regulatory environments can keep up with changing economies, and that there is transparency. Dubai has rightfully earned its favorable reputation as a good place to do busi-ness. And a large part of that reputation stems from the excellent counseling and assistance offered to foreign companies by the Dubai Chamber of Commerce, the Dubai Department of Economic Develop-ment, and other government organizations

geared to promoting trade and investment. Of course there are always areas for im-provement. US (and other foreign) firms often cite the restrictions on foreign own-ership, the requirement of having a local agent in order to do business in the UAE, and difficulties in terminating agents as some of the issues affecting their invest-ment decisions in Dubai and the UAE. I understand that the new revisions to the Companies Law that was just passed by the UAE Cabinet will allow more than 49% foreign ownership in certain sectors. We will be following these new developments closely and welcome any changes that make it easier for our firms to do business in the UAE. Additionally, another concern I have heard from US companies across industries, vis-à-vis Dubai, is a need for increased transparency in regulatory development.

What is your outlook for US businesses oper-ating in Dubai and for the region as a whole in the coming year?I am bullish on our companies operating in Dubai and in the region. Our exports to the UAE were up almost 35% for January-Oc-tober 2011, versus the same period in 2010. Despite regional political unrest, the Gulf has generally remained stable and is mak-ing heavy investments to address many of the socioeconomic concerns of its citizens. US businesses must be ready to compete, of course; but they have the technology, products, and business know-how to do so. In 2012, like in years past, you’ll see our companies visiting Dubai’s trade shows, meeting with potential partners from throughout the region, and inviting them to visit their sites and facilities in the US. ●

Dubai has rightfully earned its favorable reputation as a good place to do business.

2 The Dubai Mall now features many US brands and franchise stores

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INTERVIEWMatías Mori

See For YourselfTBY talks to Matías Mori, Executive Vice-President of Chile’s Foreign Investment Committee, on a recent trade drive with the UAE, the opening of a UAE embassy in Santiago, and the benefits of investing in Chile.

BIOGRAPHYMatías Mori was appointed as Executive Vice-President of the Foreign Investment Committee by Chilean President Sebastián Piñera on July 12, 2010. He was awarded his undergraduate degree in law at the Universidad Católica de Chile and holds a Master of Law degree from the Law School of the University of Chicago and a Master of Public Administration degree from Harvard University’s John F. Kennedy School of Government. His professional experience is primarily in corporate law where he has worked on bond placements and the negotiation of syndicated loans on behalf of Chilean state enterprises and overseas companies. In addition, he has advised state companies and private investors on projects in the hydrocarbons sector.

1 Matías Mori, Executive Vice-President of Chile’s Foreign Investment Committee

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TBY What are the positive outcomes from your visit to Dubai?MATÍAS MORI I came to Dubai with Pro-Chile, the Chilean promotion bureau, to participate in the Gulfood 2012 fair. We are aiming to enhance the volumes of trade between Chile and the region. When you promote a country, there are three sectors to consider: international trade, invest-ments, and tourism. International trade and tourism have a similar sales pitch in terms of attracting customers, but invest-ments are a different ball game. While in tourism, you may hope for surprises in a newly discovered country, in investments you don’t want any surprises. Interna-tional trade is a precursor to investments. We have seen the volume of trade increas-ing between the UAE and Chile. We want to reach a tipping point at which the inter-national trade between the two countries reaches the investment level.

What does the opening of the UAE’s embassy in Santiago in 2011 say about the trade rela-tionship between the two countries?International relations are based upon sig-naling, and this was a great signal for us. It demonstrates the commitment of the UAE to the region. We are hoping to launch di-rect flights from Santiago to Dubai. There is a direct flight to Brazil, and they will open a new route to Argentina. However, the volume of trade has a high correlation with the number of direct flights.

What does Dubai have to offer in terms of Chile’s opening up to the Middle East?Dubai is a hub. Its people have local re-gional knowledge, share the same religion, and practice the same customs. It’s easier for us to go through Dubai than to make trade relations with the neighboring coun-

tries on our own. Dubai has 1,400 hotels. The hospitality sector is huge, and there is a lot of room for the international trade of Chilean products such as wine, fruit, and dried foods.

What other exports is Chile promoting in Dubai?In terms of international trade, there are certain sectors we are tying to push, such as pharmaceuticals. The are many phar-maceuticals companies that want to set up here. Other manufactured products, such as produced olive oil, are also in demand. In terms of investments, we have a port-folio of public and private projects in sec-tors such as agribusiness, infrastructure, energy, and mining. We are especially fo-cused on agribusiness, given the fact that this region has issues with food security, and Chile has very healthy food produc-tion. Chileans consume just 20% of what we produce. We also have the third-largest supply of lithium, following Kazakhstan and Bolivia.

What opportunities and challenges do you an-ticipate in Dubai?I think that food is critical, and we have many opportunities in that sector. If it wishes to become a technology hub, it will start to require lithium, iron, and copper. There is a problem with branding; when other countries think about Latin America, they tend to focus on Brazil, the same way China has been the focal point in Asia. There are many countries on the side that are not as well-known and considered. We are trying to brand our position and sell our attributes. Latin America is a region of the world, and people usually view it with a lot of prejudice and believe the stereotypes, which are simply untrue in Chile.

How do you help businesses interested in in-vesting in Chile?There is a huge difference between the governments in the Gulf region and gov-ernments back home. In Chile, the gov-ernment comes behind the private sec-tor, as the private sector leads and knows best. However, in the Middle East it’s more government-to-government. The trade commissioner supports people who may be willing to invest, and while we are here in Dubai, we try to set them up with a plane to Chile. You can trade or make a touristic decision based on a brochure, but it’s very unlikely that someone will invest without

seeing the country itself. Our goal is to convince them to visit Chile.

How supportive has the UAE government been during this initiative?The government has openly supported us. The fact that it opened an embassy is a good sign. Since the UAE is flying to Brazil, it’s a signal that there is more interest in the re-gion. The UAE is becoming more aware of Latin America and its potential, especially during these times when Europe is not do-ing so well. The US also has an election this year, and the UAE is viewing that as another opportunity to try and diversify its portfolio in terms of investments. ●

Dubai2012

DIPLOMACY & POLITICS 23

INTERVIEW

BIOGRAPHYJohn Shimmin was educated at the Worcester College of Higher Education, where he studied Physical Education. Having enjoyed a successful career in teaching both in the UK and the Isle of Man, he decided to enter politics in 1996 and was elected to the Island’s Parliament (Tynwald) as a member of the House of Keys (MHK) for Douglas West. In 1999, he became Chairman of the Isle of Man Post Office and then went on to undertake a variety of ministerial roles in the Departments of Transport, Home Affairs and Local Government, and the Environment. In 2010, he became Minister of the Environment, Food, and Agriculture before being appointed by the Chief Minister to his present position as Minister for the Department of Economic Development in October 2011.

1 John Shimmin, Minister for the Department of Economic Development of the Isle of Man Government

Island & the SunTBY talks to John Shimmin, Minister for the Department of Economic Development of the Isle of Man Government, on the development of the relationship between Dubai and the Isle of Man and the potential opportunities for investors.

John Shimmin MHK

TBY The Isle of Man and Dubai share a number of economic strengths. What scope is there for an enhanced trade relationship?JOHN SHIMMIN Indeed, we share mutual strengths in independent areas of exper-tise, which are not necessarily mutually exclusive. Our desire is to explore oppor-tunities with the Emirates and further develop the already positive relationship at a government level. Equally, the Isle al-ready has a number of excellent businesses and brands operating in the Middle East region, fully complementing the local of-fering. Examples include our life insurance companies, such as Zurich, which bases its international operations on the Isle, em-ploys several hundred people in the UAE, and sells investment and savings products globally. The government on the Isle of Man is committed to providing support to such organizations.

What role does the UAE and wider Middle East play in the ongoing trade development vision?

Without a doubt, the Middle East has emerged as a key region in a global eco-nomic context, particularly over the past two decades. Furthermore, the ongoing growth pattern remains evident. This fac-tor and Dubai’s geographic location will continue to ensure the prominence of the region. The Isle of Man has recognized the opportunities, and for some time our gov-ernment-to-government relationship has been strong. We have identified a number of possibilities to explore and the authori-ties are excited by the mutually beneficial prospects. While there have been past visits by former ministers and chief min-isters to the region, with the advent of our new department committed to a sustained regional strategy for developing relation-ships, the Middle East has the potential to become our second most important mar-ket after the UK.

In which sectors do you see particular devel-opment potential opportunities?Both the Middle East and the Isle of Man have demonstrated excellence in many areas. Undoubtedly, the financial services sector will feature in our joint appraisal of areas in which we can work together. In particular, our vibrantly successful international wealth management offer-ing has potential; many globally branded businesses use the Isle of Man as a center from which to operate. We anticipate great opportunities as we explore this further. The Isle of Man also has clear strengths in asset structuring, retirement solutions, and succession planning. Diversity is a feature of the relevant economies, and we will welcome discussions at both a gov-ernment and business level in the coming months. For now, a number of great ideas are emerging, which we are very eager to explore in the region. We know that shar-ia-compliant products may be important in the region, and there is no reason why our businesses cannot offer these. I know one or two companies that already do. We also now have foundations that are more readily accepted structures for holding as-sets in civil law countries, recognizing that our traditional trusts were not as popular.

What are the benefits for the registration of air-craft from the UAE and the wider Middle East?We are proud of our renowned aircraft register, a highly successful component of our overall proposition. The register has a number of features. It is the world’s only

aircraft registry dedicated exclusively to executive jets, and our legislation and re-quirements are tailored uniquely to the executive jet sectors. In addition, we rec-ognize and accept design standards and licenses issued by multiple jurisdictions, with an unrivalled service standard. Our charging scheme is highly competitive and includes a secure mortgage register. The private and public sectors work together closely to offer an integrated one-stop shop for our clients. Lastly, we offer a neu-tral national registration prefix (M), which is highly desirable to many owners.

How strong is the government-to-government relationship? The respective governments have fos-tered a relationship for many years, and I am aware that former chief ministers are cited with great fondness by many exist-ing government officials in the Emirates. Following meetings at the end of 2011 be-tween counterparts from the Isle of Man and Dubai, we signed a Memorandum of Understanding (MoU) between the De-partment of Economic Development in Dubai and the Isle in January 2012. This is designed to underline our desire to work together for mutual benefit and will be the subject of a number of meetings during my visit to the region. We will pursue further agreements in the Middle East—the re-cently signed Double Taxation Agreement with Qatar is just one example. ●

1

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24 DIPLOMACY & POLITICS

ECONOMY

REVIEW

INSIDE 25 Back to Basics - REVIEW | 30 The Way Forward - FOCUS: Strategic Plan | 32 HE Sheikha Lubna Bint Khalid Al Qasimi, Minister of Foreign Trade of the UAE - INTERVIEW | 34 HE Sami Al Qamzi, Director General of the Dubai Department of Economic Development - INTERVIEW | 36 Fahad Al Gergawi, CEO of the Foreign Investment Office of Dubai FDI - INTERVIEW | 37 Let’s All Come Together - ROUNDTABLE: Foreign Chambers | 38 Hamad Buamim, Director General of the Dubai Chamber of Commerce & Industry - INTERVIEW | 40 Go Get ‘Em - Q&A: Business Development | 42 Free for All - FOCUS: Free Trade Zones | 44 Salma Ali Saif Saeed Bin Hareb, CEO of Jafza - INTERVIEW | 46 Mohammed Al Zarooni, Director General of DAFZ - INTERVIEW | 48 Arif Obaid Al Dehail, CEO of Trakhees - INTERVIEW | 49 Khalid Bin Kalban, Managing Director & CEO of Dubai Investments - INTERVIEW | 50 Malcolm Wall Morris, CEO of the DMCC - INTERVIEW | 51 Living Better - FORUM: Why Dubai? | 52 Mouayed Makhlouf, MENA Regional Director of the IFC, World Bank Group - INTERVIEW | 53 Mustafa Abdel-Wadood, CEO of Abraaj Capital Limited - INTERVIEW | 54 Samer Sarraf, Senior Vice-President & Country Head UAE of Amwal Al Khaleej - INTERVIEW

Built by HH Sheikh Rashid Bin Saeed Al Maktoum in 1978, the Dubai World Trade Centre was the tallest building in Dubai when completed. It plays host to companies such as Federal Express, General Motors, Johnson & Johnson, MasterCard International, Schlumberger, and Sony.

u As growth rates return to show a steady rise, Dubai’s efforts to refocus the economy toward its traditional strengths in trade, finance, and tourism have ushered in a remarkable recovery that is paving the way for sustainable, long-term growth.

Back to Basics

Although Dubai was hit hard by the global financial crisis in 2009, its economy has re-covered remarkably over the past three years. Efforts to diversify the economy and promote a business-friendly environment have led to a resurgence in foreign investment that has put the Emirate on the path to sustainable, long-term growth. In 2011, GDP reached $84.7 bil-lion, growing by 3.4%, up from the 2.8% GDP growth the Emirate registered in 2010. This trend of accelerating growth is expected to continue through the medium term, with GDP growth in 2012 predicted to reach 4.5%. This is likely to put Dubai in the leading position in the recovery of the UAE economy by 2013, with the Emirate’s predicted 2012 growth rate more than a percentage point higher than the 3.2% expected for the UAE overall. One of the factors that distinguishes Dubai from many other regional economies is its com-paratively low reliance on petroleum revenues. Although Dubai’s economy was built off the back of the oil and gas sector in the 1960s and 1970s, it now accounts for less than 2% of its GDP, and Dubai contributes less than 2% to the UAE’s total petroleum revenue, compared to more than 96% from Abu Dhabi, which gener-ates nearly half of its GDP from oil and gas. This stands in contrast to the strength of Dubai’s non-oil sector, which accounts for more than 76% of non-oil GDP in the UAE. Indeed, Dubai’s role as a regional hub for business, finance, re-tail, and tourism is one of the main reasons it ››

Dubai2012

25

is expected to spearhead economic growth in the UAE in the coming years. While the petro-leum sector, fueled by rising international oil prices, has led the initial recovery in the UAE, Abu Dhabi is now approaching maximum oil production capacity, and analysts are looking to Dubai, as the region’s non-oil economic leader, for the next wave of growth that will take the country’s economy through the next decade. Prior to the global financial crisis, Dubai’s economic growth was fueled largely by its real estate and construction sectors, which account-ed for nearly 30% of GDP in 2007. At that time, Dubai’s property sector was the fastest growing in the world, with construction and real estate reaching 23% and 30% growth, respectively, in 2007. Now, as Dubai looks set to spearhead re-gional recovery with the strength of its non-oil economy, the government is making remark-able strides in promoting economic diversifi-cation and sustainable, long-term investment. Dubai has renewed its focus on being a regional hub for business and trade and working to promote growth. As Hamad Buamim, Director General of the Dubai Chamber of Commerce and Industry (DCCI), told TBY in an interview, “the main lesson learned was about stability... and [the need to] focus on achieving sustain-able growth over a longer period... the city is geared toward helping companies prosper with business-friendly laws, modern infrastructure, and a diverse and predominantly young work-force.” The success of Dubai’s efforts has been demonstrated by the extraordinary growth that the DCCI has experienced in the past few years. In 2011, the Chamber added over 10,000 new members, boosting by nearly 10% the current membership, a trend that already looks set to

continue with an additional 2,000 members having joined the organization in 1Q2012. The main drivers of growth in Dubai’s economy are now the Emirate’s traditional in-dustries of shipping and logistics, tourism and retail, manufacturing, and financial services, all of which have rebounded to their pre-crisis levels and are now leading the way toward sustainable, long-term growth. As Sami Al Qamzi, Director General of Dubai Department of Economic Development (DED), explained to TBY, “the progressive build-up of dynamism and confidence visible across our key sectors demonstrates that 2012 will energize growth in Dubai.” In addition, many developers have now resumed construction projects that were halted in 2008 and 2009, which means that, despite the hit they have taken, the construction and real estate sectors still accounted for more than 20% of overall GDP in 2011. Tourism, hospitality, and retail are some of Dubai’s largest industries, and the Emirate is often referred to as the shopping capital of the Middle East, drawing in huge numbers of shop-ping tourists from across the region and from as far afield as Eastern Europe, Africa, and South Asia. Taken all together, hospitality, along with wholesale and retail trade, accounted for nearly 34% of Dubai’s GDP in 2011. The two sectors showed strong growth in 2011, with wholesale, retail, and repairing services growing by 5.8% and the restaurant and hotel industry growing by 14.7%. The sectors look set for future growth with 9 million tourists expected to visit the ››

1 Dubai is a candidate to host Expo 2020, under the slogan “Connecting minds, creating the future.”Source: Dubai Statistics Centre

GDP by Sector 2011

Major Exports in AED billions

WHOLESALE & RETAIL 29.0%RESTAURANTS & HOTELS 3.8%TRANSPORT, STORAGE, & COMMUNICATIONS 13.1%REAL ESTATE & BUSINESS SERVICES 12.1%FINANCE 11.3%OTHER 9.4%MANUFACTURING 13.3%CONSTRUCTION 8.0%

PEARLS, PRECIOUS STONES, & METALS 64.6BASE METALS 8.2PREPARED FOOD, BEVERAGES, & TOBACCO 5.4PLASTICS & RUBBER 4.3MINERAL PRODUCTS 3.8OTHER 11.8

Growth Rates by Sector as a percentage20102011

16141210

86420

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ns

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26 ECONOMY

UAE in 2012 and 16,000 hotel rooms under de-velopment to support the thriving MICE tour-ism industry. The shipping and logistics sector is also playing a leading role in the growth of Dubai’s economy, with transport, storage, and commu-nications accounting for nearly 14% of GDP in 2011. For centuries, Dubai has been known as a city of merchants, and in the past half-century, the Emirate has become a re-export hub for the region, serving as a gateway between the Mid-dle East and the world. As Fahad Al Gergawi, CEO of the Foreign Investment Office of Dubai FDI, explained to TBY, refocusing the economy on Dubai’s shipping and logistics sector is an important element of returning to long-term, stable growth in Dubai. “Dubai is a trading hub with strong logistics facilities and infrastruc-ture. Focusing on those fundamentals is what brought Dubai back, and of course with new sectors developing we are seeing new avenues and potential for growth,” said Al Gergawi. One positive step has been the UAE’s entry into the ATA Carnet system, which makes it easier to import goods for re-export. As Hamad Bua-mim explained to TBY, “the ATA Carnet is an international customs document that permits the duty-free and tax-free temporary import of goods for up to one year... [The] system will make importing products and goods for display much simpler and more affordable [and] will be a major boost for companies working in the sector.”

SUPPORTING SMEsManufacturing has also been a strong leader in Dubai’s post-crisis growth, with the manufac-turing sector growing by nearly 12% in 2011 to account for more than 14% of GDP, and a fur-ther 6% expansion expected for 2012. Although Dubai’s manufacturing and industrial sector is known for big names like DUBAL and Ducab,

the sector is, in fact, dominated by SMEs, which account for 95% of the enterprise population and 42% of the workforce. In fact, in the econ-omy as a whole, SMEs account for 40% of GDP. As a result, the government has made SME pro-motion a priority. As Al Qamzi explained, “our SME strategy focuses on enabling SMEs in Dubai to move to the next level of growth and compete on a global level through better access to capi-tal and government incentives.” One new SME promotion initiative is the recently announced “Dubai SME 100,” which will identify top SME performers in Dubai and provide a measure of success to help them grow sustainably. Another recent initiative is the creation of the Dubai Center for the Amicable Settlement of Disputes, which DED set up in cooperation with the Dubai court system. For many SMEs that have difficulty affording the legal costs involved in settling disputes through the court system, the center will provide a fast and affordable alter-native, which, according to Al Qamzi, is neces-sary to enable “an investment environment that meets the needs of SME owners.”

FDIDubai’s strong recovery has led to a resurgence of foreign investment in 2011 and 1H2012, fueled in part by active efforts from the government to shift the focus of the economy away from real estate and construction and instead promote diversified investment in Dubai’s traditional growth sectors. The Emirate attracted $7.4 bil-lion in FDI inflows in 2011. As Al Gergawi told TBY, “In 2011 we saw an increasing number of investment enquiries compared to the previous year. This is because people are seeing more encouraging news, receiving better economic data, and realizing the uniqueness of Dubai as a global center.” At the same time, many of Dubai’s large family-owned conglomerates are showing an increasing amount of interest in

The Emirate has become a global re-export hub for the region, serving as a gateway between the Middle East and the world.

Making ConnectionsAiming to bring the World Expo 2020 to the Middle East, North Africa, and South Asia region for the first time, Dubai presented its bid to the General Assembly of the 160 member nations of the International Exposition Bureau (BIE) in early 2012. If selected as the host, Dubai will develop an exhibition area of 400 hectares at the Dubai Trade Center-Jebel Ali. The Emirate’s theme, “Connecting Minds, Creating the Future,” is designed to highlight the impor-tance of Dubai as a creative and cultural hub beyond its business and touristic appeal. In addition, officials expect the event to attract a wide range of visitors and generate new interest in the UAE, as potential investors witness first hand the latest developments in the Emirate. Khalid A. Bin Sulayem, Director General of the Department of Tourism, Commerce, and Marketing, told TBY that the millions of attendees expected will benefit from “the best transportation, capacity, services, communications infrastructure, flight networks, and accommodation” during the Expo 2020, should Dubai be successful in its campaign. The four competing bidders are Ayutthaya (Thailand), Yekaterinburg (Russia), Izmir (Turkey), and São Paulo (Brazil). The decision will be made after five rounds of presentations in the period leading up to November 2013, when the BIE gives its final answer and preparatory work will begin.

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28 ECONOMY

forming joint ventures with foreign investors, making it even easier for entrepreneurs to en-ter the economy. Dubai has also benefited from the unrest caused by the Arab Spring movement and the eurozone crisis, as investors look for a safe haven. However, as Al Gergawi explained, “it is important to note that Dubai has been a safe haven for investment for many years, and will continue to be a preferred investment destination... because of the underlying fun-damentals driving the economy.” This has not stopped Dubai’s government from working hard to further enhance its appeal to investors and reinforce its role as a regional hub. The Emirate has made significant strides in moving to upgrade its legal and regulatory framework to ensure an investor-friendly business envi-ronment. As Al Qamzi at the DED explained, “the global developments have enhanced our commitment to integrating international best practices in laws and regulations, and uphold-ing the principles of transparency and excel-lence.” One major reform being undertaken is the new UAE bankruptcy law, which is set to be approved by end-2012. The law is aimed at simplifying bankruptcy processes, specifi-cally for Dubai’s many listed and family-owned businesses, in order to make it easier for busi-nesses to be rescued and for creditors to be paid. As Hamad Buamim explained to TBY, “this will have the effect of easing restructuring and of-

fering out-of-court negotiations, which in turn will help attract more overseas investments.” As the economy has continued to grow and these policies make Dubai an even more attrac-tive investment destination, 1Q2012 has already seen a substantial increase in investment ap-plications, with FDI increasing by 50% to reach over $1 billion.

EXTERNAL TRADEIt is not surprising that the UAE, which became a WTO member in 1996 soon after the organiza-tion was founded, has historically geared itself toward an open trade policy. As Sheikha Lubna Bint Khalid Al Qasimi, the UAE Minister of For-eign Trade, explained to TBY in an interview, the country’s trade strategy in recent years of keeping tariffs low and non-tariff barriers simple has helped “to float us above the global crisis without compromising our trade liber-alization.” Indeed, Dubai has seen remarkable export growth in 2011 as it works to diversify its trading partners. In 2011, the value of Dubai’s direct exports (not including re-exports or free zone exports) saw a 44% increase year-on-year, from $18.5 billion to $26.7 billion. Accord-ing to Al Qasimi, Dubai is looking to expand its export presence in emerging markets such as Latin America, Africa, and Central Asia, as well as to expand its already strong ties with India, China, and South Korea. ●

Dubai has seen remarkable export growth in 2011 as it works to diversify its trading partners.

ECONOMY 29

Dubai’s Strategic Plan, currently being revised to reflect global economic conditions, lays out a program of action to help the Emirate maintain its role as a global business hub.

FOCUS: Strategic PlanThe Way Forward The Spirit of Wellbeing

One of the largest names in providing services and products in the healthcare industry, Gulf Drug is proud to

be in the service of enhancing the quality of lives. We are indebted to our dynamic team of professionals and

patrons who continue to pursue excellence and customer satisfaction, which in turn showcases Gulf Drug as

a specialized and responsive team in the healthcare industry.

Main Business Units:

• Pharmaceutical and Consumer Healthcare

Retail Business

• Pharmaceutical Institutional Business

• Medical Equipment Business

• Turnkey Medical Equipment

• Biomedical Maintenance Business Solutions

• Medical Supplies and Instruments Business

• Veterinary Healthcare Business

Making life better

GULF DRUG P.O. Box 3264, Dubai, UAE, Phone: +971 4 397 4949, Fax: +971 4 3962970, Gulf Drug Establishment Inquiries: info@gulfdrug.com، www.gulfdrug.com

Released in 2007, the Dubai Strategic Plan 2015 sets out both a vision and a program of action to enable the Emirate to proac-tively guide its development through to 2015. The document lays out plans not only for the future of economic development, but also environment and infrastructure, social development, security and justice, and government excellence in Dubai. The main focuses of the plan are to make Dubai an even more attractive place to live, work, and do business and to proactively address any issues that could hinder economic de-velopment in the future. Despite the onset of the global financial crisis, Dubai has made remarkable strides in working toward many of the goals laid out in the Strategic Plan, such as infra-structure upgrades and reforms to the health and education systems. However, the global crisis has affected Dubai’s plans for economic development, which is why the government has now begun the pro-cess of revising the Strategic Plan to reflect the Emirate’s new strategy in the current economic conditions. The new plans, to be released in late 2012, will formalize Dubai’s return to its traditional growth sectors, and the Emirate’s focus on promoting long-term, sustainable, and business-oriented

growth for the future. The plans have been developed through collaboration and con-sultation with Dubai’s business commu-nity and with the assistance of a number of international organizations. Although many elements of Dubai’s Strategic Plan will remain the same, the economic development strategy is under-going a review through 2012, and a new plan will be released toward the end of the year. Dubai’s revised plans for its eco-nomic development strategy are expected to elaborate on the Emirate’s refocus on its traditional growth sectors: tourism and retail, transport and logistics, manufac-turing, and finance. The plans will likely focus on upgrading the regulatory and fi-nancial environment for these and other industries to ensure Dubai’s long-term competitiveness. In parallel with rapid economic growth over the past half-century, Dubai’s social development continues to improve the quality of life of its residents. Economic growth has been accompanied by demo-graphic growth and expansion that has had an effect on the social development of the Emirate. The goal of Dubai’s Strategic Plan for social development is to ensure that the economic growth the Emirate has seen

translates into improved living conditions for its nationals and foreign residents. First and foremost, this has meant ensuring the quality and availability of health care, so-cial services, and education for all, but also working to ensure that Dubai nationals can preserve their culture and participate in the economy at the same time. Dubai’s growth in recent decades has helped to position it as an important re-gional hub for business, tourism, and trade—all industries that have been heav-ily reliant on the development of state-of-the-art infrastructure and the geostrategic location of the Emirate. As growth contin-ues, Dubai must ensure the effective use of its land and resources through urban and environmental planning and continued investment in transport and utilities in-frastructure. Dubai’s investments in the Metro project and road network are two examples of this policy in action. By keeping its streets safe, Dubai has become one of the most secure places in the world, which is a remarkable achieve-ment given the rapid economic growth it has seen in the past few decades. As the city continues to grow, one of Dubai’s main priorities is to ensure both human rights and public safety. Dubai’s strategy for security, justice, and safety focuses on improving the efficiency, transparency, and fairness of the justice system (both criminal and commercial) and updating contingency plans and regulations for di-saster readiness and management. The government’s role in this vision is crucial—one important element of the international competitiveness of busi-ness centers around the globe is the ef-ficiency, excellence, and accountability of the authorities. In recent years, Dubai has made great strides in enhancing the performance of its public sector through modernizing initiatives, such as e-gov-ernment and performance management systems. In order to maintain its interna-tional competitiveness, Dubai must work to continue modernizing the government and meet the challenges of the 21st cen-tury. As part of the Dubai Strategic Plan 2015, the government excellence strategy focuses on enhancing responsiveness and accountability, improving the efficiency of government organizational structures, and creating institutional structures to incen-tivize public sector performance. ●

1 Dubai is one of the safest cities in the world

1

thebusinessyear

30 ECONOMY

The Spirit of WellbeingOne of the largest names in providing services and products in the healthcare industry, Gulf Drug is proud to

be in the service of enhancing the quality of lives. We are indebted to our dynamic team of professionals and

patrons who continue to pursue excellence and customer satisfaction, which in turn showcases Gulf Drug as

a specialized and responsive team in the healthcare industry.

Main Business Units:

• Pharmaceutical and Consumer Healthcare

Retail Business

• Pharmaceutical Institutional Business

• Medical Equipment Business

• Turnkey Medical Equipment

• Biomedical Maintenance Business Solutions

• Medical Supplies and Instruments Business

• Veterinary Healthcare Business

Making life better

GULF DRUG P.O. Box 3264, Dubai, UAE, Phone: +971 4 397 4949, Fax: +971 4 3962970, Gulf Drug Establishment Inquiries: info@gulfdrug.com، www.gulfdrug.com

INTERVIEW

BIOGRAPHYSheikha Lubna Bint Khalid Al Qasimi was appointed Minister of Foreign Trade in 2008, having previously spearheaded the UAE’s Ministry of Economy during one of the country’s most prosperous periods in history. She became the first woman in the country to assume a cabinet position. Prior to joining the government, she was one of the country’s pioneering women professionals in the field of computer engineering with extensive experience working with a number of well-known firms, ultimately leading her to a post at the Dubai Ports Authority. She was then named CEO of Tejari. She has received many awards for her work including the Vital Voices Global Trailblazer Award 2008, for her exceptional leadership in the Middle East and her profound influence on future generations of Arab Muslim female decision makers. She also received an Honorary Doctorate of Science from California State University for her contributions to science and technology.

oil), and are thus considered the backbone of the national economy. Other recom-mended sectors include tourism, finance and banking, education, health, logistic services, and ports and airports.

Which countries currently present particularly interesting opportunities for bilateral trade growth with the UAE?We are eyeing countries with high growth rates, large and expanding populations, stable economic and political environ-ments, forward-looking policies, and a clear vision of FDI in regions such as Latin America, Africa, and Central Asia. These growth partners uphold laws for protect-ing investors, widening investments, and expanding trade. We also intend to broaden our bilateral trade with strategic partners such as India, China, and Korea.

How important a role do SMEs play in utilizing opportunities and strengthening bilateral trade between countries? What can be done to em-power and enable SMEs to enter international markets and benefit from exports in expand-ing their operations?SMEs represent around 70% of our GDP, so any country tapping into our SME sector would be engaging with the backbone of our economy. SMEs are major users of im-ported goods and also account for a large exporting group; they are vital to strength-

Time to Aim HighTBY talks to Sheikha Lubna Bint Khalid Al Qasimi, Minister of Foreign Trade of the UAE, on the many opportunities for investment in SMEs and sectors such as tourism, logistics, and trade.

HE Sheikha Lubna Bint Khalid Al Qasimi

TBY What is the core of the UAE’s foreign trade policy, and to what extent is local eco-nomic openness paving the way for wider re-gional growth?SHEIKHA LUBNA BINT KHALID AL QASIMI The UAE’s foreign trade policy is geared to-ward economic openness to the world and productive interaction with its global trade partners. It is founded on the principles of parity and mutual interests. The decision to nurture an open economy was wisely made by our Founding Fathers led by our late President Sheikh Zayed Bin Sultan Al Nahyan from our country’s inception. Even then they knew that an open economy was vital to the UAE’s commercial ties at a regional and international level. An open

economy has helped the UAE gain the con-fidence of global investors and businesses and has accelerated the nation’s economic diversification efforts. It has also boosted local competition, job creation, and the options of goods and services that UAE cit-izens can choose from. An open economy has been vital to our resilience against the global downturn and the social movements that have posed numerous economic chal-lenges to the region and the world.

Following the successful diversification of the UAE economy, which sectors hold the largest growth potential for trade and investment?The industrial sector shows very promising potential. In 2011, the UAE’s industrial ac-tivities expanded by almost 11% to remain the second largest component of our GDP after hydrocarbons. The manufacturing sector accounted for a record $38.8 bil-lion in 2011. The transport sector is another rewarding area for trade and investment, as it expanded by 6% in 2011. Renewable energy is also growing, especially as we are now the official headquarters of the International Renewable Energy Agency (IRENA). The UAE has already adopted a plan to raise the contribution of the renew-able energy sector by up to 7% of national energy requirements by 2020. SMEs repre-sent yet another solid sector, accounting for over 70% of the UAE’s GDP (excluding

1

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1 Sheikha Lubna Bint Khalid Al Qasimi, Minister of Foreign Trade of the UAE2 Sheikha Lubna at the Global Arab Business Meeting

ening bilateral trade. Companies falling under the SME category face many finan-cial and policy challenges, which the UAE is keen to address. Governments should introduce supportive policies that make it easier for SMEs to expand and enhance their operations and enter international markets. For its part, the UAE aims to cre-ate a supportive environment where SMEs can easily benefit from the right financial, training, and knowledge resources. We recognize the positive value of SMEs in our national economy.

What will be the focus of the 2012 Annual In-vestment Meeting? What makes the UAE such an ideal location for international economic forums and events?The UAE is an excellent host for interna-tional dialogues and events due to its stra-tegic geographic location between East and West. As the region’s recognized commer-cial hub, it also provides an ideal setting for businesses to interact and deal with each other. It offers many world-class venues such as the Abu Dhabi National Exhibition Centre and the Dubai World Trade Center as well. The country’s thriving meetings, incentives, convention, and exhibitions (MICE) industry is considered an impor-tant medium for showing the UAE’s push away from oil toward a more diversified economy.

The UAE joined the World Trade Organization in 1996, and a number of WTO reports have since been issued evidencing the country’s commitment to creating an open international trade environment. What measures continue to be implemented in this regard?During our second Trade Policy Review (TPR) under the WTO we were commend-ed for upholding free-market principles and for aggressively pursuing economic diversification. We are committed to con-tinue implementing measures that sus-tain the positive world view of our open trade environment. For one, we continue to update and improve our economic and legislative laws to fortify our open mar-ket. Building on the strong approval of the WTO over our latest TPR, we also intend to provide more information on our trade policy and deliver on our obligations to the WTO. We will continue to work with the WTO Secretariat and benefit from the ex-pertise and technical assistance it extends. Since 2011 we have not raised our tariffs beyond 4.9% to float us above the global crisis without compromising our trade liberalization. This strategy has worked well alongside our simple tariff structure and minimal non-tariff barriers, and will continue to be in force. Of course, we will also maintain our business-friendly envi-

ronment and free trade zones, which have carved for us a successful model for invest-ment promotion.

What lessons were learned from the recent global liquidity crisis? What measures is the UAE implementing to develop appropriate policies for recovery that balance economic growth with sustainability?In the UAE, we have adopted several mea-sures to balance between economic growth and sustainability. For one, we have re-structured our economy to focus on sectors such as tourism, logistics, and trade. In ad-dition, most of the assets of national and foreign banks are located within the coun-try, with their parties well-known and sound. We have also kept the percentage of our bank reserves and capital over our total bank assets far above international Basel II standards. Moving forward, we are continuing with several mega-projects, implementing strategic wage increases, and enhancing our investment offerings to draw in more FDI. We are planning several initiatives to further strengthen trust in our economy and cement our status as a preferred regional and global business and investment partner.

As the first female UAE minister and an inspi-rational role model for young Emirati women, what advice would you impart to budding young female entrepreneurs? I would advise them to aim high and not set limits to what they can achieve; the region has made great strides in opening

up opportunities to our sisters. I would like to remind them that women possess many unique traits such as exceptional interper-sonal skills, persuasiveness, adaptability, team spirit, and confident decision-mak-ing, which make us excellent entrepre-neurs. I would also warn them not to fall into the trap of competing against men. Their greatest competition is themselves. They should work with men for the better-ment of society.

What is your outlook for the rest of 2012?Many indicators point to a breakthrough year for business in the UAE. After a three-year asset slump, the country’s banks are looking at a strong profit rally in 2012. We are also optimistic about 4% economic growth this year. Business Monitor Inter-national predicts that we will witness a 9% increase in tourist arrivals to 9 million guests; as the region’s tourism hub, this will spell big business for the UAE. These are just some of the many barometers pointing to a strong business performance for the remaining months. ●

2Image: Richter Frank-Jurgen

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ECONOMY 33

INTERVIEW

BIOGRAPHYSami Al Qamzi was appointed Director General of the Department of Economic Development in September 2008. Prior to this, he held the position of Director General of the Department of Finance, where he worked directly with the Ruler’s Court and Executive Council of Dubai to develop strategies for the Department of Finance. He began his professional career with the Central Military Command of the UAE in 1986 in a financial administrative role. He has a BA in Economics and Accounting and is extensively involved in business and industry through his board affiliations.

SME & YouTBY talks to Sami Al Qamzi, Director General of the Dubai Department of Economic Development, on the Dubai Strategic Plan 2015, the significance of SMEs, and investment flows.

HE Sami Al Qamzi

1

TBY What is the role of the Department of Economic Development (DED) in achieving the Dubai Strategic Plan 2015?SAMI AL QAMZI The aim of the Dubai Stra-tegic Plan 2015 is to leverage the Emirate’s successful economic diversification for sustainable growth and prosperity. The plan contains a common framework that integrates strategies to promote economic and social development, service excel-lence, and Dubai’s reputation as an ideal destination to live and do business. The Economic Development Plan (EDP) fo-cuses on strengthening the supply-side factors that have contributed to economic growth in Dubai—chiefly the Emirate’s strategic location, efficient government, solid institutional framework, effective service delivery mechanisms, strong laws and regulations, superior logistics infra-structure, commitment to free trade, and openness to foreign cultures—and is a key component of the Dubai Strategic Plan 2015. In line with our mandate to support economic policy and planning in Dubai, DED works in collaboration with a wide spectrum of stakeholders from the public and private sectors to ensure that Dubai retains its strong economic performance, leadership, and competitiveness. Ongo-ing global economic changes also make it necessary to regularly revisit the Dubai Strategic Plan 2015 in order to safeguard our past achievements and define a non-inflationary, sustainable growth path for the Emirate.

Why is the development of SMEs so important in Dubai?SMEs are the backbone of Dubai’s econo-my. In total, they account for 95% of the enterprise population, 42% of the work-force, and 40% of annual GDP in Dubai. Empowering these SMEs with knowl-edge and resources will eventually enable Dubai’s economy to be driven by innova-tion, technology, and high productiv-ity. Our SME strategy focuses on enabling SMEs in Dubai to move to the next level of growth and compete on a global level through better access to capital and gov-ernment incentives. Dubai SME is a DED agency that is dedicated to implementing this strategy. The agency works with every stakeholder involved in SME development, boosting the entrepreneurial environment in Dubai, building partnerships for SME growth, encouraging innovative start-ups, and grooming promising SMEs. Most re-

cently, Dubai SME announced the “Dubai SME 100,” a first-ever ranking initiative aimed to identify the top-performing SMEs in Dubai and enable them to grow. Dubai SME also organized the first Conference on Corporate Governance for SMEs and an-nounced the landmark Code of Corporate Governance in 2011. Both the conference and the code are aimed at educating SMEs on the need to bring in efficient gover-nance practices and transparency, thereby making them more attractive for financial and talent capital. Dubai SME places spe-cial emphasis on identifying entrepreneur-ial talent at a very early age and translating it into successful enterprises. The annual Young Entrepreneur Competition (YEC) is currently in its eighth cycle. The contest promotes entrepreneurial spirit among students in public and private secondary schools and universities across the UAE. In addition, Dubai SME instituted the Young Business Leaders (YBL) award, which honors successful entrepreneurs for their innovations and exemplary leadership. Fi-nally, the government has also developed a Government Procurement Program (GPP) that enables member SMEs to supply 5% of the procurement requirements of Dubai government entities.

Have you witnessed any new trends in Busi-ness Registration and Licensing (BRL) ap-plications in 2012? Are you seeing increased interest from any nearby markets?Investment inflows and business activity in Dubai have continued to grow, despite the challenging global economic climate. We have seen robust activity across key economic sectors throughout 2011. DED issued 14,360 business licenses in 2011, with the professional services sector ac-counting for the largest share at 7%. The services sector is also reflecting admirable growth and diversity along the lines of the developed world. Tourism accounted for the second-largest share of licenses issued in 2011. General trade led the list of the top 10 licensed activities in the commercial category, with 1,799 licenses, compared to 1,543 in 2010. Among the top 10 nationali-ties to which licenses were issued in 2011, citizens of the UK were on top, followed by Saudi Arabians, Indians, and Bahrainis, in that order. The licensing trends clearly in-dicate that the current economic situation in Dubai and future prospects are promis-ing at both the overall macroeconomic and sectorial levels.

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34 ECONOMY

1 Sami Al Qamzi, Director General of the Dubai Department of Economic Development2 The agencies of the DED are working together to promote investments in the evolving city of Dubai

What is the focus of the new Center for the Amicable Settlement of Disputes?The Center for the Amicable Settlement of Disputes was set up by DED in cooperation with the Dubai Courts, as a one-stop shop for quick and cost-effective settlements for businesspeople and investors. The center will have offices where legal suits can be filed, as well as judges specialized in dis-pute settlement and a group of experienced and qualified arbitrators. The center was established following a study submitted by Dubai SME, which revealed the necessity for an investment environment that meets the needs of SME owners and allows for faster and affordable dispute settlement. DED decided to extend the new approach to all businesses, given its wider relevance. The center will enable speedier and af-fordable dispute settlement, compared to what legal firms and offices offer—without the need to resort to the court system. The initiative also reflects DED’s eagerness to cooperate with governmental authorities, thereby elevating business and customer service standards in Dubai.

What are the objectives of the DED’s four key agencies? DED’s mandate is to foster Dubai’s eco-nomic development, and thus the decision to bring in key developmental agencies under its umbrella. Aside from Dubai SME, one of our agencies is Dubai FDI, which promotes investment opportunities, sup-ports international investors in establish-ing their operations here and encourages businessmen to take advantage of our stra-tegic location. The agency assists in the

identification of sector-specific opportu-nities, providing connections to a network of both government and non-government partners, as well as support throughout the investment lifecycle. Another agency is Dubai Exports, which promotes exports and re-exports by creating an environ-ment that enables local exporters and helps them establish partnerships with trade promotion agencies across the world. Dubai Exports has developed a range of value-added trade support services for UAE-based firms. These initiatives are de-signed to accelerate the profitable expan-sion of Dubai businesses in foreign mar-kets. The final agency is the Dubai Events and Promotions Establishment (DEPE). This organization aims toward developing, promoting, facilitating, and supporting the retail and events sectors in Dubai. DEPE complements Dubai’s tourism profile by highlighting the Emirate’s strengths and attractiveness as a year-round destination through a variety of events, including the Dubai Shopping Festival.

What key insights have been uncovered by the quarterly business surveys?DED has launched quarterly surveys to measure the perceptions of the business community and capture the outlook for the future. It is important for Dubai to offer the latest business updates and forecasts to support economic decision-making in the Emirate. Key trends from the surveys are collated into the Business Confidence In-dex, thus providing policy-makers, inves-tors, and businesses an objective metric for planning. For example, the findings of the

survey for the 4Q2011 indicated rising con-fidence about future revenues and profits among Dubai businesses and an increas-ing optimism from SMEs and exporting firms. Over 67% of the survey participants said that they expect an improvement of up to 10 percentage points in sales dur-ing the first quarter of 2012, compared to 4Q2011. While 39% of the companies said their profits are likely to remain stable, 44% saw 1Q2012 bringing higher profits. The survey also indicated robust activity across the trade, logistics, and transporta-tion sectors, which are the chief drivers of growth in Dubai. Nearly 30% of the com-panies surveyed reported that they will increase the size of their workforce, with manufacturing and service firms express-ing the strongest interest in hiring. Over-all, a progressive build-up of dynamism and confidence is visible across our key sectors, which demonstrates that 2012 will energize growth in Dubai. However, we will continue to closely monitor busi-ness sentiments and plans in order to apply corrective actions if and when needed. We firmly believe that these quarterly business surveys are very useful for the business community as a whole. ●

Dubai Department of Economic Developmentin numbers

Established

1992Sub-agencies

4Business licenses issued in 2011

14,3602

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ECONOMY 35

INTERVIEW

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

1 Fahad Al Gergawi, CEO of the Foreign Investment Office of Dubai FDI

The Right InviteTBY talks to Fahad Al Gergawi, CEO of the Foreign Investment Office of Dubai FDI, on Dubai’s foreign investment environment.

Fahad Al Gergawi

TBY What is Dubai’s continuing appeal to for-eign investors?FAHAD AL GERGAWI I think it is the posi-tioning of Dubai more than anything else, that as a city it enables businesses not only to come and set up but also grow in the entire region. From Dubai you can reach out to a population of around 2.2 billion within four hours; this is very important for investors. Dubai represents and is ac-cepted as a global services center to many multinationals looking at expanding their businesses in the region and globally.

What measures have you taken to increase Dubai’s appeal as a hub?We are focusing more on the central role of Dubai in the region. Our location has been

key to our status as a hub, and we will con-tinue to be important regionally and glob-ally in the future. On the economic development front we are looking at best practices that we can learn from, while at the same time trying out new things boldly and being innovative in the way we develop our infrastructure to make it more appealing to businesses. We are also launching campaigns across the global media, and new success stories are being told to the world. In addition, the key economic messages of Dubai are de-livered across bilateral and multinational platforms, such as delegation visits, mis-sions, and conferences.

Has the recent regional unrest had a direct im-pact on FDI flowing into Dubai?Regional unrest always creates a positive flow into surrounding markets that are sta-ble and have sound fundamentals. It is im-portant to note that Dubai has been a safe haven for investment for many years, and will continue to be a preferred investment destination, not so much due to regional unrest, but because of the underlying fun-damentals driving the economy. Dubai has proven that it can compete on an interna-tional scale in times of global growth and in times of global decline, which is proof of a resilient economy.

What initiatives are being taken to continually increase Dubai’s attraction as an FDI destina-tion in light of the increasing competition from regional markets such as Saudi Arabia and Qatar?We have been observing competition for a long time, and we are convinced more than ever that such competition should be welcomed by all means. One of the phi-losophies of Dubai is that rather than be-ing looked at as one city—as one center of excellence—we want there to be a holistic approach to the market. Being part of a re-gion where there are a number of cities that are vibrant only serves to add value to what Dubai has to offer in terms of investment propositions.

How does the government balance the inter-ests of local businesses in the market against the entrance of international companies?In terms of the free market, Dubai, since its inception, has set no real limit as to where foreign companies can invest. We now have global companies here in the market, and we would like our own companies to

be more competitive in order to enter and be established in the global market. When we look at those family-owned businesses now, they appear well positioned to be-come more international and offer more opportunities for joint ventures. There are still a few protected areas, such as oil and gas and telecommunications, but these are highly advanced areas. Generally, the gov-ernment wants to support multinationals that can add to diversity and competence to the business sector and engage in fair competition with local firms. It will help both sides by creating new jobs and oppor-tunities for the training and development of the local population and knowledge transfer.

In which sectors are you seeing increasing ac-tivity and from which markets?The main areas witnessing activity are trade, logistics, hospitality, and tourism, and we are also starting to see an improved flow into real estate. However, trade, lo-gistics, and services continue to dominate the scene. We have more than 16,000 hotel rooms under development, which for a lo-cation like Dubai is very important. ICT is also a strong sector. We are seeing encour-aging development in the healthcare and education sectors, and we support this be-cause we want to see global best practices in these two sectors. As for our major trad-ing partners, we see India, China, the UK, the US, and Switzerland in the top rung, and we are starting to see an increased flow coming in from South American countries as they look to diversify their trade bal-ances with different regions in the world. ●

1

36 ECONOMY

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Let’s All Come TogetherROUNDTABLE: Foreign Chambers

JONATHON DAVIDSONCEO & ChairmanBritish Business Group Dubai & Northern Emirates

PRIOR TO ARRIVALBusiness groups around the world offer companies and in-dividuals a good starting point when entering a new market. British companies often use the BBG to develop relationships and conduct research before they arrive.

BASE STATIONDubai has offered relative safe-ty and security for companies wanting to operate within the region. It is great testament to the leadership of the country that so many of the world’s leading companies choose the UAE as a base.

UNTAPPED POTENTIALAs the region continues to de-velop, and more companies see the benefit of Dubai as a busi-ness center, more opportuni-ties will also arise. One of the best things about operating in Dubai is the untapped potential of the region.

JOHN PODGOREPresidentAmerican Business Council of Dubai & the Northern Emirates

RAYMI VAN DER SPEKChairmanAustralian Business Council Dubai

SHARING EXPERIENCESThe ABC serves as a direct line to the US political and diplo-matic establishment here in the Middle East, and we assist in interacting with the UAE authorities. We also provide the ability to meet with other Americans and share personal and business experiences in Dubai, as well as the broader region.

THE LIFESTYLE BRANDI think the UAE has been doing a great job of explaining to US investors the particular eco-nomic advantages that the UAE has to offer. Dubai has been very successful at marketing itself effectively as a business and lifestyle brand, and this is slowly eroding the one-sided US stereotype of the Middle East.

PARTICULAR INTERESTSHealth care and education are sectors that are attracting sig-nificant attention of late. For example, Duke University has a presence, and New York Uni-versity (NYU) has established an amazing program in con-junction with the UAE federal government in Abu Dhabi.

SOFT BUSINESSWe needed good mechanisms for interacting socially with UAE nationals, and so we went to the Dubai Chamber of Com-merce with the idea of a golf tournament. The executives thought it was fantastic and said that they would spon-sor a UAE national team to participate.

MAINLAND COMPANIESThere is something in the order of more than 300 Australian businesses registered with the Dubai Chamber of Commerce. But those are what you would call “mainland” companies; businesses that choose to reg-ister outside of the free zones with a government entity.

TRUE STRENGTHSOne of my main focuses is on driving business outward from here into the rest of this region and trying to find ways for us to act as a conduit for our mem-bers to do business regionally, not just in Dubai. That is where Dubai’s strengths lie.

Business groups focus on building a network and strong ties with local and international players, while aiming to integrate and complement the present system.

Dubai2012

ECONOMY 37

INTERVIEW

BIOGRAPHYHamad Buamim has been the Director General of the Dubai Chamber of Commerce and Industry since November 2006. He also serves as the Vice-Chairman of the World Chambers Federation-ICC in Paris. He graduated with Honors from UCLA in 1996, with a Bachelor’s of Science in Electrical Engineering. In 2002, he obtained an MBA in Finance from the University of Missouri. Prior to joining the Dubai Chamber of Commerce, he was the Secretary-General of the Dubai Economic Council, a Corporate Manager at HSBC Bank, a Lecturer in Finance and Banking at UAE University’s College of Business and Economics, and a Senior Systems Engineer at Dubai Electricity and Water Authority (DEWA).

Favorable ConditionsTBY talks to Hamad Buamim, Director General of the Dubai Chamber of Commerce & Industry, on the variety of services the Chamber offers and its close relationship with government strategies and key markets.

Hamad Buamim

TBY How is the Chamber’s strategy aligned with the 2012-2016 Federation of the UAE Chambers of Commerce vision?HAMAD BUAMIM The Dubai Chamber was established in 1965 through a decree issued by the late Ruler of Dubai, Sheikh Rashid Bin Saeed Al Maktoum. He realized the im-portant role that a chamber of commerce would play in supporting the economy, and since then the Dubai Chamber has become a major business organization in the UAE. Over the past decade, company profiles have altered dramatically and are now much more sophisticated than what they were 10 years ago. By updating and refining our products and services in line with differing business needs, we have been able to attract new members and better support and protect the wider busi-ness community. Our offices are located in key commercial areas in order to make our products and services more accessible to the business community. They can be found in the Jebel Ali Free Zone (Jafza), Dubai Airport Free Zone (DAFZ), and Al Awir area, as well as at the Department of Economic Development (DED), Al Twar Center, and Dubai Industrial City. Our ser-vices have also changed to become more complex as doing business becomes more sophisticated. Not only do we offer docu-mentation services for traders, we also provide legal advice and support, business networking opportunities, and economic

research to the entire business commu-nity. At the same time, we are helping companies meet international standards of sustainable business through our Cen-ter for Responsible Business and resolve commercial disputes in an amicable way through the Dubai International Arbitra-tion Centre (DIAC). Helping our members meet best international practice is part of Dubai Chamber’s strategy. Therefore, we are closely aligned with the strategy of the Federation of the UAE Chambers of Com-merce and Industry (FCCI) for the 2012-2016 period. Earlier in 2012, we hosted and participated in the first workshop for the FCCI team responsible for developing the proposed new strategy. The project is important, and the Dubai Chamber will support and contribute in any way pos-sible to accelerate the development of the strategy, which aims to develop technical and administrative policies based on best international standards.

As one of the world’s top 10 business destina-tions, what are the factors that lend credibility to Dubai as an international business hub?Dubai has a number of benefits for inter-national businesses, which help attract new companies every year from all cor-ners of the globe. These include the city’s strategic location in the center of the map. Dubai offers easy access to several major consumer markets and as such is one of

Dubai Chamber of Commerce & Industryin numbers

Established

1965Members

128,000Members’ exports and re-exports

AED246 billion1

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1 Hamad Buamim, Director General of the Dubai Chamber of Commerce & Industry2 The Dubai Chamber of Commerce & Industry (pictured right) was established in 1965 by a decree issued by the late Sheikh Rashid Bin Saeed Al Maktoum

the world’s leading re-export destinations. At the same time, Dubai offers companies a safe and stable environment to do busi-ness. The city is geared toward helping companies prosper with business-friendly laws, modern infrastructure, and a diverse and predominantly young workforce. One attraction for international businesses spe-cifically is free zones, which are tax free and allow for full ownership and profit repatriation.

Which regions have you identified as holding significant potential?The main markets we have identified in-clude India, CIS countries, Africa, and Latin America. Dubai historically has strong ties with India and parts of Africa, and we are working hard to build stronger links with many countries, particularly in eastern Africa, by sending overseas del-egations and hosting the Eastern African Community Forum in Dubai in October 2012. Meanwhile, Latin American and CIS countries are witnessing incredibly strong growth, and we believe that our members could benefit from the opportunities being created in those parts of the world.

What trends have you witnessed in terms of exports and companies applying for membership?Our members’ exports in 2011 reached AED246 billion, which is 14.5% higher compared to 2010. This total is also higher than the peak in 2008, which was AED213 billion. This expansion demonstrates the strength of the trade sector and its impor-tance for Dubai’s economic growth. As for our membership trends, last year we added 10,092 new members, which took our to-tal membership to over 128,000. This was an increase of 8.5%, which points toward the economic growth that Dubai witnessed in 2011. We have seen our membership increase again to over 130,000 in 1Q2012, as more companies choose to set up in the Emirate.

What benefits will the ATA Carnet system bring to Dubai, and what motivated the initiation of the system at this stage?The UAE began accepting ATA Carnets for goods for use at trade fairs, shows, and exhibitions on April 1, 2011. The Dubai Chamber is the national guaranteeing and issuing agency of ATA Carnets in the UAE. Known as a “passport for goods,” the ATA Carnet is an international customs docu-ment that permits the duty-free and tax-free temporary import of goods for up to one year. The UAE is the first country in the GCC to implement this system, and we are encouraging our partners across the region to also adopt it. In Dubai, there

are many trade shows every year, and the adoption of this system will make import-ing products and goods for display much simpler and more affordable. This will be a major boost for companies working in the sector. We firmly believe it will help attract more exhibitors to Dubai, which was one reason behind our motivation to use the ATA Carnet system.

What lessons were learned from the global liquidity crisis, and how far along the road to recovery would you say Dubai’s economy is?The main lesson learned was about stabil-ity. We need to move away from the boom and bust years and focus on achieving sustainable growth over a longer period. And this is not just a lesson for Dubai—this applies to every economy in the world. In terms of recovery, Dubai has come a long way. The country’s key economy driv-ers—trade, tourism, logistics, and financial services—have bounced back to their pre-crisis levels. That is not to say we are out of the woods yet, especially considering the financial pressures that continue globally. However, we are certainly on a more even footing.

Where in particular can further reforms be implemented to facilitate economic growth?A number of new laws and updates to existing legislation are currently being studied by the UAE authorities, which will

help drive business growth. These include a draft of the UAE bankruptcy law, to be ready by the end of 2012. The law is aimed to enable listed and family-owned busi-nesses in the UAE to be rescued, rather than having to go through lengthy liqui-dation or bankruptcy proceedings should they fall into financial difficulty. This will have the effect of easing restructuring and offering out-of-court negotiations, which in turn will help attract more overseas investments.

What is your outlook for 2012 for the Cham-ber’s activities and the wider economy?In 2012, Dubai Chamber will focus its ef-forts on enhancing business relations with key emerging markets in India and Africa. In October 2012, we will host the Eastern African Community Forum in Dubai to help build bridges and connect our mem-bers with interested companies overseas. This follows delegation visits to Surat and Ethiopia. Generally, we anticipate Dubai’s economic growth to be around 3%-4% in 2012. ●

2

Dubai2012

ECONOMY 39

Go Get ‘EmQ&A: Business Development

Dubai’s story began with SMEs, and it continues on the same path. Abdul Baset Al Janahi

SAED AL AWADICEO, Dubai Export Development Corporation

ABDUL BASET AL JANAHICEO, Dubai SME

SMEs and exports are seen as key to the continued success of Dubai’s economy. For those wanting to get ahead, the support is available.

TBY talks to the CEOs of two development institutions on free zones, the entrepreneurial spirit, and encouraging exports.

How important is the role that free zones play in contributing to Dubai’s exports?

SAED AL AWADI Free zones in Dubai play an extremely important role in the contribu-tion of investment, trade, and especially exports through Dubai. In the year 2011, total free zone exports were valued at nearly AED172 billion, with an average in-crease of 24% annually over the last three years. The share of free zone exports and re-exports over Dubai’s total exports have consistently averaged around 40% over the last three years since 2009. A difference in the profile between Dubai’s direct exports and free zone exports, however, shows that from Dubai the major total exports are gold, jewelry, and precious metals, and for the free zones the top exports, including re-exports, are of machinery, and elec-tronic equipment.

How do your foster homegrown talent and en-courage young entrepreneurs?

ABDUL BASET AL JANAHI Dubai’s story began with SMEs, and it continues on the same path. There is a young population, and I believe that because the city is growing with more sophisticated systems, process-es, and support mechanisms, the sector is also set to grow. Previously, it was a “one-size-fits-all” situation in terms of the en-vironment, laws, and regulations, but to-day these categories have been separated.

What is good for a large company may not necessarily work for a small company. To mitigate this issue, we work with the fed-eral and local government to help realign the environment and make it friendlier to SMEs. For the completion of the economic cycle, we help start-ups launch their oper-ations, encourage and network SMEs, and then channel them to the government as they expand. For instance, if they are ready to begin exporting, then this is where the government comes in. Dubai FDI seeks to attract specific foreign investments or re-quest that smaller companies join larger partners.

What are the current export levels like with Dubai’s key trading partners?

SA In 2011 our total exports were approxi-mately AED431 billion. In 2010, out of total exports, approximately AED355 billion, nearly 40% of direct exports, were to India and 20% to Switzerland, followed closely by Saudi Arabia, Pakistan, Iran, and Iraq, while top re-export partners were India (36%), Iran (17%), Iraq (5%), and Afghani-stan. Let us not forget that we are export-ing extremely high value gold and jewelry items to India and Switzerland, which ac-counts for the high percentages. Overall, due to regional proximities and traditional business relationships, we do not see a major shift in our top exporting countries. However, as mentioned earlier, with our

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Our traditional strengths lie in our trade and relations with our neighboring countries. Saed Al Awadi

thrust toward encouraging companies to export to new markets like Europe, Africa, and the CIS, we hope to see an increase in the share of exports to these countries in the near future.

Is there an active entrepreneurial spirit in the local young population?

ABJ The new generation is very enthusias-tic. We see many of them, but other young professionals make it on their own. When they need us, they come. We have sup-ported more than 11,000 Emiratis start companies, and we are still in contact with many of them. We help them get access to government contracts, and we have at-tained close to AED1.2 billion worth of government contracts for them.

Which markets are you seeing particular growth in with regard to demand for Dubai’s products? What products are fuelling this demand?

SA Apart, from our traditional markets of the Middle East and the Indian subcon-tinent, we are seeing potential for good growth in the African and CIS countries for our products. We are fortunate that many among the basket of products from Dubai, are in demand or potentially high growth items in the varied markets as mentioned above. For example, in Tunisia, Congo, Tanzania, South Africa, and most African countries, machinery, electronic, and electrical equipment as well as articles of plastics are in demand. In Azerbaijan, Ka-zakhstan, and other CIS countries, apart from the above products, there is fair de-mand for glass products and base metals. Let us not forget our traditional markets of surrounding countries in the Middle East and Indian sub continent region, where we have a wide range and high volume of pro-cessed food and beverages being exported.

How do you help start-ups access financing options?

ABJ For start-ups, we finance through a network of banks. For existing businesses, we also work with the banking sector. We come up with initiatives and programs to encourage the banking sector to closely examine how to create a better financing scheme for SMEs. We work to bridge the gap between SMEs and the banking sec-tor. Dubai SME evaluates the activity in the field case by case, and this is one of the factors that helps make banks more aware of the service sector. Today, the service sector is under-supported due to collat-eral issues. However, we are showing the banks that they are missing an opportunity

through providing examples of successful partnerships and the potential of financing these smaller companies.

Dubai was hit significantly by the global re-cession. What lessons were learned from the crisis in this region? To what extent would you say the market is showing signs of recovery?

SA The UAE works closely with many countries both regionally and globally. We are fortunate to have close business ties with the West as well as the East. When the global recession hit, the UAE was one of the last countries to feel the impact due to cer-tain solid fundamentals. During the boom years, having consolidated our traditional sectors of trade and tourism, we naturally sought to diversify into other areas given the interest of global investors. We are proud of our achievements in the real es-tate sector and nowhere in the world will you be able to see architectural wonders built within such a short period of time as in the UAE. Having said that and with the impact of the recession, along with global market sentiment, since investors decided to be conservative suddenly, we too had to scale back the pace of our diversification, especially into real estate. We used this period between 2008 and now to further strengthen our position as the trade and tourist hub of the Middle East, while also reviewing and restructuring areas for pos-sible improvement in other sectors. We still dream, but also act on our dreams to achieve what few countries have been able to. Market recovery in as much as trade is concerned is evident in the trade figures of Dubai since 2009. In the last three years, our imports rose from AED471 billion to AED658 billion and our total exports in-creased from AED282 billion to nearly AED431 billion. Year-on-year growth of imports touched 18%, while average year-on-year growth of total exports was nearly 23%. Under the current global economic scenario, we are encouraged by this but we will work harder—the sky is our limit. We are especially appreciative of Dubai’s businesses and exporters who continue to show faith in Dubai and the UAE and con-tinue to grow with us.

How did the global liquidity crisis impact the SME market?

ABJ SMEs comprise a very unique sector, especially in Dubai. Through our study, we have discovered that SMEs complain about financing, but the majority of them do not need it in this tax-free environment. Most of their profits are either re-injected into the company or channeled to other SMEs in difficult times. We have seen an increase

in SMEs and barely noticeable closures. Although new buildings are no longer be-ing built, SMEs have continued their op-erations because they are flexible and agile. Access to finance is a bit difficult globally, but there are ways. I believe that we have seen important improvements in the mar-ket over the past two years. I did not see huge closures, even during the crisis. There is huge interest because of the stability and infrastructure of Dubai. For any business, whether a franchise or a newcomer to the region, we usually emphasize the benefits of starting in Dubai because a strategy that works here can be replicated in the wider region. This is the place to start or launch your product and expose your brand. Dubai SME sees many businesses starting here and we have witnessed their increas-ing excitement. The excellent infrastruc-ture is beyond compare in the region.

What is your outlook for 2012?

SA The outlook for 2012 is still bright, notwithstanding economic troubles in much of the Western world, which we are confident will be addressed suitably. Our traditional strengths lie in our trade and relations with our neighboring countries, especially the Greater Arab Free Trade Area, which was formed following the adoption of the Agreement to Facilitate and Develop Trade Among Arab Countries. We are look-ing to significantly increase our efforts to build and enhance our trade relations with these countries. Also, we are encouraging SMEs, many of which produce only for local consumption, to now export region-ally with the support of our various export development and promotion initiatives and programs.

ABJ I believe that the new “Green Econo-my” initiative launched by His Highness is part of the future. This is an opportunity for new businesses, and I expect entrepre-neurs to seize this opportunity to acquire or start companies that utilize sustainable energy and the green economy. ●

Dubai2012

ECONOMY 41

Free for AllFOCUS: Free Trade Zones

Dubai’s expanding patchwork of free trade zones continues to provide an impetus for foreign investment across a wide range of areas.If Dubai’s strategic location is considered paramount to its investment pull, then its free zones must be considered a key com-ponent in attracting foreign-owned busi-ness to the Emirate. There are currently over 20 free zones operating or under es-tablishment in Dubai, tailored to a number of sectors including logistics and transport, technology and renewable energy, com-modities, ICT, media and film, health care and education, finance, in the form of the renowned Dubai International Financial Centre (DIFC), and even floriculture. The Emirate’s free trade zones are seen as complementary to its already liberal for-eign trade scheme. The free zones, as such, are seen as crucial to “maintain [Dubai’s] business-friendly environment… and [carve] for us a successful model for in-vestment promotion,” HE Sheikha Lubna Bint Khalid Al Qasimi, Minister of Foreign Trade of the UAE, told TBY. The benefits

of setting up shop in one of the many free zones include 100% ownership rights, tax exemptions, and purpose-built offices and warehouse facilities. Although the ma-jority of the free zones are designed spe-cifically for certain industries, the Jebel Ali Free Zone (Jafza), arguably Dubai’s most significant, is all-embracing, boasting 6,700 foreign companies.

JEBEL ALI FREE ZONEOver the last five years, Jafza has account-ed for 40% of the entire UAE’s FDI intake, growing by over 60% and increasing its revenue by 34% year-on-year. It also represents 20% of Dubai’s GDP, accounts for 50% of its exports, and sustains over 135,000 jobs through its companies. The free zone is spread over 48 square kilometers, and hosts 6,700 foreign com-panies, including 120 Global Fortune 500 enterprises. First established in 1985, the

zone was developed with warehousing fa-cilities to cater to traders and by the 1990s expanded to cover industrial activities, with light industrial units (LIUs) developed for manufacturing. Demand for industrial space from the chemical and agribusiness industries later led to the development of the South Zone and hybrid clusters. The zone is not done growing, with dramatic development in the South Zone since 2003. Currently, a $600 million convention cen-ter complex is under construction that will include exhibition halls, conference facili-ties, and a hotel, as well as recreational and retail provisions. Its pull is hard to over-look, with 400 new companies joining in 2011 alone, including Caterpillar, Ford, and Oracle. The movement, however, is toward the “machinery and equipment segment, followed by electronics, chemicals, build-ing materials, and food,” Salma Ali Saif Bin Hareb, CEO of Jafza, told TBY. “The trend

1

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42 ECONOMY

TEL +971 4 363 6888 FAX +971 4 363 6823 www.trakhees.ae

CIVIL ENGINEERING DIVISIONCOMMERCIAL LICENSING DIVISION ENVIRONMENT HEALTH & SAFETY DIVISION

Facilitating Growth...ABOUT PCFC TRAKHEES PCFC Trakhees is the Regulatory Authority formed by Decree, under the Ports, Customs and Free Zone Corporation, that caters to commercial licensing and related government services. PCFC Trakhees governs and ensures compliance to civil engineering and environment health and safety codes within the developments and communities under Dubai World.

Department of Planning & Development

shows a growing focus on infrastructure development in the region and economic growth that has eventually driven demand for consumer goods,” she added.

DUBAI INTERNATIONAL FINANCIAL CENTREThe DIFC is arguably the second most sig-nificant free zone in the Emirate and has seen exceptional growth since it was es-tablished in 2004, now playing host to 873 companies. Originally created to bridge the gap between the financial centers of London and Singapore, the zone has at-tracted 21 of the world’s 30 largest banks, eight of the 20 largest asset managers, six of the top 10 insurers, and six of the top 10 law firms. The benefits to setting up at the DIFC include, in addition to standard free zone incentives, a dollar-denominated envi-ronment, freedom to repatriate capital and profits, an international stock exchange, and a variety of legal vehicles. “A good amount of time has been spent develop-ing the legal infrastructure, including laws and regulations,” Abdulla Mohammed Al Awar, CEO of DIFC, told TBY. While the DIFC Authority manages the day-to-day running of the zone, the Dubai Financial Services Authority (DFSA) regulates finan-cial services, and the Judicial Authority has independent jurisdiction over civil and commercial matters. As city within a city, Al Awar’s ambi-tion for the DIFC is clear. “Dubai offers un-paralleled value to institutions that want to tap into emerging market areas,” he com-mented. Its global stature can already be defined by its client base; 40% of regulated firms come from other parts of the Middle East, 42% from Europe, and 18% from the US and the rest of the world. “We have in-

stitutions that have made the DIFC their global home,” Al Awar continued, “Stan-dard Chartered started small and now has over 700 people with its own building… Bloomberg also established its 10th global office in the DIFC.”

SECTOR SPECIFICA host of other free zones have boosted Dubai’s core strengths, and none more so than the Dubai Airport Free Zone (DAFZ), which, within the boundaries of the city’s airport, hosts 1,500 companies and 12,000 employees, contributing 2.2% to the Emir-ate’s GDP. In addition to Airbus and Boe-ing, Rolls-Royce, UPS, and FedEx operate out of the zone, as well as leading luxury retailers such as Cartier, Mont Blanc, and Chanel. The free zone’s authority has now been approached to launch similar free zones abroad. “With 15 years of experi-ence, I strongly believe that we have the expertise to replicate the success of this free zone in other locations.” Dr. Moham-med Al Zarooni, Director General of the DAFZ Authority, told TBY. Within the ICT sector, Dubai Inter-net City plays host to Microsoft, HP, IBM, Dell, Siemens, and Cisco, among others, while Dubai Silicon Oasis caters to other high-tech industries, including semi-conductor manufacturing. Dubai Media City and Dubai Studio City cater market-ing, printing and publishing, music, film, leisure and entertainment, broadcasting, and information agencies, and Dubai Multi Commodities Center (DMCC) and Dubai Gold and Diamond Park support the spe-cific needs of the gold and precious met-als, diamonds and colored stones, energy, and other commodities industries. “Before DMCC was created, the value of the dia-mond trade was just $5 million annually.

In 2011, the value of the diamond trade was $41 billion,” Malcolm Wall Morris, CEO of DMCC, told TBY. In health care and education, Dubai Academic City hosts 20 leading universi-ties and colleges, and Dubai Healthcare City (DHCC) contains two hospitals as well as over 90 medical centers, serving a total of over 500,000 patients in 2011. DHCC has not only attracted foreign companies, but patients as well. “About 15% of the patients we currently see come from outside the region,” Dr Ayesha Abdullah, Managing Director of DHCC, told TBY. As Dubai continues to be supported by its core business of logistics, Dubai Mari-time City is one of the Emirate’s newest free zones, comprising a maritime center, an industrial precinct, academic quarter, marina district, and harbor residence and offices. Dubai’s free zone list also includes the Dubai Flower Centre, boasting cool chain processes to maximize shelf life and attracting buyers, traders, producers, and exporters alike. ●

1 DHCC is home to two hospitals and over 100 medical centers and laboratories

The Emirate’s free trade zones are seen as complementary to its already liberal foreign trade scheme.

ECONOMY 43

INTERVIEW

1 Salma Ali Saif Saeed Bin Hareb, CEO of the Jebel Ali Free Zone (Jafza)

BIOGRAPHYSalma Ali Saif Saeed Bin Hareb completed her education in the UAE and UK, specializing in Medical Sciences, IT, and Business Studies. Prior to being appointed CEO of Jafza in 2005, as well as its parent company Economic Zones World, she worked as Jafza’s Chief Planning Officer, responsible for strategic planning, business development, finance, and human resources. In 2012, Hareb topped Forbes Arabia’s list of the 50 most powerful Arab business women, and she was presented with the Women CEO Excellence Award at the Ninth Middle East CEO of the Year Awards held in Dubai in 2012.

Dream to Be FreeTBY talks to Salma Ali Saif Saeed Bin Hareb, CEO of the Jebel Ali Free Zone (Jafza), on the development of the free zone, growth trends, and the strength of the maritime industry.

Salma Ali Saif Saeed Bin Hareb

TBY Jafza was established in 1985 and is one of the world’s fastest-growing free zones. What is the background of its development over the last quarter of a century?SALMA ALI SAIF BIN SAEED HAREB The vision behind the creation of Jafza, the brainchild of the Dubai government, was to develop a leading industrial, warehous-ing, and distribution hub in the Middle East. The initiative was aimed at boosting Dubai’s plan for economic diversifica-tion and improving the traffic of associ-ated ports and airports. The free zone was created to be all embracing, and was designed to cater to all types of industries and business sectors. As an economy, we have always recognized the immense value of trade. Jafza officially opened in 1985 with land and standard size warehouses to provide ready-built facilities to custom-ers, who were mostly engaged in trading activities. We started functioning in that year with 19 companies. By the 1990s, we expanded our facilities to cover industrial activities. The light industrial units (LIUs) were developed to cater to the manufac-turing sector. In 2003, growing demand for industrial space from the chemical and food industry led to the development of the South Zone and hybrid clusters for these two industrial sectors. In the meantime, Jafza successfully developed and imple-mented a customer-focused service infra-structure and culture that concentrates on customer needs and requirements. Jafza’s deep commitment to service excellence led

to ISO 9001 certification in 1996, making it the world’s first ISO-accredited free zone. We also pioneered the concept of a “one-stop shop” in the region. Today, Jafza of-fers a host of infrastructure facilities to new companies, ready-built warehouses, and LIUs on developed plots, all well sup-ported with amenities such as food courts, pharmacies, hospitals, banks, on-site resi-dential facilities, and much more. Through Economic Zones World, Jafza’s parent company, clients have access to build-to-suit solutions (BTS), which are essentially custom-built logistics facilities that are also sustainable. We have taken the excel-lent infrastructure that Dubai has to offer—the port, air, and road network—and add-ed significant value attracting thousands of global companies. Today we host over 6,700 world’s finest companies, including 120 of the Global Fortune 500 enterprises.

In 2011, Jafza won the Dubai Quality Award for Excellence. What have been the key factors leading to your success?Winning the prestigious Dubai Quality Award (DQA) for excellence demonstrates Jafza’s commitment to best practices, something we have prioritized from the start. We received the DQA in 2003 as well, and we have undertaken a business pro-cess re-engineering exercise. Overall, our strong commitment to customer-oriented solutions, innovation, and the speed at which we execute new ideas are some of the reasons why we are one of the most

Jebel Ali Free Zonein numbers

Established

1985Trade generated in 2010

AED233 billionSize of LEED Gold logistics facility

65,000 sqm1

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44 ECONOMY

shows a growing focus on infrastructure development in the region and economic growth that has eventually driven demand for consumer goods.

In what ways do you work with business coun-cils around the world to enhance competitive-ness and trade relations?We are proud to be supporting continued bilateral co-operation between the UAE and the world. Jafza has representatives, partners, and dedicated teams based in the UAE and overseas to target companies in developed as well as emerging economies across the world that are looking to expand their horizons. We continuously work closely with business councils and govern-ment institutions in different international markets, as well as Dubai-based orga-nizations, on joint projects, road shows, and seminars to target various sectors to stimulate investments.

What key projects do you currently have in the pipeline?The development of the Jafza South Zone has been dramatic since 2003, with its world-class warehouses and other ameni-ties. We are still working on expanding and adding more facilities to provide a better value proposition for our customers. Under construction is the ambitious $600 million convention center complex, which will be equipped with exhibition halls, an audi-torium, banquet hall, meeting and con-ference rooms, a hotel, world-class rec-reational and retail provisions, and many other business-friendly facilities.

The Dubai government has announced a com-mitment to the development of sustainable business operations. How is Jafza contribut-ing to sustainable development?We are certainly seeing a shift toward sustainability across industries and busi-nesses in the UAE. Jafza on is increas-ingly focused on sustainability. It is now mandatory for all developments to follow Trakhees’ green building standards in the free zone, and Trakhees’ EHS rules are part of Jafza’s standard contract documents. With regards to its new customer projects, Jafza is fully committed to incorporate sustainability features that fully comply with the US Green Building Council (US-GBC) LEED rating system. Our subsidiary is Gazeley, a global provider of sustainable logistics space. The company has recently delivered a 65,000 sqm state-of-the-art and environmentally efficient logistics fa-cility to CEVA Logistics, one of the world’s leading supply chain management com-panies in Jafza. The facility has achieved LEED Gold certification, and is the first project in the UAE to gain this recogni-

favored investment destinations for com-panies interested in the region. Jafza has focused on two aspects that have worked as the free zone’s biggest growth drivers, which are ease and cost of doing business.

What contribution is Jafza currently making to Dubai’s GDP? What growth do you forecast over the next year?Jafza has demonstrated consistency in its role as an important driver of the nation’s economy. In 2010, companies based in Jafza generated trade amounting to AED233 billion, 25% of Dubai’s total non-oil trade in the same year, which was AED902 bil-lion. Over the past five years, Jafza has contributed to Dubai’s GDP at over 20% on a year-to-year basis, accounted for more than 50% of Dubai’s total exports and 40% of net FDI flow into the UAE, and sustained more than 135,000 jobs through its companies.

Dubai is consistently applauded for its excel-lent infrastructure. How has Jafza enhanced technical capabilities through technological innovation and development?We have continuously been enhancing our IT infrastructure and introducing a host of value-added services. Today Jafza is one of the most e-friendly free zones with one of the highest customer e-adoption rates in the UAE. By 2012 we want the e-adoption rates to hit above 90%. Jafza has intro-duced a number of initiatives, including support services such as the e-license and e-lease programs as well as an online ser-vice for the payment of customer invoices, all geared to offer greater convenience. Our customer service facility is also one of the finest in the country. It underwent re-engineering a few years ago, designed after analyzing the services we offered and the customer experience of our clients. The fa-cility includes an intelligent, custom-built queuing system, which, over almost a year of operation, has reduced the processing time of transactions by as much as 70%.

What trends have you witnessed in terms of new companies coming to operate within Jafza over the last year?In 2011, approximately 400 new companies joined Jafza, which included 40 leading multinationals such as ACE Hardware, AO Smith, Apollo Tyres, Baumer, Caterpillar, David Brown, Ford, Oracle, Pelican, MAN, and Stemcor Special Steels. Sector-wise, the largest chunk of new companies came from the machinery and equipment seg-ment, followed by electronics, chemicals, building materials, and food. Region-wise, the largest number of new companies came from Europe, followed by the Asia Pacific, Middle East, and the Americas. The trend

tion. Jafza actively manages utility usage to ensure a minimal impact on the environ-ment. It is also mandatory for the service providers to ensure that waste (paper, plastics, cans, etc) is reduced and recycled. We have introduced a CSR policy manual in Jafza that ties in with the company’s policy of integrating CSR into its overall business model and honoring its social and environ-mental obligations.

What was your experience like during the global liquidity crisis, and what lessons were learned during that period?There were definitely lessons learned dur-ing the crisis. Customers sought more val-ue during the crisis for their investment, and we continued to build on our custom-er-centric model to deliver that—whether through infrastructure, more commercial options, flexible terms for building, value-added products, or services. Our agility and customer focus during the downturn has been the key reason that has kept Jafza growing since 2009, in both customer base and revenues. I believe that investor confidence in the UAE is returning. Dubai is a reliable business hub and despite ev-erything, the Emirate has maintained its popularity as a business destination. The UAE economy has bounced back from a slowdown and is on track to grow 4.5% in 2012, driven by the oil and non-oil sectors.

As the sole regulatory body governing busi-nesses operating within Jafza, would you say there are any further regulatory develop-ments needed to ease the process of doing business?Regulatory development is an ongoing process. The processes we have today are more efficient and investor-friendly than in the past. Yes, there is always room for enhancement. ●

Jafza has demonstrated consistency in its role as an important driver of the nation’s economy.

Dubai2012

ECONOMY 45

INTERVIEWMohammed Al Zarooni

1 Mohammed Al Zarooni, Director General of the Dubai Airport Freezone (DAFZ) Authority

BIOGRAPHYMohammed Al Zarooni was appointed Director General of the Dubai Airport Freezone in 2000, CEO of Dubai Silicon Oasis (DSO) in 2002, and Vice-Chairman of DSO on 2005. In 1995 he joined the Department of Civil Aviation as Director of Administration and Research. He was a key figure in establishing the Free Zone Division. Previously, he served at the Ministry of Education for eight years. In 1994 he received a PhD in Economic Geography from Durham University in the UK. In 1986 he received his BA degree from Emirates University and an MBA in Economic Geography in 1989.

In the ZoneTBY talks to Mohammed Al Zarooni, Director General of the Dubai Airport Freezone (DAFZ) Authority, on the history of the zone, taking the model abroad, and recent trends.

1

TBY What is the history of the Dubai Airport Free Zone (DAFZ)?MOHAMMED AL ZAROONI The government established DAFZ 15 years ago within the boundaries of the airport. The nature of many businesses operating within Dubai called for an airport free zone, and the success of Jebel Ali, the first free zone in the region, prompted the establishment of DAFZ. The free zone was essentially an economic project that was designed to at-tract companies that add value to the mar-ket. Our focus has been on the contribution of the free zone to GDP, as well as support-ing the export and re-export process from Dubai to the region and the world. Today, DAFZ contributes around 2.2% to GDP, which is almost $1.6 billion. We have near-ly 1,500 companies and 12,000 employees operating within the free zone. Although we naturally aim to increase the number of businesses operating in DAFZ, our main focus is on quality, and in terms of indus-

trial classifications, most of our companies are in Category A. Some examples of our luxury retailers include Cartier, Clarins, Mont Blanc, and Chanel. In the aviation in-dustry we have Airbus, Boeing, and Rolls-Royce. Logistics giants UPS and FedEx also operate from here.

How has the free zone developed over recent years?Originally, the Dubai Civil Aviation con-trolled the free zone, until the government issued a decree stating that DAFZ would be independent. After the decree, business began to grow rapidly, and we started to see approximately 100 new companies join annually. According to a study conducted in 2010 by FDI Magazine, we are ranked as the second largest free zone in the world, in terms of success. In 2012 we aim to reach number one. Achieving success drives us to improve and maintain our position at the top, and we intend to rise to the challenge of being one of the world’s leading free zones. Our marketing team makes a great effort to attract companies to DAFZ, but the real challenge is to retain those compa-nies. We foster retention by providing ex-cellent services and facilities. Listening to feedback, really taking on board requests, and communicating bilaterally are essen-tial to customer satisfaction. Naturally we cannot implement every suggestion, but many of our developments over the years have directly resulted from feedback we have been given, and that is a testament to our commitment to our customers. We meet with a selection of company repre-sentatives on a monthly basis to discuss concerns and encourage open dialogue to enable us to provide the best service. Deal-ing successfully with foreign investors is of paramount importance because they are essential to our operations, and we con-stantly work to improve FDI regulations.

Do you plan to replicate the DAFZ model globally?With 15 years of experience, I strongly believe that we have the expertise to rep-licate our success in other locations. The free zone authority has been approached to launch free zones abroad, but as a policy we have decided not to invest in free zones outside of Dubai. However, that is not to say that we will not operate external free zones from a management perspective. In that instance, we will examine the political situation in the proposed countries, as well

as the economy, culture, and facilities. We are striving toward being an exemplar free zone and are happy to share our experience with our contemporaries around the world. Enquires come regularly from Africa, Asia, and Europe, and there is certainly a chance that we will begin operations abroad.

What trends have you witnessed in terms of the companies that are attracted to DAFZ as an operational hub? We have companies from all over the world operating here, but the majority histori-cally have come from the US and Europe. Recently, we have been excited to see that the number of companies from Asia—Ja-pan in particular—have started increasing. Our focus has been on attracting big global brands; however, there are also many valuable companies from the Middle East, and we wish to attract those also. In terms of core operations, many different stages of product development, including distribu-tion, consultancy, marketing, R&D, pack-ing, and assembly are represented within the free zone. We accept all categories of business. ●

I strongly believe that we have the expertise to replicate our success in other locations.

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INTERVIEWArif Obaid Al Dehail

View on the HorizonTBY talks to Arif Obaid Al Dehail, CEO of the Ports, Customs, and Free Zone Corporation (Trakhees), on the functions of the company, accreditation in Dubai’s ports and free zones, and growth forecasts.

BIOGRAPHYAfter graduating in geo-economics in 1989, Arif Obaid Al Dehail joined Dubai Ports Authority in Port Rashid in 1991. Through his career with Dubai Ports, he acquired several professional achievements in ports and shipping from Singapore Ports Authority and the University of Delaware and port planning and management in New Orleans, Louisiana. Since then, he has held different leading positions at DP World, such as Senior Vice-President of Global Operations and Engineering, Acting Senior Vice-President for the Africa Region, and Assistant Managing Director of DP World, UAE Region. In January 2012, he accepted the position of CEO of the Ports, Customs, and Free Zone Corporation (Trakhees).

1 Arif Obaid Al Dehail, CEO of the Ports, Customs, and Free Zone Corporation (Trakhees)

TBY What was the motivation behind the es-tablishment of Trakhees?ARIF OBAID AL DEHAIL Trakhees is an Ara-bic word that means “permits.” Trakhees was established by the Ports, Customs, and Free Zone Corporation (PCFC) in 2008 following the decree issued by HH The Ruler of Dubai with the aim of integrating licensing and regulatory compliance func-tions within special development zones in Dubai. Trakhees was established with an objective to handle all commercial licens-ing, construction and environmental per-mit requirements of the stakeholders and investors, to ensure community compli-ance within the applicable development projects.

Where is the main focus of your work?We operate through three main divisions: the Civil Engineering Division (CED), the Environmental Health and Safety Divi-sion (EHS), and the Commercial Licensing Division (CLD). Prior to the formation of Trakhees, CED and EHS were traditionally supporting the development and regula-tory functions for Dubai Ports, Jebel Ali Free (Jafza), Nakheel, and other develop-ments under the umbrella of Dubai World. The CED is primarily responsible for regu-lating construction activities within the Special Development Zones (SDZs), which involves approvals of master plans, devel-opment control regulations, building and modification proposal reviews, and related permits. The CLD governs and undertakes the issuance of commercial licensing and governmental services to retail and com-mercial establishments within its jurisdic-tion. EHS controls, regulates and enforces rules and regulations related to all aspects of environment, health, safety, and fire protection for all ongoing and completed construction projects, supervising the

ports and maritime industry projects in addition to assuring food safety and com-munity compliance. Concession agree-ments are in place with Jafza, DP World, Port Rashid, and Hamriya Port.

How would you characterize the recent pro-gression of the private development market? We consider 2009 our baseline year; we do not incorporate data from the period before the recession, as the market was behaving erratically. In 2011, many new projects were developed, especially from Nakheel. I also believe that there are many promising projects at the conceptual stage. Our figures and market monitoring con-firm over 10% growth when comparing 2011 to 2010. In the second quarter of 2012, we expect double-digit growth. Recently launched projects are reliable indicators that the market is picking up.

What is the significance of the Trakhees Ac-creditation Program? The accreditation program accredits Pri-vate Client Fiduciary Services (PCFS) busi-nesses and covers all areas from building and construction to food safety. We have released a number of detailed guidelines and code books covering all accredited ar-eas. For a successful project, the consultant and contractor must meet the established criteria. The accreditation program was initiated to ensure the quality and perfor-mance of both design and construction in all projects under its jurisdiction. These programs are designed to move the pro-cesses from quality control to quality as-surance and for accredited personnel to be well versed in the contents of the regula-tions so as to help them comply with the authority’s requirements. This will ensure a smooth interaction that will lead to better communication and speedy construction, which would also avoid any consequences arising from violating the Authority’s rules and regulations. Certificates and accredi-tation ID cards are issued to the partici-pants based on certain requirements, and the companies understand our process and procedures, which in-turn greatly eases the processional relationship. Other gov-erning authorities in the region have initi-ated numerous process improvement ef-forts and initiatives, which actually began with Trakhees.

What do you hope to bring to your new role from your previous work with DP World?

I had the opportunity to refine several pro-cesses here, and improvement is my prior-ity. In the past I have dealt with the ports and shipping industry and the current line of profession with no major difference in strategy, wherein people who work in the operations are decision makers as well. I am proud of my membership in DP World and the experience I obtained at the com-pany. My expertise is in process engineer-ing, and currently as CEO of Trakhees, I have been meeting with key stakehold-ers, requesting feedback, and refining our processes to meet customer needs effectively. ●

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INTERVIEWKhalid Bin Kalban

Back in the MarketTBY talks to Khalid Bin Kalban, Managing Director & CEO of Dubai Investments, on targets for investment, the improved economic outlook, and the Dubai Investments Park.

TBY How have the recent geopolitical and global economic events affected your operations? KHALID BIN KALBAN With the economic crisis in 2008, followed by the global re-cession, and recently the Arab Spring, our businesses have been affected. The finan-cial crisis has delayed our plans for expan-sion. Most countries that experienced the Arab Spring are our business partners, and we have projects in Libya, Yemen, Syria, and Egypt that have been adversely af-fected over the last three years. However, Dubai Investments has managed to remain profitable with a high level of liquidity, and we have been able to pay dividends to our shareholders. Even though it has taken a toll on our businesses, I think we have managed to remain robust.

What were some of the key strategies you ap-plied to weather the financial storm?As an investment company, we always have 30% of our investments available to us in liquid form, which we can tap into if the need arises. This has helped us wade through the financial storms, even when several banks shut down and tried to get help from the government instead of re-ceiving a bail out from the private sector. We command a unique position among other companies that have built their strategies on leverage because at Dubai Investments we have very low leverage ratios. All of our investments are man-aged conservatively. Now, the situation has reversed and the banks are slowly but steadily opening up. We hope that if we can get that rolling, we will be able to boost our liquidity by investing in some companies in our portfolio.

What are some of your key future targets on the investment side?We have already started to go back to an open business model. We have borrowed

around $200 million, and we are working on borrowing another $350 million to cope with our expansion. We are back in the market. We are returning to our strategy of acquiring new companies, and we have investors who are interested in invest-ing in our portfolio. Additionally, we are performing evaluations and due diligence studies so as to possibly exit from the ma-ture companies in our portfolio. In 2012-2013, we will be back to normal business practices, especially with the Arab Spring more or less settled down. There are still a few countries where the political climate is grim, and we have taken that into account. Also, Dubai’s economy has given us some positive signs and has demonstrated posi-tive trends. The real estate market is recov-ering and the banks are funding companies and projects. Most companies have solid business plans that are focused on business prospects as opposed to speculation.

What is your outlook for Dubai Investments Park?The park is one of our most successful projects and has already reached capac-ity. There are not many opportunities for companies to come in and just lease land. However, if customers have not been able to deliver on their promises or deliver on their lease agreements, the space can be reassigned to other clients. We have been very active over the last year to develop our own activities in the park. For example, we have just completed Phase I of a logis-tics project in the park. It cost around $80 million and has already been developed and leased. Around 10%-15% of Phase II has also been completed. I think by the middle of 2013 this project will have been completed and leased out. We have built a hospital and leased it to a third party at a cost of around $25 million. We have devel-oped major supermarkets and entered into a 20-year lease with Carrefour. We are also thinking of replicating the park somewhere else and have already received invitations from Libya and Iraq. We are now develop-ing something similar on a smaller scale in Fujairah. We will use our expertise, busi-ness plans, and networking tools to build similar facilities in other locations. Some of our clients here have already indicated that if we build another park in another loca-tion, they would be happy to invest.

What is your outlook for 2012 for Dubai Invest-ments and the wider economy?

We can see now positive trends from all sectors of the economy, especially from manufacturing exports to other countries. On many occasions, even countries facing political upheaval have invited us to attend conferences and meetings, besides re-questing us to come back with our business plans. We are now in the process of setting up agencies and representative offices in various countries, while our sales force is working hard to increase our market share in these countries. We already see posi-tive financial rewards in the first quarter of 2012, and if the trend continues we are on the right track. ●

BIOGRAPHYKhalid Bin Kalban handles many posts, including Chairman of Union Properties, Managing Director and CEO of Dubai Investments, and member of the board of directors of First Energy Bank, Arab Insurance Group, Emirates NBD Securities, Emirates NBD Capital KSA, Islamic Bank of Asia, National General Insurance, and Thuraya Satellite Communications-Telecommunications Company. He has an Associate’s Degree of Arts in Business Management from Arapahoe Community College, US and also majored in Management at the Metropolitan State College.

1 Khalid Bin Kalban, Managing Director & CEO of Dubai Investments

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INTERVIEWMalcolm Wall Morris

1 Malcolm Wall Morris, CEO of Dubai Multi Commodities Centre

BIOGRAPHYMalcolm Wall Morris is a commodity and derivatives expert with over 16 years of experience in the physical commodity and exchange sectors. Before joining DMCC in November 2009, he spent two years as CEO of the Dubai Gold and Commodities Exchange (DGCX). Previously, he was involved in the physical coffee trade, based in Paris and London, as well as helping pioneer the world’s first online B2B marketplace for the global coffee market.

In terms of fulfilling our mandate, we are the region’s only dedicated commodities marketplace.

Commodities Are ForeverTBY talks to Malcolm Wall Morris, CEO of Dubai Multi Commodities Centre, on stimulating the flow of commodity trade, establishing a trade hub, and the advantages of the JLT Free Zone.

TBY Why was Dubai Multi Commodities Cen-tre (DMCC) established?MALCOLM WALL MORRIS The DMCC was created in 2002 by the government to stimulate the flow of commodity trade through the Emirate. To achieve this, we were granted 200 hectares of empty land to develop in any way we pleased. After thorough market reviews, the Executive Chairman, Ahmed Bin Sulayem, decided to create a mixed-use free trade zone as a way of stimulating the physical presence of commodities. Ten years ago, when DMCC was conceptualized, this entire area was arid desert. Today, it is known as Jumeirah Lakes Towers (JLT) Free Zone and is a vi-brant city within a city, where 50,000 people live and work in 61 towers. How-ever, JLT is not just a property development or a community, it’s actually the fastest growing free zone in the UAE. DMCC has developed significantly from its original remit and is both the master developer and licensing authority for the JLT Free Zone, as well as the region’s leading commodi-ties authority.

How successfully has the trading hub been established?In terms of fulfilling our mandate, we are the region’s only dedicated commodi-ties marketplace. DMCC has become the diamond trading center for the region, and despite being such a young country, we are now among the top three diamond centers in the world. Just one example of how we have impacted the diamond industry is in the trade statistics. Before DMCC was created, the value of the diamond trade was just $5 million annually. In 2011, the value of the diamond trade was $41 billion. The previous year it was $35 billion. And for gold, another important commodity that we facilitate the trade of, has seen its traded value grow to $56 billion in 2011. We’ve achieved this by providing com-modity companies with relevant physi-cal infrastructure, products, services and facilities that enable them to operate at a world class level. A gold or diamond com-pany, for example, is able to set up a busi-ness with us, buy or lease office space in the free zone, store its goods in our state-of-the-art vaults, use our boiling, polish-ing, refining or certification services and trade goods on our platforms. They are also able to meet with industry peers and share best practices with other industry play-ers through our conferences, forums, and

networking clubs. In terms of numbers, we have brought over 4,600 companies to the free zone over the past decade. In 2010, we registered 725 new companies, and in 2011 almost 1,400. In 2012, between January and June we had 1,000 new businesses join us. We attract around 180 companies every month, and of the companies that join us, around 85% of them are new to Dubai and many chose the JLT Free Zone as their re-gional base.

Does JLT differ from other free zones in any way?Companies choose the JLT Free Zone be-cause there is an availability of freehold and leasehold real estate, it is well located between two metro stations, close to the airport, as well as within reasonable com-muting distance of the capital, and we are also in the middle of a large residential area with over 30,000 residents. Like all free zones in the UAE, there is no corporate tax for 50 years and 100% ownership of the business. However, as JLT is a mixed-use free zone, almost all business activities can be licensed here, which leads us to have a variety of companies ranging from retail outlets, hospitality, and IT, to market-ing, consultancies, medical facilities, and of course, commodities companies. This gives us a clear advantage over free zones that only license a specific business activi-ty. Being the region’s leading commodities authority, we are clearly the natural choice for any commodities company. This is un-derlined by a clustering effect that various industry segments have followed. For ex-ample, we have over 600 diamond compa-nies here. But we see the clustering effect also in areas such as petrochemicals, gold, and tea. The specifically created physi-cal infrastructure we offer is an important contributing factor in this area. ●

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50 ECONOMY

JOHN N STADWICKPresident & Managing Director, GM Middle East Operations

NABIL A. HABAYEBPresident & CEO for the Middle East & North Africa, General Electric

ROY JAKOBSCEO, Philips Electronics Middle East & Turkey

Considering GM’s 100-year history and where we will be in the next century, emerging mar-kets are the driver of growth in the automo-tive industry. Currently, over 60% of our sales are completed outside of North America, and going forward we seek to further strengthen our position in the Middle East. The Middle East is set to grow faster than most regions in the world over the next decade. We are forecasting that total industry vehicles sales in the Middle East will grow from about 1.15 million units in 2011 to 2.1 million units by the end of the decade—reflecting approximately 85% growth. This would make the Middle East one of the world’s fastest growing auto-motive markets outside the BRIC countries of Brazil, Russia, India, and China. This is due to the positive economic outlook for the region, particularly due to strengthening oil prices, and favorable demographics. Educational levels are increasing, the middle class is ex-panding, and about 60% of the population is under the age of 25. These elements are very beneficial for the automobile business. Many consumers are buying their first car, and a variety of others are upgrading to larger and more expensive vehicles. With our portfolio of brands and models, we are able to sell ve-hicles to meet all these needs and wants—from entry-level to luxury cars. GM’s portfolio in the Middle East reflects that with Chevrolet, GMC, and Cadillac all positioned for growth.

Multinational corporations choose Dubai because of the region’s growth potential, quality of life, and demand for a wide range of products and services.

Living BetterFORUM: Why Dubai?

GE has been in the region for over 80 years. We started operations by supporting the oil and gas sector in power generation. People know us as what we used to be, an appliance company. There is a lot that the Middle East region has had to offer, particularly Dubai. Over the years we have found new ways to strengthen our relationships and partnerships. Just look at the region’s growth—over the last 30 years, Dubai has transformed dramatically. Though it has limited natural resources, the city wanted to monetize these resources for infrastructure development. First, Dubai built a very strong infrastructure network to help improve people’s lives with electricity, clean water, and transportation systems. Second, Dubai used this monetization to build good healthcare and education systems. Third, Dubai knew that its energy resources were limited, and it wanted to diversify its economy industrially. Finally, Dubai wanted to stimulate tourism by offering many support systems. GE also has strong business functions as an oil and gas company, and we were in a posi-tion to help monetize the region’s natural re-sources. We’re a power generation company, a water company, and a transportation com-pany with aviation and even rail. We’re also a healthcare company. Dubai’s vision and what GE has to offer matches perfectly. That’s why we increased our presence to suit the region’s needs.

We have been in the region for more than 50 years, and we truly believe in the poten-tial of Dubai and the UAE as a market, and even more as a regional hub for Philips in the Middle East. We manage 14 countries from our regional headquarters in Dubai, focused on diversified businesses such as health care, consumer lifestyle, and lighting. We also see Dubai as a gateway to expansion into other parts of the region, as the Emirate enjoys a neutral position, representing “the Switzerland” of the Middle East. It is also well equipped to serve different areas. The Emir-ate is progressive and innovative in its ap-proach to business and growth. This attracts companies such as Philips, which centers its efforts on meaningful innovation. We also have regional hubs in Beirut, Riyadh, and Is-tanbul. These bases all fall under the umbrella of Dubai. At its core, Philips is focused on innovation, and Dubai offers the perfect com-bination of innovation and location, aligned with development in the region and the UAE. Dubai is very adept at embracing innovative approaches. The healthcare system works to-ward the application of the latest technology and the sharing of knowledge. For example, the Saudi German Hospital, a recently built leading hospital in Dubai, is a facility that is fully equipped with Philips’ technology and in-novations. We bring in our global knowledge and experience.

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INTERVIEW

BIOGRAPHYMouayed Makhlouf joined the IFC in 1998 in the Central Asia, Middle East, and Northern Africa Department based in Washington, DC. He then joined the Central Asia, Eastern, and Southern department as an Investment Officer where he was part of the Central Asia transaction team and oversaw its growing portfolio in Kazakhstan, Uzbekistan, and Tajikistan. In 2001, he relocated to Istanbul, where he processed transactions in different sectors for Turkey and Central Asia. In 2005, he relocated to the Dubai office as a senior business developer responsible for the Gulf Cooperation Council and Levant region. Mouayed holds a Master’s of Science in Finance from George Washington University in Washington, DC.

1 Mouayed Makhlouf, MENA Regional Director of the International Finance Corporation, World Bank Group

The Way ForwardTBY talks to Mouayed Makhlouf, MENA Regional Director of the International Finance Corporation, World Bank Group, on the role of the office in the region, developments in the housing finance market, and the potential of green financing in the Emirates.

Mouayed Makhlouf

TBY The IFC opened its base here in Dubai in 2006. Why did the IFC choose Dubai?MOUAYED MAKHLOUF Dubai is our second largest office in the MENA region—our largest office, which is also our regional hub, is in Cairo. We opened our office here in 2005 with the goal of building relation-ships and encouraging investors from the GCC who had outgrown their home mar-kets to invest in the less developed coun-tries of the MENA and Africa regions and beyond. Our role is to identify potential clients, build relationships with them, and invest alongside them in those less devel-oped economies. Many of these investors have never invested outside of the GCC before, and they need a partner who can take the risk and invest alongside them in these riskier markets. The whole idea has worked extremely well. Over the past nine years, we have mobilized about $3.5 billion in the form of South-South in-vestment from the GCC. We also do some small interventions in the GCC—mainly in projects that are highly developmental. We also aim to make it easier for SMEs to access credit. To borrow money, you need to pledge assets as collateral. Unfortunate-ly, in the UAE, there is no asset registry, which means that only fixed assets such as buildings or property can be used. An as-set registry—something that exists already in most developed countries—would allow SMEs to use moveable assets, like equip-ment, as collateral. If we can develop this system and make it easier for SMEs to ac-cess credit, then SMEs will be able to grow and create more jobs.

What recent strides have been made in the development of the housing finance market?The housing finance market is still very underdeveloped compared to other re-gions, but it has made progress. Mortgage finance has two main parts. The first part is just banks lending to consumers to buy a home. This part of the market has really begun to develop in the UAE—much more than other places in the GCC. However, banks cannot lend money this way in-definitely. After a while, they reach capac-ity and they need to sell off these loans so they can continue to expand their mort-gage portfolios. This is the second part of mortgage finance, the secondary mort-gage market, and it has yet to fully develop in the UAE, which limits the ability of banks to continue lending. We worked on a transaction to jumpstart the secondary

mortgage market with a company called Emirates National Securitization Com-pany (ENSeC). In 2007, we invested in the first Islamic securitization, providing $20 million in financing. Unfortunately, this happened right before the financial crisis, so the whole idea of mortgage-backed se-curities never took off. It is a market that still needs to be developed if we want to increase home ownership in the GCC.

What are the main hurdles facing the develop-ment of the local capital markets?Local capital markets in the UAE are very underdeveloped. Most companies still de-pend on banks for financing, but banks usually cannot provide long-term finance, which means that companies are often forced to take short-term loans when they really need long-term loans. Companies with no experience in the capital markets are reluctant to enter on their own. This hinders growth in the region.

Do you think the UAE has the potential to be-come a hub for green financing?I think Dubai certainly has the capacity to become a hub in the region for green fi-nancing. At one point, there was an initia-tive in Abu Dhabi to move in that direction, which proved that it can be done, but the whole green financing initiative has been progressing more slowly than everyone would like. Dubai has the geographical base, the legal structure, and the presence of international organizations to make it happen. I can’t think of any other place in the region with that capacity. We are extremely supportive of this, and when-ever we lend, we always try to include an element of sustainability. In Lebanon we developed a system to “score” buildings on sustainability and encourage our cli-ents their to include “green renovations” as part of their investments. We are always interested in projects that will contribute to energy efficiency, waste management, and other sustainability issues in the GCC. If there is a transaction that includes those elements, we will take part directly or in-directly. ●

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INTERVIEW

Focused on a VisionTBY talks to Mustafa Abdel-Wadood, CEO of Abraaj Capital Limited, on the company’s latest acquisitions, investments, and expansion plans.

BIOGRAPHYMustafa Abdel-Wadood is a member of the Board of Directors and Vice-Chairman of the Executive Committee of Abraaj Capital. In his capacity as CEO of Abraaj Capital Limited, he oversees the company’s investment activities. Prior to joining Abraaj Capital, he was at the regional investment bank EFG-Hermes, with his last position there as CEO in the UAE, overseeing the bank’s expansion in the lower Gulf. He has also served on the boards of several publicly listed and private companies. In 2002, the World Economic Forum selected him as one of the 100 Global Leaders for Tomorrow and Young Global Leader in 2007. He is Co-founder and member of the Dubai-based Young Arab Leaders group and a member of the Young Presidents Organization.

1 Mustafa Abdel-Wadood, CEO of Abraaj Capital Limited

Mustafa Abdel-Wadood

TBY Abraaj Capital is the only private eq-uity group in the global top 50 with operations based outside of Europe or the US. What has been the driving force behind the success of your operations?MUSTAFA ABDEL-WADOOD We owe our success largely to our focus and persistence throughout our 10-year history. We have a strong commitment to the region, and beyond that, to high growth markets in general. Very early on, we recognized the entire region as a source of opportunity. When the firm was established, we identi-fied the Middle East as a region with an in-teresting demographic and growth profile and saw that the corresponding opportu-nity for investment would be tremendous. By focusing on that vision and building teams ahead of time, we have been able to grow the business steadily.

What did the acquisition of London-based Au-reos capital bring to the group?This merger accelerated a plan that was al-ready in place, which was to leverage the regional growth that we experienced by being based in MENASA. Five or six years ago, we expanded to Turkey and have ex-perienced huge success there. A year ago, we targeted Southeast Asia and set up an office in Singapore. Leveraging the ex-perience within the teams that we have in place as well as our understanding of helping businesses grow has been a core focus for us, and we have gradually been expanding the target investment geogra-phy. Our focus is on growth markets, and we are on a deliberate path to increasingly look at Asia and Africa, as well as other growth markets. The Aureos Capital ac-quisition provided the acceleration of that footprint in a very rapid manner, as it had been investing for 10 years in SMEs across Africa, Asia, and Latin America.

The healthcare sector has played a strategic

role in Abraaj Capital’s investments. What makes this sector so attractive?Health care is a sector with massive growth potential, and one we find to be extremely interesting. We have exposure to multiple aspects of the sector, from pharmaceutical retail to hospitals, medical labs, and every-thing in between. If you look at the demo-graphics of growth markets, they are very underserved and underinvested in terms of health care across the board, especially in the MENA region. They are underserved right through from hospital beds, diagnos-tic labs, and infrastructure. Locally, health care has become one of the key priorities of the government. There is significant in-vestment potential, especially for public-private partnerships (PPPs). It’s a space that provides opportunities at different levels and is largely counter-cyclical.

Why was it the right time to divest your interest in Turkish hospital group Acıbadem?We invested in Acıbadem in 2008 at the peak of the boom, and during the four-five years that we held it, which were probably some of the most challenging in recent his-tory, the business more than tripled in size in terms of profitability along a number of other metrics, including creating more than 5,000 jobs. The number of hospitals within the group also increased from six to 13, which proves that even in times of financial uncertainty and challenging en-vironments, the sector continues to grow. There is a natural holding period for us, however. We go into an investment with a clear view on delivering support and value to the existing shareholder, entrepreneurs, and principals, in order to take the busi-ness to the next level. We ultimately aim to deliver returns to our investors, and so at some point we have to exit and seek opportunities elsewhere. However, we be-lieve that the opportunities for the group remain strong, and that is why we continue to invest and have remained a shareholder in the holding company, IHH Healthcare Berhad.

What opportunities has the shifting political landscape in the Middle East created for in-vestors with capital to deploy?There has been a significant short-term impact in terms of uncertainty. However, if you look at how events unfold, what it ultimately results in is increased awareness of key issues that need to be addressed. In the long term, this thinking will take on

a positive acceleration, and the countries involved will begin to build a much stron-ger economic base. Some of these coun-tries had been growing economically at a phenomenal pace; however, in some cases they lacked sufficient focus on a more in-clusive and sustainable growth model. In the short term, we will see slightly slower growth rates, but on more solid and strong foundations. For investors who are looking long term, they will find good fundamen-tal local businesses looking for partners to drive future growth. ●

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INTERVIEW

The Minority ManTBY talks to Samer Sarraf, Senior Vice-President & Country Head UAE of Amwal Al Khaleej, on the company’s extensive asset management portfolio and its performance.

Samer Sarraf

TBY What is the extent of your asset manage-ment portfolio?SAMER SARRAF With the global economic crisis and its impact on the region and Dubai especially, most of our focus has moved toward management. In Dubai we own stakes in a contracting company, a media advertising company, a jack-up drilling rig, an oil field services company (which we recently sold), and we also had operations in Damas, which was exited at the time of its IPO in 2008. With all of our portfolios we aim to enhance the value of the company by being an active member on the board and the various committees, most importantly the executive commit-tee. Within this role, we work with port-folio companies through improving corpo-rate governance, reporting standards, and putting in place the key strategy plans for the company’s growth. Amwal also acts as the financial advisor to the portfolio com-panies by optimizing the balance sheets and the finances of the company, advising and searching for potential M&A opportu-nities, leveraging our network to open up new markets, and introducing our clients to our banking relationships. Over the past six months, with the way the market has been improving in Dubai, we are starting to go back into sourcing mode, in which we are looking for companies to start invest-ing in. At the same time we continue to en-hance the value of our portfolio companies and to look for potential exits.

How have your funds been performing from an exiting perspective?We have two funds under management, and they have been performing well. We are in the process of doing an IPO for a travel agency in Riyadh, which will be one of the best transactions we have seen in the area. Hopefully, we will have another exit sometime this year. Saudi Arabian compa-nies have generally been doing very well. In many cases, Egypt has not been as badly hit as you might expect. However, the cur-rent political instability is putting transac-tions and activity on hold, though overall the performance of many of our portfolio companies there has been holding up well.

The investment approach at Amwal is to take a minority interest in companies and not to use leverage. Why do you take this approach?The reason for that is very simple, and that is how we look at the region. The vast ma-jority of businesses in the region are family

owned, and they generally do not want to relinquish control. What they are looking for is somebody who can come in and help them with institutionalizing the company, put in place the correct corporate gover-nance, and help them with the transition to the next generation, especially for com-panies displaying fast growth figures that suddenly need a set of skills they did not need before. We therefore generally take minority stakes and invest our energy in companies that already have the right management in place. As such, we “invest in” as opposed to “buy out” companies.

Looking to the local capital markets, what do you think are the main challenges facing its further development?Dubai has grown at a very fast pace, and what we find today is that while the growth is going at a high pace, the soft in-frastructure has not had time to catch up. It started to catch up recently because of the slowdown in the economy, but it still has a way to go. The authorities have put into operation the appropriate systems and in-frastructure in terms of capital markets, as well as developed a solid regulatory frame-work. However, not everything has been tested. For example, what happens under bankruptcy? How are minority investor rights protected, and how easily can a con-tract be applied and enforced? Such issues are critical in terms of giving you comfort as an investor in the country. Secondly, retail investors have generally driven the markets here, and that still continues to be the case. Around 80% or 90% of Saudi Arabia’s market is retail. Dubai has been picking up on volume and moved up to about $200 million a day, which is a good amount of trading volume as compared to levels of around $20 million a day during the past few years. This is critical for com-panies looking at the exchange, because you need to see liquidity. New liquidity would most likely bring down the price. We want to see good volumes to really re-flect a more accurate picture of the value of the company. ●

BIOGRAPHYSamer Sarraf joined Amwal Al Khaleej in 2008. Prior to that, he was a Senior Associate at Lehman Brothers, based in its London office as part of the Investment Banking Natural Resources Group. Earlier in his career at Lehman, he was part of its global real estate group, where he led teams in the origination and analysis of commercial real estate loans. He also has four years of experience in construction management with Bouygues Batiment in France and Tahiti, as well as one year of architecture experience in France with AART Farah Architects & Associates. He holds an MBA from Columbia Business School, double majoring in Finance and Entrepreneurship, and he has a Bachelor’s in Civil Engineering from McGill University, majoring in Structural Engineering.

1 Samer Sarraf, Senior Vice-President & Country Head UAE of Amwal Al Khaleej

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FINANCEINSIDE 55 The Twin Zones - REVIEW: Banking | 56 Y. Sudhir Kumar Shetty, COO of Global Operations at UAE Exchange - INTERVIEW | 58 HE Abdulrahman Saleh Al Saleh, Director General of the Department of Finance - INTERVIEW | 60 Abdulla Mohammed Al Awar, CEO of the DIFC - INTERVIEW | 62 Saeb Eigner, CEO of the DFSA - INTERVIEW | 63 Rick Pudner, Group CEO of Emirates NBD - INTERVIEW | 64 Raghu Malhotra, Division President, Middle East & North Africa of MasterCard - INTERVIEW | 65 By Your Side - FORUM: Private Banking | 66 Rob Broedelet, Country Executive UAE at ABN AMRO - INTERVIEW | 67 A Little Encouragement - ROUNDTABLE: International Banks | 68 Something Different - Q&A: Local Banks | 69 Just Add Liquidity - REVIEW: Capital Markets | 70 Gary Anderson, CEO of Dubai Gold & Commodities Exchange (DGCX) - INTERVIEW | 71 Find the Pool - Q&A: Local Exchanges | 72 Making the Most of It - FORUM: Capital Markets Development | 73 Premium Market - REVIEW: Insurance | 74 Michel Khalaf, President of Europe, Middle East & Africa for MetLife - INTERVIEW | 76 Keep It Safe - FORUM: Insurance | 78 Ahmad Al Kazim, Managing Director of ASCANA - INTERVIEW

u The finance sector is showing strong signs of growth and renewal in Dubai, especially within the DIFC. On the local side, prudent practices are putting bank loan books onto a sounder footing.

The Twin Zones

The dirham is derived from the name of the old Greek currency Drachma, and means "handful." It is a unit of currency used in several Arab countries, and was used throughout the Ottoman period. The UAE dirham was introduced in 1973, replacing the Qatari and Dubai riyal.

REVIEW: Banking

Dubai has steadily been growing as the premier international banking locale in the GCC re-gion, stealing much of the thunder away from the more traditional destination of Bahrain. Of the 23 local banks registered in the Emirates at the end of 2010 by the Central Bank of the UAE (CBUAE), eight of them were headquartered in Dubai. However, with the merge of Dubai Bank into Emirates NBD Bank in the first half of 2012, the number of Dubai’s local banks will fall to seven, providing much needed consolidation in a sector sustaining itself on more sober fare.

LOCAL BANKSDubai’s local banking industry can be divided between standard commercial players and their oft-related sharia-compliant counterparts. Emirates NBD is the largest of the Dubai-based banks, and is the largest banking group by as-sets in the UAE as a whole, beating out the Na-tional Bank of Abu Dhabi (NBAD). Emirates NBD is a universal bank that also provides a sharia-compliant window through its subsidiary Emir-ates Islamic Bank. As of 2Q2012, the bank re-ported assets up 5% to AED298.4 billion on the same figure for YE2011. Operating profit was up a strong 52% to AED1.3 billion in year-on-year terms, while total income saw 7% growth over the same period to AED5.2 billion. The loan-to-deposit ratio improved from 105% at end-2011 to 100% by 1H2012, while the capital adequacy ratio (CAR) stood at a solid 19.5%. The impaired loan ratio, much an overhang from the past, stood at 14.3% for 1H2012, with a coverage ››

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Pay it ForwardTBY talks to Y. Sudhir Kumar Shetty, COO of Global Operations at UAE Exchange on the company’s success in the UAE, plans for expansion, and the future of money transfer technology.

What has made UAE Exchange so successful locally?When we started, only the banks were conducting money transfers. The issue, then, was that the majority of workers completed their work only by 6.00 pm, so they could not get to the bank as the bank’s branches closed by 2.00 pm. This problem presented an opportunity for a company like ours to get in to money transfers. The traditional exchange companies, then, only dealt with the buying and selling of currencies. Instead, we started offering both money transfer and currency exchange services.

Where are you eyeing next for expansion?Our first goal is to expand in eurozone countries. The timing is good because great locations are available at affordable costs. We are also building a good network in Africa for two reasons. First, there are a large number of Africans working in the eurozone, the US, and Canada. We also see an expansion in the infrastructure and agriculture areas of Africa in the near future, with many Chinese, Korean, and Middle Eastern companies investing in Africa.

What is the next step for technological development in the field?Going forward, we will be adopting mobile technology. This technology is slowly emerging, but we are ready on our end to use mobile phones as one of the modes for money transfers. We would also like to develop the use of pre-paid cards. These are the future products of money transfer.

ratio of 46%. The bank has been more conserva-tive than its peers when judging the level of un-derperforming loans, and this should stand it in good stead for future operational performance. Emirates NBD staged an approved take-over of Dubai Bank over 2011, consolidating its financials in October of that year, though keeping the bank for now as a subsidiary of its overall operations. Rick Pudner, Group CEO of Emirates NBD, described the acquisition as “signal[ling] a new phase rich in opportunities for both banks.” As part of the takeover, the Dubai government has signaled it will guaran-tee all of Dubai Bank’s delinquent loans for a period of 7 years, thus improving the long-term outlook for the Emirates NBD group. Dubai Bank’s ATM network was integrated into Emir-ates NBD’s operations over the first half of 2012, while further levels of operational rationaliza-tion will continue over the year. Following the takeover, Pudner reported the group branch network at 168, with more than 780 ATMs and CDMs across the UAE, though with a majority concentrated in the Emirate of Dubai. Despite the challenging conditions of the past, Pudner foresaw gross loan growth of some 4%-5% over 2012. Emirates Islamic Bank, a subsidiary of Emirates NDB, also reported a strong start to the year, with total income up 20% to AED454 million, while income grew in a parallel fash-ion to AED231 million. The bank expanded its branch network to 35, opening storefronts in Dubai Mall and Dubai Investment Park. Its ATM and CDM network grew by four terminals to 105 by the end of 2Q2012. It is looking to expand its reach in both the SME and high-income per-sonal markets, while revamping its online of-fering and extending further into both housing and auto financing. Dubai Islamic Bank (DIB) comes in as the second largest local in terms of assets, report-ing some AED92.5 billion at the end of 1Q2012, up slightly on the AED90.59 billion recorded at YE2011. DIB styles itself as the world’s first Islamic bank, dating its operations back to 1975. In addition to the 74 branches DIB has across the UAE (up by four over 1Q2012), the bank has some 75 branches via its subsidiary in Pakistan, as well as having banking interests in both Jordan and Turkey. Its overall size makes DIB the third largest sharia-compliant bank in the world, and the largest by far in the UAE. It reported a solid financing-to-deposit ratio of 77% for 1Q2012, while customer deposits grew by 5% over the quarter to AED68.1 billion. The bank’s CAR stood at 18.2%. The impaired fi-nancing ratio was 14.5% at YE2012, with some AED8.1 billion on the books. Provision cover-age came in at 49% for the full year. The bank has been increasing its provisions for impaired loans over 2008-2010, much in line with tak-ing on former home financer Tamweel onto its books in 2010. Mashreq Bank comes in third for asset size among the Dubai locals, reporting them at

AED76.4 billion, down slightly by 3.5% on the FY2011 figure of AED79.2 billion. The bank has extensive international operations, with open windows in 10 other countries besides the UAE. Besides its standard commercial line, Mashreq Bank also operates a sharia-compliant subsid-iary, in addition to other interests in investment banking, brokerage, and mutual funds. The bank reported full year net profits of AED820 million for FY2011, while the same figure stood at AED591 million in 2Q2012, some 7.2% up in year-on-year terms. The CAR was a firm 22.7% for the first half of 2012, while provisioning for bad loans declined by 45% to AED352 million, demonstrating a substantial repositioning of its balance sheet. The bank’s Executive VicePresi-dent and Head of Retail Banking Head of Retail Banking, Farhad D. Irani, underlined to TBY that Mashreq was making firm steps to cement its position in the retail market, with the goal of making it “number one by 2013.” As part of its new strategic focus, local Emirati customers are being sought. “Our heritage is Emirati,” Irani said, “and we should be the primary bank for UAE Nationals.” The Commercial Bank of Dubai (CBD) is the next largest in terms of assets, reporting unau-dited figures of AED39.65 billion in 2Q2012, up on the AED38.24 billion from YE2011. The bank has a strong presence in the corporate segment. CBD reported a net profit of AED662 million in 2Q2012, while its CAR improved from 23.1% to 23.6% over the first half of the year. Another bank of note in Dubai is Noor Islam-ic Bank, which reported assets of AED16.87 bil-lion for FY2012. Fairly new to the scene—estab-lished in only 2008 —the bank has sought to be innovative despite the trying global economic conditions. “We are the first bank to introduce internet and phone banking in Arabic that can be used on any mobile unit,” Hussain Al Qemzi, Group CEO of Noor Islamic Bank told TBY. It has a concentration on corporate and whole-sale activities, though is looking for additional opportunities in trade financing. Commercial Bank International comes next in terms of as-sets, at AED11.40 billion at FY2011. The bank’s roots are in Ras al-Khaimah, and it reported a net profit of AED64.77 million for 2011, well up on the AED16.59 million declared for 2010. It reported a CAR of 15.25% at YE2011. Emirates Investment Bank is another con-tender worthy of mention, as it seeks to carve a unique path in the private banking industry. The bank is unusual in that it is targeting much the same customer base of high-net-worth individuals and institutions as many of the for-eign representative banks in the DIFC, though it operates under UAE jurisdiction. As its CEO Khaled Sifri told TBY, “We like keeping things simple and focused, which allows us to be quite flexible and client responsive.”

FOREIGN BANKSIn terms of the representation of foreign banks,

thebusinessyear

56 FINANCE

E Emirates NBAD

D Dubai Islamic Bank

M Mashreq Bank

C CBD

N Noor Islamic Bank

C

M

Y

CM

MY

CY

CMY

K

AbnAmro1\3 Horizontal.pdf 2/22/12 11:06:19 AM

there is a distinct split between those who oper-ate within the UAE economy proper, and those that have representation and activities in the free zones. Of the 28 foreign banks with opera-tions in the UAE, 20 of them are headquartered in Dubai, leaving the remaining eight based out of the capital, Abu Dhabi. Some of the larger banks in terms of penetration and branch size included Standard Chartered, HSBC, Habib Bank AG Zurich, RBS, and United Bank. Standard Chartered has the largest branch presence across the UAE (11), as well as hav-ing over 130 ATMs and CDMs scattered across the country in strategic locations. Although the bank has a regional headquarters presence in the DIFC, it will be moving its UAE-focused staff to a new $140 million facility by the end of 2012, as Jonathon Morris, CEO of Standard Chartered UAE told TBY. The universal bank still maintains its strong focus on trade and wholesale finance, offering both conventional and sharia-compliant products. HSBC Middle East, as well as its Islamic banking wing Amanah, has a strong presence in the UAE market, with eight branches, three of which are in Dubai. The bank is looking to improve its penetration of the local SME market in the UAE, announcing an AED1 billion fund for trade investment in May 2012. HSBC has reserved 30% of this SME fund for UAE nation-als, hoping to increase its market share of this lucrative customer segment. In addition, the bank acted as lead financier for Mannai Corpo-ration’s buy out of leading jewelry chain Damas International.

DIFCIn Dubai, the core free zone for financial activ-ity is the Dubai International Financial Centre (DIFC). The DIFC was conceived as a way to

bridge the time gap between Singapore and London for finance-related activities, allowing for a greater focus on the MENA, South Asia, Central Asia, and East African markets. As of the end of 2010, according to the CBUAE, there were 67 foreign banks with representation in the DIFC. In 1Q2012, the DIFC reported 861 ac-tive financed-related companies working from its network of 18 buildings, while some 21 of the world’s top 30 banks had representation offices in the zone. The DIFC is far more than just banking, with insurance firms, asset managers, and corpo-rate law firms all finding their niche within the zones growing infrastructure. Banks within the DIFC do not provide retail facilities, as this would overlap with the banking services pro-vided in the regular UAE economy, but they tend to be focused on wholesale and investment banking, with regional private banking services also beginning to see growth. The Dubai Finan-cial Services Authority (DFSA) acts as regulator for the financial community in the zone, while the DIFC also boasts its own judicial and arbi-tration center that is based on common law principles, in order to improve transparency and encourage market confidence. Just a few metrics are telling about the growth seen in the DIFC’s operations. In 2011 assets under man-agement by firms in the zone came in at $7 bil-lion, and then rose to $8.1 billion over 1Q2012. Deposits in 1Q2012 were at $12.8 billion, while loans amounted to $14.7 billion, according to the DIFC’s 1Q2012 report. While the DIFC is still looking to carve out a larger niche in the international financial services market, its recent growth trend looks encouraging. As further clustering occurs, the hope to make Dubai one of the world’s finance centers is well within grasp. ●

Dubai Bank Assets YE2011, in AED billions

Capital Adequacy Ratio YE2011, as a percentage

Bank Key

300

250

200

150

100

50

0

25

20

15

10

5

0

Source: TBY & company reports

E

E

D

D

M

M

C

C

N

N

FINANCE 57

INTERVIEW

BIOGRAPHYAbdulrahman Saleh Al Saleh is the Director General of the Department of Finance (DOF) of Dubai. He is also the Chairman of the Board of Directors of the Dubai Financial Support Fund. Prior to joining the DOF, he spent four years as the Senior Executive Director for Corporate Affairs in Dubai Customs (DC). In this role, he was responsible for managing the support departments for DC, which include Finance, HR Management, HR Development and Administrative Services. He chaired a number of committees in DC such as the group responsible for the introduction of VAT in Dubai, the Employee Affairs Committee, and the Executive Credit Policy Committee, and was a Member of the Reform and Modernization Program Committee, as well as the IT Steering Committee.

Savings on Both SidesTBY talks to Abdulrahman Saleh Al Saleh, Director General of the Department of Finance, on the creation of support funds to safeguard against crises, the restructuring of Dubai’s debt, and positive indicators for the future.

HE Abdulrahman Saleh Al Saleh

TBY How fundamental is the department’s role to the Dubai Strategic Plan?ABDULRAHMAN SALEH AL SALEH Our role is to make sure that we provide the neces-sary financial resources to ensure that we are meeting the requirements of the wider plan. For example, the development of in-frastructure required the development of the transport sector, for which the main project was the Dubai Metro. We had to ensure there were available resources, and that was done successfully. Even though the metro launch was in September 2009, the peak of the financial crisis, we man-aged successfully to support it. Similarly, we are also supporting the social side. For example, there is a housing project where a few of the projects were also commis-sioned during the crisis and launched by His Highness. Similarly, in the financial services sector, there were some concerns about meeting some certain obligations during the crisis. The government was also there to make sure necessary support was given. We always work closely with the other government entities to make sure they have the necessary resources to achieve the requirements of the strategic plan.

In 2009 you established the Dubai Fund for Financial Support, which was in the middle of the crisis. What was the strategy behind the creation of the fund?The idea was just to support government-related entities (GREs) and also some of the strategic projects of the state to ensure there was no negative impact on these projects. We try to make sure they are able to meet their short-term obligations. Some of the GREs are in charge of very impor-tant strategic projects for the government. For example, Dubai World is in charge of DP World, which is a global port operator. Our role was to stand by and give the nec-essary financial support. Now, the GREs are able to manage the challenges on their own with the improved business condi-tions. Recently, we have seen that many of them have taken the initiative to restruc-ture their debts and also start new projects successfully.

How confident are you that the successful restructuring of two-thirds of Dubai’s debt will pave the way for upward growth?The debt restructuring was mainly done because the GREs had a mismatch be-tween their short-term borrowing and

their long-term projects, which meant they would not be able to meet their ob-ligations. The restructuring allowed them to have a longer time period for the repay-ment of their debts that would match with their projects, which are mostly in the real estate sector, where recovery takes a long time. Most of the major restructuring has already been done successfully, with the participation of all the major creditors. The smaller GREs are progressing very well also.

You have established the Support Services Center. How successful has that been since it was established?The Support Services Center is progress-ing very well. The idea behind it is that it is like an incubator for new entities, to give them the right support rather than waiting on them to develop support services when they have the duty to do the core business that they should be doing. The focus on the support is being taken care of. However, with the successful progress of the center, we find many of the new entities prefer to continue with the support services even after they are well established. And the newcomers of already established entities want to join the Support Services Center. That’s how both sides act. There are sav-ings on the budget side, giving them more time to focus on their core business rather than the support.

What positive indicators are there that the Dubai economy is back on track after the global liquidity crisis?If we first identify the main sectors in the Dubai economy, we find sectors such as lo-gistics, trade, tourism, and aviation. If we review the performance of these sectors from 2007 until now, we find the perfor-mance of these sectors has been very good. There is no concern about the main sec-tors of the Dubai economy. The main issue is with the real estate sector, which was a newcomer to activities in Dubai at the be-ginning of 2007. Now, this sector is recov-ering. The real estate cycle usually takes a longer period for recovery, but otherwise we are very optimistic about the near- and long-term future of the main sectors of the Dubai economy. For example, with the aviation sector, the government has ap-proved a strategy that would require the expansion of some infrastructure. We have been working with the airport authorities to make sure the required financial re-

1

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58 FINANCE

1 Abdulrahman Saleh Al Saleh, Director General of the Department of Finance2 The Department of Finance celebrates the UAE's 40th anniversary

sources are there to meet the requirements of the expansion. If you pass by the airport you can see the work in progress there. The tourism sector has also been performing very well this year and over 2011. Dubai has been successful in attracting tourists, who used to go to other destinations, but because of what they call the Arab Spring, not surprisingly their first choice is now Dubai. We have seen hotel occupancy reach very high numbers. We used to have very quiet summers, but last year was very busy, and hotel occupancy reached record levels, so we are optimistic. The govern-ment is also giving the necessary support to the main sectors to progress well and support the economy and the strategies of the government.

How do you prioritize fund allocation?It all depends on the requirements of the strategy. The Road and Transport Author-ity (RTA), which is tasked to look after all transport infrastructure projects created through the government, is one example. There are some key projects that require allocations that would be given priority over other projects, and that would apply also to other projects in the municipality, like the sewage plant; it comes to priori-tizing the allocation. The Dubai munici-pality has a second sewage plant that was just commissioned. That was one of the top priorities because of the increasing volumes being sent to the existing sewage plant, which was the only one in Dubai. We work closely with all of the govern-ment departments and we don’t develop

the budget and allocation on our own. Once all the information has been gath-ered and the discussion has taken place, the summary is presented to the Supreme Committee, which is the final authority prior to presenting it to His Highness. The Supreme Fiscal Committee (SFC) will help us in finalizing the allocation between the government departments to ensure that it is consistent with the strategy.

What about the development of the local capi-tal markets?I think global markets require transpar-ency, with more and more up-to-date information. The region has not been that active in capital markets in the past, so it will take time for the region to adapt to the requirements of the capital markets or the international investor for receiving trans-parent up-to-date information. We have been working on this and we have been successful. Through road shows and face-to-face meetings we have made a differ-ence. I think the next stage is to try to make online information available to investors. I think that would be a step forward. We are working all the time to improve the qual-ity and timing of the information, but it takes time to gather information from dif-ferent sources and stakeholders. We have been successful in developing the capital markets in Dubai. After Dubai entered the capital markets, we had very successful issues in 2009, 2010, 2011, and 2012. Our plan is to improve communications with the investors in sukuks and bonds through road shows and face-to-face meetings. ●

We work closely with all of the government departments and we don’t develop the budget and allocation on our own.

2

Dubai2012

FINANCE 59

INTERVIEW

BIOGRAPHYAbdulla Mohammed Al Awar was appointed as the CEO of the Dubai International Financial Centre (DIFC) Authority in June 2009. Before assuming the role of CEO, he served as the Managing Director of the DIFC Authority until 2009, where he led a division responsible for attracting leading financial institutions to operate in the center. In addition to his role at the DIFC Authority, he is also on the Board of Directors of Borse Dubai and Dubai Executive Jets Ltd. He graduated from the HH Sheikh Mohammed Bin Rashid Program for Leadership Development. He holds a Bachelor of Science degree in Business Administration from the University of Colorado in Boulder, Colorado.

More than the MoneyTBY talks to Abdulla Mohammed Al Awar, CEO of the Dubai International Financial Centre (DIFC) Authority, on the establishment of a suitable regulatory framework for the sector and the creation of micro-cities.

Abdulla Mohammed Al Awar

TBY What is the key role of the Dubai Inter-national Financial Centre (DIFC), and how has that role evolved since it was originally created?ABDULLA MOHAMMED AL AWAR The DIFC was created to bridge the gap between the financial centers of London and Hong Kong. This jurisdictional gap is a signifi-cant region of about 42 countries spanning a wide geographical scope. However, it also has a lot of potential in terms of wealth in individuals, institutions, and invest-ment companies that are able to invest in new infrastructure and are excited about these opportunities. These factors were in place, but what was missing was a sound international financial center to centralize the wealth and facilitate business, and so the DIFC was established in 2004. In order to be at the level of power of other interna-tional centers, we had to get several aspects of the model right—specifically infrastruc-ture, because we cannot simply be a free trade zone. The entire eco-system has to match other leading centers, and that predominantly lies in the soft infrastruc-ture such as laws, regulations, and judicial authority. We have seen growth because of the institutions we covered, in terms of numbers of people working and also com-panies. Private developments in the free zone are also popping up. We have the ma-jority of major businesses at the center; 21 of the largest 30 banks are with us, eight of

the 20 largest asset managers, six out of the top 10 insurers, and six out of the top 10 law firms. We have been able to attract those major players and create jobs and transfer knowledge into the community.

How important was establishing the right regulatory climate within the DIFC?An extensive amount of time has been spent developing the legal infrastructure, including laws and regulations through discussions with the federal cabinet of the UAE in terms of what type of independence the center could have. The UAE govern-ment entrusted the center and provided it with independence by means of applying a common law jurisdiction. This is very appealing for the international financial community because it feels at home with a familiar system, while being closer to its target audience. There are three bodies that govern the DIFC yet perform inde-pendently from each other. On one side there is the DIFC Authority looking after the master plan and strategy of the center. We develop the infrastructure and we gov-ern all non-financial services carried out from the DIFC and provide promotion for the center. The Dubai Financial Services Authority (DFSA) is the financial services regulator, and it licenses financial insti-tutions to carry out business, supervises these financial institutions, and enforces regulations. The third body is the Judicial Authority, DIFC courts, which has inde-pendent jurisdiction over civil and com-mercial matters arising from the center. We also have an Arbitration Centre, DIFC-LCIA, which offers dispute and resolution services and alternatives to the courts.

What was the strategy behind creating a micro-city?It is 110 acres and there is a concept of a state within a state. First, we talked about how sound and advanced the legal structure had to be. We have ensured that world-class infrastructure was in place, as well as business-friendly laws. Another major factor, which is common in all major financial centers, is lifestyle. That is quite important for us, and we focused on cre-ating the environment in an all-inclusive manner. The institutions that are operating here and their employees do not feel that this is predominantly just a space or an office park; we added the lifestyle compo-nent and it became a jurisdiction of choice. People can live here, enjoying their time

1

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60 FINANCE

1 Abdulla Mohammed Al Awar, CEO of the Dubai International Financial Centre Authority (DIFC)2 The DIFC is regulated by the Dubai Financial Services Authority (DFSA)

after work at the cafes, restaurants, and art galleries. You have to create an environ-ment where people are happy working and it is often the case that large employers find it difficult to recruit people from abroad because of where they are investing. These places have to offer good choices in terms of schools, healthcare systems, and quality of life. I think that is where Dubai excelled, as everything is integrated; everything is very advanced here and moving at the same pace. When we talk about growth and emerging markets, this is where the focus lies right now.

How important is Dubai as a hub for other emerging markets and what role is the devel-opment of the new Silk Route playing?I think it is quite central; the role Dubai plays between growth markets is a crucial one. Dubai offers unparalleled value to in-stitutions that want to tap into emerging market areas. If you look at the locale of what is between London and Hong Kong, there is Africa, the Middle East, and South Asia, and the trend has been there for the past two years. Even international banks have seen their future here and are re-inforcing their presence even while they have been more conservative and cutting down elsewhere. These banks understand that the future is here, whether it is in in-frastructure financing, trade financing, project financing, or other projects in pre-dominantly growth markets. The Chinese banks are following all of their clients into Africa, and banks are talking to us and choosing DIFC as their base because it is the more logical choice for them; South Asia is the same. Connecting Brazil to Chi-na via Dubai makes more sense because of the convenience of direct flights.

How important is NASDAQ Dubai in terms of the development of local capital markets?Any financial center has to have active, liquid capital markets in place, and I think in that manner NASDAQ Dubai plays an important part in Dubai’s strategy as an international center. But to complement the center, NASDAQ Dubai is also an inter-national exchange because of the interna-tional listing requirements, the obligations that have been put in place, and the fact that it is also regulated by the DFSA. Inter-national investors appreciate the choice for the international exchange as opposed to local exchanges.

How have you re-aligned your strategy since the financial crisis?It is ironic, because the crisis that hap-pened in 2009 was at about the same time that we had our fifth anniversary, and we had already undertaken a plan to revise the business strategy of the center. We saw that we had met the initial goal of creat-

ing a critical mass, creating awareness, and developing the DIFC’s recognition at an in-ternational level. The next step was for us to become a more mature financial center by means of scale, because if we were to compete with the likes of London, New York, or Hong Kong, they obviously have an advantage because of their age. When we look at the scale of activity, we see that more assets are being booked and more business is happening. In that respect, we need to focus on building scale, and what that means is that we not only need to fo-cus on acquiring new clients, but we also need to focus on current existing players to expand by means of added business secu-rities and coverage. We have seen a significant amount of organic growth since 2009—not only new companies but existing players also ex-panding their footprint, adding more func-tions and people. Now, from a key perfor-mance indicator perspective, while that does add to the number of new companies, it also adds in terms of economic value and GDP contribution. That is also now cen-tral to our strategy. For example, we have institutions that have made the DIFC their global home; Standard Chartered started small and now has over 700 people with its own building and has moved its CEOs for all regions expect East Asia to Dubai. Bloomberg also established its 10th global office in the DIFC. ●

Dubai International Financial Centre Authorityin numbers

Established

2004Companies in 2004

19Companies in 2012 (April)

873People working with DIFC

12,000DIFC-owned buildings

18Occupancy of DIFC-owned buildings

95%

2

Dubai2012

FINANCE 61

INTERVIEW

BIOGRAPHYSaeb Eigner was appointed CEO of DFSA in August 2011. He has served as Deputy Chairman of the Board since 2007, and as a Member of the Board since October 2004. Formerly a Senior Manager at ANZ Grindlays Bank PLC in London, Eigner headed the Middle East and Indian Sub-continent Division, which he left to found Lonworld in the early 1990s. He is the Chairman of Lonworld, a private investment group. Eigner holds a Master's Degree in Management from London Business School.

1 Saeb Eigner, CEO of the Dubai Financial Services Authority (DFSA)

On the LookoutTBY talks to Saeb Eigner, CEO of the Dubai Financial Services Authority (DFSA), on its mandate, creating a financial center, and the regulatory environment.

Saeb Eigner

TBY What does the regulatory mandate of the Dubai Financial Services Authority (DFSA) cover?SAEB EIGNER The DFSA’s regulatory man-date covers all financial and related activi-ties conducted in or from the Dubai Inter-national Financial Centre (DIFC), including asset management, banking and credit services, securities, collective investment funds, custody and trust services, com-modities futures trading, Islamic finance, insurance, an international equities ex-change, and an international commodi-ties derivatives exchange. In addition, the DFSA registers auditors, ancillary service providers (law firms and accountants), and is responsible for anti-money laundering supervision in the DIFC.

Creating a financial hub in Dubai has been part of the ongoing vision for the long-term pros-perity of the city. What are the strengths of the Emirate in this regard?The Emirate of Dubai, through its Ruler His Highness Sheikh Mohammed Bin Rashid Al

Maktoum, has created by means of legisla-tion a modern financial and business hub connecting the region’s emerging mar-kets with the developed markets of Eu-rope, Asia, and the Americas. Since 2004, Dubai has been committed to encouraging economic growth and development in the UAE and the region through its strong fi-nancial and business infrastructure, such as the creation of the DIFC. For example, the DIFC offers its member companies benefits such as 100% foreign ownership and a 0% tax rate with no restriction on capital convertibility or profit repatriation. Furthermore, the DIFC has its own inde-pendent common law judiciary, namely the DIFC Courts. The Emirate continues to enhance its infrastructure. For example, it has recently enacted legislation to extend the jurisdiction of these courts to enable the benefits of the DIFC Courts to be more widely available. Combining all of these attributes, including the fact that financial institutions find that Dubai offers a high standard of living for their employees as well as modern office space, the Emirate positions itself as the appropriate and first-in-mind location attracting and retaining businesses and talent.

What have been the most significant re-cent developments in terms of the DFSA’s regulation?There have been two recent significant developments. The first development was the enlargement of the DFSA’s regulatory remit to make it responsible for all anti-money laundering supervision across the DIFC rather than, as was previously the case, in respect only of firms it regulates for conducting financial and other related activities. The second development was the acceptance by the DFSA of a delegation of power from the Registrar of Companies to be responsible for investigations and conducting enforcement action in respect of breaches of DIFC laws administered by the Registrar of Companies, such as the Companies Law.

Financial services companies wishing to obtain a license to operate within the DIFC are processed through the DFSA. What kind of trends have you witnessed in terms of applications? The 2011 period was a time of growth in the DIFC, with the number of authorized firms increasing by 8% after two years of consol-idation and following the rapid growth ex-

perienced in 2005-2008. In 2012, this mo-mentum is continuing with applications 80% higher than for the same period last year. The DIFC is being selected as a hub to offer products and services to clients in the GCC, wider Middle East, and North Af-rica and Asia. In terms of specific growth drivers, we see banks—particularly from China and India—increasing their presence and offering their commercial lending and trade finance services, wealth managers from Europe seeking to enhance and grow institutional and private banking relation-ships in the region, and global investment banks and other wholesale intermediaries migrating trading teams to the center.

You have recently visited China, where the DFSA signed an updated Memorandum of Understanding (MoU) with the China Banking Regulatory Commission and then travelled to Hong Kong and Singapore. What are the benefits of such cooperation agreements and high-level visits?Cooperation among regulators has always been important, but at a time where so much activity and capital flows are across borders, it is even more so. In that regard, we are pleased to have updated our coop-eration agreements with the Chinese regu-lator. Also, as the center of global wealth and activity moves eastward, the DIFC is well placed. We further cemented our strong relationships with the Hong Kong and Singapore authorities and met with leading government and industry identi-ties. We have much to consider from how Hong Kong and Singapore have developed as financial centers. It was also pleasing for us to hear from them. ●

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INTERVIEW

Core FocusTBY talks to Rick Pudner, Group CEO of Emirates NBD, on the banking system, expectations for the capital markets, and Dubai’s economic outlook.

BIOGRAPHYRick Pudner was appointed Group CEO of Emirates Bank in early 2006, joining from HSBC, where he worked for over 24 years in a number of senior roles in various locations around the world, including South Korea and the Middle East. He also held the positions of Chairman of the Foreign Investors Advisory Council for the Mayor of Seoul, Chairman of the European Union Banking Committee in Korea, and Vice-Chairman of the Foreign Bankers Group in South Korea. Pudner currently sits on the boards of Emirates Investment Service, the Economic Development Council, Emirates Fund Managers (Jersey), and Emirates Financial Services.

1 Rick Pudner, Group CEO of Emirates NBD

Rick Pudner

TBY What are the strengths of the banking system in the Emirate?RICK PUDNER Over the last 40 years, Dubai has transformed its economy to consist of international trade, banking, tourism, real estate, and manufacturing. The govern-ment’s investment in transportation, tele-communications, energy, and industrial infrastructure has opened up many routes to an extensive foreign trade network. Coupled with the incredible infrastructure and the safe political environment it offers its residents, Dubai has emerged as a lead-ing regional commercial hub and a world-class business environment. Dubai’s abil-ity to overcome the financial crisis that occurred in 2008 reflects strong govern-ment support that enables the Emirate to be a stable and conducive environment for prosperity.

Emirates NBD is the UAE’s largest lender. Do you see banks in the region increasing lending levels in the near future?Given recent global economic events, the outlook has become more cautious and un-certain. As a result, we are expecting lower levels of loan growth than before. For 2012, we are aiming for gross loan growth at around 4%-5%, with contributions from both retail and corporate lending.

How is the recent takeover of Dubai Bank by Emirates NBD demonstrative of the Dubai government’s desire to consolidate the bank-ing sector? The acquisition of Dubai Bank by Emir-ates NBD signals a new phase rich in op-portunities for both banks. The transaction closed against a cash consideration equal to the fair value of the entity acquired. The financial results of Dubai Bank were con-solidated on October 11, 2011 without any impact on the group’s net profits or non-performing loan (NPL) ratio on the date of the takeover. The recent integration of Dubai Bank ATMs within the Emirates NBD network has been a successful and impor-tant milestone in the integration process.

In the coming months, Emirates NBD will complete the next phase of integration that will enable Dubai Bank customers to access new options, such as utility bill payments, when using Emirates NBD ATMs.

What was the strategy behind the creation of the Center of Operational Excellence known as Tanfeeth?Building on the success of Network In-ternational, the creation of Tanfeeth was a strategic decision aimed at providing world-class services to the bank as well as its external clients across many industries. The decision was of great value to Emirates NBD as it offers opportunities to reengineer our processes and introduce global best-practice tools and technology that will im-prove efficiency and enhance the quality of the service that we offer customers.

What are your expectations for Dubai’s capital markets in 2012? Emirates NBD has continued to boost its drive toward increased transparency with analysts, investors, and customers at large, enabling further business opportunities while aiding the capital markets. In recent months, the Gulf’s capital markets have witnessed a surge in sukuk and conven-tional bond issuance as markets have im-proved, following the tight global condi-tions in 2011. Other parts of the world are seeing the value of tapping these markets, especially Asia. Other sources of finance are emerging with the development of the offshore renminbi (CNY) market, fund-ing that is proving very attractive. Emir-ates NBD recently launched a CNY1 billion bond, which attracted strong investor appetite and was priced at a competitive level.

How active is Emirates NBD in corporate so-cial responsibility (CSR) activities?In line with its vision and mission, Emir-ates NBD is committed to engaging all its stakeholders in a sustainable and respon-sible manner, making it one of the most active financial institutions in the commu-nity with a clear CSR strategy. Over the last year, Emirates NBD has worked to support and develop three focus areas in its com-munity: education, environmental issues, and health care. As we are a group driven by customer satisfaction, our numerous golfing events give us the opportunity to please our internal and external custom-ers. At Emirates NBD, we are aware of the

passion and excitement one feels when golfing next to champions. Horse racing is a national UAE sport, and one that we share a passion for at Emirates NBD. As a highly competitive, pedigree sport, horse rac-ing is aligned to our own values of success and ancestral heritage. Therefore, Emir-ates NBD is the Dubai World Cup official banking partner and sponsor. Having es-tablished a firm place among the top thor-oughbred racing events in the world, the Dubai World Cup attracts a global audience each year. Our sponsorship also provides us with invaluable international exposure that goes hand-in-hand with participat-ing in this high-profile event and helps strengthen our brand recognition. ●

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INTERVIEW

BIOGRAPHYRaghu Malhotra has been with MasterCard since 2000. Prior to his current position, he held a variety of leadership roles, spanning Marketing, Business Development, and Public Relations across multiple international geographies. Most recently, he was MasterCard’s General Manager for the Middle East. Prior to joining MasterCard, he worked for American Express, ANZ Grindlays Bank, and Citicorp Credit. He also held a number of advisory positions to industry committees within the payment and technology sectors, including being a founding member of a committee that established the first industry-wide initiative that led to the formation of a credit bureau in India.

1 Raghu Malhotra, Division President, Middle East & North Africa of MasterCard

Seamless TransfersTBY talks to Raghu Malhotra, Division President, Middle East & North Africa of MasterCard, on the importance of shifting transactions from paper and cash to electronic methods.

Raghu Malhotra

TBY Almost 85% of the world’s transactions still take place with cash, although Master-Card itself is synonymous with plastic. What are the key opportunities going forward for processing networks regionally?RAGHU MALHOTRA Economies around the world, as well as central banks and gov-ernments, are increasingly looking at this sphere as they realize that cash transac-tions are actually fairly inefficient. We have conducted global studies and found that it costs a government or an economy between 50 and 150 basis points just to use cash. This is not taking into account what banks spend in terms of just putting the cash into people’s wallets. If one looks at the true cost of cash, it starts to be up-ward of 150 basis points. In other words, cash can cost a country about 1.5% of its GDP; this is a substantial amount of money that could be saved if electronic payment

solutions replaced cash transactions. In this part of the world, only 10% of pay-ments are electronic, while 90% are still cash or checks. I think that we have now reached the cusp where paper might give way to electronic transactions. This could not have been the case 20 years ago, in the absence of the necessary infrastructure to carry out the transactions securely, but the situation has now improved significantly to pave the way for an evolution to replace cash with a more efficient and a much more transparent system.

What kind of new technology are you bringing to the local market?Technology comes in different forms. One is platform services, an example being the enablement of e-commerce around the world. This is not a new concept, but it is growing substantially and we are en-hancing MasterCard’s platform services as consumer preferences change and new e-commerce channels are opened. If you are booking airline tickets online, it is likely that you’ll be going through MasterCard’s channels whether or not you used a Mas-terCard product.

In developed consumer markets, debit cards have now overtaken credit cards in terms of popularity. Are the same trends being seen here?Clearly, debit cards have come to the fore-front in this part of the world, but debit cards use is actually determined by several factors. One of these is the savings habits of consumers. If one looks at developing markets such as India, saving rates tend to be extremely high, and consumers tend to opt for debit cards that are linked to their savings accounts. This is one reason and example why debit cards take off in some markets. A second factor impacting the use of debit cards is the acceptance infrastruc-ture. Some markets, such as the US, have been developing their infrastructure for 30 years, and thus every shop now accepts cards. This is not yet the case in a lot of de-veloping markets. Another factor is consumer habits. Consumers tend to take out cash for very small, low-cost purchases out of sheer habit. When more places accept cards, consumers stop taking cash out with them, instead preferring to spend on their cards. Of the 90% of payments made in cash, around 50% might be small-value

payments. This begins to show the sheer volume of the market, and could lead to debit cards overtaking credit cards in some markets. Therefore, the use of credit or debit cards depends more on saving rates, what sort of infrastructure is available, and consumer tastes and preferences, but we believe that both cards have their specific uses and that there is a place for both in consumers’ wallets.

How are local consumer habits changing in terms of online payments?A recent MasterCard survey found that 42% of UAE shoppers accessed the internet for online shopping in 2011 (this does not, however, indicate that all of them made purchases). That is an extremely high per-centage, growing from 33% in 2010. Different industries have responded to the digital age in their own ways. The airline industry is one sector that has revo-lutionized how it sells its products. A few years ago, consumers would book their tickets through a travel agent. Now, the airlines have gone completely digital. The same thing has also happened with hotels and holiday packages. I suspect this trend will also move into the retail side. In summary, given the change in con-sumer habits and the rapidly evolving online payment infrastructure, we expect online shopping to grow at a much higher pace than traditional ways of shopping. We expect this trend to continue in the fore-seeable future. ●

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KHALED SIFRICEO, Emirates Investment Bank

ARNAUD LECLERCQHead of the Middle East, Eastern Europe & Central Asi, Lombard Odier

ROHIT WALIAExecutive Vice-Chairman & CEO, Bank Sarasin-Alpen

Over the years, the banking industry in our region has changed significantly, especially when it comes to the high-net-worth (HNW) individual sector. First of all, the number of HNW individuals in the region increased dra-matically over the past decade. The amount of wealth that is held by HNW individuals in regional terms has also increased. Many of the regional commercial banks have started paying attention to these facts and developed private banking platforms to cater to HNW in-dividuals. The international banks covered the region for many years with suitcase bankers. However, in recent years they have set up of-fices with teams of bankers on the ground. Bahrain used to be the hub of the offshore industry, but now the DIFC seems to have taken the lead and has attracted a larger number of banks to the region. We work to offer a service that is similar in terms of quality to an international private banking boutique. However, we book the business locally and are committed to a long-term presence with local understanding. These things set us apart from the international banks. We have our own custody platform through which as-sets are booked, while if the client works with international banks the money would need to be sent overseas to international booking centers based in jurisdictions such as Swit-zerland, the UK, or even Singapore.

Local and international private banking companies take advantage of demand for Islamic banking services, diversification opportunities, and high-net-worth individuals in the local market.

By Your SideFORUM: Private Banking

In private banking, size matters in the sense that the world has become increasingly complicated. IT capabilities, controlling, and reporting are much more expensive and com-plex. Financial markets have become more complex, and with globalization a bank has to be much more active on the markets, not just in Europe but in Asia as well. To have the capacity to handle this, a bank needs to be a certain size and have the right knowledge and people to preserve and capture wealth, and of course always be aware of how the environment is changing. There are a combi-nation of factors to consider when deciding who you can really trust with your wealth. We have to be very active, and we are doing that through sophisticated IT management. We have developed our own tools, which we manage entirely internally for ultimate security. The banks’ internal systems have historically been closed, but we have opened them up to our clients. Even if we ultimately make the decisions, the client can always check in on what is going on. It is not a trading platform, but a very sophisticated asset management platform, recognized as one of the best in Switzerland. So the first step for us was ease of access to information, and with that came the need for greater client involvement on our part.

Our core focus is private banking because we are a Swiss private bank. Our tag line is “Sustainable Swiss private banking since 1841,” and especially in today’s times this motto has really helped us grow our busi-ness and gain client confidence. In addition to the conventional private banking offering, we have expanded our offering in the last year by launching family office services as well as a comprehensive Islamic wealth management offering for our clients. In addition, we also provide value-added services to our clients via our associate Alpen Capital, which pro-vides investment banking advisory services. I feel this model really works as the investment banking advisory business of Alpen Capital adds value to the private banking business of Sarasin-Alpen. We have a comprehensive Is-lamic Wealth Management platform based on sharia principles. We also have our very own Sharia Board that is responsible for reviewing and monitoring our Islamic offering. It is an es-sential offering, as many of our Arab clients, who form 70-80% of our customer base, often want a sharia-compliant structure. We launched our services based on extensive cli-ent demand and we are one of the only Swiss private banks to have such a comprehensive offering.

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INTERVIEW

1 Rob Broedelet, Country Executive UAE at ABN AMRO, DIFC Branch

Rob Broedelet

BIOGRAPHYRob Broedelet obtained his BSc in Business Administration from Salem International University, and his MBA in Marketing from Marshall University. Before his current position, he had worked with ABN AMRO Bank NV in positions of management in the US, the Netherlands, Bahrain, Monaco, Switzerland, and the Channel Islands.

Fresh BeginningsTBY talks to Rob Broedelet, Country Executive UAE at ABN AMRO, DIFC Branch, on the banking sector, advantages of the DIFC, and the local real estate sector.

TBY ABN AMRO has been in the UAE since 1973. What are the specific nature of this market?ROB BROEDELET ABN AMRO decided that Dubai will serve as our primary platform from where we service our clients from the Middle East, Africa, and also the Asian subcontinent. ABN AMRO came to the Middle East as a trade finance bank as we followed the commercial activities of our Asian clients. We have been active in this region since 1923 when we set up a bank in Jeddah in Saudi Arabia. We then subse-quently expanded over the years into cor-porate finance and structured finance in the region, and we were one of the largest houses bringing bonds to the local market. In 2007 ABN AMRO was taken over by Roy-al Bank of Scotland, Santander, and Fortis Bank. At that time we had almost 3,000 people working in the UAE and were one of the largest credit card issuers. In February 2010 we set up our new bank in the Dubai International Financial Centre (DIFC), and have been granted a category-one bank-ing license. We are one of only four banks that actually book client accounts in the DIFC. All other banks in the DIFC function as a mere representative office and they book their clients mostly in Switzerland or Singapore. This really sets ABN AMRO apart from the other banks operating in the DIFC.

How did the establishment of the DIFC help your business?The DIFC has its own infrastructure, while the regulatory environment for us is man-aged by the Dubai Financial Services Au-thority (DFSA). The DFSA has a strong team of supervisors and a clean regulatory record. It is a well respected supervisory body internationally and staffed by inter-national professionals. The DIFC also has its own court system. Cases can be heard in the DIFC courts and hopefully resolved

fairly quickly. The license application pro-cess by the DFSA and the DIFC was a very smooth one.

Traditionally stable locations for investment have been stretched to the limit following the financial crisis. How has that forced you to re-define the quality of your investments?I think that Dubai has proven to be a stable location despite the financial crisis. And then if we combine the financial crisis with the sociopolitical shifts, or what we now refer to as the Arab Spring, Dubai has shown tremendous resilience and perse-verance as a financial center. The DIFC has around 700 companies operating from it, including some 300 banks and wealth management firms. Dubai has derived some benefits from the Arab Spring, as people looked for a more stable place for their investments in the region and de-cided to come to Dubai. I have not seen any firms leave Dubai because of concerns with the current regional situation. It’s quite the reverse. We’ve seen that a number of banks have brought people in from other regional centers in the Gulf because of the perceived political stability in the UAE. Also, our cli-ents have made their analysis of the UAE’s political situation and continue to feel that the UAE is a very solid and stable environ-ment from which they continue to operate.

The real estate market was one of the worst hit areas during the global liquidity crisis. Do any investment opportunities remain with high-quality dividend yields in this sector?I do believe so, yes. I think we also have to

be bit more precise when we talk about the UAE real estate market. People who invest-ed in UAE real estate before 2007 are likely still making money today. In the commer-cial real estate sector there is excess capac-ity, which is simply going to take time to be picked up by the market. The residen-tial real estate sector is all about location, location, location. There has always been, and there continues to be, interest from Europe, Eastern Europe, Asia, and the Middle East to buy properties in the UAE because of the tremendous infrastructure built up over the years coupled with its strategic location on the axis from Africa to Asia. Not to forget the safety on the streets in the UAE. I think that the residential real estate sector has found new pricing levels and reasonable yields can be made. If you expect to make a 12% return on an apart-ment, forget it, but if you can take 4%–7%, then the market is here. ●

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ROUNDTABLE: International BanksA Little Encouragement

TAREK ELREFAISenior Executive Officer & Head of Global Client Management Middle East & AfricaBNY Mellon

HENRY T. AZZAMAdvisor Deutsche Bank

JONATHAN MORRISCEOStandard Chartered UAE

ON THE GROUNDDubai is the hub for our product specialists servicing the Middle East. Our office here means we can be on the ground with and in the same time zone as our clients, and enjoy enhanced connectivity to the markets we serve.

HERE TO STAYWe have a strategy for the Mid-dle East and we understand the opportunities and challenges. Our commitment to the region means that we stick around through the good times and the bad, and we have persevered throughout challenging market conditions.

OUTSTANDING SERVICEBNY Mellon is the largest bank servicing the debt capital mar-kets in the world. We service $12 trillion in outstanding debt, and are involved in every single type of product on the market.

HERE FOR YOUOur operations here are that of a typical investment bank. We are here to add value and offer investment banking services. We have several businesses that we take care of, the most important of which we call the global markets, where you have brokerage, trading, and hedging, all of which are at the heart of our mission.

A MERGER IN ORDERThe Dubai and Abu Dhabi stock exchanges clearly need to merge to create a bigger entity. Together they could enhance the volume of trading, increase liquidity, and encourage insti-tutional investors to come in.

SPENDING TIMEThe hesitancy of the private sector can more than be made up for by the public sector. Governments have consider-able amounts of cushion from their previous reserve; they can lead spending.

FIRST IS BESTWe were the first bank to re-ceive a commercial banking li-cense from the Dubai Interna-tional Financial Centre (DIFC). We have the most senior man-agement team among interna-tional banks in the region.

CORE FOCUSWe provide a wide range of conventional and Islamic wholesale and retail banking services. For our wholesale clients we provide world-class trade finance, clearing and settlement, and cash manage-ment services.

LEVERAGING REACHAs an international bank with a focus on the world’s most dynamic markets, we are well positioned to take advantage of the emerging trade and invest-ment corridors of Asia, Africa, and the Middle East.

Foreign banks use Dubai as a hub for leveraging their reach to an array of markets in the same time zone and beyond.

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Something DifferentQ&A: Local Banks

FARHAD D. IRANIHead of Retail Banking, Mashreq Bank

HUSSAIN AL QEMZI Group CEO, Noor Islamic Bank

Local financial institutions are bolstering the Emirate’s mainstream banking sector, and are successfully rolling out retail and corporate products.

TBY talks to two bank executives on the prospects for Dubai as a hub for finance and the nature and adaptability of their offerings.

How viable is Dubai as a regional retail bank-ing center for excellence?

FARHAD D. IRANI We have a fair amount of confidence in Dubai’s future as a financial and commercial hub. Mashreq has op-erations outside the UAE as well, and my team and I also look after our operations in Egypt and Qatar. We are slowly look-ing at our regional operations in India as well—we have offices all over the world on the institutional side, but on the retail side this is what we have. Dubai seems to be a natural center of economic activity and growth for the future. It has become an is-land of prosperity. It has become the place that is the benchmark for all of the nations and communities to aspire to. I think that with the establishment of the Dubai In-

ternational Financial Centre (DIFC) and the creation of all of the investments and promotion is a reflection of a very forward-looking government. And coupled that with rule of law, safety, and security, and that it is a great place to live in terms of comfort, I think you get the picture. There are very few places in the world that reflect this kind of stability. Look at Singapore, for example. In the 1980s and 1990s Singa-pore grew as a consequence of unrest and uneasiness within its region surround-ing. Around 35% of all Singapore bank-ing assets are Indonesian owned, 40% of all property is Malaysian owned, and the Chinese have a major presence as well. It is the island of prosperity and stability in the region. Dubai runs a parallel path as well. Both of these markets and countries have benefitted from leadership that is forward looking and business oriented, and I think the results are here for us to see.

HUSSAIN AL QEMZI Dubai is already a lo-gistical international hub with a huge port facility. This is a city that can clear 1,200 containers per hour. We supply and re-export to many nations around us, from companies on our border to East Africa. For example, Somalia has been relying on Dubai for years, and all of its shipments and goods have been coming from Dubai. We also reach Turkmenistan, the Kurdistan region of northern Iraq, and North Africa. This is an international hub that seeks to consolidate its services. The vision we have is to create a financial presence outside of

the Emirate, but that has yet to happen. However, we have done a lot of business in Turkey. Although Noor Islamic Bank is predominantly a corporate, wholesale bank, our activities are determined by our banking partners. We work very closely with Turkish bankers and our relationship allows us to operate together. We have now completed transactions totaling over $2 billion in 18 months; we are raising funds for Turkish financial institutions, and we have many possibilities in the pipeline. This is what we have envisioned, and we aim to duplicate this activity in Southeast Asia or North Africa. This is where we see a lot of interest and potential to grow.

How was your bank affected by the global economic crisis?

FI We had to change mindsets in the or-ganization, and remember that in the af-termath of the economic crisis, you can forgive a financial institution for being a little more conservative than otherwise. So we discovered that we had multiple checks with customers, multiple call-backs, and multiple form-filling endeavors. We elimi-nated 422 processes in six months. Records that were redundant, we just took out. We created a concept called first point reso-lution (FPR). My target FPR is 85%. The front-end service person getting a com-plaint from a customer should be able to resolve it there and then 85% of the time.

Is there a misconception that Islamic banks are heavily exposed to real estate invest-ments and not as reliable as their conventional counterparts?

HQ I do think these misconceptions exist to a certain degree. Historically, Islamic banks have always looked at asset-based finance, and this is how the model started in the beginning. However, the model of Islamic banks has devolved significantly, and today there are many products that meet almost every need. There is plenty of room for creativity, and the consumer side has already established clear products. The wholesale side of banking still needs im-provement, and every transaction involves innovation. Some of our experiences deal with a number of large companies. We sought opportunities to prove that we do not simply want to manage property fi-nances, and we have been able to create a very good structure. ●

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u The local financial markets have struggled throughout the global financial crisis, but improved levels of oversight and transparency may help boost liquidity and trading levels.

Just Add LiquidityREVIEW: Capital Markets

Making sense of markets is the most daunting task in economics. One is well advised to keep this in mind and look beyond daily appearances in Dubai, which is home to the most complex and diverse capital markets in the Middle East and North Africa. Next to its bourse, the Dubai Financial Market (DFM), the Emirate operates the region’s only, and greatly thriving, de-rivatives exchange in the Dubai Gold and Com-modities Exchange (DGCX). The third exchange is NASDAQ Dubai, a leading market place for Sharia-compliant asset backed securities, or sukuk, which are commonly called Islamic-style bonds. The DFM, incorporated in 2000, is the lon-gest established of the three markets. It has 73 listed companies, according to the DFM web-site. This number includes 13 titles listed on NASDAQ Dubai as the latter outsourced its op-erations in July 2010 to DFM as part of a merger agreement. The DFM’s strongest sector is real estate and construction, followed by banking. In June 2012, the two sectors accounted for over 60% of total traded value on the DFM. According to DFM CEO Essa Kasim, the exchange is seeking to diversify away from its overemphasis on real estate and financial list-ings, because the growth sectors in the Emir-ate’s economy are underrepresented in the current mix. “Dubai is gifted with one of the most highly diversified economies in this part of the world with fast growing sectors, includ-ing trade, tourism, health care, and education,” Kasim noted. Performance wise, an interesting period to take a snapshot of an Arab stock market is the month before the month of Ramadan. As Rama-dan is not the time to undertake IPOs and major secondary issuances, companies and investors tend to position major actions right before or after the fasting month. Noting that Ramadan in 2012 coincided with the peak of summer when slowing of bourse activity is to be expected, the 30 calendar days before Ramadan beginning on July 19, 2012 saw the DFM record a total volume of 2.1 bil-

lion shares representing an average daily traded value of almost $32 million. Emaar Properties, one of the bourse’s leading stocks by market cap, climbed over 13% during the period, while the DFM index moved 3.82% higher and closed at 1,535.71 points. In taking a view on DFM activity in the first six months of 2012, January and June were the two months with slowed turnover while the spring months and July signaled increases in activity. Average traded value per day on the DFM in 1H2012 was around $68.35 million, rep-resenting a year-on-year improvement in daily traded value of 43%. Average daily traded value on DFM in 1H2012 was also more than three times the turnover seen in the second half of 2011, which was a period of minimal investor appetite and which had marked the lowest point in DFM activ-ity since the second half of 2004. From 2005 through 2009, daily traded value averaged much higher, ranging between $200 million and $400 million. In terms of primary markets activity, the years before the global financial crisis were bumper ones for Dubai’s capital markets. From 2006 to 2008, 10 companies undertook IPOs on the DFM, including the market operator itself. ››

The DFM's trading volumes are beginning to rebound, though the market is still in its early days of development.

Top 5 Companies by Market Cap on the DFM1H2012

Source: DFM

NATIONAL INDUSTRIES GROUP HOLDING AED34.49 billion

AGILITY AED18.42 billion

EMAAR AED17.01 billion

EMIRATES NBD AED15.12 billion

DU AED13.90 billion

IN

TR

RE

FI

ICT

TOTAL MARKET CAP AED174.03 billion

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Golden OpportunityTBY talks to Gary Anderson, CEO of Dubai Gold and Commodities Exchange (DGCX), on the emergence of the Emirate as a global hub for commodities trading.

What are the key tools that the DGCX offers for managing currency and commodity price risk in the region?The DGCX offers a number of competitive advantages. Firstly, the trading infrastructure and derivatives products provided by the exchange offer market participants exceptional financial management, risk mitigation, and profit optimization tools, giving market participants a cutting-edge, transparent, and secure technology infrastructure, combined with well-established and stringent compliance and governance standards. Secondly, transacting and clearing trades on the DGCX gives businesses the benefit of being under the purview of robust local taxation and regulatory regimes.

Did the crisis have a large impact on the DGCX? In the current environment, traditional asset classes like equities and real estate have declined substantially in value. The DGCX futures contracts offer opportunities for portfolio diversification from these traditional asset classes since they allow for financial gains when markets move in either direction. The DGCX’s futures contracts also offer additional revenue opportunities through arbitrage trading with other markets. Commodity futures are known for their negative correlation with equities and, therefore, they offer the perfect tool for portfolio diversification in an uncertain economic environment. The DGCX commodity futures therefore provide an attractive, alternative asset that can offer higher returns than some other traditional asset classes in the current environment.

This flotation was a pioneering step in the de-velopment of regulated stock exchanges in the Middle East and North Africa, as Dubai was the region’s first bourse owner to integrate the op-erator in the capital markets play. The experience of the worldwide financial crisis and the ongoing search for stronger in-stitutional structures and mechanisms in the global economy led Dubai through a period where companies deferred dozens of IPOs to the future and investors treaded softly and with great caution. MSCI, the international issuer of indices, struggled throughout recent years in finding the appropriate view on GCC exchanges. In 2009, it dropped Saudi Arabia from its regional indices after it could not come to an under-standing with the operator of the Saudi Stock Exchange, which accounts for over 48% of cu-mulative market capitalization in the GCC and is the dominant securities market in the entire MENA region. An announcement in April 2012 that MSCI would restart publishing a domestic Saudi Arabian index in June 2012 was not yet implemented by mid-July. In relation to the bourses of Qatar and the UAE, MSCI acknowledged repeatedly that the three operators of the Qatar Exchange, the Abu Dhabi Securities Exchange, and the Dubai Financial Market had invested great efforts into improvements and in meeting technical requests from international financial market participants. However, MSCI kept the three bourses as frontier markets under review for upgrade for an unprecedented four times as it was unable to come to a decision on classifying them as emerging markets. The arduous relationship between the in-ternational financial services provider and Gulf operators hints that Arab capital markets have specificities with positive impacts that are not always captured by models from the West. The concept of a securities market holds universal appeal because an exchange is the most reliable and dynamic mechanism to discover the mar-ket value of a security, correct biases quickly, and fairly price the risk associated with it. Arab economies, for example, have a degree of co-hesion based on cultural and family business traditions that eluded the European and US his-tories of market formation. Reflecting those strengths is a project on which the DFM embarked only 12 years ago. The intermediate outcomes of the process, whether tending to the highly positive as in the years 2005 through 2008 or hesitant as in the recent past, are only a small part of the structural de-velopment of the Dubai capital markets, which are positioned on a dual bonanza of growing global economic reach and the GCC’s revenue streams from hydrocarbons. According to Nasser Saidi, the highly articu-late Chief Economist of the Dubai International Financial Centre (DIFC), the prospects for con-tinuously positive trade balances of Gulf econo-

mies create a long-term perspective by which regional capital markets will contribute more to financial performances of GCC countries than oil revenues. From early on, the UAE securities markets fulfilled important functions of widening the awareness of capital markets and opened new avenues for citizens to participate in their na-tional wealth. However, expectations of short-term profit did not serve investors, says Jeff Singer, the chief executive of NASDAQ Dubai. “Wise investors are looking to the future, rather than regretting losses they may have incurred in the past. I believe that the UAE equity mar-ket will be an important driver of individual wealth, as well as the nation’s economic activ-ity, in coming years,” he affirms. Equity and debt markets in the UAE can tap into hitherto unrealized growth potentials and utilize further new impulses from both regula-tory and market sides. While bonds and sukuk issued by corporations and sovereigns in the GCC find international demand, secondary markets for bonds in the region are under-de-fined and need to be developed, market partici-pants and officials have observed. A definite highlight in MENA capital markets is the DGCX, whose trading volume for the first six months in 2012 rose 172% year-on-year to 3.85 million contracts. Reporting strong annual growth rates since its establishment in 2005, the Dubai-based currency and commodities market is today reputed as the best currency exchange in the Middle East and recently won, in July 2012, an accolade of “Best Global Com-modities Exchange 2012” by an international financial publication. According to DGCX CEO Gary Anderson, the exchange, which debuted a copper futures contract in April 2012 as its latest innovation, plans to intensify investor education, introduce further products and enhance its global reach in the course of the year. “The DGCX has played a vital role in strengthening the UAE’s financial system by providing hedging tools and mecha-nisms that allow market players to transfer and manage risk within a well-regulated environ-ment. And I’m committed to ensuring that the DGCX’s role in the UAE’s economic growth continues,” he concluded. ●

The Dubai-based currency and commodities market is today reputed as the best currency exchange in the Middle East.

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ESSA KAZIM Managing Director & CEO, Dubai Financial Market

JEFF SINGERCEO, NASDAQ Dubai

Dubai’s financial markets are looking at new ways to improve liquidity and deepen the trading pool to bolster the bourse.

TBY talks to executives in local stock exchanges on the changes in the market and the instruments the exchanges can use to overcome economic challenges.

After some turbulent trading, are you hope-ful that there will be some more interest from companies in floating their shares?

ESSA KAZIM Naturally, the primary mar-ket is highly correlated to the secondary market, and as we all know the stock mar-kets have been going through unfavorable conditions due to the repercussions of the global economic crisis. Consequently, IPOs have been in a period of slowdown over the last three years. However, we have been engaged in continuous discussions with potential issuers, and we can see an enor-mous backlog that will flow into the mar-ket once conditions are more favorable and business owners realize the possibility to have attractive valuations. According to an independent survey commissioned by the DFM, the majority of respondents from pri-vate and family businesses were interested in going public over the next two to three years as they acknowledge the importance

Q&A: Local ExchangesFind the Pool

of tapping into capital markets to fund their expansion plans and sustain growth. Undoubtedly, taking a private company into the public arena is an essential step in the preparation to meet challenges by em-bracing international best practices in the company’s management, corporate gover-nance, and investor relations.

UAE shares are still depressed compared to the boom years that ended in 2008. Will prices return to those levels?

JEFF SINGER Prices reached unrealistically high levels in that period. Much of the for-eign money that flowed into the UAE was hoping to take advantage of a revaluation of the dirham against the dollar, which never took place. Many investors were also too optimistic about Dubai’s short-term economic prospects. The Emirate’s fun-damental strengths as a hub for business, finance and trade are not in doubt; unfor-tunately these investors confused the posi-tive long-term trend with a likelihood of quick profits being always available on the stock market. The environment in Dubai, as in the world as a whole, has changed. I don’t believe those high prices are coming back in the near future. I am pleased to say that most of the companies that NASDAQ Dubai is talking to about carrying out an IPO in future are fully aware of that. They are looking forward, not back, and they realize that going public with a realistic valuation is still a very attractive option for them, compared to other ways of raising capital.

What new instruments and platforms are be-ing developed to drive the evolution of Dubai’s stock exchange?

EK The DFM spares no effort and takes nu-merous initiatives to lay out the necessary framework for various market enhance-ments. As part of these efforts we have shifted to a delivery versus payment (DVP) model to embrace international best prac-tices and we have successfully consolidated with NASDAQ Dubai, creating a larger and unified liquidity pool and diversified as-set classes through the trading of NASDAQ Dubai securities on the DFM platform. Re-cently, this drive was reinforced through the trading of Dubai Gold Securities via our platform as well. As for developments in the near future, we are now in the process of introducing new market enhancements including short selling, securities borrow-ing and lending, and market making. We are confident that these widely recognized developments over the last two years have set the market on the right track for sus-tainable growth.

You have called for a radical revamp of the UAE’s capital markets to “create an underpin-ning for long-term growth.” What are your key recommendations?

JS The UAE should consider floating more of its government and quasi-government companies. It has excellent businesses that investors would love to buy. Flotation would raise money for the government, support the corporate governance prac-tices of the companies and therefore their performance, and enable investors to share in their success and diversify their UAE ex-posure. Such IPOs would show family and smaller companies that the government stands behind the capital market, which will encourage many of them to go public as well. The UAE would also benefit from a relaxation of restrictions on the foreign ownership of its listed companies. This would increase overall investment. Intro-ducing short selling, with stock lending and borrowing, would also be a step for-ward as it would enable investors to hedge risk and allow investors to stay in the mar-ket when the market falls. A central clear-ing house is also part of a mature frame-work that sophisticated investors would like to see. Best practice market regulation is also key. Investors like clear and sensible rules that are coherently enforced. ●

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Making the Most of ItFORUM: Capital Markets Development

Transparency is the name of the game in Dubai’s capital markets, with more sophisticated financial instruments being introduced over 2012.

GIAMBATTISTA ATZENICorporate Trust VP, Sr Relationship Manager MENA & Turkey, BNY Mellon & Founding Board Member Gulf Bond & Sukuk Association

SEIF FIKRYCEO, EFG-Hermes UAE

PETER GOTKEVice-President Depositary Receipts BNY Mellon & Founding Board Member Middle East Investors Relations Society

JAHANGIR AKASenior Executive Officer, SEI Investments Company

Overall, 2011 was a very inter-esting year. It started out very well but then came to a halt very quickly when the Arab Spring af-fected the whole MENA region. The combination of the Arab Spring and the international eco-nomic situation made it extremely difficult for players in the UAE to access international debt capital markets. The challenging times in the market resulted in six or so months of inactivity in the region. It wasn’t until the Abu Dhabi-based company IPIC decided to pursue some significant debt capital market transactions that other entities in the region decid-ed to follow suit. So far, 2012 has been an interesting year. The va-riety of financial instruments that have come onto the market this year has demonstrated that there is a large appetite for debt and sukuk instruments in the region. It is now clear that the Emirate plays a crucial role in debt capital markets simply because the vast majority of players that operate in the sector—not the debt issuers, but the banks, the lawyers, advi-sors, and traders—are all based in Dubai.

As a first step in pursuing our regional expansion plans, we chose the UAE on the basis of its status as a world-class regional hub with a robust regulatory structure offering an efficient and straightforward business environ-ment. Being a dedicated MENA investment bank, on-the-ground presence in key markets was a necessity, not an option, and we needed a regional platform with international standards that would enable us to attract global and regional talents and for that the UAE was our premier choice. Of course, having a robust finan-cial and logistical infrastructure and a favorable time zone, with among the most convenient and modern travel infrastructure in the region, allowed the UAE to be the trade and merchants hub for the region, and we were eager to be part of that.

Investors will pay a premium for companies that have good dis-closure in this region. And we know there is a problem when people globally do not trust the information. Over the last three to four years we have started to see a positive change in this region. However, many companies do not fully understand the benefits of transparency, and so there is a long way to go. Still, if we look at how far we have come in terms of transparency in the last three to four years, there really has been a shift. Another problem was that, back in 2008 with the financial crisis, most of the com-panies coming into the region were hedge funds. So as soon as the crisis hit, this fast money left, driving the market down further. The repercussion was that for the next two to three years compa-nies perceived foreign investors as more trouble than they were worth—not fully comprehend-ing that by taking control of the investor relations function they could attract longer-term value and growth-driven investors.

We officially set up our offices here in February 2008 after a history of running the business out of London. Our business model is to look after institutional money, sovereign wealth funds, endowments, and foundations. The significance, therefore, of Dubai, is the strength of domes-tic opportunity. The other part of the distribution business is looking after the wealth of indi-viduals, and Dubai offers the best opportunities in the region. Ap-proximately 90% of wealth and assets in the broader Middle East sit in the GCC. Within that space, there is a real focus around Saudi Arabia, the UAE, Kuwait, and Bahrain. Qatar and Oman are also significant, but from a regulatory perspective, this was the best choice. This is because of the Dubai Financial Services Authority (DFSA). It is a regula-tory framework that everyone is aware of, and it is very easy for us as a foreign organization to op-erate here. Our expansion plans are always just around working with our clients to grow assets and look after them.

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72 FINANCE

Premium MarketREVIEW: Insurance

u Nothing but growth is predicted for Dubai’s insurance market, as premiums skyrocketed over 2011.

The promise of the insurance market in the UAE, and in Dubai specifically, is growth for many years to come. In 2011, total insurance premiums written in the UAE expanded to $6.6 billion and premium growth stood at 10.5% after adjusting for inflation. As it occurred in a year when insurers in worldwide and emerging markets faced many new pressures, the rise in premiums highlights the country’s consistent growth potential for insurance and reaffirms its position as the largest insurance market in the region. When compared with its peers, the UAE rep-resents 45% of the $14.7 billion combined gross insurance premiums in the GCC, well ahead of large neighbor Saudi Arabia, which accounts for just under 34% of the total and in 2011 achieved inflation-adjusted premiums growth of 8.3%, according to the world insurance review com-piled each year by the Sigma research unit of global reinsurance group, Swiss Re. Being more than double of what they were in 2006, total premium volumes for both the GCC and the UAE in 2011 are doubly impressive when seen against the backdrop of the Gulf’s fairly re-cent arrival in the global insurance community after long reticence in deploying insurance as system of national socioeconomic safeguards. After seeing a first blossom of Arab insurance companies around the middle of the past cen-tury, some countries in the Levant and North Africa placed their faith in statist or quasi-so-cialist economic models and stifled insurance along with other parts of the financial system. Other countries in the region, benefiting from well functioning Islamic care and societal solidarity systems in conjunction with having small population sizes and growing national oil incomes, required insurance only for narrow tasks, such as joint venture projects undertaken in cooperation with energy multinationals. Until five or 10 years ago, it was not rare for policy makers and even members of the region-al insurance industry to be unable to offhand cite a consolidated premiums figure for either the GCC or the wider Middle East and North Africa region. Today, awareness of regional premiums performance is high, at least among insurance leaders and skilled practitioners, and

concerned policymakers are emphasizing the value of insurance. However, while insurance has grown at stunning nominal rates in some GCC markets (over 20% in some years before accounting for inflation), the regional industry still represents a force that is marching but not fully moving. The GCC’s combined share in the $4.56 trillion global premiums pie is smaller than Portugal’s 0.36%, and the GCC countries’ insurance pen-etration, or share of insurance in national GDP, has not seen as much growth as would be need-ed to bring the region up to par with emerging market averages. Globally, average insurance penetration rates in 2011 stood at 8.6% in advanced markets and at 2.7% in all other markets. According to Swiss Re, the UAE insurance penetration in 2011 actually dropped by 0.3% points to 1.8%, the second highest in the GCC. The Gulf’s lag vis-à-vis insurance penetra-tion averages in advanced and emerging markets is much larger in the life business than in non-life insurance. Bahrain and the UAE rank above the emerging markets average when it comes to non-life insurance. But life insurance con-tributions in GCC countries, at most, equate ››

The top three local insurance firms account for 21% of the market. There are almost 60 insurance companies operating in the UAE.

Source: Alpen Capital

UAE Insurance Market Share percentage of market held by top three insurers, 2010

TOP THREE INSURANCE FIRMS 21%ABU DHABI NATIONAL INSURANCE CO. ARAB ORIENT INSURANCE CO.OMAN INSURANCE CO.OTHER INSURANCE FIRMS 79%54 FIRMS

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Arabian Scandinavian Insurance Company PLC

ASCANA is geared to accept all general classes of insurance at competitive rates and tailor made to suit the ever expanding requirements of the sophisticated market throughout the U.A.E.

Motor Insurance

Engineering Coverage

Property Coverage

Shop, Home & Office Insurance

Medical & Group Life Insurance

Bank’s Protection

Marine Insurance

General Accident

P. O. BOX 1993 - Dubai - United Arab Emi Rates TEL + 9714 282 4403/282 5585 FAX + 9714 2825586.ascana@emirates.net.ae www.ascana.net

to about one-quarter of non-life contributions, and to much less in Saudi Arabia and Qatar. Among factors besides low acceptance of life insurance that have played a role in keeping in-surance penetration rates in the UAE and GCC stymied, one has to name the rapid expansion of nominal GDP values in the past decade and the large contribution of hydrocarbon exports in this GDP growth. As the Gulf’s overall economic expansion has kept outpacing insurance growth that came from a small base, the widening of the insurance base in the UAE depends on drivers of premiums growth that can penetrate society on a broad scale. As developments in Saudi Arabia and Abu Dhabi have shown, the strongest growth spurts in premiums across all Arab markets have been wholly linked to the introduction of mandatory insurance schemes in two high-volume lines: motor and medical. Dubai, which has postponed the introduc-tion of mandatory health insurance a few times since 2009 because of the economic crisis and concerns over the impact on businesses, will provide the next great boost to insurance de-mand in the GCC when the scheme is imple-mented in 2013, as expected.

TAKAFUL TIMEAnother much-discussed growth factor for insurance demand is takaful, or Islamic insur-ance. Integrating principles of mutuality in protection against the impacts of adverse events and professional financial management in shar-ing of profit and loss, takaful has many positive applications that wait to be explored. According to the 2012 World Takaful Report

by consultancy Ernst & Young, the sharia-compliant general and family takaful contribu-tions in the UAE stood at $818 million in 2010. Aggressive competition and challenges on the ability to generate returns are issues confront-ing the budding takaful industry, which is nonetheless coming into its own as regulatory, ratings, and political conditions in a growing number of Islamic markets begin to work in its favor. Weaknesses that affect all Arab insurance markets and that are gradually being addressed in relation to both Islamic and conventional in-surance entail needs for more reliable and more detailed market data, for better collaboration among regulators and supervisory bodies, and for more human capital. In parallel to expanding the capacities for academic and practical insurance training and

Pays to Be Portable TBY talks to Michel Khalaf, President of Europe, Middle East & Africa for MetLife, on the company’s product offering and adaptation to the local insurance market.

Are you developing any new insurance products for the local market?We are constantly reviewing our product offerings, and we are also in touch with the market to determine the emerging needs and areas that require additional focus. To give you an example, early in 2011 we launched a whole series of new products focused on education because we feel that is an area that, obviously, everyone cares about in terms of their children’s future and education, so there is a need to make sure that there are products out there that fulfill this particular need. People want portability. If they leave, they want to be able to continue to enjoy these products, and to make sure that the products provide them with the benefit that they were intended to provide.

How has the insurance industry transformed locally over the past decade?New products have appeared that were not present on the market a decade ago or even a few years ago. I think the most important and significant change is that the channels that offer insurance products have also evolved significantly. Banks were not major distributors of insurance products in this part of the world 10 years ago, but that is a trend that followed Western Europe and other markets. Now banks are very important distributors of insurance products. Also a few years ago a channel like direct marketing was not really existent in this market. Now this channel is growing at a fast rate. These complement some of the more traditional channels such as agency, face-to-face, direct and broker distributions, which continue to be very important and significant.

The strongest growth spurts in premiums across all Arab markets have been wholly linked to the introduction of mandatory insurance schemes.

1

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74 FINANCE

Arabian Scandinavian Insurance Company PLC

ASCANA is geared to accept all general classes of insurance at competitive rates and tailor made to suit the ever expanding requirements of the sophisticated market throughout the U.A.E.

Motor Insurance

Engineering Coverage

Property Coverage

Shop, Home & Office Insurance

Medical & Group Life Insurance

Bank’s Protection

Marine Insurance

General Accident

P. O. BOX 1993 - Dubai - United Arab Emi Rates TEL + 9714 282 4403/282 5585 FAX + 9714 2825586.ascana@emirates.net.ae www.ascana.net

making careers in insurance more attractive to GCC citizens, education of the markets and awareness building among potential insurance buyers is just as pressing a need, for insurance leaders such as AXA. Another point of note is that the insurance industry in the Middle East and North Africa region is still, after many years, searching for its natural hub. While Lebanon has long served as the region’s undisputed main source of tal-ent in the insurance industry, the country’s market is falling more and more behind the size and growth dimensions of the GCC economies. Egypt, the region’s most populous market with huge development hopes, is the seat of the Gen-eral Arab Insurance Federation secretariat, but Cairo has many issues to work out before it can aspire realistically to serve the regional indus-try as a hub. Bahrain and Qatar have each put their hats in the ring as contenders for a role in regional insurance, but, so far, no regional hub solution has compellingly presented itself from there. Dubai has the strength of the DIFC and the benefits of a city that never stops dream-ing of greater things. This bears well for the insurance players who base themselves there. A diverse range of international and Dubai-based insurers and intermediary or services specialists testify to TBY how the business in-frastructure and social attractiveness of Dubai have drawn Chartis, Now Health, and Metlife Source: Alpen Capital

Source: Swiss Re, Alpen Capital

GCC Non-life Premiumspercentage by country, 2010

Constituents of Non-life Insurance (UAE)percentage by sector, 2009

15% Marine & Aviation

50% Property & Misc Accidents

35% Motor

UAE 47%SAUDI ARABIA 32%BAHRAIN 4%KUWAIT 4%OMAN 5%QATAR 5%

1 The life side of the insurance market remains a major growth opportunity

to anchor their Middle East operations in Dubai. Local companies like Arab Orient and Dubai Insurance aspire to ever-greater regional roles and Salama, the world’s largest takaful and re-takaful provider, is incorporated in Dubai. Although financial investors have fewer op-portunities to explore in nationally fragmented MENA insurance sectors than in the most populous emerging economies, strategic in-vestors and international providers value Arab insurance beyond its current size. According to global reinsurance operators such as Swiss Re and Munich Re, the path of insurance growth is clearly marked by the shift from developed economies into emerging markets. This path leads through the Middle East. Adding in moderate profiles for catastrophe risks and historically small natural disaster exposures in the GCC means that the growth potentials and risk diversification opportunities of Arab insurance markets provide more than enough reasons for international and regional risk specialists to base themselves in Dubai. As the clustering of providers inescapably enhanc-es the quality of the industry’s products and of-ferings in the local market, it also makes more and more sense that the industry has bright days ahead. ●

FINANCE 75

FORUM: InsuranceKeep It SafeInsurance companies recognize the competitiveness of the finance sector and are eager to rise to the challenge of serving the Gulf’s largest market.

M. RAJENDRANCountry Manager UAE, AXA Insurance Gulf

ABDELLATIF ABUQURAHCEO, Dubai Insurance

CHRISTOS ADAMANTIADISManaging Director of Middle East & North Africa, Chartis

In terms of insurance, Dubai has possibly the most potential within the Gulf. If you compare Dubai as an emirate against other cities in Saudi Arabia that are quite large, like Kho-bar, Riyadh, and Jeddah, I would say Dubai has the largest mix of companies. The UAE is the most advanced in terms of the popu-lation and insurance uptake. Dubai is there-fore a very competitive market. There are close to 60 companies operating here, and 160 registered brokers in the small market. New large players are coming to the market, such as the likes of Zurich, which is going to have an impact in terms of the competition in 2012. The biggest potential lies in health care. In Abu Dhabi, healthcare coverage is compulsory. In Dubai and other Emirates, it is non-compulsory, but it is going to become compulsory in the next couple of years. It may happen this year or the next, but it is bound to happen. And most companies have started to move toward offering healthcare benefits to their employees as the norm. There is also potential in terms of marine insurance, and AXA is primarily very strong in the area within the Middle East. The motor market has always been very competitive, but again there is growth potential depending on the costs, and there has been much improvement in 2011 compared to 2010.

Our focus when we started in terms of medi-cal and life insurance was on the local com-munity. However, expatriates comprise a big percentage of the population here in the UAE, and you cannot ignore that this is mainly an expatriate market. If an expatriate is in Dubai this year, he/she might be in Qatar the next year, or in the UK the next. We wanted to be able to offer a policy that they could take any-where in the world, with the same coverage. This was why we entered into a partnership with William Russell, and at the same time, we wanted it to be tied to the rebranding exercise that we did. We therefore told the market that we were rebranding, enhancing the image, as well as catering to certain classes of business that we would not otherwise be able to ser-vice without the partnerships. We have very specialized products that we are offering to the banking sector now. We have structured a product that is designed to help banks offer loans and financing in an easier and cheaper way. This is a very well-established and ma-ture product in Europe, but in the GCC I think we are the first company to offer this sort of product.

We are predominantly in corporate insurance, but increasingly we’re looking at the con-sumer space as well, including homeowners, personal accidents, and lifestyle products. We have large plans for all three. We are the leader in financial lines and directors in office insurance, for example. However, we are con-tinuing our efforts in educating the markets. We spend time developing the market by holding seminars and publicizing novel insur-ance products. Chartis is a pioneer in terms of distribution innovations. The company aims to continue strengthening its relation-ships with brokers in the market. There is no doubt that brokers play a very important role. We have conducted a variety of research and market reviews, and the company has identi-fied pockets of customer bases that are inter-ested in online shopping. This is something we are looking to develop through our call center. As a retail-oriented country, there may be an opportunity to position insurance as a retail product. This is another type of distri-bution innovation. On the sales side of prod-ucts, we see a need for a customer-oriented product. The incumbents have not refined the product to fit different income groups and national groups. We’re looking to brand insurance offerings both insurance wise and product wise in a way that fits specific seg-ments. There’s another huge opportunity in terms of customer experience, which is largely underdeveloped.

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76 FINANCE

CHRISTIAN GREGOROWICZCEO, NEXtCARE Group

DAVID T. YOUSSEFManaging Director , Middle East, Now Health International

OMER HASSAN ELAMINSenior Managing Director, Orient Insurance

The insurance market is consolidated at the country level—and the UAE is the largest in-surance market in the region in close competi-tion with Saudi Arabia, which had tremendous growth in the last few years. Dubai is in the top range of insurance penetration per capita when we compare it to other countries in the region. The market has evolved immensely over the last decade. In the late 1990s most health treatment was funded by the public sector. Governments became more and more aware of increasing health costs and inflation, and sought to shift the funding of healthcare to the private sector. Many governments in the region made the decision during the mid-2000s, and introduced mandatory health insurance. Coupled with this move, employ-ers wanted to offer more and more benefits to their staff and many companies are now providing medical insurance. We have seen double-digit to triple-digit growth in the past three or four years, and now about 80% of the population is insured. We don’t consider the market totally saturated yet; there is still room for new products and ideas. There is definitely new business coming in as the new numbers of people arriving to this country are still very high. We are currently managing 4 million claims annually amounting to $550 million.

The market is very competitive. There are about 63 insurance companies and 175 insurance brokers. Owing to these circum-stances, the market is facing a culture of intense competition. In addition to the large number of companies, six huge businesses control roughly 60% of the market. We offer a variety of niche products. A very successful product that we have launched is guaranteed auto protection, or GAP insurance. It is a product that pays the difference between the original purchase price of your vehicle and its depreciated value. If a customer purchases a car today, uses it for two years, but totals the car before the end of the second year, our policy will cover the difference between the damages paid and the original value of the car. Clients find themselves back to their original financial position from before they purchased the car. This enables our custom-ers to purchase a new car without suffering financially. Health care is one of the fastest-growing sectors for insurance companies. However, this means that the sector has also become a battleground for the insurance in-dustry. Companies are constantly fighting for a larger share, and one of the problems in the market is that healthcare providers and hos-pitals are increasing their prices.

Dubai was built as a regional hub rather than a local economy. Our place of work is Dubai, where we enjoy a nice lifestyle in a fairly open society, with the proper infrastructure and political stability. Companies are based here, but many conduct business outside of the Emirate. For example, this is the regional of-fice for the Middle East and Africa, and Dubai is just one of the markets in which we oper-ate. Some of our primary markets abroad are Qatar, Bahrain, Kuwait, Kenya, and Tanzania. We’re also moving into South Africa, Uganda, Zimbabwe, and North Africa in the future. Looking at the neighborhood, other options could include Lebanon and Saudi Arabia, but these countries have drawbacks, such as occasional political strife, size, and lack of dedicated resources. From an expatriate perspective, and as an international inves-tor, Dubai is more comfortable. It is crucial to attract the best people who can manage businesses successfully, and if we can’t at-tract high-caliber staff, it will be difficult to pro-tect our investments. Dubai attracts people, especially when comparing it to the rest of the neighborhood and region. Currently, the UAE is home to the largest insurance market in the Middle East. We’re projected to close at about $6 billion in 2012 for some 5 mil-lion people. The market is even larger than in Saudi Arabia, where forecasts predict $4 bil-lion of premiums for a population of 25 million.

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INTERVIEW

1 Ahmad Al Kazim, Managing Director of ASCANA

BIOGRAPHYAhmad Al Kazim graduated in 1989 with a Bachelor’s degree in Business Management from American College in London. He joined Arabian Scandinavian Insurance Company PLC in 1991, starting off as a Marketing Manager, before becoming the Managing Director and Acting General Manager in 1995. In 2000 he was confirmed as General Manager of the firm, and took over the role of CEO in 2010. As of April 2012, Al Kazim is the CEO and Vice-Chairman of ASCANA.

A Watchful EyeTBY talks to Ahmad Al Kazim, Managing Director of ASCANA, on operations in Dubai, development strategies, and new trends.

Ahmad Al Kazim

TBY Tell us a little bit about the history to ASCANA’s operations and the decision to es-tablish a Scandinavian-Arabic joint insurance initiative?AHMAD AL KAZIM The decision to establish a Scandinavian-Arabian initiative in the financial sector was to support the broad-based initiatives introduced by the govern-ment of Dubai and the federal government. An insurance company protects its clients from fortuitous and unexpected contin-gencies and accidents over which they have no control and thereby leave them to focus on their core business and partici-pate in nation building as good corporate citizens.

What are the benefits of operating from Dubai?There are immense benefits of operating from Dubai. It is the foremost strategic commercial hub dealing in all commer-cial economic social and sports and leisure activities in the region. The vast growth achieved by Dubai during the past 10 years is a realistic yardstick for economic di-versification. As an insurance company, we also support our clients by protecting

their assets and covering their liability exposures even when they set up business establishments outside the UAE.

How has the company performed over the past years and what is your development strategy?As a composite insurer created under a government decree with a paid up capi-tal of AED140 million, we have achieved an impressive record of performance and have established a reputation of integrity, efficiency, and reliable service to our cli-ents. As far as our development strategy is concerned, it is somewhat clouded with uncertainty due to sluggish growth con-cerning premium income and subdued in-vestment returns coupled with deteriorat-ing underwriting results. Notwithstanding the reduced growth momentum caused by the global recession, it is our endeavor to forge ahead with innovative insurance products, especially in medical and life cover. As the world is struggling hard to come out of the recession and kick-start economic growth, we are striving hard to support construction sector projects through our various engineering insurance coverage products.

How big is Dubai’s insurance market in rela-tion to other economy sectors and how do per capita premium levels compare to the sur-rounding regions? The UAE is one of the most robust markets in terms of insurance penetration. Total premiums written by the insurance in-dustry in the UAE are about AED25 billion, which is the highest amongst countries in the GCC region.

What new and customized products have you introduced recently?We have recently introduced online servic-es to our varied clients on a selective basis, and we hope to expand these services to embrace our full insurance portfolios.

As a result of globalization, deregulation, and international security threats, the insurance in-dustry has gone through a tremendous trans-formation over the past decade. What key ef-fects from these factors has Dubai Insurance witnessed over the past decade and how do these apply in particular to Dubai?The insurance industry is not immune from the impacts of globalization. The recent events associated with the Arab Spring have resulted in increasing demand for terrorism and political violence insur-

ance. We are also witnessing increasing demand from our clients in the shipping industry for kidnapping and ransom cov-erage for crews and vessels following in-stances of piracy in the Gulf of Aden and Somali coast.

What has been the impact of regulatory changes on the Dubai insurance sector? While the insurance authority has been trying to bring in more regulations to the insurance industry, we are keen that it introduces them more in line with inter-national standards so as to ensure the sol-vency of the risk carriers operating in the market and protect the public from indis-creet insurance professionals.

How did the global financial liquidity crisis af-fect the insurance sector in Dubai?The global financial liquidity crisis ad-versely affected the entire global eco-nomic activities in general, and Dubai in particular, in a significant way. Insurance premiums were drastically reduced due to the impact. Real growth in premiums came down. The interest rates became low, in-surers assets values diminished, and their liabilities increased. There are also con-cerns about the increasing quantity of re-ceivables appearing on the asset side of the insurers’ balance sheets. ●

1

The UAE is one of the most robust markets in terms of insurance penetration.

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ENERGY

REVIEW

INSIDE 79 Flip the Switch - REVIEW | 80 Adnan H. Ghabris, CEO & Managing Director of NPS Energy - INTERVIEW | 82 Saeed Abdullah Khoory, CEO of the Emirates National Oil Company (ENOC) - INTERVIEW | 84 Ahmad M. Bin Shafar, CEO of Empower - INTERVIEW | 85 Khamis Juma Buamim, Chairman of Drydocks World & Maritime World - INTERVIEW | 86 Going Green - FOCUS: Dubai Green Economy Partnership | 87 Adnan Sharafi, Chairman of the Emirates Green Building Council (EGBC) - INTERVIEW | 88 Ivano Iannelli, CEO of the Dubai Carbon Centre of Excellence - INTERVIEW | 89 Nasser H. Saidi, Chairman of the Clean Energy Business Council - INTERVIEW | 90 Lord Marland of Odstock, Chairman of UK Trade & Investment’s Business Ambassadors’ Group & Minister of the Department of Energy & Climate Change of the UK - INTERVIEW | 91 It’s Easy Being Green - FORUM: Green Technology | 92 Nabil A. Habayeb, President & CEO of the Middle East & North Africa for General Electric - INTERVIEW

The Emirates National Oil Company (ENOC) is based in Dubai, where it engages in activity related to crude oil production, LPG processing, and other petroleum products and services.

u As fuel prices rise and energy demand grows in Dubai, the Emirate is striving to improve its energy efficiency and diversify its fuel supply. By 2030, Dubai hopes to be one of the cleanest, leanest energy consumers in the region.

Flip the Switch

Although the UAE as a whole contains the world’s fifth largest proven oil reserves, some 97.8 billion barrels of crude, Dubai’s oil reserves are meager and mostly offshore. Until a new oil field, Al Jalila, was discovered in 2010, the Emirate had four operational fields: the older, more productive Fateh and Southwest Fateh oil fields and the smaller Falah and Rashid fields. The fields’ main operator is the Dubai Petroleum Establishment (DPE). Approximately 100,000 barrels of crude per day (bbl/d) of oil is cur-rently produced in Dubai, which has reserves of around 4 billion barrels. Since the early 1990s, when production peaked at around 400,000 bbl/d, these reserves have been dwindling. By 2030, they are expected to be completely used up. At 113.3 billion cubic meters (bcm), Dubai’s natural gas reserves constitute just 2% of the UAE’s total resources. The onshore Margham gas and condensate field is the Emirate’s larg-est, and began operations in 1984. Margham currently provides Dubai with nearly 4 million cubic meters per day (mcm/d), while offshore fields contribute an additional 2.8 mcm/d. The field is connected to Margham Plant, where raw gas is processed to produce retail condensate. Some of the leftover dry gas is transported to Jebel Ali Port, a major hub for the hydrocarbon trade. The natural gas from offshore oil fields is processed by the state-owned Dubai Natural Gas Company (DUGAS). Energy consumption across the UAE is ris-ing steeply, with the current 470,00 bbl/d of ››

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Fully Committed TBY talks to Adnan H. Ghabris, CEO & Managing Director of NPS Energy, on its impeccable safety record, the adoption of new technology, and key developments.

NPS Energy has a “zero time lost due to injury” record. How do you maintain these high standards?The working environment in the oil and gas industry is recognized as one of the most dangerous in the world, and as such it is imperative to protect our people, assets, and the environment first before profit. This can only be done through the continuous training of our workforce and by ensuring that our management is fully committed to maintaining the highest possible standards.

What is the company’s strategy in adopting new technology?In terms of major equipment and tools, we have formed partnerships with a number of leading manufacturers in China and the Far East, again where products were designed with the assistance of NPS engineers, and now widely used across the region. In some cases our budding R&D engineers have taken off-the-shelf components and utilized those in a unique way to address a client specific issue. With success, this development has then been widely marketed as a new technical solution.

What do you foresee as being among the key developments in the coming years?We are fairly selective when we enter new territories. This is simply due to the shortage of resources and the complexity of certain markets. Having said that, apart from the obvious expansion in Iraq, both India and Malaysia are attractive target markets for NPS Energy’s growth in the near future. We have already made some forays into these countries, but we are still at an early stage.

petrol consumed expected to increase by 27.5% by 2020. Since 2007, the UAE has been consum-ing more natural gas than it produces, with a shortfall of 10.5 bcm in 2009. Dubai is certainly contributing to this, because natural gas is the feedstock for approximately 95% of the Emir-ate’s generated electricity. Of the 11 power plants that currently supply Dubai with its 8,721 MW of installed electrical generating ca-pacity, eight are part of the Jebel Ali Power and Desalination Station. The other three comprise the Aweer Power Station, which began opera-tions in early 2012. Some 76% of the electricity generated at both stations is from gas turbines, while the remainder uses steam turbines. Electricity demand in Dubai rose 9.6% between the summers of 2009 and 2010. Per capita electricity usage in Dubai is currently 20,000 kWh per year, and 130 gallons of wa-ter per day. There is no shortfall in electricity supply or demand at the moment; in 2011, the Emirate enjoyed a healthy reserve margin of 2,515 MW. Through 2012 and 2013, however, the research firm RNCOS expects electricity demand in the UAE to rise by a compounded annual rate of 10%. To accommodate this rising demand, Dubai intends to increase its installed generating capacity to 10,000 MW in 2012 from

8,721 MW at the end of 2011. Dubai’s desalina-tion capacity is also keeping ahead of steeply rising demand. Installed desalination capacity in 2011 was 400 million imperial gallons per day (MIGD), compared to 276 MIGD of demand.

SHORING UP SUPPLYThe natural gas with which Dubai powers its grid mainly comes from Abu Dhabi and more gas-rich countries in the region. In 2008, Dubai signed a 15-year liquefied natural gas (LNG) contract with Qatar and its partner Shell for 4.1 bcm of gas each year. The first shipments began arriving in 2010. Known as the Dolphin pipeline, this project links Qatar’s natural gas reserves to Abu Dhabi, Dubai, and Fujairah, from where it extends to Oman. It was the first transnational pipeline in the Gulf region. Dubai has been receiving 12.2 mcm/d of gas through a pipeline from Sharjah since 1992. A third pipeline from Abu Dhabi delivers natural gas to Dubai’s mature oil fields for injection, thus increasing recovery rates in the fields. The Dubai Supply Authority (DUSUP) is the body responsible for procuring, transmitting, stor-ing, and delivering natural gas within Dubai. The pipeline network constructed and operated by DUSUP has a total length of 460 kilometers,

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and range from 48” high-pressure gas pipelines to 10” condensate lines. DUSUP’s end customers include DPE, DUGAS, the Dubai Electricity and Water Au-thority (DEWA), the Dubai Aluminum Com-pany (DUBAL), and the Emirates National Oil Company (ENOC). As part of its effort to shore up enough natural gas to expand Dubai’s in-stalled electrical generating capacity, DUSUP began importing LNG through a floating stor-age regasification unit (FSRU) in Jebel Ali Port in 2010. The port, which mainly handles refined petroleum product trading, can accommodate tankers of up to 80,000 tons in capacity. Although Dubai’s own oil and gas reserves are minor, the Emirate hosts several ma-jor international oil services firms. In 2007, Halliburton opened its regional headquarters in Dubai. In 2008, another enterprise opened headquarters in the Emirate: a joint venture between the British-UAE energy services com-pany Petrofac and Mubadala Development, the Abu Dhabi state-owned industrial conglomer-ate. Shell’s Dubai-based branch, Shell Gas & Power, also provides an array of exploration and production services to companies operating in the region, and offers high-tech digital field ca-pabilities, such as enhanced oil recovery (EOR).

DOMESTIC DEVELOPMENTSThe state-owned refiner and fuel marketer ENOC currently runs Dubai’s only refining fa-cility at Jebel Ali. ENOC announced in mid-2012 that it was planning to increase the facility’s capacity from 120,000 bbl/d to 140,000 bbl/d by the end of the year. ENOC also signed a 10-year financing contract of $100 million for the construction of a 60-kilometer jet fuel pipeline from the bulk liquid petroleum terminal in the Jebel Ali Free Zone (Jafza) to Dubai International Airport. One existing pipeline already links to the airport, but the second pipeline has been planned in anticipation of increased jet require-ments, and will be commissioned in late 2013.ENOC is also busy on the domestic fuel retail-ing side of its business. Heavy state subsidies on fuel force ENOC and its UAE-owned retail sector competitor Emarat to sell petroleum at a feder-ally capped price of $0.89 per liter for the low-est fuel grade. In 2011, ENOC’s losses amounted to approximately $1.5 billion due to the com-bination of higher international fuel prices and the UAE-imposed domestic subsidies. The company expects losses whenever global crude oil prices exceed $45 per barrel, according to ENOC Chief Executive Saeed Khoory, which it did for most of 2011.

CLEANING UP THE SCENERenewable energies currently contribute little to Dubai’s energy mix, although the Emirate has plenty of potential, especially in solar. By 2030, Dubai’s Supreme Energy Council ex-pects natural gas to contribute just 71% to the Emirate’s energy mix, while solar power will

account for 5%. The region’s first solar energy park will soon be constructed in Dubai, accord-ing to a government announcement in 2012. Dubai has also been involved in negotiations with Abu Dhabi about developing nuclear pow-er, although nothing definite had been planned as of mid-2012. Energy conservation is another focus of the Supreme Energy Council. Wrong usage wastes up to half of Dubai’s electricity each year. The Emirate needs more techniques that promote efficient energy usage, such as the district cooling services of Empower, a joint venture between DEWA and TECOM Investments that has a current capacity of 370,000 refrigeration tons spread over 17 projects at residential and business centers in Dubai. Technologies such as consumption-measuring submeters for each apartment unit in a building can also promote energy savings, according to Empower CEO Ahmad E. Bin Shafar, who says Empower has one of the largest such meter installations at the Jumeirah Beach Residence project. ●

1 The UAE’s demand for petrol is expected to increase by 27.5% by 2020

Although Dubai’s own oil and gas reserves are minor, the Emirate hosts several major international oil services firms.

Source: DEWA

Electricity Consumption by sector, 2011

COMMERCIAL 46.81%RESIDENTIAL 27.78%POWER STATION & DESALINATION AUXILIARY 8.58%INDUSTRIAL 7.53%OTHER 9.30%

Electricity supply & demand Installed Capacity (MW)Peak Demand (MW)

Desalinated Watersupply & demand Installed Capacity (MIGD)Peak Demand (MIGD)

10,0009,0008,0007,0006,0005,0004,0003,0002,0001,000

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INTERVIEWSaeed Abdullah Khoory

BIOGRAPHYSaeed Abdullah Khoory is the Chairman of the Board of various joint ventures and subsidiaries within the ENOC group. He is an active member of the Supreme Council of Energy, a regulatory body that overlooks the development of the power and energy needs of Dubai. A graduate in Petroleum Engineering from the University of Tulsa, Saeed Abdullah Khoory started his career with the Abu Dhabi National Oil Company (ADNOC). He is currently CEO of the Emirates National Oil Company (ENOC).

A Greener LifestyleTBY talks to Saeed Abdullah Khoory, CEO of the Emirates National Oil Company (ENOC), on its focus to secure upstream assets and reduce dependence on gas imports.

TBY ENOC has noted the need for a driven strategy to increase its resilience in the face of an increasingly changing and competitive market. How is this strategy being put into practice?SAEED ABDULLAH KHOORY The energy market is changing. The complexity of do-ing business has increased, especially after the global financial crisis. The government of Dubai has set up the Supreme Council of Energy to focus on the future energy se-curity of Dubai. Growth cannot be driven without securing energy supplies. In the past, because there were different energy organizations in Dubai, there was no prop-er coordination. The Council has brought all the entities that are working in the energy sector under one umbrella to un-dertake long-term planning and develop strategies to meet the Emirate’s require-ments. Hence, the 2030 Dubai Integrated Energy Strategy has been adopted.

What is the next step in developing a strategy?From ENOC’s perspective, we are look-ing at being more focused on securing upstream assets. We have created a dedi-cated team to evaluate asset opportunities. Of course, the market has been changing rapidly, and we are closely monitoring the

situation. Historically, most of our focus was on Dubai and the Northern Emirates, but with the overall market conditions, and the rapid growth in the UAE, in Dubai in particular, we have also started focusing on driving international growth and find-ing opportunities to build on the experi-ence we have gathered in the past. Interna-tionally, there are a lot more opportunities to grow, and we are working on these too. Our operations are set to spread across East Asia, the Middle East, and Africa. In building upstream opportunities, we are also looking for growth opportunities. In the past we have not been involved in gas activities, and we are strongly considering gas trading and supply. This could become an integral part of our business. We are also evaluating other potential opportunities in the UAE, and in Dubai. This is only part of our strategic growth vision.

The Supreme Council of Energy has declared its commitment to reducing Dubai’s depen-dence on gas imports from elsewhere in the Gulf. What can be done to achieve this goal?Identifying alternate energy sources, fo-cusing on renewables, and promoting a culture of energy efficiency across all stakeholders are the keys to reducing the

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1 Saeed Abdullah Khoory, CEO of the Emirates National Oil Company (ENOC)2 ENOC is preparing to support government initiatives by offering customers more environmentally friendly lifestyle products

dependence on gas imports. ENOC has already developed concerted initiatives to promote the use of compressed natural gas (CNG) as a fuel alternative, and the re-sponse has been extremely encouraging. What is crucial is to roll out sustained cus-tomer and user awareness initiatives, and ENOC is supporting this through various corporate social responsibility programs. We established a long-term strategy to achieve this. The Gulf is rich in gas sup-plies, but today the supply of gas through Dubai comes from Abu Dhabi and the Dol-phin pipeline. It is the only source today, and there is scope for expansion. Already, Dubai has established its first LNG facili-ties, which could address gas shortage and the Supreme Council of Energy is planning to diversify energy sources to find a good balance.

What potential do you see for the develop-ment of the clean energy sector, and in what ways do you support its evolution?Promoting sustainable development is an initiative of Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, and is an integral part of our strategy. Apart from price volatilities, we have seen two key changes that are relevant not only for the region but also globally. The first is the increasing importance that the re-gion’s governments are placing on sustain-able development. The second is the grow-ing awareness among customers to adopt energy-efficient measures. ENOC is sup-porting the government’s Green Vision as well as addressing customer requirements for a “greener” lifestyle through various initiatives. To promote the use of com-pressed natural gas, Emirates Gas, a sub-sidiary of ENOC, has been working closely with the Roads & Transport Authority (RTA) to introduce CNG to public transport to enhance environmental protection. A unique model of pipeless natural gas fuel stations has been proposed in Dubai as part of plans to implement cost-effective and environmentally friendly natural gas transportation. At a macro level, recently the Sheikh Mohammed Solar Energy Park was an-nounced, which will be the first of its kind in the region. Solar power is used heavily in the Gulf, but only by smaller communi-ties and is not very effective as of now. By 2030 we are hoping that the energy mix will contain at least 5% generated through solar panels. The vision behind this initia-tive is to utilize and develop the energy matrix. It is, however, very important to encourage the development of a regulatory system to handle it. Solar power has its own challenges,

but today I think it is the most viable op-tion. Part of our strategy is nuclear power. Today, Abu Dhabi is developing nuclear power and Dubai is a part of that vision. We have been negotiating to see how we can utilize this form of power. ENOC will continue to partner in environmentally re-sponsible initiatives and promote a culture of sustainability, which is important in ad-dressing the growing energy demand faced by the region, as well as mitigate the effects of climate change.

The UAE’s proximity to emerging Asian mar-kets presents numerous opportunities. What do you foresee as being the key developments over the coming years?I believe that a large part of the demand for petroleum products will be led by the Asian economies, and the proximity of the Middle East to the fast-growing emerging markets in Asia serves as a tremendous opportunity for the region’s oil and gas companies. The increased ties between the Middle East and the growing Asian nations will drive the oil trade, which will offset any demand reduction from the devel-oped nations that are witnessing sluggish economic activity. Demand for petroleum products is expected to rise to 90.7 million barrels per day—an all-time high. A large part of this strong demand will be driven by the non-Organization of Economic Co-operation and Development (OECD) coun-tries, with Asian economies taking the lead followed by the Middle East. Dubai’s core sectors—trade, tourism, and transport—have supported the city’s overall economic growth. The aviation sector has in particu-lar been a driving force and we anticipate it to remain one of the strongest growth pil-lars of Dubai’s economy.

ENOC’s subsidiary EPPCO supplies lubricant products to many countries. What develop-ments can we expect from this sector in the coming years?ENOC Lubricants is already expanding its market presence in the Middle East region, the Indian Subcontinent, and African mar-kets. In the coming years, we expect the company to further strengthen its market reach, and offer the full spectrum of prod-ucts, especially with a focus on improved fuel mileage, increased cooling efficiency, excellent engine protection, and environ-mental friendliness. This was highlighted recently with the launch of a top-tier synthetic oil, the Protec Flex Energy SN, a first of its kind in the Middle East and Africa. The new product has the highest certification in the region. It also meets the requirements of all types of vehicles—from hybrid vehicles to model vehicles from the US, Japan, South Korea, and Europe. ●

Today, Abu Dhabi is developing nuclear power and Dubai is a part of that vision.

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INTERVIEW

BIOGRAPHYAhmad M. Bin Shafar has a Bachelor’s degree in Business Administration from California State University in Los Angeles. He is currently CEO and a founding member of Emirates Central Cooling Systems Corporation (Empower), a position he has held since the company’s inception in February 2004. He has over 16 years of experience in senior management positions, including eight years with Standard Chartered in the areas of Corporate and Retail Banking, Finance, Marketing, and Customer Relations. He is also the Chairman of the Board of Directors of Empower Logstor Insulated Pipe Systems (ELIPS), a strategic joint venture between Empower and Logstor, a world leader in pre-insulated pipe systems.

1 Ahmad M. Bin Shafar, CEO of Empower

Cool RunningTBY talks to Ahmad M. Bin Shafar, CEO of Empower, on the opportunities for investing in district cooling as a utility service, and his company’s push to support green building technology and maintenance.

Ahmad M. Bin Shafar

TBY Where does the UAE sit within predictions that energy demand may increase by 12% an-nually in the region?AHMAD M. BIN SHAFAR The UAE provides financial and political stability and is a hub for trade, tourism, logistics, and financial services. People prefer to base operations here to better serve the wider region and North Africa. There are other benefits such as no taxation, good connectivity, and security that make this place a preferred choice to live and to do business. It is the growth in business that will drive this growth in energy demand, and I believe the UAE is well placed to achieve the pro-jected increase in energy demand in the region.

What is your cooling ton capacity?We currently have a total capacity of 370,000 refrigeration tons (RT) spread over various prestigious projects in Dubai. To name a few examples, we provide cool-ing for Jumeirah Beach Residence (JBR), the Dubai International Financial Centre (DIFC), Dubai Healthcare City (DHCC),

Business Bay, and the Dubai World Trade Centre Residences. We are targeting to in-crease our capacity to reach 500,000 RT by end-2013 by expanding and extending our existing infrastructure wherever possible and building new district cooling plants and networks where required. In the long run, we have set a target of achieving 1 million RT by the end of 2020.

What new technology and innovations is Em-power using to support its strategy?Empower has been a pioneer in promoting submetering solutions in the region, which the company has installed at its various projects. Higher energy efficiency can be achieved by installing submeters for dis-trict cooling services at each apartment or unit level in the building, which measure actual consumption each unit, creates en-ergy accountability, and promote energy savings. We have installed one of the larg-est submetering solutions at a single loca-tion at our JBR project, consisting of 7,200 submeters spread over 40 residential and hotel towers. Empower has also taken initiatives to efficiently utilize water resources by con-suming Treated Sewage Effluent (TSE) water in place of potable water for its make-up water consumption for district cooling services. We have successfully implemented TSE plants at our DHCC and DIFC projects. Currently, Empower is working toward implementing the Ther-mal Energy Storage (TES) solution in our new plants, which are under various stages of construction. Such a solution would fur-ther enhance efficiency in energy and will shave off the peak demand of electricity through balancing and optimizing power requirements throughout the day.

What trends have you witnessed in the Emir-ate since the enactment of the green building regulations?Buildings with district cooling services qualify as green buildings, and we are one of the companies that actively support the development of this technology. The en-actment of the green building regulations will support us and encourage more build-ings to adopt district cooling services.

Is there a willingness from investors in the re-gion to support the district cooling business?Investors and banks look for businesses that have capabilities to generate steady and stable cash flows. If investors can see

a healthy historical financial performance, strong professional management, and pre-dictable future cash flows, they are more than willing to invest in such companies as their investments are secured. At the same time, they can make money and enjoy a diversified risk portfolio. Since district cooling is considered a utility business, it offers stable, steady, and long-term cash flows. Empower has been consistently delivering strong finan-cial results on a year-on-year basis, and has therefore attracted various investors (banks and financial institutions) that have invested in the business and derived appropriate returns. As for other district cooling companies, I am not sure if this is the case.

To what degree do you see the development of sustainable energy progressing in Dubai?The development of sustainable energy progressing in Dubai will depend on the overall development of the Emirate as a whole. The current growth rate is in the range of 7% to 10%, and I believe this may continue, assuming Dubai continues to be the preferred destination of immigrants moving here or by new investors looking toward Dubai as a safe haven.

What is your outlook for 2012?We will continue to grow. We have many projects in the pipeline that are set to be delivered during the third or fourth quar-ter of this year. On an overall basis, 2012 will be another good year for us, following growth of approximately 10% to 12% over 2011. ●

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INTERVIEW

Port PerspectiveTBY talks to Khamis Juma Buamim, Chairman of Drydocks World & Maritime World, on Dubai as a maritime hub, maintenance and conversion operations, and his outlook on the market.

BIOGRAPHYKhamis Juma Buamim holds a degree in Business Management and Economics, and was appointed Chairman of Drydocks World and Maritime World in May 2010. An oil and gas industry veteran, he was previously the President and CEO of the Regional Clean Sea Organization, and spent 26 years at Conoco and ConocoPhillips in various positions, including Vice-President of Dubai Petroleum Company, a ConocoPhillips affiliate in the UAE.

1 Khamis Juma Buamim, Chairman of Drydocks World & Maritime World

Khamis Juma Buamim

TBY What are the origins of Dubai’s Drydocks World?KHAMIS JUMA BUAMIM Many years ago, Drydocks World was established as a re-gional business. Later on, the government decided to expand the horizons of the company, increasing its capabilities and services. Without a doubt, Drydocks World is one of the largest dry docks in the world. We cater to very lucrative markets, specifi-cally targeting regional and international businesses. Drydocks World acquired a number of dry docks in Singapore and In-donesia, expanding actively until the mis-fortune of the global financial crisis struck the region. Although we had to adjust our vision and strategy, the crisis did not bring an end to our growth approach. In 2010, we launched a new strategy designed to serve the energy sector. We have consolidated our business into the categories of repair, maintenance, conversion, and modular fabrication; we also have a very successful new build operation. Maritime City incor-porates business operations clusters into the Drydocks World group, and I would classify ours as a growing business.

Where do Dubai’s strengths lie?Dubai will always be the number one hub in the region. The Emirate has always been part of a very effective trade route, with an “easy in, easy out,” policy in terms of maritime activity, which is important to create value-added in the industry. In Dubai, the right moves have been made to-ward developing an industry that is heav-ily reliant on maritime trade. The growth in the oil and gas industry in the region will certainly enhance the sector, as more and more platforms and service vessels will be required for transportation. Moreover, in the trading segment, it is well known that almost 87% of global trade in the region is handled by UAE-based organizations.

What success have you experienced in main-tenance and conversion operations?At the beginning of 2012, we signed an agreement for a $255 million project. In the repair segment, we have a monthly turnover of approximately $30 million-$35 million, and we continue to grow. We are still in the negotiation phase for a num-ber of mammoth potential projects in the pipeline. The projects we have are among the best in the world; we are building the largest offshore platform for renew-able wind power energy in the North Sea

with Norwegian company Aibel. Sustain-able energy is one of our main focuses, as it has the potential for growth over the long term. We conducted a detailed study regarding the areas of Drydocks World that we would like to see growing, and designed a strategy based on that analy-sis. We are developing the world’s larg-est turret for the global gas industry in partnership with Shell, Technip, and SBM Offshore. This turret is designed to be used for a deepwater gas project off the coast of Australia. Furthermore, we are developing two modular conversions for the Gulf of Mexico and the US, and these conversions represent a remarkable achievement for us.

Are you actively looking for joint ventures to enhance your current capacity?We are heavily involved in Singapore and Indonesia, and in Dubai we actively en-gage in international partnerships. We have participated in a number of discus-sions with special partners in Turkey, Libya, Vietnam, and Japan, and in different Southeast Asian countries. After signing a recent major contract, global attention was focused on us. We were forced to compete in a very difficult market against shipyards that are fully subsidized by governments and have extensive knowledge bases in the oil sector, as well as docks that have no restrictions similar to the restructur-ing measures we were facing. Neverthe-less, we came out on top, and the situation has opened doors for us. Currently, we are involved in discussions about manag-ing other yards, exporting our knowledge base, and promoting our brand name. Many countries would like to see our strat-egies implemented in their own yards. We are a following an operational excellence program, which incorporates a very exten-sive business management strategy with built-in efficiency, on-time delivery, and cost-effective measures that ensure qual-ity products of the highest standards in safety. The trend is that the market seeks lower costs at a higher level of quality, and Drydocks World can offer that.

What is your 2012 market outlook?We are on the right track. For 2011 we posted a profit of $125 million, and we will settle for no less than in 2012—we expect at least a 10% growth rate. We are very well positioned to be the first choice for our cli-entele, and plan to expand our capacity to optimize our growth potential. ●

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Going GreenFOCUS: Dubai Green Economy Partnership

Dubai is becoming a regional role model for the green energy business. In the past year, construction began on the Emirate’s first sustainable city, a massive solar park was launched, and the British University in Dubai opened the UAE’s first solar academy.

Prabissh ThomasManaging Director, PTL Solar“Over the past few years, the UAE has emerged as a global center for renewable energy development and there definitely is demand. It is quite difficult to say which the largest market in terms of demand is, because each has its own needs, and we cater to multiple requirements.”

In 2012, the Supreme Energy Council of Dubai began implementing its Integrated Energy Strategy for 2030. The plan calls for a more diverse and renewable energy mix over the next two decades. In 2020, the contribution of natural gas to Dubai’s electrical energy will decrease by 10% to

85%, clean coal will contribute 14%, and solar 1%. By 2030, natural gas will con-tribute just 71%, nuclear power and clean coal technologies 24%, and solar power 5%. The strategy also aims to reduce total energy consumption 30% from its present rate by 2030.

Various business councils and associa-tions devoted to cleaner and more efficient energy use are appearing on Dubai’s scene. The Clean Energy Business Council (CEBC) was established in 2010 to promote clean energy across the Middle East and North Africa (MENA) region. In MENA countries, subsidies for fossil fuels amounted to $166 billion in 2010, two-thirds of the world’s total, according to CEBC chairman Nasser Saidi. While most regional governments are reluctant to provide such generous sub-sidies to renewable energy producers, Saidi says he believes there is potential for Dubai to “emerge as a clean energy and clean technology financing center,” particularly through the Dubai International Finance Centre (DIFC), Dubai’s main financial free zone. Another free zone in Dubai, TechnoPark, is focused on promoting R&D in renewable energy technologies, especially through its Dubai Institute of Technology. However, the existing incentives for clean energy businesses in Dubai are already quite at-tractive. In 2011, the Emirate’s business-friendly environment and high-tech in-frastructure attracted a major clean energy and smart grid developer, RUBENIUS. The firm, a world leader in energy “smart me-ter” installations and energy storage tech-nologies, was courted by Dubai’s Foreign Investment office, and will henceforth op-erate out of its headquarters in the Emirate. Enabling the clean energy market in Dubai is the task of the Dubai Carbon Cen-tre for Excellence (DCCE), established in 2011. The DCCE already has 12 active proj-ects, of which seven are in the Clean Devel-opment Mechanism pipeline. In total, the projects will represent an annual emissions reduction of 1.7 million tons of CO2 after they are completed. The DCCE’s current initiatives range from works such as the DUBAL GTX project, which will improve efficiency in large steam power plants, to green buildings and grid-connected solar installations. In early 2012, the DCCE and Dubai’s Supreme Council of Energy signed a memorandum of understanding that in-cluded plans to develop a carbon trading scheme within the Emirate. A few years older than the CEBC and DCCE, the Emirates Green Building Coun-cil (EGBC) was founded in 2006, when the federal government of the UAE was first ex-amining the power consumption efficiency of buildings. Globally, buildings represent

Projected Electrical Generating Capacitythrough 2030

Source: Dubai Supreme Council of Energy

2010

Natural gas 99%Diesel 1%

Natural gas 85%Clean coal 14%Solar 1%

Natural gas 71%Clean coal 12%Nuclear 12%Solar 5%

2020 2030

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Conserve & UpgradeTBY talks to Adnan Sharafi, Chairman of the Emirates Green Building Council (EGBC), on supporting companies as they seek to make Dubai a more environmentally friendly place.

How important is it for companies to adopt green building practices in the UAE?Buildings, generally, represent about 40% of the greenhouse gases that are emitted into the atmosphere worldwide. In our region and in our country, it is much higher than that. It becomes much more important for us to tackle the problem of pollution and greenhouse gases, while at the same time tackling the problem of energy consumption. That is getting more and more prevalent, with energy prices going up, and less energy available. We want to conserve as much as possible.

Do you assist new companies investing in Dubai’s green technology sector?A few months back we had a company that was involved in water saving technology for bathrooms. It wanted to have a presence here in the UAE, and it approached us. EGBC provides a network for new companies coming into the market. We provide the ability to access that network and access people to sell their products to. We find that a lot of companies set up in the UAE do join as members, so they can have that network and drive the industry forward.

What are the main challenges going forward facing the broader uptake of green building initiatives? The main challenge is getting the different parties together to commit to making existing buildings green. We have put forward a scheme for retrofitting existing buildings that addresses that issue. The reason for that is because we have legislation, guidelines, and standards for new buildings. There is strong legislation for new buildings, but what about the existing buildings? We cannot tell people to stop using buildings. We are quite fortunate that measures to go green in existing buildings are financially feasible investments. Generally you can get savings of between 10% and 30% with payback periods of between two and three years.

40% of the greenhouse gasses emitted into the atmosphere, but in the UAE, buildings consume closer to 80%, according to EGBC Chairman Adnan Sharafi. EGBC functions as a network for new companies looking to invest in Dubai’s green building sector. In most building projects, between 10% and 30% energy savings can be quickly achieved, with payback periods of two or three years. It is easier today for firms to get financing for such projects than it was five years ago, says Sharafi, because of the growing “green consciousness” among re-gional banks.

RENEWABLE ENERGIESDubai’s most obvious renewable resource is solar energy. But to date, no solar gen-erating power plants have been connected to the Emirate’s grid, and private solar producers only generate 4.5 MW. That is about to change. At the beginning of 2012, the government confirmed plans to build a 48-square kilometer solar farm, the Mohammed Bin Rashid Al Maktoum Solar Park, which will have a generating capacity of 1,000 MW when it is completed in 2030. The first utility-scale solar power station in the region, the project will be implemented by the Supreme Council of Energy and operated by the Dubai Elec-tricity and Water Authority (DEWA). In sum, the park is estimated to cost $3.27 billion. The first phase of the project will be finished in 2013, and have a capacity of 10 MW. In line with the Emirate’s new focus on solar energy, a new solar academy opened in Dubai in early 2012. A collaboration be-tween British University in Dubai (BUiD), US-based green energy manufacturer PTL Solar, and Solar Energy International, the academy had an inaugural class of 20 stu-dents. The academy offers such five-day courses as “Technical PV Sales and So-lar Business” and “Battery Systems,” all hosted at BUiD. Aimed at educating and training future regional leaders in energy sustainability, the academy will run its courses every three months. Solar isn’t the only renewable resource waiting to be tapped in Dubai. Biogas has major potential as well, according to Vijaykumar Nair, Managing Director of Indian firm Green Energy and Biotech (GEBC). A tender has been launched to build a Bio-Compressed Natural Gas (CNG) plant in the Sewage Treatment Plant in Dubai City, says Nair. The Bio-CNG plant could convert the methane exhaust from the treatment plant into fuel for municipal vehicles. Another GEBC project will per-form the same function with waste from the city’s vegetable market and Meydan Racecourse.

GREEN DEVELOPMENTInternational green building companies have been involved in Dubai for the past decade. Green Technologies opened an office in the Emirate in 2002 and built the first LEED-certified project in the Middle East in 2006, the Wafi City District Cooling Chiller Plant One. Most green buildings in Dubai have Gold or Silver LEED certifica-tion, according to Mario Seneviratne, Di-rector of Green Technologies, while about 10% have platinum status. Dubai-based EMS International is more focused on energy efficiency consulting in buildings that are at the design and con-struction stage. EMS has completed 400 green building projects in Dubai, with 20% energy savings accomplished on average. At the Burj Khalifa, the world’s tallest building, EMS enabled the developers to save 690 MWh each year by incorporating a sophisticated solar water heating and air conditioning system into the design of the building and its surrounding towers. When it is completed in 2016, Dubai’s first sustainable city will house 10,000 residents over 743,000 sqm. Designed by Diamond Developers, its carbon emissions are projected to be nearly 75% lower than average residential housing in Dubai. The city will feature a recycled wastewater system and sewage for irrigation, a solar farm, a “green belt” of 100,000 trees, and a fully integrated waste disposal system. Transportation options will include solar-energy powered vehicles and horses. A university with three faculties will teach sustainable environmental sciences. Work on the landscape and city infrastructure will begin in late 2012. Another planned residential develop-ment in Dubai, Vertical Village by GRAFT Architects, also features a remarkable ar-ray of green technology. No time frame has been announced for the project yet, but it has already generated buzz among the green building community. A vast solar collector array will generate most of the energy, while the buildings will have so-lar roofs that transport energy into their structures to power air conditioners and provide hot water. Even Emiratis who don’t live in these specially designed green communities will be able to use energy more efficiently through an upcoming DCCE project. The center is designing smart energy kits that provide consumers with a monitor show-ing the worth of their current and project-ed energy consumption before they receive their electricity bill. The monitors might even compare each consumer’s usage to those of the wider community to further motivate wasteful users to “green” up their behavior. ●

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INTERVIEW

Carbon Is DatedTBY talks to Ivano Iannelli, CEO of the Dubai Carbon Centre of Excellence, on energy efficiency in the GCC, clean development initiatives, and Dubai as a green financing hub.

BIOGRAPHYIvano Iannelli is the CEO of the Dubai Carbon Centre of Excellence and has previously worked as Managing Director at ISTIDAMA, Chief of the Programme Development Unit at the United Nations Office for Project Services, and Head of Operations at the United Nations Office for Project Services. He has also worked for the Italian Ministry of Foreign Affairs. Iannelli attended the University of Memphis, as well as Cambridge, Cranfield, and Coventry.

1 Ivano Iannelli, CEO of the Dubai Carbon Centre of Excellence

Ivano Iannelli

TBY What is the role of the Dubai Carbon Cen-tre for Excellence (DCCE)?IVANO IANELLI Gulf Cooperation Council (GCC) countries are often painted with the same brush. There is a perception that they have no interest in the environment or sustainability, but that could not be farther from the truth. A lot of what we do does not make it into the media, but we have a solid record of success stories that drive social and economic development for-ward. The DCCE works under the Supreme Council of Energy as a market enabler. Our role is to identify areas of the carbon value chain that can be facilitated through mar-ket-based mechanisms—to promote the involvement of business in the low-carbon economy. We usually focus on projects that are almost ready for commercial imple-mentation, but need a final layer of effi-

ciency. We help to provide this efficiency, whether economic, financial, or policy-driven, by putting all the actors around the table, tapping into international markets, or creating our own mechanisms.

What practical initiatives do you have in place at the moment?Our first projects were focused on develop-ing the carbon potential of Dubai-owned assets through the clean development mechanism (CDM). The money from these projects provided us with the financial stability to continue the initiative. We now work with a range of organizations, both large and small. We are working with Dubai Electricty and Water Authority (DEWA) and Dubai Aluminium (DUBAL) on projects as large as the DUBAL GTX project, which takes very large steam power plants and centralizes the steam distribution to im-prove efficiency and avoid additional fuel burn. On the less industrial side, we have projects such as a program of activities for green buildings and grid-connected solar installations. We help smaller projects ac-cess the carbon market by allowing them to register with us under an umbrella agreement. We also act as an advisor on low-carbon development, usually focusing on emissions reduction projects, which are really our bread and butter. We focus on projects where we see emissions reduction potential that the project owner may be unaware of or may not have the expertise to take advantage of alone.

Is there the potential to develop technology in the UAE for regional export?Funnily enough, I’ve just learned of a so-lar manufacturer that produces solar cells here in the UAE and exports them to China. That means there is a UAE-based company that is already price- and quality-compet-itive enough to enter a highly developed market such as China. Emirati investors are growing more sophisticated and there is a growing appetite for this type of invest-ment. Dubai used to be all about real es-tate, services, tourism, finance, transport, and commodities, but now everyone’s eyes are opening up to other areas of invest-ment, such as the energy sector and green technology products. This means that the green industry is suddenly seeing a lot of new interest.

What about the UAE as a green financing hub?We are seeing new financing mechanisms

that are being developed here. There is a lot of synergy between Islamic banking and green technologies. Something as simple as an ESCO model with a performance agreement to encourage energy efficiency is totally new here. That sounds simple, but putting it in place through a financial tool is complicated because there is noth-ing to securitize on the back end. However, if we utilize an Islamic financing approach, you can all of a sudden leverage participa-tion in the project to mitigate some of these risks. So what was unfortunately difficult to put in place has actually turned out to be a specific fit to the market. We are focusing on developing financial markets and new investment platforms. One of the biggest barriers to getting projects off the ground has been access to finance. Not because there is no finance in the UAE, but because banks need to be motivated by raising their awareness to finance projects. We are working with some banks right now to finance very small, low-risk projects just so we can see what the banks consider opportunities in terms of know-how pro-cesses, and how we can help them develop these processes. ●

Everyone’s eyes are opening to other areas of investment, such as the energy sector and green technology.

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INTERVIEW

Clean & GreenTBY talks to Nasser H. Saidi, Chairman of the Clean Energy Business Council, on the development of clean energy, the impact of reduced fuel subsidies, and the potential for green financing.

BIOGRAPHYIn addition to his role as Chairman of the Clean Energy Business Council, Nasser H. Saidi has been the Chief Economist of Dubai International Financial Centre (DIFC) since 2006. He leads the links with governments, central banks, and international organizations. He is also the Executive Director of the Hawkamah Institute for Corporate Governance and the Mudara Institute of Directors at the DIFC. He is a member of the IMF’s Regional Advisory Group for MENA and Co-Chair of the Organization of Economic Cooperation and Development’s MENA Corporate Governance Working Group.

1 Nasser H. Saidi, Chairman of the Clean Energy Business Council

Nasser H. Saidi

TBY What potential does this region have for the development of clean energy?NASSER H. SAIDI The Clean Energy Busi-ness Council (CEBC) is actually regional in scope, and we look at the whole Middle East and North Africa (MENA) region as one that has enormous potential for re-newable energy and clean technology. It clearly has a comparative advantage in solar, but also wind in a few countries as well. One of the major characteristics of a clean energy program—and clean energy in general—is the necessity to have in place a strong policy and regulatory framework. Clean energy is very much in its infancy as an industry, and we are only at the begin-ning of the roll-out of clean energy and renewable energy solutions. If you look at how the world produces energy, and how it uses it, clean energy and renew-able energy is still a very small fraction of the total—maybe 5% or 6%. But it is very promising for a large number of reasons, including climate change. Climate change is clearly the principal driver of these ef-forts, both public and private, aimed at reducing pollution and preserving the environment. Unfortunately in our region there is an absence of any policy or regula-tory framework. Although this region has this enormous comparative advantage—particularly for solar—it has not invested in it. If you look at total investment in solar energy, renewables, and clean energy in general across MENA in 2011, it was only about $840 million or so, out of a world total of $260 billion.

How is CEBC involved in supporting the de-velopment of a sustainable local environment?CEBC was set up firstly to promote greater awareness of the need for clean energy as a source to replace our use of fossil fuels, which are non-renewable. Secondly, the organization was set up to help govern-ments and other policymakers put in place a policy and regulatory framework.

Thirdly, its aim is to work with the pri-vate sector in terms of introducing clean energy and clean technology. Fourthly, and probably most importantly from my viewpoint, is that not only do we have the potential for the increased use of clean en-ergy and renewables, but we can be major producers.

How large a role does the subsidization of fuel play in this story?Regionally, we heavily subsidize the use of fossil fuels. We are the biggest subsidizers of fossil fuels in the world; in 2010 our sub-sidies amounted to $166 billion. That is two -thirds of the world’s fuel subsidies, just in our region. The subsidies we put on fuel are greater than what we invest in education. Part of our message in the CEBC is to start a discussion on gradually removing fossil fuel subsidies. If you still want to maintain the level of subsidies, reorient them to-wards renewable and clean energy. In the MENA region, 80%-85% of the subsidies go to the richest 20% of the population. The people who benefit are the rich. If you look at Dubai, there is a high percentage of wealthy expatriates who are paying no taxes, yet contributing to the heavy con-sumption of fuel. Removing the subsidies would fix a distortion in the price system from an economic point of view.

What opportunities are there to develop the green financing sector in Dubai?On a global basis, there is no center that is focused on clean energy finance, and I believe the Dubai International Financial Centre (DIFC) has great potential in that sense. Given the resources available, and given the companies that we have in the DIFC, we believe there is potential for the

DIFC, and therefore for Dubai, to emerge as a clean energy and clean technology financing center, certainly for the Middle East. Anybody who has a clean energy project could then come and get the fi-nancing from the DIFC. We could list secu-rities, we could list funds, or find financing for funds, project finance, infrastructure finance, and all the consulting related to that in terms of structuring. For example, public-private partnerships are another thing we are missing in the region that we should really put in place. One other thing we have looked at that is promising for the future is a “green sukuk” initiative, which we have launched. There are, of course, conventional sukuks being issued, but we have looked at having green sukuks that would finance projects that satisfy both in-ternational climate criteria and be sharia-compliant. That would mean the Islamic finance industry could then be using Is-lamic “green sukuks” to finance projects across the world. ●

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BIOGRAPHYLord Jonathan Marland is Chairman of UK Trade and Investment’s Business Ambassadors’ Group and Parliamentary Under Secretary of State for the Department of Energy and Climate Change. He was awarded a life peerage in 2006 as Baron Marland of Odstock. Outside of politics, Lord Marland was one of the founding directors of Jardine Lloyd Thomson PLC, a multinational insurance business, and also founded the Jubilee insurance company at Lloyd’s of London.

1 Lord Marland of Odstock, Chairman of UK Trade and Investment’s Business Ambassadors’ Group & Minister in the Department of Energy & Climate Change, UK

Lord Marland of OdstockINTERVIEW

Breaking CycleTBY talks to Lord Marland of Odstock, Chairman of UK Trade & Investment’s Business Ambassadors’ Group & Minister of the Department of Energy & Climate Change of the UK, on the green technology bond, and promoting international dialogue on climate change.

TBY What makes green spending such a pressing activity for the UK?LORD MARLAND The transition to a low carbon world will not be possible unless developing countries are supported in their domestic efforts to mitigate and adapt to climate change and develop their own low carbon economies. Accelerating the de-velopment and deployment of low carbon technology in developing countries is key to achieving this, and this is why technol-ogy has been a critical element of inter-national negotiations on climate change under the UNFCCC.

In what ways is the UAE leading the way for the rest of the Arab world?The UAE has been taking an active role in addressing the impacts of climate change and investing in renewable energy. Beyond hosting the ground-breaking Masdar City, and its university, carbon centre, and low carbon technology hub, the UAE is the host country of the International Renew-able Energy Agency (IRENA). IRENA was created to promote the widespread and increased adoption and sustainable use of all forms or renewable energy. Being the host to this first truly global organiza-tion devoted solely to renewable energy technologies is a good sign of commit-ment and leadership of the UAE both in the Arab region and internationally. In-ternational discussion is nothing without domestic action. Abu Dhabi has created Masdar City, which is working on the 100 MW Nour and 100 MW Shams solar PV and CSP installations. It has also created a new obligatory sustainable construction index called Estidama. In Dubai, the focus has been on energy efficiency, with new tar-gets on commercial and residential energy efficiency introduced, and the overall en-ergy pricing structure reformed. The UAE hosted the World Future Energy Summit (WFES) for the fifth time this year. WFES is an annual event that draws major play-ers of the renewable energy world to Abu Dhabi, from both the private and public sectors. During this year’s WFES, the UN Secretary-General Ban Ki-moon officially unveiled his Sustainability for All initia-tive, which seeks to lay the groundwork to elevate 3 billion people out of energy poverty in a sustainable manner. The UAE also hosted the Clean Energy Ministerial in 2011, which is regarded as a key forum with the potential to monitor and drive ac-tion on the development and deployment of low carbon energy, and “Eye on Earth,” a new symposium dedicated to sharing the best available information on climate change and natural phenomena.

How does the UK work with the UAE govern-ment to promote dialogue on international cli-mate change negotiations?We hold regular bilateral meetings with UAE government officials at all levels dur-ing the UNFCCC international climate change negotiations, both to discuss our mutual positions and ensure we are work-ing together toward a positive outcome. For example, we are both actively involved

in the negotiations on technology aimed at putting in place an international technol-ogy mechanism to accelerate the devel-opment and deployment of low-carbon technologies to help developing countries mitigate and adapt to climate change.

What’s next for the climate change agenda?The ultimate aim for the UNFCCC negotia-tions is building the international climate change regime required to limit global average temperature rises to below 2°C above pre-industrial levels. The most cost-effective way of delivering the 2°C goal is to work toward a single, legally binding instrument, applicable to all. There is cur-rently no plausible alternative. The UK is not letting up in its efforts to get a global legally binding agreement. The UNFCCC process moves a step at a time, but the substantial progress made at Durban con-ference showed what can be achieved. The outcome we want to see at Doha is one that delivers on each element of the Durban agreements. We need to adopt a second commitment under the Kyoto Protocol to begin on January 1, 2013, as part of a tran-sition to a wider single, comprehensive, and global legally binding climate regime. We also need to further advance our work toward the adoption of a new legally bind-ing agreement under the Convention by 2015 at the latest that is applicable to all. We need to take forward the work plan we launched in Durban to enhance the pre-2020 mitigation ambition. We also agreed some specific tasks for this year under the negotiating track on Long-Term Coopera-tive Action, which we agreed will close in Doha. ●

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90 ENERGY

FORUM: Green TechnologyIt’s Easy Being Green

With green technology a popular addition to new developments, a new sector has developed to turn saving energy into a business.

SAEED ALABBARDirector, Alabar Energy & Sustainability Group (AESG)

MARIO SENEVIRATNEDirector, Green Technologies

VIJAYAKUMAR NAIRManaging Director, Green Energy & Biotech (GEBC)

KHALED BUSHNAQCEO, EMS International

We have been very active in the last couple of years with many concerts, events, publications, and getting all the stakehold-ers together, raising awareness, engaging with different partners.Basically, that has helped to push the country in the right direction. One of our core functions is being a forum, and that means that we are a group of people with lots of knowledge in different areas of green buildings, which can help our stakeholders in making sure that we get to the goals much more effectively than if we were doing it on our own, so to speak. The membership is reflected by the whole building supply chain, from the person that finances it to the banks and lawyers involved in structuring operations. There are also the actual developers them-selves, the consultants that de-sign it, the contractors that build it, the material suppliers, and then the owners and operators. This is the entire supply chain, and members and expertise rep-resent every level.

Our primary field is engineering. I am a mechanical engineer, and most of my staff members are engineers and LEED Profession-als. We take a subject and work on reducing as much energy from it as we can. The backbone of the company is engineering, and then we have the LEED System. Water and electricity are about 60% of any given building’s in-puts, and most of it is mechanical and electrical engineering. That is why we are successful in green buildings. Energy and water are the ingredients of a building. LEED is a simple way of making a building. It quantifies elements of the building and gives you a quick and easy way to assemble it optimally. We did this for a long time, and the US Green Build-ing Council asked us to develop education programs. That’s the third aspect. We also conduct LEED Education Programs. We teach mostly engineers, archi-tects, NGOs, product suppliers, and those involved in the building industry, the fundamentals, and how to achieve green buildings. That is the first course, and there are also more advanced courses. These three business units are interrelated.

When we began this carbon-based biogas program in 1985, we understood the potential of the technology. We developed a portable, family-sized domestic plant, which worked without the use of carbon and was utilized to manage the organic waste generated within the household. Gradually, we have made the technology more efficient and made it suitable for any institution that is generating waste. At both the institutional and domestic levels, the gas generated through this technology can be utilized to replace cooking fuels. On a larger scale it can be utilized for generating power. Another ad-vantage of this technology is its ability to handle organic waste, whereas other waste manage-ment systems can only handle sorted waste. Through the bio-management process we can produce three by-products: energy, liquid fertilizer, and solid fertilizer. The technology hygieni-cally disposes of the waste, pro-ducing energy and fertilizer, and in addition, it contributes to pro-tecting the environment from car-bon emissions, because meth-ane gas is generated through the breaking down of waste.

When we started our business, we looked at the energy effi-ciency of existing buildings. We would go into a building and see where energy was being used but did not deliver a service; it was effectively an energy audit. We would tell the clients that we can save them 25% off their energy bills. They can then use their savings to pay us back for the investment we will make. Obviously, it will be two or three years before the client pays the full amount back, just like a bank service. The clients end up ex-tremely happy. Around 19 years ago, electricity was much cheap-er, but now everybody wants to save on energy costs. One thing then led to another. We started with some big projects, such as the Trade Center and Terminal 2 at the airport in Dubai. Then, one day, a client questioned why we weren’t involved in projects at the building stage, instead of imple-menting our technology later on. As a result, we opened another service called Energy Value Anal-ysis (EVA). Basically, EVA over-looks the energy designs of the consultants from the energy point of view from the design stage.

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INTERVIEW

TBY What is the background of GE’s opera-tions in the region, and what role does Dubai play in the region?NABIL A. HABAYEB GE has been in the region for over 80 years. We started operations by supporting the oil and gas sector in power generation. People know us as what we used to be, an appliance company. There is a lot that the Middle East region has had to offer, particularly Dubai. Over the years we have found new ways to strengthen our relationships and partnerships. Just look at the region’s growth—over the last 30 years, Dubai has transformed dramati-cally. Though it has limited natural re-sources, the city wanted to monetize these resources for infrastructure development. First, Dubai built a very strong infrastruc-ture network to help improve people’s lives with electricity, clean water, and trans-portation systems. Second, Dubai used this monetization to build a good healthcare and education system. Third, Dubai knew that its energy resources were limited, and it wanted to diversify its economy indus-trially. Finally, Dubai wanted to stimulate tourism by offering many support systems. GE also has strong business functions as an oil and gas company, and we were in a po-sition to help monetize the region’s natural resources. We’re a power generation com-pany, a water company, and a transporta-tion company with aviation and even rail. We’re also a healthcare company. Basi-cally, GE is an industrial company. Until recently we were also in the media sector with NBC Universal, and we are now in partnership with Comcast. Dubai’s vision and what GE has to offer matches perfect-ly. That’s why we increased our presence to suit the region’s needs. Today’s lead-ers see us as a partner that can help them achieve goals in every sector. They see us as a part of their vision, just as they have seen a GE refrigerator as a reliable and in-tegral part of the home. We recently set up our headquarters in Dubai so that we could better cover the Middle East, North Africa, Turkey, and Pakistan.

Although GE has been in the region for 80 years, the market is still considered to have huge growth potential. What changes have you witnessed in your seven years in this position?The first time I came to Dubai was in 1976. I came to visit my father who was working here. I remember the four-hour journey from Abu Dhabi to Dubai. Today, if you

1 Nabil A. Habayeb, General Electric President & CEO for the Middle East, North Africa, and Turkey

Power generation and the industrialization of Dubai offer exciting opportunities.

BIOGRAPHYNabil Habayeb graduated from Syracuse University with an M.S. in Mechanical Engineering, before joining GE Power Systems’ Field Engineering Programme in 1982. He worked in various regions as a sales manager and customer service manager for GE before being named General Manager for Africa, India and the Middle East (AIM) Region in 1997. He has also lived and worked in Saudi Arabia and New York, before being based in Dubai, where he is responsible for developing and expanding the growth of GE’s different business lines across the region.

Live BetterTBY talks to Nabil A. Habayeb, President & CEO of the Middle East & North Africa for General Electric, on infrastructure development, energy efficiency, and green technology in Dubai.

Nabil A. Habayeb

take the same road, it boasts multiple lanes each way and the journey takes just an hour and 15 minutes. It has been very fas-cinating to see the infrastructure grow. The education and healthcare systems have also seen great improvements. Dubai has become a hub for people to fly from Latin America to Japan due to the strength of the national airlines. I was among 30 interna-tional business representatives who were invited to His Highness’ palace. He sat down with us and asked us what help we needed to grow, and what issues we were facing. This, over the years, has helped to break down bureaucracy and get things moving more quickly. The fundamentals continue to be important in Dubai, and that will keep it going strong.

You’ve been very involved in infrastructure development from the ground up. What is in progress now that’s exciting for you?Power generation and the industrializa-tion of Dubai offer exciting opportunities. We have three facilities for water, oil and gas, and energy. We also have a wastewa-ter treatment facility. All these facilities use advanced GE equipment. Not only are we participating in power generation, but we’re also providing clean and environ-mentally efficient water. We re-use the water, both for industry and waste. We are improving the health of the people and the quality and cost of health care. In the avia-tion sector, Emirates is among GE’s largest customers. We lease aircraft, sell engines, and we have built a training facility. We have been working very closely with the Dubai Executive Council in the energy sec-tor to make operations more efficient. ●

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92 ENERGY

INDUSTRY

REVIEW

INSIDE 93 Good to Grow - REVIEW | 94 Anne Ruth Herkes, State Secretary, German Federal Ministry of Industry & Technology - GUEST SPEAKER | 98 Abdulla J.M. Kalban, President & CEO of Dubai Aluminium (DUBAL) - INTERVIEW | 100 Coming Together - ROUNDTABLE: Local Industry | 101 In the Same Neighborhood - FOCUS: Dubai Industrial City | 102 Abdulla Bel Houl, Managing Director of Dubai Industrial City - INTERVIEW | 103 The Perfect Fit - FORUM: Auto Retailers | 104 Top of the Line - FOCUS: Automobile Industry | 106 K. Rajaram, CEO of Al Nabooda Automobiles - INTERVIEW | 107 Check It Out - FOCUS: FMCGs | 109 Tarek El Sakka, General Manager of Dubai Refreshments - INTERVIEW | 110 Jamal Al Ghurair, Managing Director of Al Khaleej Sugar - INTERVIEW | 111 Yves Manghardt, Chairman & CEO of Nestlé Middle East - INTERVIEW

Aluminum, iron, and steel have benefitted from increased attention in recent years, spurring heavy industry to grow rapidly in Dubai and around the GCC region.

u As confidence returns, heavy investments in the industrial sector have triggered a comeback in automotive and retail sales, metals manufacturing, and FMCGs.

Good to Grow

Having weathered a construction downturn that sent ripples throughout its industrial and retail sectors, Dubai is in the midst of an indus-trial revival, driven by surging consumer confi-dence, attractive thematic industrial zones, and demand for industrial materials throughout the Gulf. According to the Ministry of Economy, industrial investment grew by 12.8% over 2012. Industry represented 16% of the UAE’s GDP in 2011, becoming the most valuable sector in the country after hydrocarbons. The government plans to increase industry’s contribution to GDP to 25% in the medium term, an initiative supported by a host of incentives, industrial clusters, and free zones.

INVESTMENTThanks to its renowned business-friendly envi-ronment, Dubai is becoming a hub for the Gulf’s light- and medium-manufacturing activities, with specific emphasis on mechanical equip-ment, chemicals, food and beverage, and min-eral products. According to Abdulla Bel Houl, Managing Director of Dubai Industrial City, the Emirate’s political stability in the midst of turmoil in other Arab countries is also helping to drive industrial investments. “[Dubai] has benefited from its ‘safe-haven’ status in the face of regional volatilities, with new FDI being re-diverted from other parts of the region into the UAE,” he told TBY. As a result, an increas-ing number of industrial corporations are look-ing to Dubai as a production platform for the broader MENA region, a market characterized by its increasing purchasing power and a 424 million-strong population that the UN expects to grow 10% per year over the medium term. ››

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Abdulla J KalbanPresident & Chief Executive Officer

For more than 30 yearswe have been buildinga reputationas a world-classbusiness. This isjust the beginning.

Together we shineFor more information call: +971 4 884 6666 www.dubal.ae

Focusing on sustainability is our foundation, and our future.

Since our inception in 1979 we have dedicated ourselves to establishing DUBAL as a world-class supplierof aluminium to global markets. You might put our success down to an unswerving focus on quality and theunparalleled 99.99% purity of our products.

But it is also our commitment to ensuring our successes today lead to greater achievements tomorrowthat has helped make us what we are.

Building the future today. That’s what sets us apart. And you can quote us on that.

Ideal PartnersAnne Ruth Herkes, State Secretary, German Federal Ministry of Industry and Technology, talks about trade links and development with the UAE.

In 2011, the UAE was our largest trading partner in the Gulf region, with a volume of trade exceeding €8.5 billion. It is particularly encouraging to see not only that German exports are developing well, but that imports from the UAE to Germany are also recording a continuous expansion. They almost doubled to more than €1 billion last year. A total of 40 years after the commencement of diplomatic relations between our countries, our economic ties have become a key pillar of our strategic partnership. However, our economic relations now reach far beyond individual sectors. A sort of organic tissue of economic links has grown up between our countries covering all areas of economic activity: trade in goods, services, movement of capital, and, of course, investments. Cooperation is especially intensive in the sectors of SMEs, security technology, vocational training, renewable energy, and energy efficiency. The German-Emirati Joint Council for Industry and Commerce, which was set up in 2009, is an important pillar of our bilateral trade and investment ties. And the long-standing German-Emirati Joint Economic Commission is a major institutional pillar of our economic relations. The Commission’s ninth session is to take place in Berlin in 2012, and the aim will not least be to pinpoint and strengthen further fields of cooperation. High levels of investment will be needed for infrastructure projects in the next few years in the UAE, in the areas of energy and water supply, transport, healthcare, and environmental protection. Here, German firms are ideal partners. Not only do they have outstanding expertise in these fields, but they are also valued worldwide for their special quality.

Nestlé Middle East, which opened a new $136 million factory in Dubai in 2010, is one such company. Chairman & CEO Yves Mang-hardt told TBY, “we have a winning formula because we are manufacturing here, catering to the more specific needs of the region, and using the latest technology available.” Atmospheric gas manufacturer Gulf Cryo also moved its headquarters from Kuwait to Dubai in 2010. More recently, the KEF Compa-ny, a valve manufacturer and the latest venture of industrialist Faizal E. Kottikollon, opened its corporate head office at the Dubai Interna-tional Financial Centre (DIFC). Dubai Refresh-ments, which manufactures and distributes Pepsi products, is also planning to move into a much larger space in the Dubai Investment Park in 2013. “This transition is driven by the future expected growth of the UAE and of Dubai Refreshments,” said General Manager Tarek El Sakka of Dubai Refreshments. Dubai has particularly distinguished itself as a hub for value-added services in the food sup-ply chain. For example, Al Khaleej Sugar, the first sugar refinery in the Gulf region, imports raw sugar primarily from Brazil and uses the Dubai facility to produce a refined product that is then exported to consumers and food and beverage (F&B) manufacturers. Having recently built a 1.5 million-ton ca-pacity warehouse in Dubai, Al Khaleej Sugar’s growth is in line with increased industrial ac-tivity throughout the F&B segment. “When we first commenced operations, our clients were 20% industrial and 80% consumers,” Manag-ing Director Jamal Al Ghurair told TBY. “Now we have reached a stage where these figures are 40% and 60% respectively. The industrial side of the business is growing rapidly.”

DUBAI INDUSTRIAL CITYThe epicenter of Dubai’s industrial activities is the Dubai Industrial City (DI), a 55 square-kilometer stretch of land that marks the second largest non-real estate project in the Emir-ate. According to Abdulla Bel Houl, Managing Director of DI, the area consists of six zones dedicated to key industries. “The synergy and interchange between the six zones is a vital component that attracts investors to the city,” Bel Houl told TBY. DI is home to 150 companies, including leading firms such as BASF and Ikea. In 2012, total in-vestments in DI surpassed AED6 billion. Major new investments in 2012 include a Byrne Equip-ment Rental’s new HQ complex, an AED15 mil-lion project scheduled for completion in 2013; a new headquarters for UAE-based Geoscience Testing Laboratory; and a full-fledged fledged perfume manufacturing and packaging facility by Rasasi Group. In 2011, DI, in partnership with the Road and Transport Authority (RTA), completed a major infrastructure development covering power, water, sewage, irrigation, and telecoms across

a 15 square kilometer swath of the city. In Janu-ary 2012, DI launched the second phase of state-of-the-art warehouses occupying 3.5 million square feet of land. This includes facilities for cold storage specifically suited for the F&B and pharmaceutical industries. As of 1H2012, 30% of the new phase of warehouses was booked. To date, DI has invested more than $1 billion in infrastructure. DI, which extends free zone benefits for companies exporting to 17 countries, is a part of five knowledge-based clusters under TECOM Investments, a member of Dubai Holding.

METALSWhile light and medium industries are seeing the most investment, increasing demand in the region for iron, steel, and aluminum are spur-ring significant heavy-industry activity. According to the Gulf Organization for In-dustrial Consultations, the number of steel-works operating in the GCC region has in-creased from 84 mills in 2000 up to 184 in 2011. This is matched by an accumulated investment increase of more than seven fold. Of those iron and steel mills, 31% are operating in the UAE, putting the Emirates second only to Saudi Ara-bia in the region. This represents 20% of total investment, amounting to $3.86 billion, again putting the UAE second only to Saudi Arabia. In 2011, Dubai Port handled over 900,000 tons of metal exports. “Steel is very important in many countries, but owing to the fast development of the UAE, the demand for structural steel is exception-ally high here,” says Amr Ali Ahmed, Man-aging Partner of Al Shafar Steel Engineering (ASSENT), which operates the largest steel en-gineering, fabrication, and construction facility in the Gulf. ASSENT, part of the Al Shafar Group of Companies, is focused on steel building ma-terials for industrial, oil and gas, and water and power facilities. Like nearly all of its competitors, ASSENT imports its raw materials and then engineers, manufactures, and adds value in Dubai be-fore selling to both local and foreign markets. Ahmed told TBY that 80% of their products are used in the UAE while the remaining 20% are exported to Qatar, Kuwait, and Saudi Arabia, though he sees this ratio changing to 50/50 in 2012. Dubai is also becoming an export hub for aluminum. Dubai Aluminium (DUBAL), a flag-ship industrial powerhouse in the UAE, exports nearly 90% of its production. Approximately 17% of that goes to Europe, which President and CEO Abdulla J.M. Kalban says will become an increasingly lucrative market if and when the EU decreases its 6% tariffs on aluminum. In the meantime, other markets are presenting major opportunities. “The newest market for us today would be South America,” Kalban told TBY. “We started selling there last year, with 10,000 tons being shipped to that market. We aim to sell ››

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94 INDUSTRY

Abdulla J KalbanPresident & Chief Executive Officer

For more than 30 yearswe have been buildinga reputationas a world-classbusiness. This isjust the beginning.

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Since our inception in 1979 we have dedicated ourselves to establishing DUBAL as a world-class supplierof aluminium to global markets. You might put our success down to an unswerving focus on quality and theunparalleled 99.99% purity of our products.

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25,000 tons there in 2012. By 2015, we expect to sell more than 50,000 tons to South America, mainly in Brazil, Chile, and Venezuela.”

AUTOMOTIVEWhile the UAE has no domestic automotive manufacturing industry, Dubai is a magnet for cars and as a result has developed a highly competitive base for parts and components, particularly in terms of re-export. According to Business Monitor International (BMI), the UAE auto market contains 1.4 mil-lion vehicles and is growing annually by 10% on average. Within the UAE, Dubai represents half of the vehicles stock. Over 70% of the 150,000 four-wheel drive vehicles sold annually in the GCC region go to the UAE and Saudi Arabia alone. The major players are Nissan, Toyota, Mitsubishi, Mercedes, BMW, Volkswagen, Jag-uar, Land Rover, Ford, and General Motors. The parts and components segment is grow-ing annually at a rate of 20%, and with nearly 65% of stock imported and then re-exported, they are among Dubai’s top-10 re-export prod-ucts. The lion’s share of re-exports goes to the Middle East, Africa, and East Europe. Dubai Auto Zone (DAZ), a cluster of the Jebel Ali Free Zone (Jafza), generated AED14 billion in trade in 2011, marking a 20% year-on-year rise and a 40% increase over the last three years. According to Talal Al Hashimi, Managing Direc-tor of the UAE region for Economic Zone World, this growth puts the sector back to pre-reces-sion peak levels. “The physical and soft infra-structure of Dubai is the magnet for fast supply chain management industries like automotive,” Hashimi said. According to BMI, automotive sales are forecasted to rise by 49%, from 403,296 units in 2011 to an expected 600,672 units by 2015, largely as a result of growth in the luxury car market. Within this premium segment, Al Na-booda Automobiles commands a 65% market share. According to its CEO, K. Rajaram, Al Na-booda currently houses the world’s largest VW workshop and is the world’s largest Porsche dealer. The company is also currently in the process of building the world’s largest Audi showroom. “The only way you can sell a high-ticket car is to invest in facilities,” Rajaram told TBY in an interview. Rajaram is excited by the sales growth of 2011, in which Al Nabooda set a record by sell-ing 217 Porches in August, an all-time record in Porsche history. According to the CEO, the company is now back to 2007-2008 peak fig-ures. “Dubai’s import procedures are fantas-tic,” said Rajaram. “We all have accounts with customs and nothing waits at the port. If a car lands at 11.00 am, it is in my workshop by 12.30 pm in the afternoon.” Likewise, Arabian Automobiles Company was the number one Nissan distributor in the GCC by sales volume in 2011. It also buys more Nissan spare parts than any other distributor in

the world, and the company recently opened the largest Infinity showroom in the world. According to Michel I. Ayat, CEO of AWR Automotives, the 12% growth in the luxury range “gives a strong indication that consumer confidence is returning to the UAE.” Nissan’s own sales grew 35% in 2011, outperforming the overall market three fold.

RETAILDubai’s broader retail market reveals a simi-lar resurgence in consumer confidence. BMI’s 3Q2011 UAE Retail Report forecasted retail sales would grow from $31.01 billion in 2011 to $41.22 billion in 2015. The anticipated 33% jump is a reflection of highly positive indicators—BMI sees GDP per capita rising by 18.7% to $74,484 during the coming period, coupled with an annual average GDP growth of 3.6%, and the population growing to 5.2 million by 2015. Within this population growth, demographic specifics are also expected to play a vital role. In 2005, 30% of the population was in the 20-44 age range, considered as the most economically active segment for retail sales. According to the UN, this range should hit 56% of the population by 2015. Growing household consumption is also coupled with an increasing acceptance of new retailing concepts. LOGTA, for example, has re-cently launched an e-commerce platform and has become one of the leading online shopping sites in the Middle East. “Recession hits old in-dustries,” says CEO Islam Zween, “but some-thing new like e-commerce remains relatively unaffected as retail in general is doing relatively better than other industries in the Arab region.” Dubai’s shopping landscape—physical and virtual—is a huge part of its tourism draw. Ac-cording to A.T. Kearney’s 2011 Retail Report, Dubai is now head-to-head with London as the most popular retail city in the world. This spells strong profits for a variety of retailers, particularly those such as Dubai Duty Free that are most closely linked with visitor consumers. Colm McLoughlin, Executive Vice Chairman of Dubai Duty Free, told TBY that in 2011 sales were up 15.7% to $1.46 billion, making it the biggest retailer in any airport worldwide. Among the best-performing subsectors overall in 2011 were over-the-counter pharma-ceuticals, which reached $300 million in 2011, automotive sales, which sold 403,296 units in 2011, and consumer electronics, which com-manded $3.97 billion. BMI expects that by 2015, OTC pharmaceuticals, automotive sales, and consumer electronics will see increases of 40%, 49%, and 26%, respectively. Noting that the UAE had the highest fash-ion clothing sales per capita in the developing world at $785, A.T. Kearney’s 2011 Retail Apparel Index described Dubai as a “hotbed for upscale retailers.” As long as per capita incomes remain on the up, retail demand across a variety of sec-tors is bound to continue. ●

Manufacturing Growth Rate as a percentage

2007

5.8

10.1

6.2

10.1 11

.7

2008 20102009 2011

Source: Dubai Statistics Centre

Manufacturing as a percentage of GDP

14

12

10

8

6

4

2

0

2006

2007

2008

2009

2010

2011

The UAE auto market contains 1.4 million vehicles and is growing annually by 10% on average.

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INTERVIEW

The 13th ElementTBY talks to Abdulla J.M. Kalban, President & CEO of Dubai Aluminium (DUBAL), on the dynamics of the global aluminum market and his impressions on the UAE’s growing role as an major aluminum producer.

BIOGRAPHYAbdulla J.M. Kalban is a dynamic business personality with growing acclaim and stature in the corporate world. Following his BSc in Industrial Engineering from the University of New Haven, he began his career as a graduate trainee at DUBAL in 1985. He has progressed through the ranks of DUBAL to become President and CEO of one of the largest single site smelters in the Western world. He also sits on the boards of a number of regional and international associations and companies, as well as being an active Emirati policy maker.

Abdulla J.M. Kalban

TBY DUBAL celebrated its 30th anniversary in 2009 and is one of the flagship industrial pow-erhouses in the UAE. What developments has DUBAL witnessed in the industrial sector over the last three decades, and what factors have been instrumental to its success?ABDULLA J.M. KALBAN The industrial sector in Dubai in particular has become very at-tractive and extremely solid. The aluminum industry is the biggest non-oil industry in the UAE today. Aluminum is a commod-ity, and banks are using metals as a re-serve, even as an investment. We currently sell to almost 300 customers worldwide in about 45 countries on six continents. We manufacture products in three main forms: extrusion billets, foundry alloys, and high-purity aluminum. We are focus-ing on four different sectors: construction, packaging, transportation, and also now aerospace. A decade ago, we accounted for 7% to 9% of the industrial sector. This has changed slightly with a lot of new companies now contributing to Dubai’s GDP. Today we are producing 1.03 million tons. Currently, 10% of our production is used locally, while 90% is exported. When 90% of your production is exported, you need good facilities, good transportation, and a good port to handle 900,000 tons of metal exports. We are very fortunate to have DP World, which has contributed to DUBAL’s success because of the technol-ogy and services that it provides. We, in

turn, contribute to its income—about 25% of DP World’s income comes from DUBAL, through transportation and handling, plus storage, because we store our products at its facilities. From there we also supply five to six downstream destinations in the UAE. We work closely with downstream busi-nesses in the UAE and have been doing so successfully for the last 33 years.

Which are the key markets for you, and where are you witnessing increased growth and in-ternational demand?In the 1980s, we used to sell 80% of our products to Asia. However, after the Asian financial crisis in the late 1990s, we shifted our focus to other parts of the world. Asia and Southeast Asia nevertheless remain important markets for us. The Moroccan, Tunisian, and Egyptian markets are impor-tant also, as well as Syria, Jordan, and Leb-anon. About 17% of our total production is sold to Europe, and that is a major market; not so much from a revenue perspective, but from a strategic one. In the EU, a 6% tariff is applied to all of our products, and this duty has been imposed for almost 15 years. When this tariff is reduced, the mar-ket will become far more lucrative for us. The newest market for us today is South America. We started selling there last year, with 10,000 tons being shipped to that market. We aim to sell 25,000 tons there in 2012. By 2015, we expect to sell more than

1

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1 Abdulla J.M. Kalban, President & CEO of Dubai Aluminium (DUBAL)2 DUBAL sells its products to almost 300 customers in 45 countries3 DUBAL plans to produce 2.5 million tons of aluminum by 2020 with partner EMAL

50,000 tons to South America, mainly in Brazil, Chile, and Venezuela.

How was the price of aluminum affected by the global crisis?Before the crisis, aluminum prices were close to record highs. During the crisis, prices dropped to close on $1,300 per ton. Despite this, 2009 was a good year for DUBAL as we adopted a different strategy to the other players. While many compa-nies cut production, made staffing cut-backs, froze salaries, halted projects, and stopped supplying certain customers, we did the opposite. The company actually increased its production, and continued its capex projects. The most important thing to DUBAL is our people, and we ensured that no one would be laid off. Throughout the crisis period we invested in our people, and we invested in our companies. We have people from over 45 nationalities working for us, and we pride ourselves on our inter-national and highly skilled workforce.

In 2007 you entered into a joint venture with Mubadalla to create Emirates Aluminium Com-pany, and together you launched the EMAL Project. What were the strategic motivations behind that move, and can you tell us a little bit more about the project and other projects you have ongoing at the moment?In 2005 we saw the potential to utilize our business model. After 25 years of growth

DUBAL had a great deal of potential in terms of people, labor experience, and technology. In 2006, Abu Dhabi officials expressed an interest in aluminum pro-duction, because its government had the energy, the site, and the desire to diversify the economy from oil into industry. Also, they wanted to build a downstream in-dustry plus sub-downstream businesses. Being a large manufacturer of aircraft maintenance items, aluminum produc-tion made sense. We teamed our interests and by 2020 are planning to produce close to 2.5 million tons from both companies. Synergies are now being studied between DUBAL and EMAL in terms of sales pur-chasing, training, and equipment, and we are trying to optimize as much as we can. EMAL Phase I was completed at the end of 2010, and it produced 724,000 tons in 2011, which DUBAL has successfully sold. EMAL now has 200 customers in 30 countries. EMAL Phase II has just started. This will take the total production capacity of EMAL to 1.3 million tons, using technology that was developed by DUBAL here in the UAE.

Turkey is one of your target destinations. What makes Turkey so attractive to you?Turkey is a very big market, it is close to us, and we believe that the aluminum industry in Turkey is booming. It is a very encour-aging market as we don’t face restrictive trade tariffs. We have started selling more

products to Turkey, and once we are fully comfortable with the Turkish market we may invest in additional technologies. We sell only one product to Turkey: foundry alloys. Our Turkish customers used to buy 25,000 tons per year, but are now taking up to 75,000 tons. We sell our products to larger car manufacturers and are able to provide the quality of backup support that such companies require. We are also looking into extrusions in Turkey. As the extrusion plants are scattered around the country, the logistics are difficult, so we are working with an agent to find the best way to reach these extruders. We would like to sell through Turkey to other coun-tries close by, using it as a hub. ●

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AMR ALI AHMEDManaging PartnerAl Shafar Steel Engineering (ASSENT)

AHMAD BIN HASSAN AL SHAIKHChairmanDucab

NAJI SKAFCEOGulf Cryo

EXCEPTIONALLY HIGH Steel is very important in many countries, but owing to the fast development of the UAE, the demand for structural steel is exceptionally high here. At the moment, we are focused on steel building materials for in-dustrial, oil and gas, water, and power facilities.

ADDING & EXPORTINGMost of the material we use is imported from Western Europe and Asia, particularly Korea and Japan. We engineer, man-ufacture, and add value to this material in Dubai in order to prepare it for the local market or export it to other countries.

POSITIVE & CHALLENGINGWe have almost reached the maximum capacity of our fac-tory, and we need to maintain our strengths to win more proj-ects. Currently, we are finaliz-ing contracts in Saudi Arabia and Kuwait, as well as in Abu Dhabi. I am very positive about 2012, but it will not be an easy year.

MEASURABLE ACHIEVEMENTSDucab started by producing simple low voltage cables for construction, but now pro-duces the full range of low, medium, high, and extra-high voltage products. Also, we now produce our own copper rods and PVC and employ over 1,200 people at our sites in Abu Dhabi and Dubai.

MOST SIGNIFICANTRegarding the markets that we focus on, the domestic sector is the most significant. We own a market share of between 35% and 65%, depending on the product. We are also strong in regional markets.

STRONG COMMITMENTSIn 2010 we announced a 50% growth rate and in 2011 a rate of almost 40%. I think it is the commitment of the man-agement team, as well as the whole staff, looking to provide quality of service to clients and customers.

CHASING OPPORTUNITIESA priority for Gulf Cryo is to continue to expand our re-gional footprint from one bor-der to the next, reinforcing our regional competitiveness as well as defending established territories. We will be proactive in chasing opportunities and continue to build and maintain our product portfolio.

STRATEGIC APPROACHIn terms of our strategic ap-proach, we know our core strength is in bulk and pack-aged gas product lines, and we know the regional economies are driven by the oil and gas sector and government infra-structure projects, so naturally these are areas to concentrate on.

ONE-STOP SHOPWe are building up new ca-pacities to improve our prod-uct availability for air gases, CO2, and hydrogen, and also expanding our packaged gases distribution points in our ex-isting markets. We are more and more a one-stop shop when it comes to industrial and medical gases and their related services.

Manufacturers are employing Dubai as a base for industrial production to take advantage of its proximity to profitable markets and booming local demand.

Coming TogetherROUNDTABLE: Local Industry

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As Dubai seeks to create a knowledge-based economy, industry benefits from collaboration and prime infrastructure in a zone dedicated to manufacturers and logistics companies in the sector.

In the Same NeighborhoodFOCUS: Dubai Industrial City

Upon completion of the first phase of de-velopment in 1Q2012, the Dubai Industrial City (DI) expanded to an area of more than 55 square kilometers of space available for the development of logistics and manu-facturing facilities. In addition, utilities such as electricity and water, as well as irrigation, roads, and telecommunications infrastructure are now readily available in the zone, which is set to become a major hub for industry companies operating in Dubai or seeking to establish a presence in the Emirate. To prepare for the expected 25% medium-term growth of the sector and in response to the 16% increase seen in 2011, the DI is working to provide a variety of resources to investors and offer benefits in six areas of industrial production. As part of the TECOM Investments busi-ness parks, the DI is the only non-free zone in the group, offering services to over 150 companies. Multinationals such as Kanoo Engineering, Shafar Steel, Al Futtaim, Ara-bian Automobiles, BASF, Conmix, Terazzo, Arabtec, Alec, BASF, IKEA, and DoFreeze have already begun operations in the DI, taking advantage of the supply chain and its geostrategic location. These enterprises also benefit from the increased connec-tivity in terms of air, sea, and road trans-port links; the zone’s proximity to the Al Maktoum International Airport and Jebel Ali Port is expected to further enhance the DI’s attractiveness for foreign and local in-vestors, as connectivity becomes increas-ingly important. Although the DI’s location is seen as its main advantage, the diverse nature of the small city enhances its appeal as a place to do business and transfer knowledge. For those establishing a base in the DI, six zones have been developed to organize businesses within key industries: food and beverage, transport equipment and

parts, heavy machinery, mineral products, chemicals, and base metals. “These zones are further complemented by other servic-es,” Abdulla Bel Houl, Managing Director of DI, told TBY, explaining that “3.3 mil-lion sqm of state-of-the-art warehouses, labor accommodation, dedicated power substations, modern office buildings, and a number of municipal amenities” are avail-able at the site. DI also offers open yard space of nearly 700,000 sqm, designed for the storage of construction materials and automobiles. The area is fully fenced with perimeter lighting, and is monitored by a 24-hour, on-site security team. As of February 2012, 30% of new warehousing under construction was already reserved. Over 1 million sqm of warehousing com-prises the second phase of DI’s develop-ment, which is especially suited for food and beverage producers and the pharma-ceuticals industry. To date, the creation of this infrastruc-ture has required an investment of $1 bil-lion. The DI will eventually cover an area of 185 million sqm, house approximately 500,000 residents working in the sector,

and support 30 factories, with completion of the entire complex slated for 2015. Since 2004, the DI has been working to enable operational synergies through cooperation between similar segments of industrial production, as well as offering a solution for real estate needs. In doing so, the zone provides industrial land for self-building, pre-built warehouses for logis-tics and light industrial use, labor accom-modation, office space, retail showrooms, on-site assistance for start-ups, and op-erational services for each tenant. Demand for space in the developing DI continues to increase with the support of campaigns, exhibitions, and business partner testimonials, Bel Houl told TBY. “We are in the process of negotiating with several large industrial players who are looking to establish a base at Dubai Indus-trial City. Some of these will be announced soon. We are keen to maintain this positive momentum,” he said. Looking to the fu-ture, the DI is expected to be a springboard for enterprises entering the local market and a source of innovation and collabora-tion for the industry sector as a whole. ●

1-3 Dubai Industrial City boasts office, worker accommodation, and warehouse facilities

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INTERVIEW

Ready & WillingTBY talks to Abdulla Bel Houl, Managing Director of Dubai Industrial City, on the history of the industrial zone and the advantages of investing and operating in Dubai.

BIOGRAPHYAbdullah Bel Houl is the Managing Director of the Manufacturing and Logistics Cluster at TECOM Investments, a member of Dubai Holding. The Industrial Cluster currently comprises Dubai Industrial City, the region’s leading manufacturing and industrial destination. He is mandated to establish Dubai Industrial City as the most competitive industrial destination in the UAE. Prior to his current position, he was the Executive Director of Building Project Management at Tamdeen and Senior MEP Manager Asset Development at Dubai Properties Group.

1 Abdulla Bel Houl, Managing Director of Dubai Industrial City

Abdulla Bel Houl

TBY Dubai Industrial City has more than 150 companies operating in the zone, including some of the biggest names in industry. What strategies have you initiated to attract such large players?ABDULLA BEL HOUL Dubai Industrial City ranks very high when it comes to re-sponding to the supply-chain needs of our business partners. Within its 55 square kilometer precincts, the city has leading industrial names such as BASF, IKEA, and Al Marai, which is a regional dairy manu-facturer from Saudi Arabia. We are the second largest non-real estate project in Dubai, which consists of six zones dedi-cated to key industries: food and beverage (F&B), heavy machinery, mineral prod-ucts, chemicals, and base metals. Organiz-ing industries into their own zones brings obvious, inherent benefits of symmetry, specialization, and safety. There is strong synergy between the chemicals and min-erals industries, since companies working in the mineral sector and producing build-ing material such as cement rely on chem-ical-based products. Some other factories

recycle water and the excess is passed to construction firms. These zones are fur-ther complemented by other services such as 10 million square feet of state-of-the-art warehouses, labor accommodation, dedicated power substations, modern office buildings, and viable commercial area, in addition to a number of municipal amenities. To date, Dubai Industrial City has invested more than $1 billion to create this infrastructure. Dubai Industrial City is adjacent to the Al Maktoum International Airport and within a short drive from the Jebel Ali Sea Port. Both factors have been pivotal to the growing popularity that the zone enjoys, among companies that are looking to expand their industrial opera-tions out of Dubai.

In which sectors are you seeing increased in-terest and growth?We are experiencing good growth across all six industrial zones, but I would particu-larly mention that our F&B, base metals, heavy machinery, and chemical zones are receiving considerable attention. The F&B zone lends itself very well to the unique set of infrastructure and logistic requirements that go into the manufacturing, packaging, and movement of food products across the region. Our business partners in the other zones support activities in the construc-tion sector, including the mechanical, electrical, plumbing and air conditioning industries. Our warehouses are also regis-tering significant interest. In January 2012, we launched our second phase of state-of-the-art warehouses across 3.5 million square feet of land. These include facili-ties for cold storage, which are especially suited for F&B and the pharmaceutical in-dustry. We also have warehouses for gen-eral use, others for light industrial activity, and retail showrooms equipped with back storage. Already, 30% of the new phase of warehouses is booked.

What makes Dubai such an attractive logistic hub, and what is the growth potential for the re-export sector here?Historically, Dubai has enjoyed promi-nence as a harbor for international trade between East and West. The pivotal part played by Dubai Creek is also of special interest: this natural waterway is where Dubai began trading with the world—and the world with Dubai—more than a cen-tury ago. Personally, I find it fascinating that even with the appearance of mega

ports like Jebel Ali, the Creek has retained its commercial appeal, in particular with regional traders. Besides the ports, the government of the UAE has put priority on the development of world-class urban infrastructure, streamlining various pro-cedures that make the UAE the top coun-try in the Middle East in terms of ease of doing business. Additionally, the govern-ment has made sizeable infrastructure de-velopments; the Emirate is located within few flight hours from the large markets in South and East Asia and the modern Euro-pean markets. Dubai also enjoys excellent sea and port facilities, as well as a modern road network that facilitate the land trans-port of goods across the GCC.

Would you say there is any need for further regulatory change in the industrial sector to help the market open up further?Generally speaking, industrial projects are by nature very capital intensive. The government of the UAE has taken strin-gent steps to boost the nation’s industrial sector. The industrial sector grew to 16% of national GDP in 2011, becoming the sec-ond most valuable sector in the UAE after the hydrocarbon industry, and there are plans to further increase the contribution of this sector to reach 25% in the future. The creation of Emirates Development in 2011, with its mandate of supporting short- and long-term development re-quirements, is an excellent step forward as it will help fuel the local industry fur-ther. Commercial banks are also realiz-ing that industry offers significant long-term returns and are now more willing than before to support worthy industrial projects. ●

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The Perfect FitFORUM: Auto Retailers

K. RAJARAMCEO, Al Nabooda Automobiles

MICHEL I. AYATCEO, AWR Automotives

AXEL DREYERGeneral Manager, Galadari Automobiles

The single most important reason behind our success is that we have the finest workshops in the world as well as the world’s largest VW workshop. The company has one of the largest Porsche workshops in the world, and we are in the process of building the world’s largest Audi showroom, which will have five floors. The only way you can sell a high-ticket car is to invest in facilities. We are the world’s largest Porsche dealer—no other dealer comes close to us. Our firm is just starting the design for the new Porsche center. We are the agents for Dubai and the Northern Emir-ates. From Dubai, Fujairah, and Sharjah, we reach all our markets. People who have the money to buy our type of cars will always have money. Some customers deferred purchases during the global financial crisis, but sales al-ways pick up. For VW, which represents our mid-range segment, what happened was many people left during the recession. They then all started coming back. We are back now to figures we had in 2007-2008. Most of our customers hold onto their cars for be-tween three and five years. The company is also very active in the secondhand car mar-ket. Monthly, we sell 20-25 used Porches and 50-60 used Audis. We sell what we get in, but we do not get a lot of used cars to sell.

Luxury brands, multi-purpose vehicles, and passenger cars are fulfilling Dubai’s demand for mobility in terms of class and style.

Looking at UAE vehicle sales in 2011 up to and including August, we can see that MPVs—or multi-purpose vehicles—repre-sent the fastest growing segment in the UAE market, witnessing 24% growth. However, this a relatively small segment of the overall UAE automotive “car park.” More interesting to note is the 12% growth in the luxury car segment, which itself gives a strong indication that consumer confidence is returning to the UAE. Light commercial vehicle (LCV) sales are witnessing growth of 12%, and the tradition-ally dominant passenger car and SUV seg-ments are continuing to grow, albeit at lower digit growth rates of 3% and 2%, respectively. The total GCC car market is up just 1% in 2011, and the UAE car market is up 10%, but Arabian Automobiles’ sales growth across the Nissan product range is up 35%, and we take great pride in having outperformed the UAE car market by more than three fold. During the boom years, business came to us without the need for marketing. There is no substitute for developing an organization based on best practices. We need to have the IT to enable the business to function at the highest levels in an automated fashion. Our people need to be educated to deliver the best performance to more than 180 nationalities living in Dubai. The company has to get the basics right to achieve customer satisfaction and customer retention.

Galadari Automobiles has over 35 years of history within the UAE market, so it is one of the oldest automotive distributors in the local market. It has also had a distribution agree-ment with Mazda for 35 years, making it one of Mazda’s oldest partners in the region. The market has changed from basically a seller’s to a buyer’s market. Customers want a pro-active approach and proper follow-up. They want proper professional treatment. The customer now has plenty of choices. He will browse around in the showrooms looking for the best offer, and it is not only about the car and the package, it is also about the treat-ment he receives. Our aim is to give personal-ized treatment to our customers. It is not an easy task because of the different nationali-ties we have in Dubai. Everybody has his own perception of how he wants to get treated, so it is difficult in this kind of environment. But we are looking forward to fulfilling these kinds of objectives. Of course, service is one of the key factors because the sales executives are getting trained to sell the cars, and increased customer loyalty or the retention ratio comes from the service. If the customer is satisfied with our service then maybe he will consider Mazda for the next purchase or recommend us to a friend. Therefore, we are really focus-ing on the service side to treat the customer in a different and more personalized way.

Dubai2012

INDUSTRY 103

High-end vehicles are especially attractive to consumers residing in Dubai, and multinationals see the Emirate as a prime location for the development of a more comprehensive components industry.

Top of the LineFOCUS: Automobile Industry

When it comes to 4x4 luxury, there are few that compare to the new Nissan Patrol. Command attention on any road with its supreme performance from an unmatched 400hp engine. Savor every mile of effortless acceleration while the thoughtfully crafted interior wraps itself around you. Step inside and witness the decadent result of perfected history.

REWARD EVERY SENSE WITH LUXURY.

2 0 1 2

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Dubai 04-2952222 | Sheikh Zayed Road 04-3390999 | Sharjah Al Khan 06-5542333 | Sharjah Al Wahda 06-5398111 | Ajman 06-7421161 R.A.K 07-2351661 | U.A.Q 06-7666158 | Dhaid 06-8822681 | K.F.K 09-2382092 | Fujairah 09-2223818 | Dibba 09-2444753www.nissan-dubai.com

Although auto manufacturing in the Mid-dle East is largely limited to a small number of assembly lines dedicated to commercial vehicles such as buses and trucks, the UAE is one the largest consumer markets in the GCC. The country makes up approximately one-quarter of all passenger car sales in the entire region. The UAE’s rising national wealth has created a niche market for the sale of imported vehicles, and a large re-export trade exists based on the country’s regional status as a key strategic location. Dubai takes the lead in the country’s car market, home to 50% of the vehicle stock, and continues to be a high-consumption, fast-growing market for the automotive industry, with a consistently high ratio of cars per household in recent years. The combination of a young demo-graphic, relatively high living standards, a growing population, and generally favor-able oil prices continues to be a key driving force behind growth in Dubai’s auto sec-tor. According to the recently conducted New Vehicle Buyer Survey, 66% of all new car purchases in the UAE are made by customers between the ages of 18 and 29. First-time buyers make up 61% of all new

car sales, due largely to the young demo-graphic profile of the UAE as a whole. The survey also revealed that car buyers in the UAE make brand choices based on seating and ride comfort in addition to style and reliability. The styling aspect is particu-larly notable in the UAE, where cars have long been demonstrative of an individual’s public image. Figures indicate that Japanese auto-mobiles dominate the auto market with a 60.98% share, while Korean brands come in second at 13.78%, followed by US brands at 10.15%, and European brands at 8.20%. The industry reported strong fig-ures in early 2011, and despite the disaster in Japan, car sales continued to perform strongly throughout the year. This was due in part to high stock levels, accord-ing to Khaled M. Issa, COO of Hyundai Dubai. The local automotive market grew by 19.7% in 2010 to $11.1 billion, up from $9.2 billion in 2009, according to figures released by the Ministry of Foreign Trade. Trade in small passenger and luxury cars grew by almost 24% to $10.6 billion in 2010 compared to $8.5 billion in 2009. Do-mestically, car sales in the UAE in 2010 in-

creased by 10% to $42.4 billion compared with $38.5 billion in 2009. Overall UAE passenger car sales of all types rose 15% to 273,924 in 2011 and are expected to climb a further 13% in 2012. Al Majid Automobiles, the UAE retailer for Hyundai, witnessed a 40% growth in sales in 2011 for the first seven months of the year. Similarly Ara-bian Automobiles, the UAE retailer for Nis-san, recorded an 18% improvement in sales over 1H2011. The dealer also registered a 40% increase in its second-hand car sales in 2010 and expects sales of new and used cars to equalize over the coming years ow-ing to the rising popularity of pre-owned vehicles in the region. Evidence that the automobile industry is also benefitting from the UAE’s safe-haven status has been demonstrated by the dramatic growth in the sales of SUV and luxury cars. Consequently, although the overall market was hit hard by the global financial crisis, regional political unrest during 2011 helped to boost local sales. The UAE is the world’s fourth larg-est market for Rolls-Royce and is a strong market for Cadillac model sales. General Motors launched a variety of new Cadillac

1

thebusinessyear

104 INDUSTRY

When it comes to 4x4 luxury, there are few that compare to the new Nissan Patrol. Command attention on any road with its supreme performance from an unmatched 400hp engine. Savor every mile of effortless acceleration while the thoughtfully crafted interior wraps itself around you. Step inside and witness the decadent result of perfected history.

REWARD EVERY SENSE WITH LUXURY.

2 0 1 2

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Dubai 04-2952222 | Sheikh Zayed Road 04-3390999 | Sharjah Al Khan 06-5542333 | Sharjah Al Wahda 06-5398111 | Ajman 06-7421161 R.A.K 07-2351661 | U.A.Q 06-7666158 | Dhaid 06-8822681 | K.F.K 09-2382092 | Fujairah 09-2223818 | Dibba 09-2444753www.nissan-dubai.com

models in 2011, including the CTS, CTS-V, SRX, and Escalade, and according to Middle East President John N Stadwick, these have been performing extremely well in the Dubai market. Luxury car sales rose around 20% to 25,010 in 2011, after a 16% rise in 2010, and are predicted to rise by up to 15% in 2012. Luxury vehicles ac-count for 9% of the country’s car sales, with purchases driven by the country’s young population. According to Business Monitor International, roughly 66% of all new car purchases in the UAE, which has the world’s sixth highest per capita income at over $47,000, are made by customers between the ages of 18 and 29. The impact of a further slowdown in the European market may be felt in the UAE luxury car market however, and Dubai’s safe-haven effect may also fade as partial political stability returns to other Arab countries. However, even if growth in the luxury market does slow, it is unlikely that the top-end brands such as Rolls-Royce, which sells cars priced above $270,000, will see a significant impact. The manu-facturing of the components sector, as with that of automobiles themselves, re-mains underrepresented in the UAE. It is estimated that approximately two-thirds of the auto parts and accessories that are imported are re-exported to other coun-

tries, predominately in the Middle East, Africa, and Europe. In fact, auto parts and accessories are among the top 10 products that Dubai re-exports.New tire imports have risen steadily over the last decade, while imports of auto components too have shown healthy, double-digit growth. The main components imported and exported include tires, mounted brake components, gear boxes, drive axles, mufflers and ex-haust systems, glass, lead acid batteries, and accessories. In the long term, Dubai has the strong potential to become a produc-tion base for components, due to the avail-ability of key materials locally, particularly aluminum and plastics. For the time being, investment from international companies into Dubai as a key parts distribution hub continues, with international giants such as General Motors expecting to make a $70 million investment for the expansion of its parts and distribution segment in 2012. The regional used car market is also expanding rapidly, registering annual sales of 100,000 units and valued at $1.5 billion, creating opportunities for Dubai as a hub for spare parts distribution. Environmental challenges such as the climatic conditions have also driven the market for accessories and spare parts, as citizens and expatri-ates continue to update and maintain their vehicles. ●

Luxury vehicles account for 9% of the country’s car sales, with purchases driven by the country’s young population.

1 Demand for luxury models has sparked the continued interest in car shows in Dubai

INDUSTRY 105

INTERVIEW

The Exclusive ExperienceTBY talks to K. Rajaram, CEO, Al Nabooda Automobiles, on the key strategies for marketing and selling luxury cars in Dubai.

BIOGRAPHYK. Rajaram has almost three decades of experience in the automotive industry. He started his career in Muscat, Oman in 1983. After working in Oman for almost 18 years, in 1996 he re-located to Dubai to run the Audi, Volkswagen, and Porsche Franchise in the UAE. He became CEO of Al Nabooda Automobiles in September of the same year.

1 K. Rajaram, CEO, Al Nabooda Automobiles

K. Rajaram

TBY What is the essence of Al Nabooda’s success?K. RAJARAM We sell cars starting from the AED100,000 range up to AED3 million. If you want to succeed in this market, you have to give the buyer an experience that is unique. He is not buying an ordinary car; he is buying an exclusive experience. What we have learned is that you have to put money into infrastructure, high-qual-ity workshops, facilities, and showrooms, as people want that after having paid this kind of money.

What does your future roll out strategy look like?In Sharjah, we are building three show-rooms and workshops. They will be opened three months after the opening of our Fujairah facilities. The Audi showroom will be ready by the end of 2012. Currently

we have 800 employees, and by the end of 2012 we will have more than 1,000.

How do you compare the micro markets un-der your dealership?All of them are growing, especially Fujairah. We have seen tremendous growth in the past six or seven months. A huge city center built by Al-Futtaim Group is com-ing up, and a new road is being built. Start-ing from February 2012, driving time from Dubai to Fujairah takes just 35 minutes. Abu Dhabi is building an oil and gas pipe-line direct to Fujairah to pump out oil and gas for export directly from there instead of coming around the Gulf. A lot is happen-ing in Fujairah. Sharjah has always shown good expansion, too. We have a large cus-tomer base in Sharjah. We already had a center there, but it was a small showroom. Now we are building a proper facility.

How do you compare your brands vis-à-vis your competitors?We have done a little better than most of them. In 2010 the Japanese had an over-stocking problem. We never had such an issue except for the first few months of the crisis. We sell all of our cars, and all our customers are on a waiting list. You can-not walk into my showroom and buy a car. In both middle and premium classes the demand is all around. The automobile in-dustry has been extremely strong in 2011,

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and we have seen tremendous growth. The industry was set back a little because of the earthquake in Japan, as the Japanese automotive industry caters to the global automobile industry. The entire car busi-ness has grown tremendously. We set a record in August by selling 217 Porches in a month, which has never been done in the history of Porsche.

How do you evaluate the regulatory framework in Dubai?There is a regulatory framework called the GCC Regulations, which define the re-quirements for automobiles in the GCC re-gion. This is a standard applied Gulf wide. Any manufacturer or dealer operating in the GCC automobile sector needs to com-ply with them.

From where do you receive your products?We receive cars from various manufactur-ing facilities around the world. It depends on the model. For instance, VW has 30 plants around the world. We get the new Jetta from the US, Beetle from Mexico, Amarok from Argentina, Touareg from Bratislava, and Golf from Germany. Essen-tially, we deal with VW Germany. What is more, Dubai’s import procedures are fan-tastic. We all have accounts with customs, and nothing waits at the port. If a car lands at 11:00 am, it is in my workshop by 12:30 pm in the afternoon.

What is your outlook for the short term?We are extremely surprised with the buoy-ancy of the market. We did not assume that we would be in a position where we would have no stock. On December 31 we ended 2011 with virtually no stock. In the car market we see that the Korean brands are growing very aggressively. They are eating away the market share of Japanese cars. ●

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Check It Out

Increased household consumption and expatriate wealth has driven trends in the FMCG market in recent years, and the sector is now employing record numbers.

FOCUS: FMCGs

1 Dubai Refreshments’ new manufacturing facility in Dubai is set to be the largest bottling plant in the Middle East

While the real estate sector continues to recover following the global economic downturn, retail was alive and kicking in Dubai and across the UAE throughout 2011. Behind impressive growth of over 30% in UAE retail sales figures in 2011 are increased household spending, the grow-ing wealth of the country’s expatriate residents, and more widespread modern retailing concepts. The UAE has one of largest mass grocery retail (MGR) sectors in the Gulf, with sales exceeding $5.3 billion in 2011, account-ing for 69% of the total food and beverage market. The trend looks set to continue toward MGR, which should represent ap-proximately 74% of the sector by 2015, ac-cording to Business Monitor International (BMI) data. As sales grow, so does the workforce. Mark Timms, Director of the Gulf Recruit-ment Group, claims that “employers an-ticipate a continued hiring pace [in 2012],

with the brightest job prospects reported by employers in the [FMCG], construction, and pharmaceutical sectors.” FMCG logistics spending is also on the up to cope with demand. Logistics spend-ing is now expected to grow at a CAGR of 4.6% over the 2010-2014 period. Moving into 2011, non-refrigerated food led FMCG logistics spending with 43%. Non-food personal care followed next with a 22% share.

MARKET STRUCTURE & DRIVERSIn 2011, the UAE’s packaged food market was valued at $2.5 billion. Bakery goods represented 23% of the market, followed by dairy (23%), dried processed food (20%), and confectionery (12%). The sec-tor is firmly focused on supermarkets and hypermarkets, especially due to the high urbanization level of over 85%, as well as weather conditions, which make it diffi-cult to sell fresh foods in non-refrigerated

environments. Supermarkets and hyper-markets account for 81% of packaged food sales, followed by smaller grocery retailers at 10%. Overall, total sales through MGR totaled $8.1 billion, with hypermarkets occupying a 51% market share, followed by supermarkets (21%), small grocery retailers (16%), and food, drink, and to-bacco specialists (12%). The small grocery retailer segment, unlike the supermarket and hypermarket segment, remains frag-mented, with over 70% being indepen-dent operators. The MGR sector is headed by Carrefour, with a 21% market share, followed by Union Co-operative Society (10%), ADCOOP (7%), Lulu Hypermarket (6%), and Choithram (4%). ››

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Dubai2012

INDUSTRY 107

Dubai Refreshments (P.S.C.) is the sole franchisee, manufacturer, and distributor of Pepsi-Cola Products in Dubai and the Northern Emirates.

The company introduced the Pepsi range of products to the UAE over 50 years ago and today, Dubai Refreshments successfully exports to over 35 countries.

DRC is currently building its brand new, state-of-the-art production facility at Dubai Investment Park to better service its growing list of local and international customers.

For all local and international business enquiries, please contact DRC at

Sheikh Zayed, 2nd InterchangeP.O. Box 420 | Dubai, United Arab Emirates

T. +971 4 3393000 ext. 2203 | F. +971 4 3381684

Sales of packaged food grew by 8.5% in 2011, with noodles and spreads expe-riencing the highest growth. Demand for convenience food such as frozen food and canned or preserved food also rose by over 10%, in response to longer hours worked by Emiratis and expatriates, according to New Zealand Trade and Enterprise. Fresh foods, except for meat and seafood, dropped over 2011, as the market trends toward convenient options thanks to de-mand from expatriates. In terms of growth, hypermarkets are recording the highest figures, growing 8% in 2010, taking mar-ket share aware from specialist stores. Dubai Refreshments, one of the first industrial companies in the UAE, manu-factures and distributes PepsiCo prod-ucts in Dubai and the Northern Emirates. Indicative of the beverages industry, its turnover in 2011 was around $260 mil-lion, and, according to General Manager Tarek El Sakka, the company is constantly seeking new opportunities in the market. “However, it is difficult for us to operate in small niche sectors. We are looking for categories where we can leverage our vast manufacturing and distribution capabili-ties,” he commented. The company is also gearing up to move its facilities to Dubai Investment Park, where it will occupy 1.4 million square feet of land. In terms of soft

drinks, smaller producers are starting to gain a foothold in an industry dominated by global brands. “There were very few products in Dubai 20 years ago, with car-bonated soft drinks dominating the bever-age category. Today, there are hundreds of products including flavored water, juice drinks, sports drinks, flavored milks, and malt beverages,” said El Sakka, concluding that, “this variety of drinks led people to experiment with new products. We must evolve with the market if we want to con-tinue to be successful.”

MARKET POTENTIAL & IMPORTSWith food consumption widely expected to increase at around 5% yearly until 2015, there is much potential for FMCG retailers and logistics firms alike. As the economy recovers further, demand for high-quality products will also rise, and Dubai will like-ly follow global trends into flavored waters and iced teas. Although hypermarkets and supermar-kets lead the way in growth expectations over the 2010-2015 period at 4% annually, the move toward convenience foods will also boost the growth of the convenience store sector. The UAE is an importer of food and beverages, importing $11 mil-lion worth in 2010. Due to the challenge of growing in the desert, fresh meat and

vegetables are mostly imported, as are cereals, fruit and nuts, and confectionery. India is the country’s biggest import part-ner in the FMCG sector, followed by Bra-zil and the US. Dubai’s traditional trading partner, Iran, comes in fourth. The UAE, however, meets approximately 80% of its own demand for milk, under 50% for eggs, and 30% for red meat. It is also home to many global brands, many of which reside in Dubai Industrial City, a non-free zone development catering to industrial firms in manufacturing and logistics. By the end of 2011, 30 factories were in operation in zone, and it was home to around 50 logis-tics firms from the region. Among Dubai’s global brands are Kraft, Mars, and Néstle, which told TBY it forecasts double-digit growth in 2012. Behind the growth, said Yves Manghardt, Chairman & CEO, is the amount of invest-ment being made. “The economy in the region is definitely picking up again,” he added. However, increasing price controls by the UAE authorities is a cause for con-cern among some FMCG manufacturers. “It can be a drawback and this is some-thing that the UAE has to manage more carefully,” commented Manghardt, con-cluding, however, that the “UAE has been a very investment-friendly place and should remain so.” ●

108 INDUSTRY

INTERVIEW

Thirst for GrowthTBY talks to Tarek El Sakka, General Manager of Dubai Refreshments, on the company’s partnership with PepsiCo, commodity prices, and new production facilities.

BIOGRAPHYTarek El Sakka has a Bachelor’s of Science in Business Administration from the University of Southwest Louisiana and an MBA from Rice University in Houston, Texas. He is a 25-year veteran of the FMCG business, and has spent over 19 years in various locations and positions within the Pepsi system. He is currently General Manager of Dubai Refreshments.

1 Tarek El Sakka, General Manager of Dubai Refreshments

Tarek El Sakka

1

TBY How has the business expanded since it was first established?TAREK EL SAKKA Dubai Refreshments is over 50 years old, and we were one of the first industrial companies in the UAE. The company has the license from PepsiCo to manufacture and distribute products in Dubai and the Northern Emirates. Dubai Refreshments is a public shareholding company with over 100 shareholders. Generally, our shareholders do not sell their shares. Many of our investors have been with us since the very beginning, and our shareholders include many of the UAE’s most well-known business fami-lies. We are outgrowing our current facili-ties, and we are anticipating a move to our new factory in 2013. Dubai has grown very rapidly, and our business has grown in the same way Dubai has.

Do you produce a full range of Pepsi products?Dubai Refreshments has a contract with PepsiCo, one of the leading companies in the world with a large portfolio of food and beverages. The range of products that we produce depends on what the market needs. If there is significant demand, new products can be sourced from the PepsiCo portfolio for local launch, but this is done after a careful feasibility study. Our fea-tured products from PepsiCo are carbon-ated beverages such as Pepsi, Diet Pepsi, 7-Up, Diet 7-Up, Mountain Dew, Miranda, and Shani, as well as products such as Aquafina and Lipton Iced Tea, which we import and distribute. We are also looking at a variety of other products that could potentially be distributed or manufactured in Dubai. In 2011, our turnover was about $270 million, and we are constantly seek-ing opportunities in the market. However, it is difficult for us to operate in small niche sectors. We are looking for categories where we can leverage our vast manufac-turing and distribution capabilities.

How have the prices of commodities such as sugar and plastic affected your operations?Although we managed to keep the price of Pepsi the same for more than 30 years, we were forced to increase it in 2011. This choice was driven largely by increases in commodity prices, particularly sugar. In-ternational sugar pricing is led by Brazil. The Brazilian economy has grown tremen-dously in the last 10 years, and the local currency became much stronger as a re-sult, which has helped drive sugar prices to historically high levels. Sugar is a signifi-cant element in our total production costs. Other elements such as energy and basic metals are also witnessing cost increases. These factors have contributed to the rising cost structure, which we eventually had to recover.

Where will your new operations be located?We have a plot of land in the Dubai Invest-ment Park, which is roughly 1.4 million square feet in size. Our current facility only has about 18,000 square feet of space, so we are expecting a large improvement in space. This transition is driven by the future expected growth of the UAE and of Dubai Refreshments, as well as our desire to be able to continue providing our cus-tomers with quality service and to offer our employees a healthy working environ-ment. The move is also based on our aim to enter new markets, which will require additional production facilities and logis-tics space. We are working to become a regional player, and we want to have the infrastructure that allows us to operate on a wider basis.

How well placed are local FMCG companies in competing with global giants entering the market?People have grown up with Pepsi, one of the oldest and largest brands in the UAE. We have a large market share in the car-bonated soft drinks category, and Pepsi-Cola is perceived as a local company with an international flavor. Few companies can match Dubai Refreshments in this regard, but we do see an evolution in the market, with many smaller producers becoming serious players. There were very few prod-ucts in Dubai 20 years ago, with carbon-ated soft drinks dominating the beverage category. Today, there are hundreds of products including flavored water, juice drinks, sports drinks, flavored milks, and malt beverages. There are a multitude of

flavors, packages, and different concen-trations of juice content for each product. In today’s market, the consumer has a wide range of choices and that is where we see competition. This variety of drinks led people to experiment with new products. We must evolve with the market if we want to continue to be successful.

Have local consumer tastes changed over the past decade?Consumer tastes are evolving with people trying new varieties of beverages. Many consumers are cola drinkers that venture out into other categories once in a while. Around 20 years ago, consumers may have tried a different product three times every 10 times they purchased a beverage. Today, consumers are experimenting much more frequently and are trying products such as tea, juice, and flavored water drinks, sim-ply because of their wide availability and variety. ●

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INDUSTRY 109

INTERVIEWJamal Al Ghurair

1 Jamal Al Ghurair, Managing Director of Al Khaleej Sugar

BIOGRAPHYAs an active member of many ventures and a fixture within the UAE business society, Jamal Al Ghurair has served on a number of advisory boards for both government and public sector organizations and was an Executive Member of the Federal National Council of the UAE for its 12th Assembly during 2000-2002. He is the Managing Director of Al Khaleej Sugar, and also manages a group of companies across many sectors, including porcelain, real estate, and transport.

Sweet SuccessTBY talks to Jamal Al Ghurair, Managing Director of Al Khaleej Sugar, on Dubai as a regional hub, the sugar market, and the export game.

TBY What is the history of Al Khaleej Sugar, and what is the benefit of using Dubai as a regional hub?JAMAL AL GHURAIR We are proud to be the first refinery in the Gulf region. Currently, our production capacity is approximately 1.5 million tons, and we export our prod-ucts to nearly 40 countries. Our primary markets are GCC countries with an addi-tional focus on Iraq and the MENA region. For centuries, Dubai has been a strategic hub and trading point; it offered us an ideal location to build our refinery. Dubai also offers world-class infrastructure and gives us a unique advantage to interact and conduct business with various organiza-tions and business interests from around the world.

Have there been any recent changes to the source markets for importing sugar to the region?We are a value-added business. We import raw sugar predominantly from Brazil, and then use our facility here to produce a re-fined product that we export to the manu-facturers of consumer products. We serve as a bridge between the raw producer and the consumer. We occasionally use suppli-ers from India when they produce a sur-plus. Our relationship is reciprocal. When Indian suppliers are short we sell back to them too. However, 60% of the world’s raw sugar originates from Brazil, so it re-mains our primary supplier.

What are your plans to expand the company?Our expansion plans are currently on hold as we are now in a market saturation stage. In basic terms, you can only produce as much as the market can consume. There-fore, our current focus is on optimizing production costs and improving our value-added services. We are additionally seek-ing to further develop our relationships with producers and consumers. In terms of new construction, we have built a new warehouse in Dubai with a storage capac-ity of 1.5 million tons in order to cope with fluctuations in the market and to increase our white sugar storage capacity to in-crease supply efficiency.

What have been the major recent trends in the market?Sugar is not on the front line of food pro-duction. Sugar generally plays a support-ing role based largely on consumer pref-erences. Lately, we have been producing

various types of sugar to cater to different product line needs. Our clients range from food and beverage producers to cooked food to direct consumers. When we first commenced operations, our clients were 20% industrial and 80% consumers. Now, we have reached a stage where these fig-ures are 40% and 60%, respectively. The industrial side of the business is grow-ing rapidly, much faster than the direct consumers.

What challenges is the industry currently facing?Sugar does not carry any duty or protec-tion tariffs in this region, so whenever a manufacturer has excess sugar, this region is the place to dump it. Our business suf-fers from this trend, and our key strategy is to reduce our production costs. Currently, the major short-term challenge we face is an oversupply from India in the market. In the long-term, the challenge is to be more efficient and closer to our customers. It’s absolutely crucial for us to identify trends and respond quickly. Anticipating con-sumer demand is vital.

You have made some significant steps in implementing sustainable business practices. Why is this important to you?We desire to be as environmentally con-scious as possible. The added benefit to us in implementing energy conserving measures is a continued reduction in our energy expenditures. This is a source of pride for us, as we currently consume only half the energy of similar manufactur-ers. Reducing energy costs is one effective technique for companies looking to reduce costs and maximize revenue potential.

What is your outlook for the industry in 2012?Currently, we are assisting companies en-tering the market, and persuading them to use Dubai as a hub to implement value-added services in the food supply chain. Companies can efficiently import raw products, add value, and then re-export. We benefit by supplying sugar. Person-ally, I don’t foresee any major trends in the sugar market in 2012. I think the trend will continue to be steady growth as food and beverage demand increases. ●

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thebusinessyear

110 INDUSTRY

INTERVIEWYves Manghardt

1 Yves Manghardt, Chairman & CEO of Nestlé Middle East

Try It OutTBY talks to Yves Manghardt, Chairman & CEO of Nestlé Middle East, on the company’s new facilities, the Middle East market, and the FMCG segment.

BIOGRAPHYYves Manghardt was born in 1957 and graduated from the HEC Business School in Lausanne, Switzerland. He joined Nestlé in 1984 and held various positions around Asia, including in Japan, Sri Lanka, Hong Kong, and Vietnam. Between 1999 and 2001 he was Country Manager of Nestlé Singapore, before becoming Commercial Director of Nestlé Philippines. In 2001 he was appointed Vice President of Nestlé SA, and later became Market Head of Nestlé Southern African Region, and later Nestlé Middle East Chairman & CEO.

1

TBY What is the significance of Dubai in terms of your regional operations?YVES MANGHARDT Nestlé’s first official presence in the Middle East was in 1934 in Lebanon. Since then, we have grown in the entire region, and we have opened operating companies in every country of the Middle East, with the exception of Ye-men and Iraq. In these two countries we work with agents selling and distributing our products on our behalf. In 1997, we established our regional head office in the Middle East in Dubai. We currently focus our activities on 13 countries of the Middle East.

In 2010 you opened a new factory in Dubai—a $136-million investment. What made Dubai the choice for such a large investment?There were many factors, including the ability to attract talent, the overall eco-nomic, political, and legal environment, and the existing infrastructure. It is indeed important that we are able to ship prod-ucts across the region easily, bring in raw materials, and export finished products. We took into consideration other factors as well, such as schools for children of all ages and investment and tax incentives. In the end, Dubai was selected to build a NIDO plant, followed by a KIT KAT factory. The overall environment in the UAE has been very supportive, and our employees very much enjoy living in the UAE.

In terms of retail and distribution, how would you characterize this market compared to others?We distinguish between three trade clus-ters in Middle East. The first includes countries like Qatar, the UAE, Bahrain, Oman, and Kuwait, where the top-10 re-tailers account for more than 50% of our sales. In this environment, business is much more skewed toward key accounts, supermarkets, and hypermarkets. In our second cluster, the top-10 retailers make

up less than 30% of our business includ-ing countries like Jordan, Saudi Arabia, and Lebanon. The third cluster consists of countries where the top-10 retailers ac-count for less than 5% of our business with countries like Palestine, Yemen, Iran, Iraq, and Syria. The UAE are very much a part of what we call a developed trade environ-ment, where key accounts, hypermarkets, supermarkets, typically Carrefour, Lulu, the Coop, and Spinneys represent the ma-jority of our sales.

What challenges are there for FMCG compa-nies operating in this environment?There is one key issue; the fact that there is increasing price control activity by the UAE authorities. It is a real challenge, and to a certain extent it threatens Dubai’s competitiveness in the future, both from a retail perspective and from an investment point of view as well. If a company is not free to price its products, decision makers will start to ask themselves if it is really the right place to invest. It can be a drawback and this is something that the UAE has to manage more carefully.

What products and strategies are you imple-menting to lead the local market?We are gradually establishing what we call a “multi-tier portfolio” with products and brand propositions for different price points, from premium to popularly posi-tioned products (PPPs). We are respond-ing to the diverse needs of our consumers by adding more products in the premium and in the more affordable segment to our assortment as well. Recently, we have launched our MAGGI bouillon powder that is even more affordable than our MAGGI stock cube in countries such as Syria and Iraq. In addition, we have introduced NESCAFÉ 3in1 Matinal, a different blend, which is more affordable than our standard NESCAFÉ 3in1. In Syria, we have brought a variant of KIT KAT to the market that is smaller than in the rest of the region in order to reach a specific price point. In the premium segment, we have just launched NESCAFÉ Dolce Gusto—a coffee machine with capsules—in the UAE, Qatar, and Kuwait. NESCAFÉ Dolce Gusto is the new way to have a coffee shop experience at home at a more affordable price. Two years ago, we introduced a range of premium soup called MAGGI Excellence, which has transformed our consumers’ experience in terms of quality and convenience. NE-

SCAFÉ Ready-to-Drink in cans is another successful product positioned more on the premium side. Our own factory in Dubai allowed us to re-launch KIT KAT last year with a taste that has been adapted to the preference of the Middle East consumers. We have a winning formula because we are manufacturing here, catering to the more specific needs of the region and using the latest technology available. ●

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ICT

REVIEW

INSIDE 113 An Apt Success - REVIEW | 116 HE Mohamed Nasser Al Ghanim, Director General of the Telecommunications Regulatory Authority (TRA) - INTERVIEW | 118 Eesa M. Bastaki, CEO of the ICT Fund - INTERVIEW | 119 Osman Sultan, CEO of Emirates Integrated Telecommunications Company PJSC-du - INTERVIEW | 121 Join the Cloud - ROUNDTABLE: IT Infrastructure Development | 122 Across the Board - Q&A: Global IT Solutions | 123 Stirring Interests - FORUM: IT & Media

Dubai Internet City has attracted many multinationals to open regional headquarters within its boundaries, including Microsoft, IBM, Oracle Corporation, Infor Global Solutions, Sun Microsystems, Cisco, HP, Nokia, Cognizant, and Siemens.

u Dubai, in its quest to become the premier hub for business and commerce in the region, has long recognized the significance of ICT, with investment in infrastructure now on the up.

An Apt Success

Given the national and transnational nature of telecommunications companies, the develop-ment of ICT and telecommunications in Dubai has been inextricably linked to the development of the sector in the UAE as a whole. The Inter-national Telecommunications Union (ITU)—the UN body that aims to guide the development of the industry globally—has, in its 2011 ICT Development Index, ranked the UAE the most advanced of all Arab states, and the 29th most developed in the world in terms of ICT. The ITU has also noted that the UAE “is now ranked fourth in the world after Japan, South Korea, and Hong Kong in terms of fiber-optic penetra-tion,” with the country’s telecommunications market expanding in value from $8.2 billion in 2005 to $13.6 billion in 2011, attaining 20% an-nual growth.

TELECOMS PLAYERSThe modern telecommunications era in the UAE effectively began in 1976, when local partners and UK technology firm International Aeradio established Emirates Telecommunications Cor-poration (Etisalat), which later came under ma-jority UAE government ownership and control. Etisalat, among the first networks in the world to deploy mobile phone technology, enjoyed a market monopoly over nearly all aspects of the telecommunications market until 2005, when the UAE government inaugurated the Emirates Company for Integrated Telecommunications. The new company launched the “du” brand the following year, and in 2007 launched its mobile service, which by 2009 had secured 32% of the UAE mobile market. While financial turmoil ››

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in the UAE that year slowed du’s ascent some-what, it quickly recovered pace and by the end of the first quarter of 2012 had captured some 46.7% of the mobile telecommunications mar-ket of 11.7 million subscribers. Du added some 320,600 customers in 1Q2012, more than any quarter in the preceding two years, with the average revenue per user (ARPU) in the mobile sector at $32.4. Given that mobile penetration in the UAE was a sliver under 200% at the end of 2011—the highest mobile penetration rate in the Middle East and among the highest in the world—du’s gains have largely been chipped away from Etisalat’s customer base, rather than by attracting new customers to the market. In the first quarter of 2011, for example, du added 272,000 mobile subscribers, while concurrently Etisalat lost 334,000. Competition between the two carriers has been limited to the mobile market, however. Although both companies do offer fixed-line and broadband services, as of the second quar-ter of 2012, they did not offer them in the same areas of the UAE. Announcements of a timeline for when competition may begin in these other areas of the telecommunications market have been in and out of the media for several years, with the latest deadline being the end of 2011. At the end of December 2011 the UAE’s Tele-communications Regulatory Authority (TRA)—formed in 2004 to monitor, regulate, and guide the development of the industry—announced that plans had been postponed once again, ex-plaining that neither operator was technically ready for the network sharing that would be necessary to allow for competition in the fixed-line and broadband markets. While perhaps frustrating for consumers, the situation in the UAE is in line with global trends for telecommunications markets that have been newly opened to competition. Given the cost of infrastructure development and the generally slow consumer adoption rates of fixed-lines, new players in the market tend to focus efforts on the relatively cheaper and faster-growing mobile sector. Indeed, when one looks at the UAE, there is an average of two mobile sub-scriptions per resident, while fixed-line sector penetration was still at just 31% by the end of 2011. When it entered the market, du had initially targeted low-revenue mobile users, but has evolved its strategy as its success has grown, with the company increasingly targeting Eti-salat’s post-paid subscribers, who tend to be higher-spending clients. The company has stated that in its projections, given its current trajectory, it will surpass Etisalat’s market share in the UAE by end 2012. Telecommunica-tions experts in the UAE have also stated in pub-lished reports that du’s total revenues are likely to increase 54% between 2010 and 2015, while Etisalat’s gains will be a more modest 18% over the same period. While being hounded by du in its home market—which resulted in a 3% loss

in operating profits in the UAE—Etisalat’s over-seas operations also took a beating in 2011, with tough trading conditions eroding the value of its operations in India, hacking nearly 23.4% off of its 2011 net profits. That said, in terms of overall reach, revenues, and resources, Etisalat still dwarfs du, given that the former is a transnational player active in 18 countries and is the largest company in the UAE outside of the oil and gas industry, while the latter’s operations are largely limited to the Emirates. As a straight comparison, Etisalat’s total revenue in 2011 was $8.77 billion, with net profits, after royalties paid to the govern-ment, pegged at $1.58 billion; du’s total revenue in 2011 was $2.42 billion, with net profits after royalties a shade under $300 million. In its annual report for 2011, the TRA noted that the telecommunications sector contributed 4.9% to the UAE’s GDP, and employed 10,800 people. The same report noted that internet service subscriptions increased 10.5% in 2011 to more than 1.3 million, while the number of internet subscriptions using fiber-optic lines was up 70.8%, signaling a massive migration away from more antiquated copper-wire net-works. This is reflected in the fact that, as the TRA report pointed out, in 2008 there were no residential customers receiving internet service faster than 4 MB per second, while in 2011 almost half of all residential subscriptions matched this speed or were faster. Both Etisalat and du said they would continue to expand their high-speed fourth-generation (4G) and long-term evolution (LTE) networks through-out 2012, with the former launching the service in December 2011 and the latter launching it in June 2012. And while rumors of the possible introduc-tion of a third telecommunications player in the market have circulated almost since the cre-ation of du, the TRA has denied that it intends to allow a new provider to enter the market before 2015. Market analysts have pointed out that this hesitance is likely due to the fact that, given the level of saturation in the mobile market, a third player could only make gains on the current duopoly players’ losses.

ICT TECHNOLOGYThe UAE, and Dubai in particular, has invested heavily into transitioning into a knowledge-based economy, notably by investing in free trade zones with optimized facilities to attract multinational companies. The impetus for Dubai Internet City (DIC), for example, came in the late 1990s when it became clear that the Emirate’s ability to count on its oil resources for revenue was shrinking, according to DIC Man-aging Director Malek Sultan al Malek. “The ICT sector provides a platform for other industries to develop. Unfortunately, at that time the re-gion only had consumer products and we didn’t have system developers or ICT infrastructure companies,” he says. “We had to create spe-

Telephony Usagein millions of usersFixed LinesMobile Subscribers

Internet Usagein millions of subscribers

International Telecommunications Union’s ICT Development Index 2010by regional and global rank

14

12

10

8

6

4

2

0

1.45

1.40

1.35

1.30

1.25

1.20

1.15

1.10

2008

2008

2009

2009

2010

2010

2011

2011

2012

Source: TRA

Source: ITU

1ST UAEGLOBAL RANK 29

2ND BahrainGLOBAL RANK 33

3RD QatarGLOBAL RANK 45

4TH Saudi ArabiaGLOBAL RANK 52

5TH KuwaitGLOBAL RANK 65

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cialized value propositions for these companies and industries to come to Dubai. This is why we decided on the first free zone out of the stra-tegic plan to move toward a knowledge-based economy. What we’ve done for this special-ized economic zone is to study the goals of the typical ICT company. For many, the goal was to expand into the Middle East, and we decided to provide an open door for these companies to put a foot in this region.” Among the specialized infrastructure within the DIC is a state-of-the-art telecommunica-tions network, with the DIC having its own branch dedicated specifically to meeting the needs of DIC clients. “For example, we deployed temporarily a state-of-the-art platform by Cisco, and we were the largest community using IP telephony at that time,” says Malek. “The government has been keen to encourage the development of this and other sectors, and we offer incentives to technology companies such as free zone status, tax breaks, and so on. Multinational companies are coming here not only to serve Dubai, but to have a place to start in and to learn from, to then serve the whole region.” And come they have. Since opening in Oc-tober 2000, and allowing for 100% foreign ownership, the DIC has attracted numerous global heavyweights to open their regional headquarters within its boundaries, includ-ing Microsoft, IBM, Oracle Corporation, Infor Global Solutions, Sun Microsystems, Cisco, HP, Nokia, Cognizant, and Siemens, among others. The DIC’s more than 140,000-sqm area is now the base for more than 850 companies and their

more than 10,000 employees. The proximity of so many companies involved in software devel-opment, business services, e-commerce, and consultancy in the same area has functioned like a magnet to draw in more. This cluster effect has been compounded by the DIC being situated beside other free zone areas including Dubai Media City and Dubai Knowledge Village, adjacent to popular resi-dential areas including Dubai Marina, Jumeirah Beach Residence, and Palm Jumeirah, and at the same time a stone’s throw from half a dozen high-end hotels and conveniently accessible 25 kilometers south of downtown Dubai off of Sheikh Zayed Road, the main route to Abu Dhabi.

A TELLING SUCCESS“Promoting competition in the telecommuni-cations sector has also benefited the develop-ment of ICT infrastructure,” stated the ITU in a recent report. “Such competition not only encourages development of the ICT industry, but also acts as a stimulus for overall economic development of the country.” A sign of the regional dominance Dubai has helped foster in the ICT industry is that the UAE is now the source of some 60% of mobile phone application development in the Middle East, according to Flagship Projects, a local applica-tions development company. The firm reports that the most-used Arabic language apps in the region are in the genres of music, social news, and religion, with an estimated 40% of those who own a smartphone using between six and 10 apps per day. ●

Internet service subscriptions increased 10.5% in 2011 to more than 1.3 million accounts.

1

1 Etisalat operates in 18 countries across Asia, the Middle East, and Africa

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INTERVIEWHE Mohamed Nasser Al Ghanim

TransformationTBY talks to Mohamed Nasser Al Ghanim, Director General of the Telecommunications Regulatory Authority (TRA), on the move away from monopoly and fiber-optic solutions.

BIOGRAPHYMohamed Nasser Al Ghanim is the Director General of the Telecommunications Regulatory Authority (TRA). Described as a telecoms and ICT veteran and one of the few highly experienced telecoms engineers in the UAE, he was entrusted with establishing a telecoms regulatory body in the UAE in 2004. In 2006 and under his leadership, the TRA licensed the second telecoms operator in the UAE, thus putting an end to a 30-year monopoly and opening the UAE market up to fair competition in the telecoms sector.

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TBY What has been the biggest achievement of the Telecommunications Regulatory Au-thority (TRA) since its inception in 2003, and was it in line with what you originally set out to achieve?MOHAMED NASSER AL GHANIM The vision of the TRA is an optimal enabling environ-ment in which the UAE’s ICT sector will emerge as a leader in the global market-place. Since its inception, the TRA has at all times worked toward this vision whilst re-specting government policy and the aspi-rations of the leadership. The TRA’s vision has been supported by four strategic ob-jectives: organizational excellence; the e-readiness of government services; the pro-motion of shared infrastructure between government entities; and a world-leading environment for ICT services. In accor-dance with its vision, the TRA is working closely with all stakeholders to undertake the necessary projects to secure the TRA’s vision for the sector. Since introducing competition in mobile services in 2007, the TRA has been very happy with the way the mobile market has developed. We have two very innovative operators with advanced networks offering low prices by interna-tional standards. Competition works very well in that market. The TRA is in the pro-cess of introducing a range of measures to enhance competition within the market such as, for example, bitstream intercon-nection and passive infrastructure sharing (ducts, cables, and exchanges) for high-speed data markets. In terms of consum-ers, the TRA recently undertook a number of surveys within the UAE that revealed, among other things, that there is generally a high level of satisfaction amongst busi-nesses and consumers with the ICT servic-es delivered in the UAE. Finally, a number of international bodies collect information from around the world in order to rank countries across a wide range of different telecommunication sector indicators.

What role does the evolution of the local telecommunications industry play in the wider 2030 vision for the UAE? What are the strengths of the UAE as a regional ICT hub?The overall health of the UAE’s economy is intrinsically linked to the state of the tele-communications sector. This is because telecommunications is a vital business in-put. If we want a strong economy, we need a strong and sustainable telecommunica-tions sector. Without a robust telecom-munications sector in the UAE, businesses

would not be able to compete effectively in the global markets and they would be less likely to move to the UAE. Telecommuni-cations also plays a very important role in the day-to-day life of our residents, so it is important from a social perspective that we continue to focus on safeguarding the future of the sector.

How large a role does the ICT sector currently play in contributing to Dubai’s economy?Dubai’s economy is strongly ICT based and matches the TRA’s vision of becom-ing a global leader in the region for ICT services. In the free zones of Dubai (and, to a certain extent, Abu Dhabi) many of the world’s leading ICT companies have established offices or partnerships with established ICT companies locally. The TRA has a key role to play in ensuring the continuation of a strong and sustainable telecommunications sector. The TRA has put in place policies ranging from the pre-vention of anti-competitive practices to cyber security to improve the functioning of the telecoms market in these zones. It must also be recognized that the TRA’s role is not just to assist in the development of industry—it is also to protect the end-users of telecommunications services. But, over-all, we strive to ensure that we achieve an internationally competitive telecommu-nications sector that supports the growth ambitions of the UAE’s economy and at the same time meets the needs of both busi-ness and consumers in Dubai.

The entry of du into the market in 2007 changed the market from a monopoly to a du-opoly. What challenges were faced in effecting this change?The main challenges the TRA faced during the introduction of du into the telecommu-nications sector was to ensure the appro-priate policies and practices were in place to allow competition to develop. Since the introduction of du in 2007, both UAE op-erators have invested heavily in fixed and mobile infrastructure, with each having very advanced 4G mobile networks, and in high-speed fixed fiber networks. Both mobile and fixed networks in the UAE are very advanced when compared to those in most other countries around the world. The operators are also continuing to invest in developing innovative product and ser-vice offerings within the market and the TRA works hard to ensure that the regula-tory environment supports this continued

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1 Mohamed Nasser Al Ghanim, Director General of the Telecommunications Regulatory Authority (TRA)2 There are more than 1,300 companies registered at Dubai Media City

We strive to ensure we achieve an internationally competitive telecommunications sector.

investment through being stable, trans-parent, and based upon internationally recognized best-practice principles.

You recently updated your methodology for collating local telecommunications statistics. Did the most recent report reveal any new trends?The latest data published by the TRA is for January 2012. This showed that subscrip-tion levels for fixed, mobile, and internet services have continued to grow. For ex-ample, the total number of mobile sub-scribers at the end of January 2012 was 11.94 million. This represents an increase of 213,000 total mobile subscribers since the end of December 2011. The apparent decrease in penetration of all the telecom-munications services was due to a change in methodology of how the TRA estimates the population of the UAE. For example, for mobile services the penetration fell from 199% in December 2011 to 149.1% in Janu-ary 2012.

How advanced is the UAE, and Dubai specifi-cally, in terms of fiber-optic connectivity?The UAE has an extensive fiber footprint, not only in the densely populated areas but also in the less populated areas, with a strong commitment to roll out the fiber networks nationwide in the coming years. The fiber networks are a mixture of GPON-based FTTH/FTTB combined with intra-

building copper cabling with ethernet topology. A variety of services is provided over fiber from residential services like voice, internet access, IPTV, business ser-vices, symmetric and asymmetric high-speed data connections, and MPLS-based VPN services. The two operators, Etisalat and du, are both rolling out their respec-tive fiber networks in the UAE, although du has a historic footprint in certain areas in Dubai, whereas Etisalat covers the rest of the UAE.

What approach is being taken to establish a strong regional internet exchange?The TRA has conducted extensive studies on Internet Exchange Points (IXPs) from technical, regulatory, and economical fac-tors. The TRA recognized that establish-ing a regional IXP in the UAE would boost its position as an ICT leader and hub. The TRA has identified this project as one of the strategic projects for the industry. The TRA is working with the industry to establish the IXP in the UAE. The objective of this project is to promote public peering on in-ternet traffic between carriers and opera-tors based on international best practices. The establishment of the IXP will ben-efit the ICT industry and the consumer in terms of diversity in internet connectivity, performance, and price. The IXP technical setup is currently in the testing phase and will be launched soon. ●

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INTERVIEW

Time to LinkTBY talks to Eesa M. Bastaki, CEO of the ICT Fund, on its initiatives to promote and enhance ICT development in Dubai and make a lasting impression on the global industry.

BIOGRAPHYEesa M. Bastaki received his BSs and MSc degrees in Electrical Engineering from the University of California, San Diego and PhD from the University of California, Irvine. Before becoming the CEO of the ICT Fund, he held several high-ranking posts such as Chairman of the Energy Research Section, and later the Technology Research Section between 1990 and 1992 at the Technology and Energy Research Center of UAE University (UAEU). While at the UAEU, he served as the Assistant Dean. He also founded the IT Center at Al-Ain Municipality in 2000. Bastaki was Consultant and Director of Education and Technology from 2003 to 2008, and one of the founders of the Dubai Silicon Oasis Authority.

1 Eesa M. Bastaki, CEO of the ICT Fund

Eesa M. Bastaki

TBY What key strategies are in place to achieve the aim of making the ICT sector the second largest in Dubai?EESA M. BASTAKI Future trends are very promising in the ICT sector, and world economies will be measured through ICT implementation and production. Modern communications, as an example, started with connecting people to people. Then it developed from connecting people to serving them in all aspects of life. Hence, the future favors the ICT sector transform-ing developing economies into developed societies. Therefore, the ICT Fund’s key strategies are to create a skilled workforce through funding scholarships, to support R&D in ICT, and to enhance knowledge ac-quisition through funding incubators and start-ups. This is due to the fact that the

increase in ICT dependency is exponen-tial and growing rapidly to the extent that technology will be a necessity if a society wants to keep up with the changes. ICT will be the main economic driving force for the future of those who want to sustain ec-onomically and catch up with the trends. Nowadays, the world spends more than $3 trillion annually buying technology, and the trend is strengthening exponentially year after year. Future technology will play a large role in every aspect of work, busi-ness, industry, health, environment, secu-rity, and more. This will require trillions of dollars to be spent yearly. Thus, producing technology will control the larger portion of the world’s economies, comparing it to the oil and gas industry, which could have nearly the same share.

How large a role does the ICT sector currently play in contributing to Dubai’s economy?The ICT sector is playing a very important role in Dubai and the UAE’s economy. However, it is mainly contributing to the economy on the infrastructure and ser-vices side. The UAE has yet to acquire the know-how of technology and transfer the knowledge into society to create an ICT knowledge-based economy. Thus, through the technological initiatives al-ready in place, the ICT sector will be play-ing a very important role to contribute to the economy of Dubai and the UAE. The day will soon come when the UAE will be producing knowledge and exporting it to the world.

What areas will the ICT Fund’s budget be fo-cusing on for development in 2012? What are your considerations when allocating funds to organizations for R&D?In 2012, the ICT Fund will mainly focus on creating the required skilled workforce by supporting scholarships to universities in the country and abroad. It will also sup-port schools as they create awareness of new technology available and the ways to utilize it, as well as deal with the basic elements of ICT technology for the benefit the country. Secondly, we will focus on funding R&D in ICT to localize know-how and create knowledge. Thirdly, the ICT fund will support ideas and concepts from those innovators in order to be foster their skills and generate innovative ideas to de-liver products that are “Made in the UAE, sold globally.” Finally, the ICT Fund will support ICT National Interest Projects by

funding them, in order to fill the gap and connect the missing link needed to create an ICT eco-system.

Promoting an entrepreneurial culture among the young people of Dubai is of great impor-tance to you—in what ways are you fostering this culture?An entrepreneurial culture already exists in Dubai. However, the ICT entrepreneur-ial culture still needs to be looked at. This is the missing link that needs to be connect-ed. The ICT Fund is striving to create this culture through supporting ICT incubators in the country. These incubators produce graduates as start-up companies, which will form the nuclei of the local industry. The ICT Fund will also establish its own in-cubator to help the country establish tech-nology companies and achieve our goals.

Innovation is an inherent part of media in an ever-changing world. How do you see Dubai as a hub for innovation? Dubai is well known for its innovative ini-tiatives, even though it has very limited resources. It is the creativity of Dubai that has led it to progress so rapidly and com-pete with much more mature economies. Since ICT is the future for those who want to keep up with the vast advancements in technology, it is natural to enter into the field of production. ICT companies can contribute to the sector and create the eco-system we envision in the UAE through supporting technology transfer. The re-sults of the success stories will help Dubai contribute to the overall development of the ICT industry worldwide. ●

1

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INTERVIEW

A True DelightTBY talks to Osman Sultan, CEO of Emirates Integrated Telecommunications Company PJSC-du, on the brand, revolutionizing the telecoms sector, and innovation in the UAE.

BIOGRAPHYOsman Sultan was named CEO of Emirates Integrated Telecommunications Company PJSC-du in January 2006. Having joined the telecommunications industry in 1983, Sultan’s experience in the field is varied and covers operations in Europe, North America, and the MENA region. He has held management positions in sales, marketing, and customer services, as well as leadership roles in three of the world’s largest telecommunications companies.

1 Osman Sultan, CEO of Emirates Integrated Telecommunications Company PJSC-du

Osman Sultan

1

TBY What was the vision behind the creation of du, and what were the challenges to enter-ing the market?OSMAN SULTAN The creation of du was the first step in opening up the telecommuni-cations sector in the UAE to competition. It was the first time in UAE telecoms history that the market was opened up to second-ary players after 100% penetration had been attained in the mobile segment. That, in itself, was a great challenge. Another challenge we faced was that it was the first time that a telecoms start-up was offering the full range of telecoms services right away. Usually, start-ups begin with only mobile voice services and then move on to offer fixed broadband services and so on. From the very beginning, we had a man-date to offer services in mobile, fixed tele-coms, fixed broadband, home TV services, IP TV services, and broadcasting. That was a very exciting challenge. The third chal-lenge, and probably the most important, was that this is the first telecoms start-up in the Arab world that was created without support from an existing and established operator.

What have been the most instrumental factors in the exponential growth the company has witnessed in its short five-year history?We should be very proud of what we have achieved in just five years of launching our services. Today, we are a company that has a significant market share in the mobile sector in the UAE—over 46%. In the most penetrated market in the world for mobile services that is remarkable by any stan-dard. We are now getting close to having 6 million active mobile customers. We have managed to reach close to AED9 billion in revenues in 2011. We have very good profit margins, as evidenced by our ability to dis-tribute our first dividend to our sharehold-ers just five years after launching the ser-vice. We are very proud of these results, of our position in the market, the value cre-

ated for our shareholders, and the pool of talented people that we have. We worked hard to get this talent on board and cre-ate a strong corporate culture, and today I believe that we have one of the strongest brands within the Arab world. We have ex-cellent infrastructure. Our mobile broad-band network has recently been ranked the best in all of Africa and the Middle East. We also have solid foundations in our governance. We are very passionate about the brand, which is not just about having a nice logo or campaigns; the brand is about everything that this company lives and breathes, interfacing with its customers, employees, and shareholders.

What trends have you seen in the growth of mobile data in the UAE, and what percentage of total revenue does mobile data comprise at the moment?Today, data revenues represent about 15% of our revenues. I expect that in the coming five years it will exceed 30% or 40%. Less than 20 years ago, mobile telecommunica-tions empowered the concept of mobility that transformed completely almost ev-erything we do. Mobile data and broad-band capabilities added a completely new dimension. It came with incredible power; the power of the internet, the power of ››

Our mobile broadband network has recently been ranked the best in all of Africa and the Middle East.

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new freedom, enjoyment, efficiency, and prosperity, especially in emerging econo-mies. Now, we are contemplating the mo-ment when, in just a few years, the number of mobile devices will be higher than the number of human beings on this planet. The internet itself was a breakthrough, and later gave birth to social networking. I strongly believe that being connected is a basic human right. It is an idea that I am passionate about.

Broadband internet in the UAE is still working on becoming more competitive in terms of speed and cost. How do you see this evolving?In terms of speed, I think that broadband internet in the UAE is already very com-petitive. The UAE will probably be one of the first countries in the world to have fiber-optic cables running into all homes and offices. In terms of cost, things have evolved a lot, especially in the residential market over the last three years, driven by competition. However, fixed broad-band for business probably needs some more attention. It is becoming increasingly competitive, though. All over the world, telecoms operators are looking at how to price it properly. I think that enterprise customers are willing to pay for a premium service. Capacity is going to become more vital. This is why we are going to spend bil-lions investing in the right infrastructure.

Looking at the UAE as a hub for potential in-novation in the IT market, how is du leading the way?The idea of the UAE as a hub is a very im-portant one. Things evolve, and depending on the pace of change, you feel the progress of evolution. The UAE first became a hub for goods and merchandise in this part of the world, helped along by the right infra-structure. It then began to transform into a hub for people through the creation of the right enablers: themed free zones, tour-ism, airport infrastructure, airlines such as Emirates, Etihad, and Air Arabia, as well as flydubai more recently. These develop-ments are responsible for turning the UAE into a hub for capital inflow and invest-ments. I am convinced that the next phase will see the UAE becoming a hub for the digital space. It is a natural step. This part of the world generally missed the industri-al revolution of the previous two centuries. We did not create the infrastructure for big factories that could drive innovation—we were buying and using. I believe that the digital age is a great opportunity. It does not require all the infrastructure of facto-ries and R&D centers. Dubai, over the last 15 years, has been through a brainstorm-ing process and put all the right aspects in place to attract investment flows. In the digital age, we have the opportunity to ce-ment the UAE’s place on the map. Aware-

ness at the level of decision makers, policy makers, regulators, industrial leaders, and the community to incubate entrepreneur-ship could create the right ecosystem to continue attracting these flows in this digital space.

What is your outlook for 2012 for du and the wider communications industry?I think that at the end of 2012 we will be a bigger, more profitable company that will be able to delight its customers a little more. We will continue to get better at attracting the best talent from across the UAE, and create more value for our shareholders. We will be able to play a bigger role in the con-struction of the telecoms sector, and play a little bit more of a role in the development of the economy of the UAE. We will do this with ambition and determination, but also with a lot of humility in this fast-changing digital space. ●

2 Data services represent 15% of du’s revenues

Emirates Integrated Telecommunications Company PJSC-duin numbers

Established in

2005Market Share

46%+2011 Revenue

AED9 billion Number of Employees

2,0002

Image: Allan C. Donque

thebusinessyear

120 ICT

MOHAMMAD ABDULLAHManaging DirectorMedia Cluster

MALEK SULTAN AL MALEKManaging DirectorDubai Internet City & Dubai Outsource Zone

YASSER ZEINELDINCEOeHosting Datafort

AT ONCEZones dedicated to the ICT, education, and media sectors were established at the same time, in line with the idea of building a knowledge-based economy in Dubai. The idea of a media zone was not new; when Dubai Media City was established, similar zones had already been launched in loca-tions such as Jordan and Egypt.

BEST BANDWIDTHIn general, it is very impor-tant for us to keep the ICT infrastructure up to date. We are a leader in terms of fiber-optic distribution within the UAE, and that is an advantage. Within Dubai Media City, we are continually working with our telecommunications part-ner to provide the community with premium services, such as high-speed bandwidth.

ENHANCED UPGRADESWe continue upgrading our equipment, because what was useful 10 years ago is not effec-tive today, especially in terms of online content and digital media. We are working closely with the government to en-hance these upgrades.

SERVING DIRECTLYWe had to invest in our ICT de-partment, and so we created our own telecoms department within the free zone to specifi-cally serve our partners direct-ly. For example, we temporar-ily deployed a state-of-the-art platform by Cisco, and we were the largest community using IP telephony at that time.

SPACE FOR CHANGEToday, we have more than 1,300 ICT players operating within Dubai Internet City. We had to plan the right environ-ment for those ICT companies, and in just 10 years we’ve been very successful in attracting al-most all of the key players. Ev-ery year we review the indus-try’s requirements and provide space for change.

GET STARTEDWe are fostering innovation by establishing the telecommuni-cations center, subsidizing ser-vices for young entrepreneurs, and soon we will be announc-ing other packages for locals who want to get started.

WORLD CLASSWe are focused on the service aspect of the industry. The last survey we conducted revealed that 97% of our clients would recommend us to other clients. We are very proud of this. Sec-ondly, we aim to deliver IT pro-cesses, and we are world class in this respect.

BUZZWORDThe buzzword for a number of years has been cloud comput-ing. However, we are in the early stages of adopting this technology. The SME segment is much faster on the uptake, especially for software ser-vices. We are also seeing the adoption of hardware-related components of infrastructure.

TAILORED FOR SMES

We have a new initiative for SMEs, which are enjoying huge growth in the UAE. We have a tailored offering for these mid-sized companies to begin producing and operating more efficiently.

IT infrastructure organizations and companies are working together in the virtual world to develop solutions and innovations for the next generation.

Join the CloudROUNDTABLE: IT Infrastructure Development

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ICT 121

EYAD SHIHABIManaging Director, HP Middle East

ANDREW HURTGeneral Manager, Xerox Emirates

Sustainability, infrastructure, and convenience attract foreign IT companies to Dubai, where they enjoy government support and a wide customer base.

TBY talks to two foreign executives operating in Dubai on the advantages of the local market, consumer appetites, and future perspectives.

What attracted you to Dubai Internet City (DIC) as an office base?

EYAD SHIHABI DIC is a location that gave HP and many other technology companies good reason to establish here. The infra-structure that they created is very flexible, from the buildings to the facilities them-selves. More important are the free zone capabilities and the facility that enables us to use a one-stop shop across the board. The legislative support and flexibility make it easy for us to recruit people, in terms of going through immigration and labor concerns. The authorities came up with a model that encouraged businesses to come here and be successful, by recognizing that our success would be their success. We have a joint partnership with DIC that sup-ports us in country-specific programs. It

Across the BoardQ&A: Global IT Solutions

not only made it easy for us to do business here but it works in partnership with us to benefit the whole community.

Where do you see the key business opportuni-ties in the industry?

ANDREW HURT There is a race to manage print services. It’s a race because most printing within the next five or 10 years will be under some form of management. We are not just managing prints from Xerox machines; we’re managing print across more of our competitors’ machines as well. That’s one area of opportunity. I think there’s a big opportunity around environmental sustainability and we have a number of unique solutions in the area. We have a technology called “solid ink.” Essentially, it doesn’t use cartridges. The waste is set to be solid ink because a frac-tion is used by laser printers.

In a market with an increasingly tech-savvy population, what initiatives do you undertake to keep up with growing expectations?

ES Many local companies have already upgraded their infrastructure and are at the level where they compete with mature companies. Where we are now providing further education is on how they can bet-ter utilize their investments to date—how companies can use private clouds in their environment, how service providers install public clouds and deliver a better service, and how they can capitalize on the mass

of information they have. For example, we have new audio technology that can be used by call centers, which allows us to record the tone of a caller’s voice, so that a company can search for unhappy custom-ers that called that day and the software will group them by recognizing the tone. We have video technology that allows you to censor footage more efficiently. So where we are focused is in bringing cus-tomers to the cloud and helping them to adopt technology more efficiently.

Do you think that there’s an appetite for green technology in the region?

AH Absolutely. When you’re in a country that has one of the largest carbon foot-prints in the world, clearly there’s a con-science that people have around how they, in their organizations, can reduce that carbon footprint. This is one of the tech-nologies they can use. One of the things you do when you assess an organization is see how many devices they’ve got. What we have found in this part of the world is that there’s a very high ratio between the number of devices and the number of employees.

What is your outlook for the coming year?

ES Our outlook is very positive. The in-dustry has now adapted to the new way of doing business and companies are looking for new business models. We are predicting further investments in cloud computing and information optimization. People are starting to see the power of information and companies that are able to position themselves to offer capabilities are going to benefit. As a citizen and as a consumer, I see a lot of options, and we are going to see significant investments across the region to capitalize on the infrastructure that is in place here.

AH Our head office is one of our focuses. We built the infrastructure and built right throughout the crisis. We built infrastruc-ture for the next 20 or 30 years, and the whole philosophy was to provide infra-structure that was scalable, more produc-tive and efficient, and allowed customers to do business with us in an easier way. This is a platform for growth that will be focused on services, service delivery, and after-sales service support for our tech-nology business. ●

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122 ICT

AMOR BEN DHIAChairman & CEO, Cellempower

NAYLA AL KHAJAProducer & Director, D-SEVEN Motion Pictures

ISLAM ZWEENBusiness Director, Logta

By mid-2008, the market started feeling one of the biggest financial and economic crises the world has ever witnessed. The GCC was hit and the situation became extremely tough and difficult. Since then, the situation has re-mained difficult, but we bounced back and made sure that our business would thrive by sticking with our customers and clients, serv-ing them at our utmost best and thereby gain-ing their trust and confidence. However, in our experience, investment in value-added ser-vices was extremely challenging. It is hard to make people understand that while it is based on intelligence and human resources, there is still a certain level of risk when you invest in a company like Cellempower. Though we are profitable, and we weathered the storm, there are still challenges—it is just the way the country is. The attitude of the investors or institutions is extremely conservative regard-ing this innovative ICT business, which is now generating two—sometimes three—digits of growth, year-in and year-out. ICT revenues represent more than 35% of the telecoms in-dustry’s total revenues in less than five years’ time. We are as confident as the serious ana-lysts that this sector of mobile value-added services and data in general will continue generating more wealth and opportunities, thanks to the technological readiness, quality of the terminals, and the involvement of differ-ent major players.

Companies involved in IT and media are working to add value and take risks in an industry spearheading economic growth.

Stirring InterestsFORUM: IT & Media

The local film industry in Dubai is still in its early stages, and the Emirate is experiencing a very interesting phenomenon. Both fear and excitement spread rapidly here, and I would not be surprised if filmmaking catches on at a similar speed. Anything that grows fast can be very risky as well, but so far the spirit of the industry is daring and fearless. A decade ago, there was very little infrastructure for filmmaking. Today, many more resources are available—whether filmmakers seek crew or equipment. I can confidently say that I have made a film in the UAE without hiring equip-ment from overseas. However, we still have a lack of personnel in the field. In film, there are many departments, and in Dubai, it can be difficult to find a specialized pyro-technician, precision driver, or stunt master. We do fly in specific crewmembers, but the basic actors and technicians are here. Film fever has in-fected the Middle East, especially in the GCC. To be more specific, Doha, Abu Dhabi, and Dubai are increasing their efforts in film edu-cation and awareness through new programs, workshop training, university courses, and festivals. In the past, the Dubai International Film Festival (DIFF) was the only celebration of the industry in the region, but today we have over five film festivals in the Gulf. This is a very good sign that there is increasing demand for film, and many young aspiring filmmakers.

We offer SMEs web stores that address their branding needs. For retailers without e-com-merce infrastructure of their own, we provide an online platform to sell their products. We are trying to build an e-commerce community. If we do not come together, there will not be an industry. Therefore, we are trying to cater to businesses as much as we are trying to cater to consumers. Other innovations we are introducing concern online payments. We are introducing bank transfers as an option for those customers who do not wish to share their credit card information online. These customers can also purchase pre-paid cards and control the money they spend at Logta. Logistics is very important, and couriers now have to enhance their operations related to e-commerce, or new players in the market will fill this void. Some integration is needed between retailers and logistics. Retailers need to improve their inventory of goods available on online platforms. We notice that logistics operators do not treat online shoppers very seriously, and the quality of their operations as far as e-commerce is concerned falls short of customer and retailer expectations. Also, there is room for investments in warehous-ing, which we have already started in Saudi Arabia. This model had been applied by Ama-zon for a long time, and we are adopting this model gradually, trying to implement it in a way that speaks to the needs of the region.

Dubai2012

ICT 123

Driven to become the global aviation capital

Capturing the full value potential as a global passenger, tourism, trade, cargo and logistics hub.

Providing the capacity and connectivity, and leveraging existing assets to meet the needs of the aviation sector and economic growth plans of Dubai.

Ensuring sustainable and responsible growth committed to safety, health, the environment and security.

Providing and creating customer-focused services to gain competitive advantage from innovation, knowledge and efficiency.

Building and retaining capabilities for the aviation sector, while offering career opportunities for Nationals.

Ensuring a transparent, effective and commercially balanced regulatory framework that reflects the interests of the aviation industry, Dubai and the UAE.

Providing efficient and cost-effective services to the aviation sector.

TRANSPORT & LOGISTICS

REVIEW

INSIDE 125 In the Right Mode - REVIEW | 130 HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman & Chief Executive of Emirates Airline & Group - INTERVIEW | 132 Mohammed A. Ahli, Director General of the Dubai Civil Aviation Authority - INTERVIEW | 134 Paul Griffiths, CEO of Dubai Airports - INTERVIEW | 135 Upstairs, Downstairs - Q&A: Airlines | 136 Habib Fekih, President of Airbus Middle East - INTERVIEW | 137 Beyond the Sea - FOCUS: Port Expansion | 138 Sultan Ahmed Bin Sulayem, Chairman of DP World - INTERVIEW | 139 Never a Naysayer - Q&A: Logistical Solutions | 140 Movers & Storers - ROUNDTABLE: Logistics

Dubai-based DP World operates more than 60 terminals across six continents. In 2011, it handled nearly 55 million TEUs globally. Its flagship port is Jebel Ali in Dubai.

u The core of Dubai’s economic success has been a commitment to logistics infrastructure and its geographic position. It is of little surprise that the city ranks highly as a global transport hub.

In the Right Mode

In a move that shows how far the UAE has come in terms of developing its transportation and logistics infrastructure, the World Economic Form’s Global Enabling Trade Report 2012 ranked the UAE first in the region—and 11th in the world—in terms of the “availability and qual-ity of transport infrastructure.” Such a ranking placed the country ahead of the US and many Northern European countries, with the UAE’s air transport infrastructure rated as the fourth-best in the world, its marine transport facilities placing sixth globally, and its transshipment connectivity seventh best in the world.

THE VISIONMuch of the credit for Dubai’s international success is due to the achievement of the Emirate in developing and marketing itself successfully as the principal transportation and logistics hub in the GCC, if not the entire Middle East, North Africa, and South Asia region. The Emirate has leveraged its geographic position to be the transit point connecting Eastern and Western markets and metropolises, while integrating its port, rail, road, aviation, warehousing, and free zone infrastructure. All of this is commensurate with the vision for development put forth by the Ruler of Dubai and UAE Vice-President, HH Sheikh Moham-med Bin Rashid Al Maktoum. Among the main facilitators of his strategy in recent years within the government of Dubai has been the Emirate’s Road and Transport Authority (RTA), formed ››

Dubai2012

125

in November 2005 under the stewardship of Board Chairman and Executive Director Mattar Mohammed Al Tayer. Meanwhile, on the avia-tion side of the transportation sector, govern-ment-owned Dubai Airports has been oversee-ing infrastructure development in the wake of increasing traffic and fleet and route expansion from Dubai’s domestic airlines, Emirates, and flydubai. Dubai is showing no signs of slowing its transportation and logistics infrastructure growth, with the Emirate’s 2012 budget allo-cating 41% of total public expenditure to roads, transportation, civil aviation, airports, and tourism—or $3.6 billion of $8.78 billion in total public spending.

AIRThe planned centerpiece of Dubai’s aviation sector is the new Al Maktoum International Airport, located within the logistics hub of Dubai World Central (DWC), as well as Dubai International Airport. Already the fourth larg-est airport in the world, according to Dubai Air-ports CEO Paul Griffiths, Dubai International is undergoing a $7.8 billion expansion that aims to increase its capacity from 60 million to 90 mil-lion passengers annually by 2018. Al Maktoum, for its part, is slated to be one of the largest airports in the world upon completion, spread over an area of 68 square kilometers and able to transit 160 million passengers annually and 12 million tons of cargo. Within the DWC complex

Dubai Logistics City, DWC Commercial City, and DWC Aviation city are also under develop-ment. “Dubai’s geocentric location, high-cal-iber infrastructure, quality home airlines, and an aviation model that features a liberal regu-latory and tax-free business environment and close coordination and collaboration within the sector are the key factors in our growth story,” says Griffiths, who is responsible for the op-erations and development of both DIA and the DWC. “Thanks to Dubai’s open skies policy, the airport is connected to more than 220 destina-tions across six continents through 150 airlines, and continues to attract more airlines. It is a model that is paying big dividends.” He adds that aviation directly and indirectly contributes more than 250,000 jobs and $22 billion to the economy of Dubai, representing some 19% the Emirate’s total employment and 28% of its $80 billion GDP; by 2020, these numbers are set to jump, with the aviation sector set to make up 22% of total employment and 32% of GDP in Dubai. “The combination of a successful tourism industry, Dubai’s proximity to the emerging economies of the East, and the Emirate’s es-tablished role as a trading hub linking econo-mies in the Far East, Europe, Africa, and North America, will drive growth and further consoli-date Dubai’s status as a global center for trade, tourism, and commerce,” says Griffiths. “The success of Dubai’s flagship carrier Emirates, which is among the world’s fastest growing ››

1-3 The new Al Maktoum International Airport will handle 160 million passengers annually

Dubai is showing no signs of slowing its transportation and logistics infrastructure growth.

1

2 3

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airlines, and the meteoric rise of our low-cost carrier flydubai—the two biggest contributors to passenger and cargo traffic at Dubai Inter-national—will also remain a major factor in our future growth story.” The DWC also opened to cargo flights in June 2010 and is now a regular stop for 36 airlines, according to Griffiths, who adds that in its first year of operations volumes totaled 90,000 tons. The most significant percentage traffic growth during 2011 was seen on routes linking Dubai to Eastern Europe (81%), Russia and the CIS (30.5%), the GCC (26.5%), and North America (16.1%). “Since the beginning, Dubai Airport has ap-plied an open-skies policy. The main obstacle was in persuading the other operators to adopt it,” says Mohammed A. Ahli, Director General of the Dubai Civil Aviation Authority, noting that Bahrain has signed on, and Dubai has inked agreements with most European countries. “We have something even more with the US; the ‘Seventh Freedom’ has allowed cargo carri-ers to travel without returning to their point of origin. This means companies can do business and travel on. This is very good for Federal Ex-press [FedEx] and DHL; they are both coming to Dubai without going back to the US.” Ahli adds that open-skies agreements are in place with “almost all” Pacific and Asian air-line groups and “nearly two-thirds” of African countries. “We are fourth in terms of carrying international passengers,” he says. “We hope that by the year 2020, Dubai will be the number one aviation capital of the world—second place is not acceptable.”

SEAThe two main commercial ports servicing Dubai are Port Rashid and Port Jebel Ali, with the latter being the world’s largest man-made harbor and the flagship port of government-owned DP World, the world’s third largest port operator. “To date, we are operating more than 60 marine terminals around the world with a global team of 30,000 personnel,” says Sultan Ahmed Bin Sulayem, Chairman of DP World, noting that the company’s volumes in 2011 in the UAE region hit 13 million 20-foot equivalent units (TEUs), while globally DP World moved 54.7 million TEUs last year. Jebel Ali witnessed strong growth and handled 3.2 million TEUs in the first three months of 2012 alone—an 8.5% increase over the same period last year. “It was clear from listening to our customers that growth in demand would mean Jebel Ali would soon be under considerable capacity,” he said. “It was this that led us to announce plans last year to add 1 million TEUs to Terminal 2 to take its capacity to 6 million TEUs, and to develop a new terminal, Terminal 3, an invest-ment of $850 million, with the capacity for 4 million TEUs. Together they will take Jebel Ali’s total capacity to 19 million TEUs by 2014.” Sulayem added that the new Terminal 3 will

be capable of receiving the next generation of mega container ships that can carry as many as 18,000 TEUs. “In addition, the Dubai Logistics Corridor [DLC], which opened in 2010, is a positive force for growth,” he says. “It is one of the world’s largest sea-land-air transit bridges, with in-tegrated customs and security facilities. Al Maktoum International Airport is just 20 min-utes away from Jebel Ali Port, providing the supply chain sector with one of the most effi-cient multimodal platforms anywhere.”

ROAD & RAILIn November 2011, the RTA announced that in the last six years it had invested some $16.3 billion in roads, traffic alleviation, and pub-lic transportation projects, with some 90% of those developments having been completed. Altogether these projects have increased the road network 29% from 2005 to 2010, from 8,715 kilometers to 11,209 kilometers, and the number of bridges rose from 108 to 319. In December 2011, Dubai’s Ruler, HH Sheikh Mohammed bin Rashid Al Maktoum, approved a further five-year, five-stage, $272 million plan to expand Dubai’s internal road networks, which is intended to address the road infra-structure needs arising from expanding urban development. Facilitating better inter-emirate connec-tions, the Department of Transportation of Abu Dhabi announced in the first quarter of 2012 that it was opening tenders for local and inter-national firms to construct the new $545 mil-lion, 62 kilometer, E311 motorway linking Abu Dhabi and Dubai. It will be a four-lane highway running parallel to the original and is meant to relieve pressure between the UAE’s two largest cities. The Etihad Rail project (formerly know as the Union Rail Company) is expected to connect Abu Dhabi and Dubai in 2016—and the rest of the Emirates by 2018. The $11 billion venture is the largest rail project in the Middle East, with some 1,200 kilometers of track slated to carry both passengers and freight at speeds of up to 200 kilometers per hour. Phase I of the project aims to connect the Musaffah industrial area and Khalifa Port with Jebel Ali Free Zone (Jafza), while the second phase will extend close to 510 kilometers to link Abu Dhabi to Jebel Ali and Dubai city. Etihad Rail is also set to hook into the planned GCC-wide rail network—with links to Saudi Arabia at Ghweifat and Oman at Al Ain and Buraimi—to facilitate travel and trade through the region. Long-range projections peg total capacity at 16 million passengers and 110 million tons of cargo by 2030. “Once complete, the project will redefine logistics and trans-port in the region, providing a safe, efficient, sustainable network that links all corners of the UAE, and eventually, the UAE to the wider GCC,” said Etihad Rail in a statement.

Total Flights at Dubai International Airport number of flights in thousandsMilitary FightsNon-scheduled FlightsScheduled Flights

Passenger Movement at Dubai International Airport by Typemillions of passengers, 2009-2011TransitDeparturesArrivals

350

300

250

200

150

100

50

0

30

25

20

15

10

5

0

2009

2009

2010

2010

2011

2011

Source: Dubai Civil Aviation Authority

Source: Dubai Customs

Trucks Departing Dubai by Destination2011

Qatar3,264

Oman5,083

Saudi Arabia4,441

Kuwait1,790

Other Countries1,279

Yemen983

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LOGISTICS“The Dubai Trade platform that has been devel-oped here in the UAE is the most amazing tool I’ve seen and it can compete with any other in the world,” says Tom Nauwelaerts, Managing Director at Al-Futtaim Logistics. “The ease of doing business, establishing a company, and conducting highly automated transactions are some of Dubai’s best features. This, in combi-nation with the infrastructure, the access to a wide talent pool, and the fact that basically any shipping line makes a call to the Dubai ports, make it an unbeatable logistics hub.” He notes that the transport market is regis-tering considerable growth, “but there are some doubts on the longer-term growth, as very few people can really estimate today the impact that the Etihad rail project will have. This proj-ect will undoubtedly shake-up the entire road transportation sector, and provide us with new unseen business opportunities.” John Gould, CEO of the Middle East, North Africa, and Central Asia region for CEVA Lo-gistics, concurs that Dubai has world-class transport infrastructure, “which is one of its main strengths,” he says. “Jebel Ali Port, Dubai World Central, and Dubai International Airport provide the ability for a logistics company like ours to be a true air and maritime transport hub through its storage capacities to greater regions like India, Africa, and Central Asia.” He adds that Jafza is an ideal location for receiving and storing retail products that are then redistrib-uted to larger markets. “If the UAE’s govern-ment continues to provide such facilitates, we will continue growing in these areas,” says Gould, noting that the company will likely have invested $100 million in new warehouse area within two years. “There is a great seaport, a great airport, a great airline, open-sky agree-ments, and great road infrastructure. It is easier to do business here in comparison to Central Asia and North Africa.” ●

Roll OnDubai opened the doors to its metro railway system in September 2009, inaugurating the first public railway network in the GCC, with trains moving passengers between eight stations along the Emirate’s new Red Line. For more than a decade the Dubai Municipality had identified the need for a public railway system in the Emirate, as its rapidly expanding economy, population, and size created evermore severe traffic con-gestion on the roadways. Indeed, even with only one line partially opened in the met-ro’s first month of operations, Dubai’s Roads and Transport Authority (RTA) reported that the system had already carried some 1.74 million passengers. Dubai Rail Link (DURL)—a consortium of companies led by Japan’s Mitsubishi Heavy Industries—broke ground on the metro system in February 2006, focusing its initial efforts on completing the 52-kilometer Red Line, and as of April 2012, all 29 sta-tions along the Red Line had been completed, running from Al Rashidiya to Jebel Ali. The Green Line began carry passengers in September 2011 and plans to open two more lines—the Purple and Blue lines—and expand the system to 320 kilometers of track are scheduled for completion in 2020, by which time it is estimated the system will be carrying some 1.2 million passengers on a daily basis. Chairman of the Board and Executive Director of the RTA, Mattar Mohammed Al Tayer, stated that in 2011 the Red and Green lines had carried some 69 million passengers, with the Red Line carrying 60 million of those, while by February of 2012, the Dubai metro had already entered the Guinness Book of World Records for the longest fully automated metro system in the world, at just under 75 kilometers of track in operation.

TRANSPORT & LOGISTICS 129

INTERVIEW

No Time to RestTBY talks to Sheikh Ahmed Bin Saeed Al Maktoum, Chairman & Chief Executive of Emirates Airline & Group, on consistent profits, rising fuel prices, and Dubai as an aviation hub.

BIOGRAPHYSheikh Ahmed Bin Saeed Al Maktoum is President of the Dubai Civil Aviation Authority, Chairman of Dubai Airports, and Chairman and Chief Executive of Emirates Airline and Group, also including Dnata, the sole ground handling agency at Dubai International Airport. He embarked on his journey in the air transport industry in 1985 when he was appointed President of Dubai Civil Aviation. He has studied in the UK and has a Bachelor’s degree from the University of Denver.

HH Sheikh Ahmed Bin Saeed Al Maktoum

TBY What have been the key elements that have led consistent profit year after year?SHEIKH AHMED BIN SAEED AL MAKTOUM The 2011-2012 financial year was a chal-lenging one for Emirates. To have achieved a profit in spite of record fuel prices and unprecedented economic pressure is tes-tament to our tenacity. Our success is governed by our long-term strategy of reinvesting our profits directly into our product. In the last financial year alone we invested heavily in new products that will help us maintain our position as one of the world’s fastest growing and most innova-tive airlines. In addition to new on-board and on-the-ground innovations, Emirates re-ceived 22 state-of-the-art aircraft last fi-nancial year; a wide-bodied mix of A380s and Boeing 777s. Each of these new aircraft is already playing a key role in our future growth and expansion plans.

How interconnected is the Emirates success story with Dubai’s own as an aviation hub?The incredible success of Emirates and Dubai are intricately linked. Dubai is a dy-namic and vibrant city, and it has played a key role in shaping Emirates into the carrier that it is today. In the last 27 years, Emirates and Dubai have grown alongside each other. With its vast network of global destinations, all connected via its Dubai hub, Emirates has helped to showcase the unique vitality of the city. Dubai is cen-trally located between East and West, with access to two-thirds of the world’s popu-lation via a maximum eight-hour flight. This geographical positioning has served to provide us with a unique advantage and one that we have certainly capitalized on.

The ever-increasing development of local air-lines, as well as global giants, has created a highly competitive environment, and Emirates attracts its fair share of envious glances. How has the company’s strategy adjusted to deal with the increased competition?At Emirates we believe that competition is good for the industry, and importantly, it is even better for the customer. Competi-tion between airlines serves to stimulate demand. It keeps airlines on their toes and ensures that they work harder to win a customer’s patronage. Emirates operates from Dubai International Airport, which operates under an unconditional open-skies policy. This policy has ensured that we remain competitive. Emirates does not

benefit from any form of government sub-sidy, and this has proved to be a key mea-sure of our success. Standing on our own we continue to thrive, remaining profitable through challenging times and remaining the carrier of choice for the 34 million pas-sengers that travelled with us in the 2011-12 financial year. Our strategy for success remains the same, no matter how many competitors there are. We continue to stay true to our proven business model, grow-ing organically with new, modern aircraft and carefully selected destinations that we know will provide a strong return.

Rising fuel prices, regional political unrest, and global economic woes are creating challeng-ing times for the airline industry. In what ways are these factors impacting the airline?Business conditions this last year have been challenging for the entire aviation industry. Emirates is fortunate enough to possess an excellent product line that has helped shield it from the brunt of last year’s difficult operating climate. Our young fleet of aircraft, growing network, world-class service, and competitive pric-es have helped to ensure that we continue to attract new customers as well as retain those who already fly with us.

Emirates lifted the fuel surcharge from the price of tickets last year. What was the driver behind this, and how long do you see it re-maining in place?Unfortunately, like all airlines, we are re-liant on fuel to operate our business. With no sign of oil prices decreasing, a fuel sur-charge was implemented on tickets in Feb-ruary 2012 to help mitigate these increased costs.

The first flight landed into Al Maktoum Inter-national Airport in 2010. How will the develop-ment of the second Dubai airport change the dynamics of the city?Dubai World Central—Al Maktoum Inter-national Airport—is being developed in Jebel Ali to cater to the future aviation and logistics needs of Dubai. There is no doubt that the new airport will play an increas-ingly important role in the Emirate’s long-term aviation goals. Emirates aims to move to the new Dubai World Central airport between 2022 and 2030, and with plans to add hundreds of aircraft and destinations over the coming decades, we are the main driver behind its construction and will be the principal customer.

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1 Sheikh Ahmed Bin Saeed Al Maktoum, Chairman & Chief Executive of Emirates Airline & Group2 Emirates is the world’s largest operator of the A380

You are currently establishing the world’s big-gest fleet of A380s. How large will the fleet be, and what is the plan for its deployment?Emirates is currently the world’s larg-est operator of the A380. We have 21 in our fleet today and a further 69 on order, more than any other carrier. The A380 is an excellent aircraft, and feedback from our customers continues to be incredibly positive. Premium and overall seat factor for our A380 aircraft sat even higher than the rest of our fleet in the 2011-12 financial year, highlighting a continued demand in the product from passengers. Every single one of the A380s we have ordered is care-fully planned for Emirates’ present and future requirements. Our A380s are spe-cifically deployed on high-density routes where extra capacity is needed. The A380 can carry more passengers further, thus maximizing the use of slot-constrained infrastructure and reducing the number of required take offs and landings. In the coming months we have several new A380 destinations that will be launched, includ-ing Tokyo, Amsterdam, and Melbourne. In total we now fly to 17 A380 destinations across our network. The A380 sets a new standard for aviation and the environment and it plays a key role in our mission to op-erate an internationally renowned airline while maintaining a high degree of social responsibility. Based on fuel and emission efficiency, Emirates’ A380s are some of the most environmentally advanced aircraft in the sky. The A380 is quieter than any other aircraft, both inside and outside the cabin.

Emirates Airline & Groupin numbers

Established

1985Destinations & countries

120 destinations in 70 countriesAircraft

170A380s in operation & on order

21 / 69Passengers 2011

34 millionTons of cargo 2011

1.8 million

What is the airline’s ongoing strategy in the quest to establish a robust global presence?Our passengers’ expectations only contin-ue to get higher, and it is imperative that we continue to move forward with them. Growth is an important part of any compa-ny’s survival, and for Emirates our growth is directly attributable to the number of passengers that choose to travel with us. It is for this reason that we invest billions of dollars each year in expanding our service offering by way of new destinations, new aircraft, and innovative, customer-focused products. In the last five years Emirates’ route network has grown by nearly 40%, and in the 2012-13 financial year we have already announced new services to four destinations, including Ho Chi Minh City, Lisbon, Barcelona, and Washington, DC.

What were the main lessons learned during the global liquidity crisis, and to what extent would you say the economy is recovering?There has been a marked shift in busi-ness travel movements from East to West. We have witnessed incredible growth throughout Asia, Africa, and the Indian subcontinent and we continue to capi-talize on this with new links, additional frequencies, and upgraded capacity. The global economic situation has improved, but it is not uniform across all markets and is again showing volatility in the eurozone. Our development plans for all areas of our business remain on track and we are con-fident that our robust business model will continue to reap rewards. ●

Our passengers’ expectations only continue to get higher, and it is imperative that we continue to move forward with them.

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INTERVIEW

Second Not an OptionTBY talks to Mohammed A. Ahli, Director General of the Dubai Civil Aviation Authority, on the development of Dubai as a global air hub.

BIOGRAPHYMohammed A. Ahli was appointed as the Director General of Dubai Civil Aviation Authority (DCAA) in 2007 and is also CEO of Dubai Air Navigation Services (DANS). He began his aviation career in 1966 with Dubai National Air Travel Agency (DNATA), working in positions of increasing seniority. He has also worked at the Department of Civil Aviation, and held the Chairmanship of the Gulf Airport Services Association (GASA). He is currently the Director General of the DCAA.

Mohammed A. Ahli

TBY How has the Dubai Civil Aviation Authority (DCAA) been developing its strategy in recent years?MOHAMMED A. AHLI The strategy we pre-pared will allow us to separate service providers from the regulator. After having several meetings with all stakeholders, this strategy was prepared and approved by the Executive Office. We are planning to go through with this policy, which defines the expansion of facilities and infrastructure to meet the projected growth in the Emirate of Dubai. It has been designed to ensure the hub status of Dubai and to make it the aviation capital of the world. Emirates Airlines is purchasing a larger number of “superjumbo” A380s, and we are building Concourse 3 and 4 to accommodate these aircraft. Dubai Airport will reach a ca-pacity of 90 million by 2018. Al Maktoum Airport, with five runways, is being built to accommodate us to operate from both airports giving us a capacity of 160 million passengers an year.

What factors have led to the successful rapid evolution of Dubai as an international transit and travel hub?Since the beginning, Dubai Airport has applied an open-skies policy. The main

obstacle was in persuading other states to adopt it. Many airports in the Gulf are now applying this policy, and we have agree-ments with almost all of Europe. We have something even more with the US; the “seventh freedom” has allowed cargo car-riers to fly without returning to their point of origin. This means companies can do business and travel on. This is very good for cargo carriers like FedEx and DHL. They are both coming to Dubai without going back to the US. National carriers can do the same when flying to the US. We have an open-skies policy with almost all of the Pacific and Asian civil aviation groups and agreements with nearly two-thirds of the countries in Africa. Every country is work-ing to implement policies such as ours. In order to build businesses, an open-skies system should be embraced. By the year 2018 we aim to handle 90 million passen-gers. That is when we will have to move to Al Maktoum Airport. Currently, we handle over 50 million passengers per year, and by the end of 2012 we expect 56 million people to pass through our airport. Looking at the statistics, we are fourth in the world in terms of carrying international passengers. Some of the largest airports are very heavy in handling international passengers; we, on the other hand, handle international passengers exclusively. Our contribution to Dubai’s GDP is 28%, creating 250,000 jobs. By the year 2020, the aviation sector is expected to create 375,000 jobs directly and indirectly, contributing 32% of GDP.

What is the next step in terms of expanding the Emirate’s reach to different destinations? We already have connections from East to West and North to South and currently our reach extends to over 200 destinations with almost 160 aircraft, growing by two planes per month. The major players are Emirates and flydubai, and through them we have connections to and from almost every city and country in the world. We offer 18 flights per day to the UK, exclud-ing services provided by British Airways. We also have 85 flights per week to Aus-tralia. Every two or three months we open up two new destinations in response to growing demand. Emirates Airlines has been expanding very rapidly, and the team operating the company is very dynamic. In Dubai, it is your responsibility to succeed. The leaders here are very flexible, and they always give people a chance; anyone who fails has only himself to blame.

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1 Mohammed A. Ahli, Director General of the Dubai Civil Aviation Authority2 The Dubai Civil Aviation Authority carried out a project to build runways that can accommodate the massive A380

Why was the role of the DCAA realigned to re-move responsibility for managing the airport?As a government establishment, we had no limited liability. The DCAA was obliged to handle and deal with these issues. We felt there should be an agreement with a differ-ent party to secure a limited liability, “just in case.” We are part of the government, and the system was presenting a conflict of interest between being a service provider and a regulator. Moreover, European and US airlines did not appreciate that system. Previously, I felt I was wearing two hats; one was running the airport, and the other was monitoring the regulatory side. Now I am not involved in the operations side or service providers’ work. Instead, we are now a regulatory authority making sure everything is operating in compliance with international standards, which is working smoothly. We have also been entrusted with the task of formulating a strategy, which was drafted in collaboration with other com-panies and organizations such as flydubai, Emirates, duty-free zones, customs, im-migration, Dubai Airports, and the police. Everyone is a partner and a stakeholder and the strategy has now been approved. We hope that by 2020 Dubai will be the number one aviation capital of the world—second place is not acceptable.

What are the main challenges you face for the further development of the industry? The challenge that lies in front of us is in air space design, where we face many internal and external obstacles. Conges-tion in airspace is the biggest threat to our growth. The DCAA is working to overcome these challenges through discussions with the other emirates. The internal problems are simply technical issues that need to be addressed. The DCAA has a committee in place to look into this. We also maintain very good relations with the other emir-ates. The external issues may take a little more time as it they need to be resolved at the federal UAE level. However, work-ing together is the only way forward to solve this issue. We are optimistic that we can attain a European-style control that will function in the Gulf and Middle East. We hope that in the near future we will be able to unify our air space, which is very important as we seek to evolve.

How have you continued to attract airlines to Dubai?We may be the first airport in the world that responds to a request for landing and operations within half an hour, while other airports take a month or two. According to bilateral agreements, we are required to reply within 60 days. However, we need

only 30 minutes to scrutinize the required aircraft documents and to approve a re-quest. We work 24 hours a day to serve our customers. This is very helpful, and air-lines have no excuse not to come to Dubai. This has been a standard operation since I joined in 1966.

How is the shifting political landscape in the Middle East impacting the local aviation industry?The political circumstances in the region have affected our industry for the bet-ter. There were only a few governments that had accepted an open-skies policy, but we always promoted the concept to Middle Eastern politicians when they dis-cussed unity and nationality. These leaders talk about unifying and becoming broth-ers, and I largely agree with these ideals. However, if am not allowed to enter their country, why should I join any unions or region-wide organizations? In the wake of the Arab Spring, I believe that this mental-ity is changing. There are many advantages and oppor-tunities waiting in the wings. Many gov-ernments are protecting their own airlines, but we recently engaged in negotiations with Egypt and saw encouraging progress. We came to an agreement faster than ever, and I am sure that once the dust settles we will see more and more open skies in the Gulf. I believe that this is a very positive thing. ●

Dubai Civil Aviation Authorityin numbers

Passenger volume (2011)

50.98 millionAirlines

135Destinations

215

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INTERVIEW

Freedom to FlyTBY talks to Paul Griffiths, CEO of Dubai Airports, on collaboration to support the aviation industry.

BIOGRAPHYPaul Griffiths is the CEO of Dubai Airports, with the responsibility for the operation and development of Dubai International as well as the recently opened Dubai World Central, which will eventually be the world’s largest airport with a capacity to handle 160 million passengers and 12 million tons of freight annually. Prior to moving to Dubai, he was Managing Director of London’s Gatwick Airport, the second largest airport in the UK. He also spent 14 years with the Virgin Group, working closely with Sir Richard Branson as a Board Director of the Virgin Travel Group.

1 Paul Griffiths, CEO of Dubai Airports

Paul Griffiths

TBY Dubai International is the fourth largest airport in the world. What have been the key factors that have let to Dubai’s tremendous success and growth as an aviation hub?PAUL GRIFFITHS Dubai’s geo-centric loca-tion, high-caliber infrastructure, quality home airlines, and an aviation model that features a liberal regulatory system, a tax-free business environment, and close coor-dination and collaboration within the sec-tor are the key factors in our growth story. Thanks to Dubai’s open-skies policy, the airport is connected to more than 220 des-tinations across six continents through 150 airlines, and continues to attract more air-lines. It is a model that is paying big divi-dends. According to Oxford Economics, direct and indirect aviation, in total, sup-ports over 250,000 jobs and contributes over $22 billion to the economy, which represents around 19% of total employ-ment in Dubai, and 28% of Dubai’s $80 billion. On the basis of these strengths and the forecasts for passenger growth from Boeing and Airbus, Oxford Economics ex-

pects the economic contribution of Dubai’s aviation sector to rise to 32% of Dubai’s GDP and about 22% of its employment by 2020. The aviation industry as a whole has been through some tough years. In what ways do you believe airports and airlines should be pulling together to support greater commer-cial growth in the industry?Greater collaboration is needed across the entire aviation value chain. Although there have been some improvements over the years, globally there remains fundamental mistrust between the various members of the sector, namely airlines, airports, con-trol authorities, and retailers. Each closely guards customer data. And each creates processes and applies technology without considering the entire travel experience for our mutual customers. All these activities take place in separate, vertical silos, while our mutual customers bump roughly across the joins between them. And those links involve something we all hate: queues. The time wasted not only frustrates our pas-sengers, it drives up costs, reduces dwell time, and limits revenue generated in air-port shops and food and beverage outlets. And let’s not forget the role of government. Policy makers in most of the mature avia-tion markets worldwide fail to recognize the vital economic role and contributions of aviation and logistics, especially in the face of worldwide financial turmoil. A healthy aviation sector facilitates trade, commerce, and tourism. Governments need to wake up to the fact that unnec-essary taxation regimes and protection-ist policies place a drag on growth and in turn stifle economic expansion. Dubai’s aviation model is a shining example of the success of an approach that flies in the face of this legacy, thinking both in terms of aviation policy and collaboration across the value chain. How are the plans for Dubai World Central (DWC) progressing, and how will operations there change the market in Dubai as a whole?We opened our second airport, DWC, in June 2010 for cargo operations followed by general aviation in 2011. Since its opening the number of cargo airlines has grown to 36. Cargo volumes during the first calendar year of operations totaled 90,000 tons, and monthly traffic continues to grow at a rapid pace. The first phase of the project also in-cludes a passenger terminal that will be

undergoing operational readiness testing in the coming months. Passenger opera-tions are not yet planned and will depend entirely on the commercial needs of our client airlines. Providing capacity where it is needed is our immediate priority, and that happens to be at Dubai International. Over the next 10 years we will be investing $7.8 billion in the expansion of Dubai In-ternational to boost capacity from the cur-rent 60 million passengers per year to 90 million to accommodate anticipated traffic growth. The additional aeronautical and non-aeronautical revenue generated by this increased traffic will fuel the funding of the next phases of DWC, which will ulti-mately become the world’s largest airport with an annual capacity of 160 million pas-sengers and 12 million tons of cargo. In the interim, DWC will play an important role in accommodating cargo, general aviation, and passenger airlines that will find the airport an increasingly attractive option due to emerging slot constraints at Dubai International. DWC is a long-term project and work on it will continue through this decade. ●

1

Providing capacity where it is needed is our immediate priority, and that happens to be at Dubai International.

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134 TRANSPORT & LOGISTICS

SHANE JEFFREE O’HAREPresident & CEO, Royal Jet

GHAITH AL GHAITHCEO, flydubai

Dubai’s civil aviation scene is far from dominated by Emirates, with low-cost and charter organizers also in on the action.

TBY talks to two CEOs in the air transport sector on important markets, the Dubai Air Show, and oil prices.

What have been the airline’s milestones?

GHAITH AL GHAITH Since the government announced in March 2008 that it was to launch a low-cost carrier there have been a number of milestones. In June 2008, flydubai announced a historic order for 50 Boeing 737-800 NG aircraft at the Farnbor-ough Airshow. To date, we have received 21, with the rest due to be delivered before the end of 2016. Additionally, the aircraft we received in December 2011 was the 7,000th 737 Boeing has delivered, which was a very exciting time for us, and it fea-tures a special one-off livery. In terms of operations, June 1, 2009 was a historic day for flydubai, as the vision became reality when our first commercial flight took off to Beirut. In the first 12 months of operations we carried more than 750,000 passengers and expanded our operational route net-work to 16 destinations. To date, we now

Upstairs, DownstairsQ&A: Airlines

have more than 45 operational destinations spanning 28 countries across the GCC, the Middle East, Africa, Asia, the Asian subcontinent, and Central and Eastern Europe. Another significant development includes taking a bold step to invest $20 million to bring all of our engineering and maintenance facilities in house in April 2011. This was then followed by the launch of flydubai Cargo on January 1, 2012, mak-ing the transportation of goods across the region via Dubai simple, accessible, and affordable.

SHANE JEFFREE O’HARE Royal Jet is eight years old, and it was formed by Presiden-tial Flight in Abu Dhabi. It is 50% owned by Presidential Flight and 50% by Abu Dhabi Aviation, which is a publicly listed, government-majority owned company. The operation is fully commercial, and has been profitable since the second year of its operation. Presidential Flight currently operates a number of businesses, including as a Fixed-Base Operator (FSB) and man-ages a VIP terminal operation at Abu Dhabi International Airport. It operates about 350 flights a month in addition to our own movements. It provides a very important service for VIP aircraft visiting the capital of Abu Dhabi. We operate an aircraft man-agement business that handles private jet aircraft on behalf of our network of indi-vidual clients as well as corporate clients. We operate a brokerage business that bro-kers third-party charters for our clients when our own aircraft cannot service that particular business. We also have a medi-

cal evacuation service, which performs on average one mission every day, and we have 60 aircraft mainly used for those op-erations. This is a very special part of our business. The main part of our business is charter, and we have 11 aircraft in our fleet.

What new markets are significant for you?

GG India is a very important market for flydubai. Not only is there a large number of Indian expatriates living in the UAE, the majority of whom visit their home nation regularly, but the UAE is also a popular tourist destination for Indians, and there-fore there is a lot of traffic between our two countries. Moreover, flydubai is keen to increase its network in India, and we are working with the relevant authorities to make this happen. Elsewhere, in 2012, we have launched operations to four new cities, Baghdad and Najaf in Iraq, Taif in Saudi Arabia, and the capital of the Kyrgyz Republic, Bishkek, and there will be more to come. Bishkek was the 50th destination we started flights to, which is an excellent achievement for us, having launched op-erations less than three years ago. We have marked many milestones and are delighted to have reached this point.

SO We recently opened a hub in Saudi Ara-bia, which is a larger market than the UAE. We are also generating more business these days in Oman, Kuwait, and Jordan, and in Europe as well. We have set up special relationships in some of these markets, where we are building our market share. Our strategic plan is growth in the Gulf and Middle East region because that is where our main hubs are. There will be signifi-cant growth in this area for the foreseeable future. We are seeing now that the UAE growth is starting to bounce back after the global recession, and Abu Dhabi will see around 3% growth in 2012. The cur-rent market conditions are very buoyant for us. The Middle East is going to remain very important. We also are seeing the reconstruction of Iraq with many corpora-tions now going into that country to assist with its redevelopment. That is generat-ing a much higher level of growth than we were expecting. Afghanistan is something that is also on our radar, and it is a coun-try to which we fly regularly. If some of the countries settle down over the next 12 months, we will see more stability coming into the growth curve. ●

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INTERVIEW

1 Habib Fekih, President of Airbus Middle East

BIOGRAPHYHabib Fekih has been the President of Airbus Middle East since June 2006 and was also appointed the President of Airbus Corporate Jets in 2011. With more than 30 years of aviation experience, he is a veteran in his field and has played a major role in developing and expanding the regional aviation industry.

The Real StuffTBY talks to Habib Fekih, President of Airbus Middle East, on the benefits of being based in Dubai, the success of the Dubai Airshow, and staying ahead of the game.

Habib Fekih

1

TBY What is the significance of this market in terms of the company’s global operations?HABIB FEKIH The Middle East has in many ways become a leader in global aviation and has always shown a strong desire to grow its aviation footprint, not just region-ally, but globally as well. At Airbus, we strongly believe in the region’s strengths, which is why we established a fully fledged subsidiary here—Airbus Middle East—in 2006, and our global market forecast pre-dicts that the Middle East will take 7% of the world’s aircraft deliveries between 2011 and 2030.

Dubai has become a hub for the entire avia-tion industry, and the company’s regional headquarters is located in the Dubai Airport Freezone (DAFZ). What are the main strengths of the Emirate?Dubai’s main strengths are in its perfect geographical location between East and West, which enables it to act as a vital pas-senger and cargo hub between Asia and Europe, and its rich aviation history—ev-

erything from the original airport in 1959, to the opening of the Middle East’s larg-est airport—at the time—in 1971, and the founding of Emirates Airlines, now one of the largest airlines in the world. Dubai also has some of the best transport logistics systems in the region, making it a natural place for Airbus to maintain both a com-mercial office, as well as a material and logistics center, and training team.

A high demand for Airbus’s lower-cost, single-aisle aircraft were to thank for such sales fig-ures at the airshow. Will you be ramping up the production of wide-bodied aircraft?Each Airbus aircraft has its unique place in the market, and with the recent expan-sion of many short-to mid-range carriers, we’ve seen excellent sales of the A320neo, which offers more than 15% fuel savings with its new generation engines and large wingtip devices called “sharklets.” How-ever, mid-to long-range flights are also growing in number, which is why the A380 has remained so popular with larger carri-ers, and why the new A350 XWB program, which will offer 25% fuel savings com-pared to the competition, is a success, with over 550 of the aircraft ordered to date. The A350 XWB entry into service will be in the first half of 2014, with Qatar Airways as the launch customer.

What impact do Boeing’s development plans for the next decade have on Airbus’ strategy?

When developing a new aircraft, we must think years ahead to what technology might be available not only at the new air-craft’s entry-into-service (EIS) time, but also within its 40-year lifetime. Predic-tions are not always easy. We have to care-fully evaluate when exactly is the right time for a game-changing aircraft. We currently foresee a game-changing aircraft of this type with an EIS between 2030 and 2035. This timing is largely dependent on an engine breakthrough with a 20%-25% reduction in fuel burn, which, at this point, would probably be an inducted fan type being developed by NASA. Current tech-nologies simply cannot provide significant improvements over what is already avail-able today, beyond what we’re doing with the A320neo and A350 XWB. In terms of competition from countries like China and Brazil, which are currently showing a great maturation in their industrial capacities, including aircraft production, our cur-rent global market forecast predicts that the world will require almost 27,000 more commercial aircraft by 2030. Given this, we feel there’s lots of capacity within the market for Airbus to retain its lead across all sectors regardless of any new competition.

What is your outlook for Airbus, and the indus-try as a whole for 2012?Things are looking good for 2012. While we don’t anticipate another record-breaking year like we had in 2011, we still predict strong sales in the 600-650 order range for commercial aircraft, and around 570 com-mercial deliveries, and we will be spending the year continuing to work hard in both our A380 and A350 XWB production pro-grams, with the Final Assembly Line start for the A350 program imminent, the cer-tification of the sharklets for the A320 by year-end, and the recruitment of at least 4,000 more employees during the year as some of our key targets for 2012. ●

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136 TRANSPORT & LOGISTICS

As Dubai’s ports continue to see growth in cargo volume and passenger numbers, major expansion plans to upgrade capacity are set to reinforce the Emirate’s position as a leading maritime hub.

FOCUS: Port ExpansionBeyond the Sea

Historically known as the “city of mer-chants,” Dubai is an emirate defined by the importance of sea ports, ever since its foundation in 1833. With Dubai Creek as a natural harbor, the Emirate quickly be-came a center for fishing, pearling, and sea trade, and by the beginning of the 20th century, its souk was the largest on the coast and a major center for regional trade. The mid-20th century saw the dredging of Dubai Creek to accommodate larger vessels in the 1950s, followed by the establishment of Dubai’s major ports, Port Rashid and Jebel Ali Port, which cemented Dubai’s role as a major international port and re-export hub. Dubai is now the ninth-busiest container port in the world by volume, handling 13 million TEUs in 2011, an in-crease of 12% year-on-year. The Emirate ranks number one in the region, according to UNCTAD’s Liner Connectivity Index. Now, global port operator DP World, which operates all of Dubai’s ports, has plans to continue expanding facilities to ensure that the Emirate maintains its world-class standing.

JEBEL ALIJebel Ali Port was established in 1985 as part of the Jebel Ali Free Zone (Jafza), and is lo-cated approximately 35 kilometers south-west of Dubai city. As DP World’s flagship port and Dubai’s main area of maritime activity, it is the largest container handling zone between Rotterdam and Singapore, and it encompasses the biggest man-made

harbor in the world. Despite the port’s vast size, the growth of Dubai’s shipping and re-export sector in recent years has meant that Jebel Ali is nearing capacity. There-fore, DP World has significant expansion plans for the port, with the eventual goal of increasing capacity to 19 million TEUs by 2014. In the first phase of expansion, which will be concluded before the end of 2012, Terminal 2 will be extended by 400 meters, allowing the port to handle up to six vessels of 15,000 TEUs at one time and creating an additional 1 million TEUs of capacity. A second and much larger phase will involve an investment of $850 million, aiming to build a third container terminal that will add an additional 4 million TEUs and bring total capacity to 19 million TEUs.

RASHIDPort Rashid, originally Dubai’s main con-tainerized cargo port, was converted by DP World to become Dubai’s cruise terminal and is now the largest home port for cruise ships in the GCC. The port also handles ro-ro cargo to supplement Jebel Ali, as Port Rashid is closer to the center of Dubai. The port has seen significant passenger growth since its conversion, increasing from 100 ships with a total of 260,000 passengers in 2009 to 135 cruise vessel calls and a total of 375,000 passengers in 2011. In January 2012, the port saw four mega cruise ves-sels visit the terminal simultaneously for the first time. DP World now has plans to expand the existing terminal facilities to

20181614121086420

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Port Capacity vs. Usage at Jebel Aliin TEU millionsCapacityUsage

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serve up to five ships at once, and longer-term plans for further expansion to ac-commodate seven ships. The company also announced that Port Rashid will become the permanent home of the QE2, which will be converted into a luxury hotel with an attached maritime museum.

AL HAMRIYAPort Al Hamriya, built in 1975 to reduce the strain of increased ship traffic on Dubai Creek, is one of Dubai’s smaller ports, and serves both non-containerized cargo ship-ments and the local fishing industry. Al Hamriya is one of Dubai’s more traditional ports, and still has facilities to serve dhows, the traditional wooden sailing vessels that have been used in the Gulf and the Arabian Sea for generations. In 2011, DP World be-gan upgrading the port, and in June 2012, it unveiled the first phase of expansion, which involved modernizing the port’s general cargo facility used for regional trade. The second phase, currently under-way, focuses on modernizing the marina for fishing boats and developing improved facilities for dhows. These expansions con-tribute to the growth in Dubai’s maritime activity and demonstrate the breadth of available services for vessels of all shapes and sizes. ●

1 Port Rashid is the largest home port for many cruise ships in the GCC

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INTERVIEW

Port of CallTBY talks to Sultan Ahmed Bin Sulayem, Chairman of DP World, on the creation of DP World, its international capacity, and the London Gateway project.

BIOGRAPHYSultan Ahmed Bin Sulayem was born in 1955 and studied Economics at Temple University, Philadelphia. He is currently the Chairman of DP World, and is one of Dubai’s leading businessmen. He contributes to various educational, humanitarian, and related initiatives, and is a member of the World Economic Forum.

1 Sultan Ahmed Bin Sulayem, Chairman of DP World

Sultan Ahmed Bin Sulayem

TBY What factors led to the successful cre-ation of this international hub in just a few decades?SULTAN AHMED BIN SULAYEM Maritime trade has been at the heart of Dubai for generations upon generations, and it was only natural that the Emirate focus its en-ergies on this core strength, fueled by the trust, support, and encouragement provid-ed by HH Sheikh Mohammed Bin Rashid Al Maktoum. Both he and his father realized very early that Dubai could succeed by leveraging its geographical location at the crossroads of East-West trade and offer-ing outstanding supply chain services that would ensure it became a hub. Focusing on customers and investing to ensure that their growing needs are met has driven our international expansion. To date, we are operating more than 60 marine terminals around the world with a global team of 30,000 personnel.

What is the focus of DP World’s 11 new proj-ects, and what do they represent for the future of the company?We invest in markets where we see the po-tential to contribute to economic growth. With an average concession of around 40 years, we invest for the long term. Around 75% of our business comes from emerging markets, which have proven resilient dur-ing the global recession. Currently, three-quarters of the cargo we handle originates from or is destined for the markets in which we operate, known as origin and destination (O&D) cargo. We will continue to focus on these two areas in the future, investing in direct response to our custom-ers’ needs. In 2011, we saw volumes in the UAE region rise to 13 million TEUs. This means that utilization is extremely high at our flagship Jebel Ali Port, which has continued to deliver strong volume growth and handled 3.2 million TEUs in the first

three months of 2012, 8.5% ahead of the same period last year. It was clear from listening to our customers that growth in demand would mean Jebel Ali would soon be under considerable capacity. It was this that led us to announce plans last year to add 1 million TEUs to Terminal 2 to take its capacity to 6 million TEUs, and to develop a new terminal, Terminal 3, at an invest-ment of $850 million, with the capac-ity for 4 million TEUs. Together they will take Jebel Ali’s total capacity to 19 million TEUs by 2014. The new Terminal 3 will be capable of receiving the next generation of mega container ships that can carry as many as 18,000 TEUs, support the con-tinued growth of Dubai and the UAE, and enhance the country’s status as the trading center of the Middle East. Al Maktoum In-ternational Airport is just 20 minutes away from Jebel Ali Port, providing the supply chain sector with one of the most efficient multimodal platforms anywhere. While we are adding significant capacity to Jebel Ali over the coming two years, building a new terminal in Brazil and expanding our ca-pacity in China, we are also pushing ahead with London Gateway and the new Maasl-vakte 2 terminal in the Netherlands.

How is the development of the London Gate-way port project progressing? What makes this market attractive for DP World?London Gateway is progressing extremely well and will be open for business by 4Q2013, with an initial capacity of 1.6 mil-lion TEUs. Like all of our projects, we are investing for the long term. London Gate-way is set to become Europe’s largest lo-gistics park, situated on London’s doorstep and located at the heart of Europe’s largest economic zone. It will benefit businesses in the UK immensely by allowing both importers and exporters to take advantage of a more cost effective and greener way to transport the nation’s goods as well as sav-ing hundreds of millions of pounds a year.

How key are strong security measures in DP World’s daily operations?We regard security as a baseline service for our customers. The nature of our op-erations exposes us to various operational, health, safety, and security risks that can impact our people, our customers, and our business operations. To mitigate such risks, we have implemented stringent security, safety, and health measures, including rolling out the independently audited ISO

28000 security management standards throughout our network. Currently, 38 of our facilities are certified. We are the only global marine terminal operator to be invited to become a member of the US Customs-Trade Partnership Against Ter-rorism (C-TPAT), and we have 15 terminals participating in the US Customs Container Security Initiative—the largest number among the other operators. We are also a Principal Partner in the US Integrated container-scanning pilot projects. Fur-thermore, we adhere to European security measures. ●

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HUSSEIN WEHBEGeneral Manager Dubai & Northern Emirates, Aramex

DAVID ROSSSenior Vice-President of Middle East, Indian Subcontinent, & Africa, FedEx

Dubai’s large size and disposition for luxury opens up opportunities for logistics companies, which aim to please a wide variety of customers.

TBY talks to two executives in the logistics industry on the key competitive advantages of Dubai as a hub for shipping and receiving.

What is the core focus of your company’s activity in Dubai?

HUSSEIN WEHBE Dubai is considered one of the major operations for us. We don’t really focus on one certain product but aim to be a one-stop shop, so we focus on a variety of services and solutions for our clients. In addition to the services that we have, we always have the ability to tailor make new services and solutions that will cater to the requirements of our clients. We are now listening to our clients more and more and we never say no. The company takes the client’s requirements, studies them, and builds a new service based on that require-ment. It can be a spark for a new product that we can introduce to the market, and that all falls under the flexibility that Ara-mex has at its core. This is what differenti-ates us from our competitors.

Never a NaysayerQ&A: Logistical Solutions

DAVID ROSS Since we started here in 1989, international express products have been our key focus area in Dubai and the UAE in general. Our work here is progressing with the introduction of our own direct service aircraft to this market. We now have services to Dubai direct from our Memphis hub, which we started in April 2011 using a brand new Boeing 777F. This aircraft handles everything coming in from North America. We also have a direct link from our hub in China, which connects our Asian business, and then we have flights into Europe via our hub in Paris, and from here into Delhi, Mumbai, and Bangalore in India. We are very well covered, with 33 flights a week out of Dubai using our own aircraft and another 48 smaller feeder flights that we operate from here to places like Kuwait, Bahrain, and Saudi Arabia, as well as commercial lines into the African continent. Dubai is in an excellent location geographically and strategically.

From what sectors are you seeing increased demand?

HW Being a total transportations and lo-gistics solutions company, we’ve seen a lot of demand for most of our services and products. We serve the banking sector, the trading sector, and the industrial sector, and each one requires different services. For example, the banking sector in the UAE focuses more on domestic distribution and credit card deliveries, while the industrial

sector focuses more on airfreight import or perhaps land freight distribution around the region. There is demand for all of our services, plus we’ve also seen great demand for B2C services, such as e-commerce for example. E-commerce has been growing recently in massive numbers. We’ve seen a lot of requests from SMEs. They’ve been approaching us to offer them e-commerce solutions. Clients are becoming more de-manding. We have a great product called “Shop and Ship.” It is an amazing product that targets online shoppers that really of-fers a total online shopping solution from the US, the UK, and recently from China.

DR Naturally, the oil and gas sector makes up a large percentage of our client base. The automotive industry is another ma-jor market—you only have to drive down Sheikh Zayed Road to see all of the car showrooms, which make up a large sector of the economy. In electronics, parts are brought in to be modified and then need to be reshipped. Those three sectors are very strong, and they cover pretty much the whole Middle East from here—this is the hub for products from GCC states, es-pecially. Beyond the GCC, Dubai’s reach stretches to India and Africa. What is inter-esting is how successful Dubai has been at diversifying the economy. There are only a very few places like this in the world, such as Singapore.

Do you believe that there are any issues that need to be resolved to improve the efficiency of freight transport in Dubai?

HW We get full support from the govern-ment of Dubai and governmental institu-tions such as UAE Customs, which facili-tates transactions well. Their support has always been our backbone, so the more support we get from them, the more we can grow. We have excellent relations with them, and they are a part of the reason for our success.

What is your outlook for 2012?

DR There are still great opportunities for investors entering the market here, for both SMEs and large businesses. We will continue to see growth in many areas, and our outlook is very positive. We are always improving our service. That is what keeps our customers competitive in their own markets. ●

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Movers & StorersROUNDTABLE: Logistics

GHASSAN ABUGHAZALEHGeneral ManagerSTORALL

JOHN GOULDCEO, Middle East, North Africa & Central Asia (MENACA)CEVA Logistics

TOM NAUWELAERTSManaging DirectorAl-Futtaim Logistics

CLAUS SVANE SCHMIDTArea Manager & Managing Director Middle EastPanalpina

THE CONCEPT STORALL is one of over 30 companies under the holding company A&H Al Ghurair In-vestment LLC, which is one of the leading groups in the pri-vate sector, operating across a spectrum of various industries such as hospitality, education, marketing, manufacturing, and logistics. The concept of STORALL was developed in or-der to offer a variety of storage solutions.

UNDER ONE ROOFThe beauty of the STORALL model is that everything is under one roof. For example, institutional clients such as banks might lease a few units of self-storage that they prefer to manage independently but also use our warehousing for top-tier inventory manage-ment reporting systems.

GROW ITWe are increasing our capac-ity by several thousand cubic meters in both our warehous-ing and self-storage facilities. We have expanded by 30% in the past years and are currently finishing an additional 25% ex-pansion to be followed by an-other 20%-25% expansion by the end of 2012 or early 2013.

LONG TERMWe have been operating in the Middle East for almost 30 years. The extent of our opera-tions has come about through the business units that we have acquired over this period of time. We have organizations that have been with us for the past 30 years across the UAE, Saudi Arabia, and other parts of the Middle East.

MOVING AROUNDThe spread of our business is particularly focused on energy, retail, and automotive. These are the growing sectors. For example, building a refinery in Abu Dhabi implied the logistics of moving the products from the source in Korea or Japan into the UAE. In retail, a good decision is to bring products into Jebel Ali Free Zone.

GREAT OPPORTUNITIESWe always look at complet-ing acquisitions that will bring value to our portfolio. Within the MENACA area, there are some great opportunities. We have a presence in 12 countries. There are another six countries that we could move into. Some of the interesting markets for the future are Libya and Kazakhstan.

NICE DRIVEThe Al-Futtaim Group is the one of the largest car importers in the UAE, representing a huge share of the market with our wide variety of car brands such as Toyota, Lexus, Honda, Volvo, Chrysler, Jeep and Dodge, as well as Volvo and Hino trucks.

THE BELIEFWe believe strongly in deliv-ering logistics services to the market outside of our Al Fut-taim Group. The purpose is two-fold. One the one hand, I believe that the size of our op-erations in logistics open us up to an excellent leverage oppor-tunity in the market. On the other hand, if we can win large customers in the market, it proves our abilities and it keeps us on edge with the require-ments and expectations.

THE TRADE HUBThe Dubai trade platform that has been developed here in the UAE is the most amaz-ing tool I’ve seen, and it can compete with any other in the world. The ease of doing busi-ness, establishing a company, and conducting highly auto-mated transactions are some of Dubai’s best features.

HERE’S THE HUBDubai has developed into one of the main global logistics hubs, through the commitment from the Dubai government to build world-class air and ocean ports and port facilities supported by the free trade zone concept and a transparent regulatory environment.

FIRST INWe are among the first com-panies to operate at Dubai Lo-gistics City, and we spent quite some time to establish and im-plement the processes, in close collaboration with the local customs and DWC authorities as well as DNATA. Every entity was eager to support us.

VERTICAL FOCUSGenerally, we do not invest heavily in infrastructure and trucks. Instead, we prefer to work with strong local part-ners, extending our global network. We also form part-nerships to develop strong IT solutions for our vertical focus.

Dubai has refocused its energy on developing its traditional status as a logistics hub, maintaining its unrivaled status in the region.

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REAL ESTATE & CONSTRUCTIONINSIDE 141 Quality Does Count - REVIEW: Real Estate | 146 Marwan Ahmed Bin Ghalita, CEO of the Real Estate Regulatory Agency - INTERVIEW | 148 Nicholas Maclean, Managing Director of CBRE Middle East - INTERVIEW | 149 Live & Belong - Q&A: Local Majors | 150 Mohamed Alabbar, Chairman of Emaar Properties - INTERVIEW | 151 Take My Advice - Q&A: Consultants | 152 Build Me Up - ROUNDTABLE: Real Estate Outlook | 153 Strong Recovery - FORUM: Management | 154 The Top Out - REVIEW: Construction | 156 Danny Lubert, Joint Chairman of The First Group - INTERVIEW | 157 Design Front - FORUM: Construction Engineering | 158 On the Rise - ROUNDTABLE: Materials

REVIEW: Real Estate

Pictured from the viewing platform of the Burj Khalifa, the Hotel Address Downtown Dubai reaches 302.2 meters high and is classified as a supertall skyscraper, situated between Dubai Mall, the Old Town, and Dubai Lake. At 63 floors, it is the 72nd tallest building in the world.

u Dubai’s real estate sector continues to grow, although it has yet to return to pre-2008 levels. Demand for space from multinationals is set to keep the sector purring.

Quality Does Count

The impressive strides made in diversifying the UAE’s economy have successfully reduced the country’s dependence on oil revenues, and for a significant period of time there was nowhere that this was more evident than in the growth of Dubai’s real estate sector. During the height of the development period, skyscrapers along the Emirate’s Sheikh Zayed Road mushroomed with such ferocity that within as little as half a decade the aerial view had changed beyond recognition. Climbing to such dizzying heights of success invariably resulted in the Emirate feeling the impact of the global financial crisis with intensified fervor, and since mid-2008, real estate prices have fallen by 50%. The Emirate remains one the most popular regional investment destinations, with real es-tate consultants like CBRE reporting that 60% of its regional business enquiries ultimately settle in Dubai. During 2011, signs of recovery within the sector could be seen, with property experts throughout the Emirate consistently referring to “selective market stabilization.” A growing population and booming tourism sector has helped to dampen the continued reverberations of the crisis. Several rounds of successful debt restructuring by Dubai gov-ernment-related entities (GREs), the Emirate’s large debt burden, and the banks’ exposure to the still-struggling property sector continue to restrain growth predictions. There has, howev-er, been a spring back of the earnings and share prices of some local real estate developers, sug-gesting that the worst is over, although a fully fledged recovery has been contained by cau-tious purchasers. Emaar reported a 44% rise in first-quarter profits at the beginning of 2012, ››

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and the company’s shares stand 23% higher than their level at the end of 2011, compared to an 18% gain for Dubai’s main market index. Thanks in large part to the handover of a sub-stantial number of projects, developer Nakheel posted revenue growth of 159% in 1Q2012 and is moving forward to complete a number of proj-ects throughout the year. The wider UAE economy grew 4.9% in 2011, and non-hydrocarbon growth during 2012 is predicted to reach 3.5%. While recovery in the logistics trade and tourism sectors has been more concrete than in the real estate sec-tor, demand for well-designed residential and commercial property in the right location is once again strong. According to a second quar-ter report released by property experts Jones Lang LaSalle, increased evidence of investor confidence was evident from the outset in 2012, with a number of high-profile property deals completed early in the year. These included the sale of Building 6 in Gate Village, Dubai Inter-national Financial Centre (DIFC), and a debt to equity swap of residential and office space in Index Tower and Limestone House in the DIFC by Emirates NBD and Union Properties. International investors and residents of Dubai have enjoyed relatively unrestricted property ownership rights since 2006 when the government introduced foreign freehold ownership legislation. The introduction of the regulations allowed foreigners to own freehold property in certain areas designated by the Ruler of Dubai. Prior to this, foreign ownership

was restricted to leasehold titles, and in non-designated areas, foreign ownership remains restricted in this way. Despite continued efforts by the Dubai government to create an investor-friendly environment through meticulous leg-islative introduction, challenges remain. Own-ing a property in Dubai does not simultaneously grant residency to a foreign owner, which for some time created legal complications for owner-occupiers. The Real Estate Regula-tory Authority (RERA), established in 2007, is tasked with the development of various real estate laws aimed at providing regulation and clarity within sector. Under RERA, procedures have been improved, and levels of transparency have increased. In 2011 it was announced that three-year visas would be granted to owners of freehold property valued at over AED1 million. The new real estate Investor Protection Law is also projected to be finalized in 2012, offer-ing further protection to all parties involved in Dubai real estate transactions. According to Dubai Land, there was a 12% increase in mortgages in 2011, with total mort-gage transactions amounting to 3,315, worth AED69 billion. However, on a general level, access to property finance remains stringent. Mid-way into 2011 the DIFC announced plans to establish a new UAE mortgage bond market, based on Denmark’s property market. Nasser Saidi, Chief Economist at the DIFC, believes the development of an active mortgage market through mortgage securitization would pro-vide liquidity relief to commercial banks while

1 The Atlantis Hotel greets visitors to the landmark Palm Jumeirah development

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providing long-term investment opportunities to institutional investors. The implementation of a system based on the Danish model is de-signed to prevent the replication of some of the drawbacks of the US mortgage market model. The DIFC’s regulatory body, the Dubai Fi-nancial Services Authority (DFSA), introduced the Collective Investments Funds regime in 2010, regulating the use of the DIFC REIT. A closed-ended domestic property fund, the DIFC REIT is structured as an investment company and investment trust, and is aimed primar-ily at investment in income-generating real estate that must be listed and traded either on NASDAQ Dubai or an exchange established in a jurisdiction recognized by the DFSA as having an equivalent level of regulation to that in the DIFC. All positive indicators within the Dubai real estate sector will continue to be subject to un-certainty surrounding the global economy and regional geo-political developments, according to a 2012 IMF study. Dubai GREs will remain vulnerable to the fates of the global financial sector, with any worsening in conditions mak-ing it increasingly difficult to roll over debt and raise borrowing costs. While global exposure at all angles raises precarious possibilities for Dubai, it also presents opportunities. The shift-ing regional political landscape has once again shone a light on Dubai as a safe haven for inves-tors, and the real estate sector stands to ben-efit from an influx of wealth from surrounding countries.

RESIDENTIALThe start of 2012 saw the Dubai residential sales market showing signs of improvement from the outset, attributed in part to a maturation of the market, with end users beginning to buy homes to live in rather than purely for investment. The REIDIN residential sales indices indicate that the market has bottomed out, with values all but returned to 2008 levels. The leasing market has similarly improved as tenants are finding more affordable housing at competitive rates.

Recent trends in the residential market, how-ever, have been defined predominantly by the emergence of an ever-widening gap between properties in prime locations and those in ter-tiary areas. A persistent influx of new stock to the market is also serving to restrict price growth. The sophistication of the average pur-chaser has climbed steadily, and in the years since the impact of the global liquidity crisis, property location, finish, and community in-frastructure have become paramount concerns. According to Jones Lang LaSalle, 3,000 new residential units were added to the market in the first quarter of 2012, bringing total resi-dential stock to 341,000 units. Almost 90% of completed units in 2011 were apartments. It is anticipated that up to 28,000 new units will be completed in 2012 and a total of 43,000 units by the end of 2014.

COMMERCIALThe Dubai commercial real estate market is to some extent plagued by a peculiar problem. The office vacancy rate stands at more than 40%, with total citywide stock standing at 5.8 million sqm at the end of 2011. The post-crisis vacancy levels of older office stock in estab-lished locations such as Deira and Bur Dubai are rising, as tenants in stronger positions are now able to secure more affordable space in previously unattainable locations in the Central Business District (CBD). However, in spite of the large amount of empty stock, large multi-national organizations have been struggling to find suitable contiguous space. A great deal of the local property is based on strata manage-ment ownership, which means that a large office space in one building might be owned by numerous landlords. During the property boom, large swathes of developments were sold off plan to multiple investors, meaning that ev-ery floor in a tower block could be owned by a different landlord. Some 22% of Dubai’s 61 mil-lion square feet of commercial space is held by multiple owners under strata title ownership. With effective facilities management becom-ing increasingly important to the long-term sustainability of building stock city wide, strata ownership continues to create difficulties for tenants who find it challenging to deal with numerous landlords with different interests. Finding suitable, international Grade-A space is therefore not straightforward. Evidence of this was seen in 2011 by Standard Chartered’s decision to build its own office space at a cost of $140 million, due to be completed sometime in 2012. Standard Chartered will itself lease 60% of the office space within the 252,000 square-foot tower. Approximately 57% of the office stock is lo-cated in onshore locations, making it suitable only for those companies licensed by the De-partment of Economic Development. Only 20% of the stock is located within the CBD in down-town Dubai, with the majority of available ››

International investors and residents of Dubai have enjoyed relatively unrestricted property ownership rights since 2006, when the government introduced foreign freehold ownership legislation.

Retail Mall Supplyin millions of sqm

Residential Supplyin thousands of units

3.1

3.0

2.9

2.8

2.7

2.6

2.5

2.4

390380370360350340330320310300290

2010

2010

2011

2011

2012e

2012e

2013e

2013e

2014e

2014e

Source: Jones Lang LaSalle 2Q2012

Expected 2012 Office Sector Completionsby sub market

BUSINESS BAY 45%DIFC 10%SILICON OASIS 9%JLT 7%TELECOM C 7%MEYDAN METROPOLIS 5%DUBAI INVESTMENT PARK 5%AL BARSHA 4%OTHER 8%

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space located in Tecom, JLT, and Business Bay. An additional 12 million square feet of space is due to come on to the market in 2012, but in common with the current space available, this will largely be strata space, suitable for SMEs. Rental levels vary from AED2,500 per sqm for prime property located in the DIFC, to AED1,500 per sqm for general citywide loca-tions. New supply coming onto the market is expected to push rates down further, with mar-ket demand on a general level being driven by upgrades and consolidation, rather than new entrants on to the market. Major developments coming on to the market in 2012 include Cen-tral Park The Buildings by Daman in DIFC; Iris Bay and Regal Tower in Business Bay; Amesco and Platinum Towers in JLT; and SIT Tower in Silicon Oasis.

RETAILThe retail market is dominated by prime space in super centers, which makes up 65% of the mall-based space available. There has been clear evidence of the emergence of a two-tier market, with space in new malls being in high demand, and older malls steadily decreasing in popularity. Evidence of the demand for prime space can be seen by the recent announcement by Emaar Properties of its intention to expand Dubai Mall by a further 1 million square feet, bringing the total space in the mega shopping center to 13 million square feet. Nakheel Prop-erties also announced the development of The Pointe on Palm Jumeirah, as well as a 158,000-

sqm extension to the Dragon Mart Mall, due to be delivered in 2014. Prime rents have been steadily increasing, with levels currently between AED4,200 and AED5,500 per sqm according to the most recent report released by Jones Lang LaSalle. Prop-erty rates in the secondary tier market average AED3,000 per sqm. Occupancy levels in the most popular locations, including Mall of the Emirates and Deira City Center, are at almost 100%, and with little new stock coming on to the market in 2012, this is unlikely to change.

INDUSTRIALDubai’s strength as a regional trading hub has been consistently reinforced post-crisis, and large international industrial and logistics com-panies continue to choose the Emirate as a base for their regional trading headquarters. Demand from courier and petrochemical industrial com-panies has driven the strong performance of the industrial and warehousing sectors, with prime space in Jafza and DAFZ experiencing healthy demand. Rental levels vary from AED30 per square foot to AED17 per square foot depending on the location and quality of the plots. Cluttons report that there is a shortage of large high-quality space over 50,000 sqm, contrasted by an oversupply of smaller units. Large plots over 100,000 sqm are extremely difficult to come by, and this has created issues with both pricing and quality, resulting in some large multina-tionals choosing to build their own units located outside the free zones. ●

2 Emirates Towers is a striking part of the Dubai skyline3 Festival City has become a leading destination for shopping and business

Market demand in general is being driven by upgrades and consolidation.

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INTERVIEW

Sustainability & CreativityTBY talks to Marwan Ahmed Bin Ghalita, CEO of the Real Estate Regulatory Agency, on the establishment, activity, and future of the organization.

BIOGRAPHYMarwan Ahmed Bin Ghalita graduated as a survey engineer from the University of Fresno, California, and began work at the Dubai Land Department. In 1998 he obtained his MBA from the Advanced Management Department of the Arabic Academy of Sciences and Technology in Alexandria, Egypt. He went from being a survey engineer to Vice-President of the Survey Division at the Land Department, and became the first local President of the department in 1999. He also served as Director of Technical Affairs and Customer Service and in 2007 was appointed as the CEO of RERA.

Marwan Ahmed Bin Ghalita

TBY Why was the Real Estate Regulatory Agency established, and what is its role in the Dubai real estate market?MARWAN AHMED BIN GHALITA Real estate is an important part of the economy in any country. In Dubai, the real estate sec-tor became part of the economy in 1960, when the Land Department was created to begin regulating and safeguarding private property rights. The idea behind the Land Department was that to have a functioning real estate market, you need a body to en-sure that the the private property system is secure, safe, and independent. Until 2000, the Land Department dealt only with Emi-rati nationals and selected international in-vestors who had been granted permission to own land in Dubai. In 2000, we began to open up the real estate market to foreign investors by creating a designated freehold area for foreign investors, and in 2006 Law No. 7 concerning land registration in the Emirate of Dubai was issued. That law al-lows foreigners to own properties in cer-tain freehold areas. This provided a lot of Dubai residents with the option of buying

their own property and began a shift for many people from a tenant mindset to an ownership mindset. Sheikh Mohammed’s vision has always been to make Dubai a hub for business and attract foreign inves-tors. In 2000, the Land Department began establishing a strong system to enhance the services we provide to foreign inves-tors in terms of registering title deeds. Our strategic plan is now to continue enhanc-ing our services. That said, we have already achieved two critical things. First, we have been ranked fourth in the world for land registration systems in terms of speed and value. This year, for speed we were ranked first globally. It takes you only 25 minutes to get your title deed registered in Dubai. In terms of transparency, we are number one in the Middle East. This is an important factor for investors. Creating a real estate environment that is attractive to foreign investors requires legislation that is clear and easy to interpret. So far, we have more than 14 real estate laws in Dubai. We go to great lengths to ensure that any investors who come to Dubai are adequately pre-pared to participate in the market. We take investors through four stages of prepara-tion: Know, Act, Manage, and Grow. First, Know: Before an investor even comes to Dubai, he can visit our portal to familiarize himself with the Dubai real estate market. The portal provides information on rules and regulations and statistics as well as lists of approved real estate service provid-ers, such as agents and developers. Second, Act: Once an investor decides to go about acquiring real estate in Dubai, they will already know that all real estate service providers in Dubai must be licensed and trained by the government and will have official documentation to show that they are registered and approved. Third, Man-age: After you have bought a property in Dubai, and you want after-sales service, you will also be able to contact service providers that have been licensed and ap-proved by the government. Finally, Grow: Once you have begun to make money and want to expand your Dubai real estate portfolio, we will work to keep you up-to-date on changing regulations and new developments.

When you were developing the laws for the freehold land registry system in 2000, where did you look to for examples?We have a saying in Dubai: “Knowledge is weightless, so go and take it wherever

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1 Marwan Ahmed bin Ghalita, CEO of the Real Estate Regulatory Agency2 There are more than 235 nationalities living across Dubai

you can.” Initially, we looked to Australia, Germany, Singapore, Japan, and Jordan for our inspiration. We took a number of ideas but adapted them to meet our specific cir-cumstances in Dubai. After enhancing the system, we wanted to continue to improve it, so we then looked to Norway, which is first globally for real estate transactions, and New Zealand, which uses electronic real estate transactions. Because of the way we have used best practices, Dubai has the best investment environment in the world.

Who are the main foreign investors coming to the Dubai real estate market?There is an investment option to suit every foreign investor here in Dubai. Any inves-tor who comes here would be amazed. Some small investors might come to in-vest $200,000 in a small apartment. Other larger investors might spend $2 million on a villa. There are options for everyone. Our priority is just to encourage long-term investment—investors who want to stay in the market for at least five years. Today, we have more than 235 nationalities in Dubai. We have a huge number of investors from all over the world. The return on invest-ment is one of the highest in the world. At the time of the peak, just before the crisis, you could get a 35% return on investment. That was not sustainable, but now you can get a sustainable return of 8-10% on your property, tax free.

You mentioned the crisis. What about the oversupply that remains in the market follow-ing the downturn?When the economic boom started, it was led by real estate. That was one of the prob-lems with the economy initially, because you can’t lead economic growth with real estate. That was in the old days before RERA. RERA was founded in 2007 when we began to realize that the real estate growth was not sustainable and needed to be regu-lated. Our role was to encourage a sustain-able, healthy real estate sector. I think we played a big role in helping to shield Dubai from the worst of the crisis and to facilitate a soft landing. Before the crisis, when we talked about sustainability and long-term investment in the real estate market, no one paid attention. After the crisis, sud-denly people realized that proper planning in the market was necessary. In the wake of the crisis, we reassessed the real estate market, and we have stopped any projects that are not useful for Dubai or inves-tors. We’ve cleared them and restructured them, and this has helped us to cut out a lot of the excess supply that was in the market. Now, from 2010-2011, we’ve had an increase of 24% on the volume and 20% on the value of real estate transactions in

Dubai. This shows that the real long-term investors are still here, but the speculators have left. The strength of our real estate sector now has been the result of our stra-tegic planning post crisis.

Dubai has changed so much in the past seven years. How much do you think it will change seven years from now?We have a lot of international talent and creativity coming to Dubai. Now that we are giving people the ability to have real ownership in the economy, I think they are more likely to contribute to sustain-able long-term growth. I also expect to see more green buildings, cities, and hubs. Our future is in sustainability and creativ-ity. This kind of growth will ensure that the new generation in Dubai can enjoy and contribute to the continued wealth and prosperity of the Emirate. ●

Real Estate Regulatory Agencyin numbers

Established in

2007Global ranking for land registration speed

1stReal estate laws

14Title deed registration time

25 minutes

2

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INTERVIEW

Here to AdaptTBY talks to Nicholas Maclean, Managing Director of CBRE Middle East, on the state of the real estate sector in Dubai.

BIOGRAPHYNicholas Maclean joined St Quintin as a graduate in 1987, and following qualification specialized in providing real estate taxation, landlord and tenant, and valuation advice, he was appointed head of the firm’s Professional Services Department in 1995 and made partner in 1996. Following St Quintin’s merger with Insignia Richard Ellis, he became head of the Rating and Taxation Department and a member of the City Business Team Management Board. Maclean was appointed Managing Director of CBRE Middle East in 2004.

1 Nicholas Maclean, Managing Director of CBRE Middle East

Nicholas Maclean

TBY CBRE is a global leader in real estate management. What are some highlights from its experience in Dubai? What steps have you taken to attain your current position since your entry into the market?NICHOLAS MACLEAN CBRE came to the UAE in 2004 to establish businesses in Abu Dhabi and Dubai. We had for sometime been servicing the requirements of busi-nesses based in both cities from elsewhere, and we felt the time was right to provide these professional services in the home markets of our clients. We chose the UAE because it appeared to provide the best platform for CBRE, and internationally we acted for more people from Dubai and Abu Dhabi then other cities within the region. Our revenue is now split one-third govern-ment entities, one-third local businesses, and one-third international corporates. In 2008 we saw an opportunity to create a business in Bahrain, and despite the recent difficulties in that market, our office is go-

ing from strength to strength. We are now looking for further expansion through the region as our current operations reach sta-bility and grow naturally.

Vis-à-vis other real estate companies, do you consider yourself a latecomer? If so, what strategies have you conducted to establish such a strong presence in such a short time?Prior to establishing our initial businesses here we spent considerable time analyzing why other businesses in our industry have failed or performed badly, and we con-cluded that the key to our businesses being successful was a deep understanding of the way the markets worked. We consequently and immediately established a strong, market-leading research capability that continues to collect, collate, and analyze market evidence so that we have strong anecdotal records.

How does Dubai compare to other markets in the GCC?A very important component of our global business is our relationships with corporate clients, and CBRE tries to provide the best advice in all markets into which we ex-pand. Dubai has a big advantage over other regional competitor cities in that a signifi-cant majority of our corporate clients have their regional (MENA) headquarters locat-ed here. This stems from the outstanding infrastructure and in particular air trans-port and airport facilities, which are world class. On top of this, our corporate clients report that Dubai is also the easiest market in which to recruit, and so the opportunity to expand businesses is stronger here than elsewhere. For us therefore Dubai provides a level of activity that is not currently pres-ent in other cities of the GCC and also pro-vides an example of best regional practices. I do not therefore see Dubai being usurped as our regional headquarters.

How do you evaluate the real estate sector in the post-crisis period?Dubai and its participants in all sectors of the property market (investors, develop-ers and occupiers) have learned an impor-tant lesson over the last three years: the market, like all other markets around the world, is cyclical. Dubai’s property mar-kets have experienced significant declines in value across all asset classes, but many landlords have adapted well to changed circumstances, and so CBRE transacted more occupier activity in 2011 than during

2007 and 2008. Changing regional circum-stances have compounded Dubai’s advan-tage, but the quantity availability of quality stock have all been contributory.

What trends do you see in the market? What changes are you expecting in the coming years?Perhaps the most disappointing aspect of the Dubai market over the last year or so is the lack of capital transactions that have taken place at arm’s length. Dubai has the current advantage of significant invest-ment flows seeking to enter the market, but the activity that this demand should operate is being hampered by the lack of available stock. The level of liquidity in Dubai is therefore interpreted to be low. What is needed to unlock this revenue stream is willing sellers bringing appro-priately priced buildings to the market. We are also seeing, for the first time in two or three years, overseas institutional funds actively researching the Dubai market as they seek to achieve better returns than in home markets. ●

Dubai has the current advantage of significant investment flows seeking to enter the market.

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Live & BelongQ&A: Local Majors

MOHAMMED K. AL HABTOORVice-Chairman & CEO, Al Habtoor Group

SANJAY MANCHANDAInterim CEO, Nakheel Properties

The construction sector is stirring again in Dubai, with retail and hospitality space popular among the major developers.

TBY talks to two executives in the construction sector on the history of the industry and prospects for the future as activity picks up.

What have been the factors that have led to the success of your company over its history?

MOHAMMED K. AL HABTOOR I think the success of the group is a product of the leadership of the Chairman, my father. When he established the company in 1970, he had no capital—my father borrowed funds to start construction and worked 24 hours a day to arrive at this level. Today, our group is considered one of the largest in the region. The group has survived the initial construction projects and branched out into different business sectors, such as automotive, real estate, hospitality, insur-ance, and education. Although my father has been operating the company for over 40 years, he still spends all day at the of-fice. He does not believe in relaxation, even now that the company has reached a very comfortable level. Therefore, I believe his time and effort have created the success-ful company you see today. We are mainly focused on the hospitality, real estate, and

automobile segments, which are generally car agencies. The company is also expand-ing car sales in the UAE; we are seeking new opportunities and agencies through-out the region. Although this activity is in the initial stages, we are working hard. Al Habtoor Group has the right management and marketing team, and it is considered one of the best in the world in terms of selling Mitsubishi products. The hotel and hospitality segment is also performing very well, despite numerous crises over the last 20 years, from the first and second Gulf Wars to the conflict in Afghanistan. De-spite the economic crisis, our hotels were operating at very good occupancy levels and a reasonable average rate. Our hotels are better than those in Paris or London; they offer better services and amenities. We still aim to attract the maximum num-ber of tourists, and prices have dropped. This phenomenon is not optimal for us, but it does attract more people. In the next few years we expect to bring these rates back to pre-crisis figures.

SANJAY MANCHANDA We were given a de-fined business plan and were tasked with the objective to implement it. I’m proud to say that two years down the line that we are very much staying on-plan and continue to focus on delivering it. At the same time, as a developer, we have not lost sight of our activity. We have started to look at projects that will enhance our existing communities and other projects that are demand driven. For example, we are significantly expanding our hugely

successful Dragon Mart Mall and are very enthusiastic about the fact that a lot of people have shown a keen interest: 80% of the expansion is already leased. Similarly, a number of projects have been launched on Palm Jumeirah, including Palm Views, Palm Residences, and The Pointe, with a healthy response from investors. From our perspective, for the people and the inves-tors to place their trust in us is another sign of significant confidence in our company. We may have had some hiccups, but we have overcome them. We are launching what we believe to be products that people want. We want to fulfill our communities’ needs by enhancing and developing them into mature communities—places to live and belong.

In Dubai, what were the lessons learned from the economic crisis?

MH We are 80% recovered from the crisis. The remaining 20% will bring us back to a level comparable to 2007 and 2008. Con-sidering all of our businesses, trading is excellent, and the margins are even bet-ter than before. The number of car units we sell and luxury brands we offer such as McLaren, Bugatti, and Bentley positions us at number one or two in the market. People continue to purchase from us, and we sold 30% to 40% more Bentleys and Bugattis this year; we are selling every car we re-ceive. In Mitsubishi sales, we are perform-ing better than before. In our schools, we have longer waiting lists. The hotels are full, and construction is busy.

What kind of trends have you seen in terms of the demographics of investors?

SM Our buyers have has always been a mixed set of investors. Nakheel is currently developing and delivering what we have been contracted to do. If we have different people from different nationalities and dif-ferent places having had contracted with us, we are now fulfilling our obligation to give them their houses and apartments. In our newer developments, we see a lot of interest from Malaysian investors and from Southeast Asian economies, because of the proximity to Dubai and because the Emirate has shown its resilience in difficult times. The Arab Spring has helped us be-cause people are looking for a safe haven, and Dubai continues to live up to its repu-tation of being just that. ●

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INTERVIEW

Touch the SkyTBY talks to Mohamed Alabbar, Chairman of Emaar Properties, on developing the Dubai real estate sector, international operations, and improving community management structures.

BIOGRAPHYMohamed Alabbar is the Chairman of Emaar Properties and one of the Middle East’s leading property developers. He is also the Chairman of Bahrain-based Al Salam Bank and Board Member of Noor Investment Group. He graduated in Finance and Business Administration from Seattle University, where he also holds an Honorary Doctorate and serves on the Board of Trustees.

1 Mohamed Alabbar, Chairman of Emaar Properties

Mohamed Alabbar

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TBY Real estate development has played a pivotal role in shaping today’s Dubai. What role has Emaar Properties played in this?MOHAMED ALABBAR The most significant contribution of Emaar to Dubai is in sup-porting the city’s social and economic growth through the creation of prime real estate assets that add to the civic pride of the city. We provide the residents of our integrated communities with a sense of belonging, creating thousands of new jobs across the property, hospitality, and leisure segments, as well as in shopping malls through retail development, thus driving the growth of ancillary indus-tries. Since its inception in 1997, Emaar has been a true partner in Dubai’s growth, led by the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice-President and Prime Minister, and Ruler of Dubai. With the government of Dubai owning over 30% of the equity of the company, it makes sense for us to grow in our home market. Our development ap-

proach complements the growth outlook of Dubai, and through our projects we have contributed to further strengthen-ing the traditional growth sectors of the Emirate—especially in retail, hospitality, and tourism. This is underlined by strong visitor numbers to The Dubai Mall, which welcomed more than 54 million visi-tors in 2011, contributing significantly to Dubai’s retail sector. Visitor numbers to the mall were over 16 million in 1Q2012, an increase of 22% compared with the same period in 2011, highlighting the strong growth in retail and leisure that contrib-utes to Dubai’s economy. Our hospital-ity business, through our Address Hotels and other leisure assets, also complement the city’s tourism sector, having recorded robust occupancy levels through 2011. It achieved a 92% occupancy rate in 1Q2012. In the property sector, Emaar brought a new dynamic to the city by pioneering the concept of integrated lifestyle communi-ties. Since 2001, we have handed over more than 33,500 residential units that are today part of established and sought-after inte-grated lifestyle communities. A highlight of Emaar’s approach to developing inte-grated lifestyle destinations is Downtown Dubai, a 500-acre mega-project described as “The Center of Now.”

Emaar works closely with the Real Estate Regulatory Authority (RERA) to improve cor-porate governance in the sector. What recent developments have been made in this regard?Emaar works closely with all governmen-tal authorities including RERA, the Dubai Municipality, and other related depart-ments. We pioneered interim owner asso-ciations in our communities, with the resi-dents themselves taking an active role in enhancing the long-term welfare of their neighborhoods in association with Emaar’s Community Management Department. Emaar has been one of the first companies to comply with all RERA regulations for the launch of our recent project—Panorama at The Views. The development has been registered with the Dubai Land Depart-ment, and all units are listed on the Land Department’s registry. Emaar also set up a dedicated escrow account for Panorama at The Views, with 20% of the construc-tion value deposited as a bank guarantee. All sales proceeds will be deposited in this escrow account, which will be used only for construction purposes. Customers will pay based on the percentage comple-

tion of construction, providing significant protection to investors and financial flex-ibility. Emaar also works with RERA and is handling various customer concerns and developing superior policies and regula-tions to safeguard investor interests.

What is your outlook for Emaar in 2012, and the sector as a whole?This year, we will also roll out our new value creation strategy for our stakehold-ers, taking into account current market realities, the evolution of new markets, and potential growth opportunities to drive tangible value-creation proposi-tions. Our outlook for the year and for the property sector is robust, as highlighted by our new project launches and our focus on further strengthening our retail and hos-pitality and leisure businesses. Develop-ing recurring revenue streams that add to the long-term value of our stakeholders has been a key pillar of our development strategy. This is reflected in our group rev-enue model; in 2008, 90% of our revenues were accounted for by Dubai-based prop-erty developments, and the rest came from leasing and hospitality. In 2011, 41% of our revenues were from the recurring streams of shopping malls and retail and hospital-ity, 22% from our international operations, and the rest from Dubai real estate op-erations. Today, we have recurring rental revenue generating assets of over 6 million square feet, and 12 hotels and resorts offer-ing over 1,870 rooms. We will continue to strengthen our hospitality and retail busi-ness subsidiaries. ●

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STEVEN J. MORGANHead of Cluttons UAE

ALAN ROBERTSONCEO of Middle East & North Africa, Jones Lang LaSalle

Property consulting firms have benefitted from new interest in commercial space as the dynamics of the market are beginning to be worked out.

TBY talks to two consultants in the real estate sector on the evolving market and the recovery process in the wake of challenging worldwide markets.

How would you categorize the property mar-ket in the UAE when compared to other mar-kets in the region?

STEVEN J. MORGAN It is very different from any other market and has been very inter-esting to watch. The market was fuelled by a 10-year property binge, coupled with huge confidence in the Dubai govern-ment. Clearly, supply severely outweighed demand—and even that sparked a boom. Everybody expected to see a correction at some stage, but it came much faster than we had imagined. Although there is over-supply in most sectors, and the downturn has driven property prices down 50% in some cases, we are starting to see slow price increases. For example, the Dubai Marina is almost finished, as well as the Meadows and Springs Community, Ara-bian Ranches, and the Palm Jumeirah. In

Take My AdviceQ&A: Consultants

the completed projects where residents can live the lifestyle that the development was designed to provide, we see slow price increases in both rentals and sales. I think that it is fair to say that some of the over-supply is sourced from projects that are not as finished. You can’t build a master plan for development off the back of one tower.

ALAN ROBERTSON Retail is a very interest-ing and exciting sector. What we have seen here in Dubai, and I believe we will see it in Abu Dhabi, is its tremendous popularity with global brands. Global brands like to be in places like New York, London, Paris and Dubai. Whether it is a Western European, North American, or Asian brand, Dubai is a pretty cool place to have a presence. In that regard, there is very good retail demand. That is continuing, especially as North American and Western European retailers have to look outside their traditional mar-kets for growth because these markets are either over supplied or are not growing due to the poor economic conditions. Brands such as Zara from Spain and Waitrose from the UK are coming to Dubai, and we see that trend continuing. The other trend in Dubai is that over the last 12 months there has been a divergence of performance within each sector, and it is quite notice-able in retail. As the UAE has come out of its economic downturn, the best retail centers have been doing very well, whereas poorer quality schemes have struggled to main-tain footfall and are having to consider how to reposition themselves.

How have you adjusted your business strategy over the past couple of years to deal with the challenging local environment within the real estate sector?

SM Our business was interesting, because we are mainly focused on the advisory segment of real estate. About 70% of our turnover is from consulting; we are advis-ing our customers on the way back up, in terms of banks that are lending, valua-tion work, development appraisals, and feasibility studies. We were actually quite cautious and conservative throughout the boom years, and we received a fair amount of criticism in response to this strategy. We were advising banks not to lend 95% loan-to-value, and instead suggesting that the market would correct itself one day. That served us well after the downturn, because people thought back 12 months to our meetings and reports, realizing that they should not have lent 95%. This credibility put us in a good position to tackle and sur-vive the dark days of 2009-2010.

AR It has been a difficult period but every cloud has a silver lining and, in our case, we have found that our market share has increased very significantly. Instead of having a small piece of a large cake, we have had a large piece of a smaller cake. We attribute that to a flight to quality, which always comes in difficult times. As a result, the high-quality firms have done well, and the poorer quality ones have found life very difficult, and many have disappeared. That has been a noticeable trend here. The other thing we have done over the last two or three years has been to broaden the base of our business. We are now offering ser-vices in the Middle East that we did not previously, such as project management and property management, which are very important parts of the Jones Lang LaSalle business across the world. We did not start delivering these services here until about 18 month ago, and it has proved to be a very good decision. Our business is now broader based and more resilient because we are not so reliant on a small number of service lines. For example, when we acquire an of-fice for a corporate client such as Shell, in other parts of the world we normally also project manage the office fit-out for them, but previously we were not able to do that locally. ●

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SANTHOSH JOSEPHPresident & CEODubai Pearl

ZIAD EL CHAARManaging DirectorDamac Properties

MOHAMMED NIMERCEOMAG Property Development

DELIVER & MAINTAINDubai Pearl is an entirely new project being developed with the support of Abu Dhabi’s Al Fahim Group, one of the UAE’s most highly respected business conglomerates. The simplic-ity of the new master plan and modularity of the construction grid have made the Dubai Pearl project scalable and relatively easy to deliver and maintain.

NEXT GENERATIONComprising 1.86 million sqm, Dubai Pearl is currently the single largest luxury develop-ment being built in the Emir-ate. It represents the next gen-eration of luxury developments within the city, built to the highest architectural standards with an unrivalled grouping of global brand partners.

ON THE EDGECompanies such as Dubai Pearl, with well thought out strate-gies and developments that are able to demonstrate value and sustainable advantages, offer a competitive edge in the long term. This is the ideal time for developers to chart their long-term strategies and look for the next growth curve.

A PHENOMENONWe started our real estate ven-ture very early on in Dubai and were among the first private developers to launch opera-tions in the Emirate. Our busi-ness started in late 2002, due to the implementation of new laws in May of that year, when the real estate sector became a phenomenon.

BEST BUSINESSThe rental pool program is con-nected to our hotel apartment developments. We believe that serviced apartments in key lo-cations are the best business. This business model creates more benefit for the customer than just a simple hotel room.

FOLLOW THROUGHThe key to surviving the crisis was to plan for building each and every project, despite the speculations around the topic. We focused, launched a proj-ect, and ensured that we could build it; this has been our strat-egy since the beginning.

SURVIVE & DEFENDOur portfolio of finished prod-ucts is worth $600 million, and the projects have been deliv-ered and are now occupied. We managed to survive the crisis, defend our name and reputa-tion, and maintain our contacts while waiting for the economic climate to improve.

SEE THE LIGHTWe are not expecting a repeat of the eight-year development boom, but we are expecting the industry to normalize. With capital gains, our numbers av-erage between 15% and 20%. We can see the light at the end of the tunnel, but we are far from a full recovery.

FLOATING TIMEWe consider ourselves to be ex-periencing what we call “float-ing time,” which has continued for about three years. Dur-ing this period, we have been seeking new opportunities as investors and businesspeople. We are looking to the markets of Saudi Arabia, Qatar, Bah-rain, Oman, and even Jordan, Egypt, and Libya.

Build Me UpROUNDTABLE: Real Estate Outlook

As the real estate sector undergoes reconstruction, surviving companies maintain their strengths and study new opportunities.

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Facility management providers are stepping up to the plate to offer landowners a new range of products and services in a changing business climate.

FORUM: ManagementStrong Recovery

ALI AL RAHMACEO, Eqarat

MOHAMED AHMED YAHYASenior Director of Commercial & Owners Association Management, wasl Properties

TARIQ CHAUHANGroup Managing Director, EFS Facilities Middle East

We provide a complete cycle of services for investors, whether designed for development or management. Investors come to the mar-ket with a pitch for land, and we find the land that suits their development plan. When they decide to develop, we find the best architects in the market and accompany the architects with our engineering team, which monitors every stage of the project until completion. The moment the building is ready, our man-agement teams oversee the lease or sale of the building. Our services have not changed dramatically; we have only refined our pro-cesses and become more efficient. Some areas will require attention in the future. For example, we have to invest in facility manage-ment and improve our services to tenants. We are offering high-class facility management to tenants and landlords, which has evolved and improved compared to the early days of the company. On the residential side, investors can now purchase property for 50% less than in 2007 or 2008. Rental prices have fallen, which means that the value of a property will eventually decrease. We have experienced a drop of 40%-50% in rent, which reflects the value of a property—now is the time for in-vestment. On the commercial side, there are great deals on the table where investors can secure a steady income increase of 8%-10%. A number of deals are locked with lengthy lease contracts, which are good for new investors.

wasl Properties was established to act as a property manager, and it specializes in man-agement services. This model has been suc-cessful over the past four years and is starting to set a benchmark in the market. Overall, the wasl brand is now set as a benchmark against which other service levels are being measured. We have a fairly large and diverse portfolio of commercial and residential prop-erties under our management. We focus more on mid- and low-rise properties, as opposed to high-rise, and we also offer villas and town-houses. There are around 1,000 villas in our portfolio, in addition to 25,000 units distribut-ed between low- and mid-rise housing units. We also have a large portfolio of industrial lands that we rent out to investors on a long-term lease basis. Furthermore, we are moving toward managing freehold properties with our owners association management services. Finally, hospitality comprises a big segment of our portfolio. There is no doubt that there has been a reduction in the level of development in the last three years. However, we at wasl have been doing well since we offer a high level of services. The crisis has witnessed some owners reducing the level of services. Some owners even reduced maintenance of their properties. Yet, the market is witnessing a strong recovery, with increased levels of real estate transactions in the freehold market.

The facility management (FM) industry in the Middle East is still underdeveloped, and the business is still in its nascent stage in the region—here the service delivery is largely in a reactive mode. There is a serious skill set issue within the work force industry; we also have an issue with the lack of understanding of the concept of facility management. We operate with different set of enterprises, some only have a reactive approach—they only call us when there is a problem and have zero vision of preventive planned maintenance. Then there are companies that take serious note of FM, adhering to the planned preven-tive regime. Thus, there are two environments in which we operate: reactive and preventive. For this part of the world, FM is very new, and another challenge is finding a skilled work force at different levels of management. Generally, when buildings are designed, de-velopers must incorporate and integrate FM. Architects create utopian structures for which it is virtually impossible to build efficient FM models thus impacting the service delivery or resulting in higher FM costs. For example, often in context to façade cleaning in certain skyscrapers, due to the complicated designs and structure, the delivery becomes complex and costly too, therefore FM-friendly designs ensure lower maintenance costs, and there-fore boost investment returns and reduce operating costs.

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u New projects are starting to invigorate demand for building materials in Dubai, and as work on unfinished projects begins to accelerate, improved prospects have risen on the horizon.

The Top OutREVIEW: Construction

Home to 229 buildings greater than 100 meters tall, Dubai today boasts a larger number of sky-scrapers than Shanghai. The UAE, and Dubai in particular, has witnessed unprecedented activ-ity in the construction sector over the last de-cade and has one of the GCC region’s most well positioned trade regimes. Attracting strong in-ternational capital flows has not proved difficult for the UAE, which boasts some of the highest levels of construction activity per capita. Dubai has been a particularly attractive investment destination, with a large number of expatriate workers and a minimized vulnerability to oil price movements as a result of a progressively diversifying economy. Dubai construction projects in 1Q2012 were valued at an estimated $581 billion, represent-ing almost one-quarter of the total value of contracts awarded in the UAE. With regional projects estimated to be valued at around $1 trillion, the UAE continues to host the bulk of activity. The industry witnessed $28.8 billion worth of construction contract awards in 2011, which is expected to increase to $32.8 billion in 2012 and $37.9 billion in 2013. The impact of the global liquidity crisis undeniably continues to reverberate through-out the local construction sector, with large swathes of mega development plans on in-definite hold. According to figures released by Citigroup, construction projects scrapped or on hold in the UAE soared to $958 billion in the 12 months from October 2010 to October 2011. High levels of debt resulted in a scaling back of investments and scrutinizing of construc-tion project budgets in Dubai to cut spending, leading to numerous delays and cancellations in a variety of projects. However, there has been a genuine uptake of activity in Dubai, particu-larly signified by the completion of a number of delayed master developments. Although slowed, the market has certainly not halted, and for each abandoned construction site, there is a handful of completed developments. The Dubai government has announced the recommencement of a number of major devel-opment projects and an increase in spending on

social infrastructure development. In 1Q2012, the government unveiled its revised construc-tion program, putting a number of formerly stalled projects on top of its investment agenda. There is expected to be an increase in govern-ment-supported infrastructure spending in transport, power, and utilities to keep up with the 6% annual growth in electricity demand, creating opportunities for construction com-panies operating in these fields. State-owned utilities companies such as Dubai Electricity and Water Authority (DEWA) have expressed a willingness to take on majority equity stakes in projects and provide government guarantees in order to attract investors. DEWA also an-nounced a $19 billion CAPEX plan beginning in 2012, designed to triple power generation ca-pacity to 22 GW by 2017. Although public-private partnerships (PPP) have historically received little interest from other governments in the region, Dubai has re-cently been displaying a greater level of open-ness regarding private participation in infra-structure projects. It has been announced that a dedicated PPP law may be introduced in the UAE in the near future, in anticipation of the procurement of new PPP projects. Access to funding remains the main obstacle impeding accelerated growth in the indus-

Dubai Marina was first established in 2003 and its constituent buildings are nearing completion.

Corne TimmermansManaging Director, Caterpillar Middle East“We see the region as home to one of our crucial markets, and this belief is reflected in our growing presence in the region. Our presence in Dubai has grown significantly in terms of the various business units we represent, such as construction equipment, engines, solar turbines, and financial solutions.”

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try, with project finance operations remaining arduous, and credit markets still wary of the viability of the post-crisis real estate sector. Notwithstanding this, investors are expected to benefit from the clear regulatory environment governing private investments, which has cre-ated a favorable climate for infrastructure proj-ects. Coupled with this is a decline in cement and steel prices in the region, which has sig-nificantly reduced the cost of new projects. Op-portunities are appearing on the horizon for Far Eastern contractors operating in the UAE, who appear to be securing much of the new work. Access to inexpensive labor and an ability to work on lower margins continues to make Far Eastern contractors particularly competitive.

PROJECTSDubai’s development projects have revolved around the Palm islands, Dubai Marina, Dubai Downtown, and numerous skyscrapers along

Emirates Road. Local construction continues to break records, with the most recent being the world’s tallest residential building, Princess Tower at Dubai Marina, and the world’s tall-est hotel, the JW Marriott on Emirates Road. The world’s longest fully automated metro network, Dubai Metro, opened its second line in 2011, with further extensions planned. The third phase of the expansion of Dubai Interna-tional Airport is ongoing, and significant activ-ity concerning Dubai’s proposed second mega-airport, Al Maktoum International, is expected to resume in the short term. When completed, the airport will be three times the size of the world’s largest commuter airport and freight hub combined, with the capacity to accommo-date 70 million passengers annually. A central business district near downtown Dubai, the Business Bay project is currently underway and will feature numerous skyscrap-ers in an area along Dubai Creek, which is set ››

1 Dubai rises out of the desert in spectacular fashion2 Infinity Tower is the tallest building in the world with a 90° twist

Despite a number of high-profile, ambitious developments being put on hold, the thirst for innovative, awe-inspiring projects has not been completely quenched.

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to be dredged and extended. In total, the district will have upward of 240 buildings, comprising commercial and residential developments, in-cluding the iconic Burj Al Alam, a hyperboloid skyscraper designed to resemble a crystalline flower rising 108 stories above the desert floor. The infrastructure of the district was completed in 2008, and the entire development is expected to be completed by 2015. Despite a number of high-profile, ambitious developments being put on hold, the thirst for innovative, awe-inspiring projects has not been completely quenched, evidenced by recently announced plans for the Dubai Water Discus Hotel. The hotel is set to be the first of several underwater buildings in the Emirate and will feature an underwater section of 21 rooms, a diving center, and a bar up to 10 meters below the sea’s surface. According to Dubai Drydocks World, this unique project will cost from $50 million to $120 million and will be funded by BIG InvestConsult, a firm that also represents Deep Ocean Technology, the owner of the tech-nology and design concept for the hotel.

CEMENTDemand for cement in the UAE peaked in 2008, when levels of demand rose to 21.7 million tons, up three fold on the 6.9 million tons consumed in 2003. During this period, per capita con-sumption reached 4,345 kilograms—over 10 times the worldwide average. Cement demand fell 16% in 2009 to 18.25 million tons, as half of all construction projects in the UAE slowed to a standstill. Cement sales continued to be slow through 2011, although there is renewed

optimism that levels will rise in 2012 as re-gional projects reinvigorate demand for build-ing materials. In stark contrast to the boom years, where projects were frequently delayed due to the short supply of cement, oversupply currently plagues the market, coupled with increased production cost. The GCC cement sector quarterly report, released by Global In-vestment House in 4Q2011, noted that region-ally in the first nine months of 2011 the cement sector realized a 10.9% top line increase to cap out at $3.4 billion, but the industry, faced with increasing production costs, suffered a 3.5% decrease in profits year-on-year. The report indicated that the UAE top line increased 1.2% to $888.9 million during the first nine months of 2011, as compared to the previous year, and costs increased by 9% during the period, bring-ing the gross margin to an all-time low of 4.8%. Average cement prices across the GCC fell by 3.8% due to continued weakness in demand. Realization prices decreased 5.3% from $51.8 per ton to $49 per ton in the first three quarters of 2011. Many local cement companies continue to struggle, although industry experts are hop-ing for an increase of 15% in demand for mate-rials over 2012. E.R. Memon, Managing Director of Emirates Beton, states that the Dubai mar-ket as a whole has shrunk to less than 20% of the pre-crisis market, with a demand for only 400,000 cubic meters per month, compared to 2.5 million cubic meters per month pre-crisis. ●

3 The Business Bay project will contain over 240 buildings

Trust in MeTBY talks to Danny Lubert, Joint Chairman of The First Group, on the evolution of the sector, strategies, and regional operations.

How has the real estate and construction sector evolved?We arrived in September 2005 as one of the first British developers since the Dubai freehold market was opened to foreign investors in 2002. It’s been a real privilege to actively contribute to the growth of the real estate and construction sector in the Dubai. Dubai has seen unrivaled development, not just in the quantity but also the quality and creativity of projects.

What was your initial strategy when you entered the market?Throughout our network, our strategy remains unchanged: deliver quality projects that ensure worry-free returns for our investors. We do our research so we can provide our clients with all the information they need to make informed decisions that meet their investment requirements.

What role does Dubai play in your regional operations?With one-third of the world’s population based just four hours away, Dubai is a key hub for global business and travel. Its accessibility to the world’s business nerve centres has made it a must for most multinational corporations to have headquarters here.

How have you innovated the market through your direct marketing initiatives?As Victor Kiam once put it, “great product without marketing equals scrap.” The key to success is first building a great product and supporting it with good sales and marketing. One of the things we pride ourselves on is our reputation as a trustworthy developer that delivers quality projects with great returns for our clients.

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KHALDOUN R. TABARIVice-Chairman & CEO, Drake & Scull

OMUR AKAYVice-President & Managing Director, CHM2Hill International

HATEM FARAHChairman & CEO, Engineering Contracting Co

Dubai’s construction sector revival is being driven by segments across the board, including materials, power, and water.

Design FrontFORUM: Construction Engineering

We are starting to see more tender projects in every field, especially in construction and materials. When the recession happened, people started to do more refurbishment, and it is amazing how that segment has de-veloped. We managed to find work, despite the fact that the competition is fierce. During the boom, we saw many new construction companies from abroad start up, but most of them have not survived in this tough market. However, the companies that were origi-nally in Dubai are persevering. Some smaller companies did stay in the Emirate, but the volume of work has definitely decreased over the last three years. Dubai is getting back on track, and we are very proud to have a leader like HH Sheikh Mohammed Bin Rashid Al Maktoum. He worked very hard, took on all the pressure, and did not blame or point fingers. Instead, he made a comeback, and he led us to the positive situation we are in today; many of Dubai’s financial problems are dealt with, and everything is under control. We have gained credibility in the international market, and more global companies want to come back to Dubai. We have already begun to see many people return. Originally, Dubai was based on trade and services, and we are starting to build a financial hub. We have nev-er been based on development or the buying and selling of apartments. In 2011, 150,000 new residents moved to Dubai.

The focus is now on the infrastructure demand in the Arab world, driven by the huge growth in population. What that growth means is the need for more housing, water, power, and sewage lines, and this is the core specialty of the integrated engineering services that Drake and Scull offers. We are seeing tremendous growth in this part of the world and also in Asia and North Africa, which is why we are now expanding into India, Vietnam, Sri Lanka, Algeria, and Djibouti. There are substantial opportunities for our services in these areas and especially in the water and power sec-tors. These prospects are here and they are here to stay. It’s not about a trend—it is about a position. There are plenty of projects that we are executing at the moment across our entire business streams in the MENA region, so the business model of Drake and Scull fol-lows a pattern. We try to meet all demands in the construction industry from end to end while maintaining the highest level of quality and international standards.

Abu Dhabi is building nuclear energy, and we are technical advisors for that program. We were the first company hired, almost three years ago. Dubai is talking about building a possible nuclear facility, and if that material-izes, we would have an interest in that. To me, renewable energy is the future in this region, despite the traditional wealth of oil and gas reserves. In the longer term, especially with the oil and gas crisis, these commodities are being seen as more useful if exported, so governments are looking for means to gener-ate renewable power. It’s not only econom-ic—there are also environmental concerns in the long term, and I really applaud the UAE for being a pioneer in that respect. Masdar City is a good example of that. Such initiates, creat-ing a new lifestyle without generating carbon, are an important consideration for GCC coun-tries. I believe that there will be more renew-able energy in the industrial sector here, such as in the poly-silicon industry. In Qatar, we are involved in a project to make a polysilicon fa-cility. We believe that renewable energy opens new markets, especially in the support indus-tries to create manufacturing facilities.

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STEVEN PRATTRegional Manager Middle EastInterface

RIZWAN SAJANChairmanDanube

E.R. MENONManaging DirectorEmirates Beton

25 YEARSInterface has been in the Mid-dle East for more than 25 years, and we have always been based in Dubai. However, six years ago we opened our regional head office here and at the same time built a much larger team of people in Saudi Arabia, Qatar, and the UAE.

SUSTAINABLE BUSINESSAs we are a global leader in the design and production of car-pet tiles, we have manufactur-ing plants from the US to Asia. In 1995, Interface became one of the first companies to pub-licly commit to doing business in a more sustainable way.

THE MATERIALS USEDIn terms of sustainable build-ings, probably the biggest im-pact you can have in this region is in the consumption of energy and water, which seems to be what everyone is focusing on. However, the materials that are used in a building also have a huge effect.

HUMBLE BEGINNINGSThe first imports the company made were back in 1993. We imported the first materi-als for $15,000. At the end, in the brokerage business you do not make much money—just enough to survive. We then started importing materials. We spoke with suppliers and asked to supply materials on a consignment basis. I sold the materials then passed the pro-ceeds back to them. That was how we built the business.

AFTER THE CRISISBecause we were present in so many countries, business in different markets was barely affected, and that allowed us to bounce back very quickly. Our business increased by 25% between 2010 and 2011. We are expecting another 25% growth this year.

GOALSOur goal is always to expand. We want to open more and more stores. We have 33 stores at the moment. By next year we want to have 50 stores in total. We want to open a new store every two months.

PUMP IT UPThe team that manages Emir-ates Beton has been in the industry for over 20 years. We have, as a team, gained valuable technical experience in the business of producing high-performance concrete and in pumping it for high-rise projects.

RECORD BREAKERSI have been involved in projects such as the Maktoum Bridge, Wafi, Grand Hyatt, Shangri-La, the Burj Al Arab hotel, Emirates Towers, Jumeirah Beach Hotel, and City of Arabia—which are all famous landmarks—and most importantly the Burj Khalifa, where we surpassed the previous world record for high-rise pumping.

TOP QUALITYCorrosion is a very predomi-nant factor in this region, which is enhanced by the ground water and environ-mental conditions. There are windblown salts as well, and so the quality of the concrete here has to be exceptionally good.

Building materials are widely available in Dubai, fulfilling the need for specialized products and energy-efficient concerns.

On the RiseROUNDTABLE: Materials

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HEALTH & EDUCATIONINSIDE 159 Filling the Gaps - REVIEW: Health | 160 David Hadley, CEO of EHL Management Services - INTERVIEW | 162 HE Qadhi Saeed Al Murooshid, Director General of the Dubai Health Authority - INTERVIEW | 164 Thomas J. Murray, CEO of American Hospital Dubai - INTERVIEW | 166 Dr. Ayesha Abdullah, Managing Director of Dubai Sciences Cluster - INTERVIEW | 167 Heal Me - FORUM: Private Health Care | 168 Leading the Region - Q&A: Medical Technology | 169 Abboud Bejjani, Regional Director, Middle East, Africa, & Pakistan at Abbott Laboratories S.A. - INTERVIEW | 170 Rashad Hassan Al Moosa, Joint Managing Director & Partner of Gulf Drug - INTERVIEW | 171 Engineering Innovation - ROUNDTABLE: DuBiotech | 172 Top of the Class - REVIEW: Education | 175 Dr. Abdulla Al Karam, Chairman of the Board of Directors & Director General the Knowledge & Human Development Authority - INTERVIEW | 176 Dino Varkey, Group Executive Director & Board Member of GEMS Education - INTERVIEW | 177 The Key to Knowledge - Q&A: Local Educators | 178 On Campus - Q&A: Business Schools

u Both government regulatory agencies and private sector players have made progress over the past five years by consolidating the healthcare sector and incentivizing pharmaceutical production.

REVIEW: HealthFilling the Gaps

Public and private sector actors are collaborating to offer a wider range of services to nationals and expatriates living in Dubai, who would otherwise seek medical services outside of the UAE. The medical services market is expected to reach a value of $202 billion by 2020.

Since reemphasizing the importance of public-private partnerships in the healthcare sector through the formation of the Dubai Health Authority (DHA), Dubai has redirected its at-tention to reach higher standards in a variety of segments. The development of hospitals, healthcare zones, clinics, and medical profes-sionals has required heavy investment and par-ticipation from both public and private sector players. However, with government bodies incurring 75% of healthcare expenditures in the UAE, there is still dramatic room for private health-care penetration. As per capita GDP rises, and private players discover more investment op-portunities and niche markets, the healthcare services market in the GCC is expected to grow from $18 billion in 2008 to between $175 billion and $202 billion by 2020, much of which will influence the healthcare sector in Dubai. In 2011, the Dubai Statistics Centre recorded 20 private, three local, and two federal hospitals operating in the Emirate, with 1,347, 2,049, and 227 beds, respectively. Approximately 4,700 physicians were working in Dubai in 2011. Boasting high standards of health care due to increased government spending at the country level, Dubai ranks highly in terms of medical tourism popularity in the region, second only to Jordan, and followed closely by Abu Dhabi in third place, according to the World Bank. In 2007, expenditures in the pharmaceuticals market reached $740 million and are expected to reach $1.12 billion by the end of 2012. Ac-cording to Business Monitor International, drug ››

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expenditures in the UAE will reach $2.46 billion by 2014, with a growth rate of 12%. In combina-tion with favorable oil and gas prices that allow for the expansion of health infrastructure in the Emirates, and the establishment of free zones that offer incentives for domestic pharmaceuti-cal production, the segment is expected to con-tinue on a path of growth at the country level.

STATE PROJECTSAlthough government entities enlist the sup-port and input of private sector providers while developing programs and projects, state-owned institutions and national leaders have played a significant role in shaping the future of the healthcare sector. With an annual plan to add one new center per year to the existing network of 14 primary healthcare facilities, the DHA is spearheading a variety of projects for the benefit of both the local and expatriate community residing in the Emirate. One such project is the implementation of an electronic medical records (EMR) system, which is designed to streamline the process for patients visiting different service providers in Dubai. Through the system, “we will be able to control our medical stocks, facilitate a pa-perless environment, and provide patients and healthcare practitioners with complete online access to medical records,” Qadhi Saeed Al Mu-rooshid, Director General of the DHA, told TBY. In addition, the DHA has continue develop-ing the Al Jalila Children’s Specialty Hospital, which is the first specialized pediatric hospital in the UAE. Treating patients under the age of 16, the facility offers a unique and successful approach to child medicine. The number of private hospitals being regu-lated by the authorities has increased from seven in 2001 to 20 in 2012, demonstrating the government’s commitment to unify and con-solidate healthcare activity in the Emirate while expanding its services and garnering increased support for projects in the pipeline. Under the arm of government leadership, the Dubai Healthcare City (DHCC) is a free zone that is home to over 90 healthcare providers that offer more than 130 medical services to the population. Through collaboration with edu-cational institutions, such as Royal College of Surgeons in Ireland, Boston University Institute of Dental Research and Education, and Nicolas and Asp University College, the zone aims to in-crease the level of quality of medical personnel and widen the breadth of healthcare services Dubai can offer. This has attracted the attention of companies from Europe, South America, and Southeast Asia, now seeking to establish opera-tions in the free zone. The Dubai Biotechnology and Research Park (DuBiotech) was established as a complement to the activities in the DHCC as the first zone in the Middle East dedicated to life sciences. Upon final completion, the area of the park will cover 2.8 million sqm and boast a variety

of sustainable LEED-certified buildings. Com-panies setting up at DuBiotech are involved in diagnostics, R&D, manufacturing, storage, sales and marketing, distribution, consulting and service providers, industry-specific train-ing, and clinical trials. “Many clinical providers and some pharmaceutical companies operate in the DHCC, while at DuBiotech there are a whole range of operations,” Dr. Ayesha Abdullah, Managing Director of the DHCC and DuBiotech, told TBY. “We have specifically designed the DuBiotech headquarters as a laboratory,” she added. In addition to tax-free incentives, the park offers entrepreneurs state-of-the-art in-frastructure, logistics support, and centralized R&D facilities.

PRIVATE ACTORSPrivate healthcare institutions have long ben-efitted from Dubai as a centrally located place to do business, and the presence of foreign and highly trained medical professionals is a key as-set for their operations. Prompted by local demand and the comfort of living in a city with advanced infrastruc-ture, foreign employees have been easy to find for private hospitals seeking the most qualified staff. According to Thomas J. Murray, CEO of the American Hospital Dubai, there are “a sig-nificant number of physicians from Germany, the UK, and the US who want to work here. Many who come are returning to this region of the world.” With 19 beds in the intensive care unit (ICU) of the hospital and 159 in total, in-creased demand has propelled the American Hospital Dubai to expand its facilities to a newer building, boosting patient capacity by 25 beds. Meanwhile, technicians working for the hospi-tal are working to computerize patient records and billing information, in line with the gov-ernment’s wider initiative to link all activity in the healthcare sector to an accessible database. Saudi German Hospital (SGH) Dubai owns a 300-bed, multi-specialty hospital in the Emir-ate, with plans to expand its facilities to six cen-ters of excellence for critical specialties, as well as a medical tower housing 200 clinics that will be used by community doctors. In addition, the new complex will include a state-of-the-art training center for healthcare professionals from around the globe. Like American Hospital Dubai, SGH encounters no shortage of talented medical personnel, which has encouraged the company to develop its services and establish a strong presence in the Emirate. According to Dr. Mohaymen M. Abdelghany, CEO of SGH Group in Dubai, “that is the beauty of Dubai. It is a cosmopolitan city that can attract talent from all over the world. It is an advantage that we do not have in other parts of the world.” SGH Dubai also fosters collaboration, not com-petition, in the local market, adding that the company has “approached the Dubai Chamber of Commerce to establish a special group for private hospitals, so that we can discuss and

Staff FirstTBY talks to David Hadley, CEO of EHL Management Services, on opportunities in the healthcare sector.

What are the key investment opportunities in the private healthcare sector?In Dubai, I think there are many hospitals and facilities coming on board. There is an opportunity for good international operators here, and if they come it could strengthen the market. Health care is perceived as recession proof. I think that is a bold statement, as it is not quite recession proof. It is a sector that continues to do well, however, and there is still a lot of demand for it in Dubai.

How hard is it to attract quality staff?We have two main strengths here. The first is that Dubai is an attractive destination in terms of lifestyle. The second is the Mediclinic brand, which as an international group attracts good people. One thing that we are very proud of is that Dubai is always seen as a transient society on a broader scale, but our staff turnover is the lowest in the group. If you compare it to the pharmaceutical industry, it is extremely low—below 15% per annum. If you look into the healthcare sector, you are going to find that staff turnover is 24%-25% per annum. We are doing exceptionally well, despite Dubai being a so-called “transient” society.

What is your outlook for healthcare providers over the short term?I think the state of the global economy is going to impact the region. There will be many challenges. If you look here in the UAE, thankfully the authorities have completely cut back their ambitious growth plans, and it seems to be more structured and slower now. I do not think we will see a huge downturn here in the UAE. You can never be sure, but it is stable, it is growing, and the authorities are focusing on Dubai’s core strengths: trade and tourism, and obviously oil and gas.

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solve our problems together, and generate a collective voice.” This push for teamwork and cooperation has set a positive trend in Dubai, as private sector healthcare providers strive to improve the sector and seize new opportunities. Striving to achieve success in a niche mar-ket, Mohammed Kazim, General Manager of Wooridul Spine Centre, has been working to re-duce the need for Dubai citizens to travel abroad for healthcare. Having observed that an average of 500 patients from Abu Dhabi go aboard for spinal treatment annually, Kazim formed a joint healthcare establishment between Mubadala Healthcare and Wooridul Spine Hospital in February 2011. To attract over 1,300 registered patients from across the globe, “we work very closely with the healthcare authorities to iden-tify gaps in the market,” Kazim explained to TBY.

PHARMACEUTICALSGovernment-initiated parks and free zones in health care are spearheading the UAE’s struggle against prominent illnesses in the region, such as diabetes, which was affecting approximately 20% of the country’s population in 2010. In Dubai, obesity and heart disease are also preva-

lent illnesses that have influenced the prices of pharmaceutical products in the UAE, with the cost of over 100 drugs decreasing after legisla-tive reforms in 2011. In addition, new regula-tions that require employers to provide health insurance have contributed to the important growth of the pharmaceuticals market. Fore-casts for the industry are in line with the esti-mated population growth, expected to be 8% in 2012. Regionally based in Dubai, Abbot Laborato-ries specializes in the production of nutritional products, laboratory diagnostics, medical de-vices, and pharmaceutical therapies. Advanc-ing in the region over the past decade, the multinational has taken advantage of more de-veloped health care and education by integrat-ing into DHCC. “We support disease awareness and educational activities to the public, through our partnerships with government, specifi-cally the Ministry of Health and other major institutions,” Abboud Bejjani, Regional Direc-tor, Middle East, Africa, & Pakistan for Abbott Laboratories S.A., told TBY. Focused on add-ing value with innovation, Abbot Laboratories recently introduced Humira, the world’s first fully human monoclonal antibody product for the treatment of immune mediated inflamma-tory disorders such as arthritis, psoriasis, and Crohn’s disease. In response to controlled prices, Rashad Hassan Al Moosa, Joint Managing Director and Partner of Gulf Drug, commented to TBY that “one aspect is for the expatriate community not to pay too much for their medication, but at the same time it is for those UAE citizens who choose not to go to the government hospitals, where UAE citizens get their medication and healthcare for free.” In this way, new legisla-tion has helped the consumer, broadened the market spectrum, and boosted activity in the private sector, especially in terms of pharma-ceuticals production. ●

Government-initiated parks and free zones in health care are spearheading the UAE’s struggle against prominent illnesses in the region.

Source: Dubai Statistics Centre

Type of Hospitalsas a percentage

PRIVATE 80%LOCAL 12%FEDERAL 8%

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0PRIVATE LOCAL FEDERAL

Characteristics of the Medical Sectorin thousands, 2011

BED

S

PHYS

ICIA

NS

BED

S

PHYS

ICIA

NS

BED

S

PHYS

ICIA

NS

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INTERVIEW

Live LongTBY talks to Qadhi Saeed Al Murooshid, Director General of the Dubai Health Authority, on the vision behind the Emirate’s health strategy and the local healthcare sector.

BIOGRAPHYQadhi Saeed Al Murooshid is the Director General of the Dubai Health Authority, the principle and strategic health authority for the Emirate of Dubai. He is a member of the Executive Council of the Government of Dubai and a Member of the Board of Directors of Dubai Healthcare City (DHCC).

HE Qadhi Saeed Al Murooshid

TBY The Dubai Health Authority was estab-lished in 2007. What was the vision behind the establishment of the authority at that stage?QADHI SAEED AL MUROOSHID In 2007, the Ruler of Dubai decided to create the Dubai Health Authority (DHA). His vision was that the healthcare sector was growing, and that there was a need for a regulatory body to lay down a strategy for the whole of Dubai, not only for public hospitals. We had to establish the Dubai strategic health-care plan, and we had to establish a part-nership with the private sector through our regulatory arm. We also had to pre-pare a funding model that would be suit-able for Dubai. The Emirate needed a plan regarding regulation, funding, strategy, service provisioning, expanding services, and partnerships, and we needed to focus on educating the new generation. Prior to this, the Department of Health and Medi-cal Services (DOHMS), which was created in 1973, was the functioning authority that almost exclusively focused on health ser-vice delivery. Therefore, the DHA was cre-

ated, in June 2007, by Law 13, with an ex-panded vision to include strategic oversight for the complete health sector in Dubai and enhance private sector engagement.

How would you say the healthcare market has evolved in Dubai over the past few years?The UAE, and Dubai especially, is striv-ing to reach higher standards in security, health, education, and business. The ex-pectations of people moving here to live, work, or just visit are high, and we have to make sure that our health services meet those expectations. In 2007 we began a lot of projects, and we are still planning many more. We have realized that we need public-private partnerships. It is not only with money that you can develop hospi-tals; you also need knowledge and experi-ence. We are expecting two new hospitals to open in Dubai in 2012. In the beginning of 2001 there were less than seven private hospitals, and today we are talking about a total of 20 new hospitals. Clinic numbers are rising, and professionals are moving to Dubai. We have an excellent talent pool of healthcare professionals in Dubai. The people of Dubai deserve the best quality, and this is an aim we are realizing through our regulatory arm to make sure the indus-try is regulated to benefit the people. We have very good communication with the private sector and consult with it directly regarding new regulations. We need to give the people of Dubai the ability to choose and compare services. We also want to create a new market for insurance compa-nies. Health care is a huge business when it comes to insurance. I believe that health care has tremendously evolved over the years, and given all the existing parameters and our future plans, I see more progress in the years to come.

What projects do you have in the pipeline?One major project involves electronic medical records (EMR). This project will digitize all medical records, and any doctor will be able to see a patient’s medical his-tory via computer. We will be able to con-trol our medical stocks, facilitate a paper-less environment, and provide patients and healthcare practitioners with complete on-line access to medical records. You will be able to walk into a clinic, input your infor-mation into the system, and your complete medical history will be displayed—this will be applicable even when you travel abroad. In terms of other projects, we are

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1 Qadhi Saeed Al Murooshid, Director General of the Dubai Health Authority2 Qadhi Saeed Al Murooshid with HH Sheikh Mohammed Bin Rashid Al Maktoum

Dubai Health Authorityin numbers

very happy with the progress on the Al Jalila Children’s Specialty Hospital, which is the first specialized pediatric hospital in the country. It is a fully dedicated, unique facility for children below the age of 16. In addition to focusing on such special-ized projects, we will continue to pay at-tention to primary health care. We believe that primary health care is our frontline. We have an annual plan to add one health center each year to our existing network of 14 primary health centers spread across the various geographical areas of the Emirate. These are just a number of the things we have in the pipeline.

What are the key investment opportunities for partners looking to come to Dubai?There are a lot of opportunities in Dubai in healthcare investment. The challenges that investors sometimes face with regards to ownership or regulation have been resolved here. The DHA works closely with Dubai Healthcare City to assist investors. We are also working with DuBiotech, which is a lucrative project regarding pharmaceuti-cal company research. The pharmaceutical industry is very promising, and it is a big business. With the infrastructure and ser-vices that Dubai has in hand, we need to work with it to see what challenges need to be faced, because we believe that Dubai is the best place to be a hub for the distribu-tion of medicine in the region. To achieve this we have to work very hard to make sure that we are enacting the right regula-

tions for the registration of drugs and other similar issues. When it comes to clinics we are very happy that we have among us top professionals from Europe, the US, and the region. They are happy with the environ-ment here both professionally and person-ally. Access to Dubai allows people to fly in on a daily basis to do business and then fly back. For a lot of people in the region, the best point for them to meet is Dubai.

What is your outlook for the healthcare indus-try in 2012?In 2012 our focus will be on primary health care. The plan is to make sure that we im-prove the quality and support our people and family physicians in the primary healthcare sector. If we can reach people in the early stages and take care of them, then that is the best thing to do. We have to go and reach people before the prob-lems start. We have to look at our young children and make sure that they are pro-tected, not waiting until they get sick. We are going to help them focus on their lifestyle, and we are going to be lobbying for new regulations to protect students, especially the youth, from unhealthy food habits. We are working with the Dubai Municipality, which is doing a great job to make a healthy lifestyle more accessible. This is very important. Our focus is on the frontline, on primary health care. In ad-dition to primary healthcare, in 2012, we are also going to focus more on outpatient services. ●

Established

2007Private hospitals 2001

7Private hospitals 2012

20Primary care health centers

14

In 2012 our focus will be on primary health care. The plan is to make sure that we improve the quality and support our people.

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INTERVIEW

One Small StepTBY talks to Thomas J. Murray, CEO of American Hospital Dubai, on the evolution of the private healthcare sector.

BIOGRAPHYThomas J. Murray has over 37 years of experience in integrating operations, planning, and program development within a variety of healthcare environments. He has served as the CEO of four institutions, most recently at Mount Nittany Medical Center at State College in Pennsylvania. He is currently CEO of American Hospital Dubai.

1 Thomas J. Murray, CEO of American Hospital Dubai

Thomas J. Murray

TBY How has the private healthcare sector in Dubai evolved?THOMAS J. MURRAY Our institution has been around since the beginning of the development of large private sector com-panies. There were some small physician’s offices and clinics, but we were the first full-service, complete hospital with per-manent staff. We started with outpatient services and performed a small amount of surgery. We then opened up our inpa-tient units and performed more surgery, and added more physicians to our staff. It evolved over time. It was not a get-rich-quick deal; it took a lot of vision and resources to get it up and running. Build-ing a first-class hospital isn’t something that can be done fast—the tradition, staff, and the building processes are all very important.

What are the main defining characteristics of the local healthcare industry?In the US, many of the hospitals are chari-ties, either public or private, and as part of their missions they are non-profit orga-nizations. At the end of the day, however, they need turnover to reinvest in people, buildings, or new technology. We see an awful lot of that in the US, but you don’t find that here in Dubai. There’s a govern-ment sector, and a private sector, and we don’t see any charitable-type institutions here. Health care and technology is expen-sive, and there are extensive operational costs associated with it, and somehow people need to be paid. There’s a balance that you have to have, but it’s a little differ-ent here in Dubai. If you look at the national health in-surance groups around the world, they are beginning to realize that they need mechanisms for accountability. People can’t come into a hospital and stay forever, using all the services. Abu Dhabi has been leading the way, with its accountability schemes. In Dubai as well, people are sign-ing up for insurance, and the companies are asking more questions. They didn’t ask as many questions before. People have high expectations; in the past everything was done basically for free. There is a huge value in the services we provide, and more places with insurance are starting to in-stitute copayment schemes. It’s a natural gatekeeper. If you have to pay for it, hope-fully people will think before running to the doctor or emergency room for every little thing.

What are your current expansion plans?We mainly want to finish the commission-ing of our new building, which will involve relocating our intensive care unit (ICU) in the original building to the new facility here. We have 19 beds now, but we’ll move up to 25 beds in ICU. The original building needs refurbishment, although it’s only 16 years old. It’s not old, but it has been used constantly, and we need to renovate. We would like to move the patients into our new building, keep them here, and if we find that we still want to expand, we can renovate our old building to meet demand. Currently, we only operate here at our fa-cility in Dubai, but in the future we would consider expansion outside of this area. We have been invited to many locations in this part of the world, not only in the UAE.

How is information management involving in this market?We are being very careful to maintain a high standard of professional care and to continue managing information. The doc-umentation of our product is our medical record, which contains all the patient in-formation. We are spending a large amount of time and money on the computerization of these records. It’s necessary for patient care so we do not lose charts or x-rays, for example. If everything is digitized, we can transfer everything quickly or put it on a flash drive in seconds. One issue is the se-curity of information. We have to be care-ful in terms of connectivity. Another issue is that the internet service is not reliable in every part of the country. We can send bills digitally to our insurance company, and we get paid online, too. The money moves appropriately and safely, and if we move to another part of Dubai or the UAE, we want to ensure that any of our physicians can review one of our patient’s medical record from any location in the region. This is ex-tremely important for many reasons.

How much of a challenge is it to attract tal-ented staff to the hospital?We are seeing a significant number of phy-sicians from Germany, the UK, and the US who want to work here. Many who visit are returning to this region of the world. The way we organize our hospital structure is exactly the same as it is done in the US. It was easy for me to be here as a CEO, be-cause it is operated in a similar way, with only a few minor differences. The staff and patients are from many different coun-

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And genuine smiles. That’s our promise.

Comprehensive medical services.

The first hospital in the Middle East to be awarded Joint Commission International Accreditation (JCIA)

The first private laboratory to be certified by the College of American Pathologists (CAP)

w w w. a h d u b a i . c o mFor general inquiries and further information call +971-4-336-7777

For emergency servicescall +971-4-377-6644/45

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tries, but they recognize the procedures here. Even some physicians from the US are choosing to move here in the midst of a confusing reimbursement program there. Other people just want a change. Although I’ve been in the business for many years, I wanted to do something different, and this hospital provides it to me. Many young nurses come here for a couple of years. Young people from the US come here and love it. German staff are especially eager to experience a different working atmo-sphere. I feel lucky to be in Dubai.

What sort of steps need to be taken to develop the local primary care market?Primary care is extremely important, and everyone needs a primary care physician.

From a health point of view, it’s better to see people on a routine basis and screen them, as opposed to just going to the doc-tor when you are sick. I applaud those who depend on primary physicians and focus their energy on the sector, calling upon specialists only at appropriate times. A lot of insurance companies have begun to de-mand that patients are referred from their primary care physician, and they can’t go straight to the specialist. Screening saves lives and money. If we have primary care physicians that have long-term relation-ships with their patients, we can take bet-ter care of them. There’s always a balance between quality and money. For example, looking purely at saving money, you could ban insulin. Frankly, you could just get rid of the diabetic population if you wanted to save money. If you accept the fact that you have to give people insulin, you must also accept the fact that there are other issues you will have to deal with concerning that patient, such as their eyes, exercise, kidney functions, feet, and diet. Diabetes is a gate-way disease because it opens up all kinds of other diseases. If we permit insulin, we have to recognize that there are costs as-sociated with that. Part of controlling costs is having a well-informed and motivated patient population. ●

American Hospital Dubaiin numbers

Part of controlling costs is having a well-informed and motivated patient population.

Operating in Dubai since

1996Number of physicians

88Number of operations per year

100Number of beds

159

HEALTH & EDUCATION 165

INTERVIEW

The Cluster EffectTBY talks to Dr. Ayesha Abdullah, Managing Director of Dubai Sciences Cluster, on the healthcare free zone and the private sector.

BIOGRAPHYAn industry professional with over 19 years of experience in the healthcare and engineering sectors, Dr. Ayesha Abdullah’s core competencies include strategic healthcare planning, project management, and strong technical competency. In her capacity with DHCC and DuBiotech, she is responsible for overseeing the life science and healthcare free zones’ strategic planning and operations, driving the development of new businesses, and managing strategic partners.

1 Dr. Ayesha Abdullah, Managing Director of Dubai Sciences Cluster

Dr. Ayesha Abdullah

TBY Why did you decide to establish a free zone dedicated to health care, and how has Dubai Healthcare City Cluster developed since it first opened in 2005?AYESHA ABDULLAH Dubai Healthcare City Cluster (DHCC) falls into Dubai’s overall plan. It’s very much a part of the strate-gic plan of making Dubai an international city, and the key to that is education and health care. DHCC was the brainchild of HH Sheikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Min-ister of the UAE and Ruler of Dubai, and DHCC was launched in 2002. We spent a few years building the infrastructure, and we became operational in 2005. The first clinic opened in mid-2005, and since then we’ve grown into a community of over 90 medical centers, two Joint Commission In-ternational (JCI) accredited hospitals, and we have several other hospitals under con-struction. The goal is mainly to make sure that people in the region and those that go abroad for medical treatment choose to get treatment in the UAE. The concept is a public-private partnership (PPP) model in which the government has generously invested in the infrastructure, and we have invited the private sector to come in and set up shop in the cluster. We’ve been very successful in that we’ve attracted a lot of top-notch healthcare providers glob-ally: Samsung Medical Center from Ko-rea, Moorfields Eye Hospital from the UK, and Dr Sulaiman Al Habib Medical Group from the region to name just a few. In the past six years, we have seen the number of patients coming to DHCC increase, and I think we’re doing a good job of keeping people at home. About 15% of the patients we currently see come from outside the region. Predominantly they come from the GCC region, but we also see patients from other Arab countries. The goal in the long run is to be in a position to keep all of our patients at home as well as attract patients regionally that usually go abroad. Key to that is finding out what those patients are going abroad for and then providing those treatments here, so from the very beginning we have understood that health care is an industry that is based on trust and quality is of paramount importance. For that reason, we set up the Center for Healthcare Planning & Quality (CPQ), which is the regulatory arm of DHCC. We have very stringent requirements for the licensing of professionals. We look into the design of our buildings because we believe

a healing environment goes hand-in-hand with treatment.

Dubai has experienced tremendous economic growth in a wide range of industries over the past two decades. How has the private health-care industry evolved?Historically, health care was always an area that was dominated by the govern-ment across the Middle East. Over the past five to seven years, we’ve seen a shift in that emphasis, and we are seeing more and more healthcare providers coming in as they see the region as a growth area because the population is increasing, the population is aging, and aging is linked with more healthcare needs. The projec-tions for growth in the coming year in the Middle East look really strong, and so the private sector has been growing, and we are seeing this trend across the board both in this country and in the GCC region.

You also have an active role in the manage-ment of DuBiotech. How do DuBiotech and DHCC work together, and what is your joint vision and strategy for the coming years?DHCC and DuBiotech operate within the whole spectrum of life sciences; every-thing from R&D to actually creating the drugs and then providing patient care. Within that spectrum there are a lot of synergies as well as overlaps between the two clusters. Many clinical providers and some pharmaceutical companies operate in DHCC, while in DuBiotech there are a whole range of operations, including fra-grance development. We have specifically designed the DuBiotech headquarters as a laboratory. ●

We are seeing more and more healthcare providers coming in as they see the region as a growth area.

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International and domestic companies have been attracted by the dynamics of Dubai’s private healthcare setup, driving up quality and standards.

DR. CHRIS CANNINGChief Executive & Medical Director, Moorfields Eye Hospital Dubai

DAVID HADLEYCEO, EHL Management Services

DR. MOHAYMEN M. ABDELGHANYCEO, Saudi German Hospitals Group

MOHAMMED KAZIMGeneral Manager, Wooridul Spine Centre

I think we all agree that in terms of the way that the patient, the purchaser, and the provider work together, the balance in this country is not right. It’s not right because there is no gate-keeper that controls how many times a citizen of the UAE can access health care. It can be accessed as many times as a person chooses. A patient can go to 12 different doctors for the same condition on the same day, and the Thiqa Program will pay the invoices for each con-sultation. There is no incentive for the patient to stop getting health care. In certain situations pre-authorization is required, but anything under AED1,000 will be automatically covered. Patients here believe that they are only doing right by themselves in get-ting third and fourth opinions. This practice is not seen as be-ing distrustful of any of the indi-vidual doctors, whereas in the UK people are rather diffident about asking for a second opinion. It erodes motivation for doctors, and in the long run, I firmly be-lieve that it does the patient more harm than good.

The market here is unique purely because of demographics. Some sources put the average age at around 30-32. Less than 1% of the population is over the age of 60. Dubai has one of the high-est migrant populations in the world—80% of the population is expatriates. Considering these factors, healthcare needs to be specially tailored, which means focusing on a lot of young fami-lies through pediatrics and ma-ternity specializations. The other specific factor here is that there are a lot of conditions related to lifestyle, such as diabetes, obesity, and heart disease, even in young people, and the cor-responding treatments need to be accommodated within the healthcare system. Rashid Hos-pital also has one of the most fantastic trauma departments in the world, and this is crucial due to the amount of road accidents that occur here. We came here knowing there was going to be a lot of competition within Dubai Healthcare City. We felt confident that what we offer is unique, and we know we operate hospitals to the highest standards.

The services that we provide here are of a general and acute care hospital, where we have all spe-cialties under one roof. You can call it a one-stop shop for health-care services. We are also adding some new services because our target is to be a medical hub in the region. In that vein, in the sec-ond phase of the project we are developing six center of excel-lence with 50 beds each, so that we can foster different specialty centers. These specialty cen-ters have been designed purely in partnership with the German universities. So, before people go to Europe, they will think twice, and consider coming to our hos-pitals for treatment instead. To further boost this idea, we have planned for a medical tower ac-commodating 200 clinics for the community-based doctors. Furthermore, this project will also include a post-graduate training center attached to these hospi-tals. This will help to identify and attract the best healthcare pro-fessionals from around the globe. In terms of our relationships with vendors and suppliers, we have developed very long-term relationships.

There is definitely strong de-mand in the market, and that is what is driving the success in the UAE and Dubai specifically. The health authorities are tak-ing bold steps to open up the market to private sector players and increase competition and therefore quality. One example of this is Abu Dhabi’s introduction of mandatory employer-funded healthcare for all nationals and residents of the Emirate. This has opened up a great deal of choice for patients and enabled providers to compete in terms of quality. It has been a real success story so far. We have 1,300 reg-istered patients, and that number is growing every week as more and more people find out about us and word spreads about the high-quality care we provide. Around 30% to 40% of the sur-geries we have performed to date have been revision surgeries for people who have undergone procedures before either in the US or in Germany, Singapore, Thailand, or locally. Our physi-cal therapy has been a hit, and we are very happy with the out-comes we have seen.

Heal MeFORUM: Private Health Care

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WACLAW LUKOWICZCEO Healthcare Middle East, Siemens Healthcare

DR. MICHAEL HEUERPresident of Europe, Middle East, Africa, and Latin America, Roche Diagnostics

A solid medical technology industry has developed around Dubai’s growing healthcare sector.

TBY talks to two industry heads on the operating environment and demand trends.

What is the history of your presence in the re-gion and the significance of Dubai in terms of your regional operations?

WACLAW LUKOWICZ Siemens has been pres-ent in Dubai for over 40 years. Our pres-ence here is geared toward providing better healthcare services to the local population, and this is in line with Siemens Health-care’s strategy. We have been here for a long time, and have a strong commitment to the region. Dubai is an important mar-ket for us, as it is a regional hub and serves as our regional headquarters, enabling us to provide a broad range of healthcare so-lutions catering to the needs of the neigh-boring countries, including offerings for the high- to low-end markets.

DR MICHAEL HEUER We have been active in the Middle East for many years. Via our partners and distributors, we take care of distribution, customer support, and lo-gistics across the region. The organization that supports these distributors across the world is located in Mannheim, and the marketing support, service support,

Leading the RegionQ&A: Medical Technology

trainers, and applications are directed from there. The extremely good experi-ence we have had with the development of our business in the Middle East region led us in 2011 to change the setup of how we distribute our products here, and how we can become a company that is closer to its distribution partners and customers in the region. We have therefore decided to open an office and management center in Dubai. This center will take over marketing re-sponsibilities, service, support, training, logistics, and quality management, as well as all other necessary activities to be closer to our customers in the region.

What major trends have you seen in terms of demand for your projects and services?

WL We cater to a very diverse market in the region, ranging from very developed mar-kets in various parts of the Middle East, where residents have access to the best and latest in medical technology, to less devel-oped markets such as in South Asia which include countries such as Afghanistan and Pakistan, where the doctor to population ratio still needs to be determined. In places such as Dubai, which is at the forefront of technological advancements, we see a growing need for increasing accessibil-ity to healthcare, improving coverage, and disease prevention. A young population still exists, and the developed world topics which many European countries and Japan are facing have yet to surface. However, there are specific diseases, such as diabe-tes, which are more prevalent. Siemens is

driving the trend for prevention, and we aim to focus on early detection.

MH The strongest demand is for fully automatic central clinical laboratories. What many are looking for are platforms that cover the broadest possible param-eter spectrum, in order to consolidate the workload of many different instruments into one central laboratory. We are very pleased with the outcome. We also see that the medical and healthcare systems in hospitals are becoming increasingly inter-ested in adopting point-of-care solutions in order to be closer to their patients.

How has the geopolitical situation in the area affected your operations?

WL We have seen a degree of instabil-ity in the political situation. However, the UAE has enjoyed clear, absolute stability. I’m very proud of our team because they have continued to service the equipment located in tumultuous areas, demonstrat-ing how being locally-based benefits our customers. Throughout the revolution in Egypt, our teams have worked to support medical facilities. Basic service is needed for the equipment, and if we are to achieve excellence and patient focus, we had to continue our operations. There has been a small amount of hesitance in the private sector, but growth has still been possible.

How large will your new base in Jebel Ali be?

MH By 2013 we will have approximately 50 people working in different areas: market-ing, marketing support, quality manage-ment, safety, training, technical services, IT, and finance. We believe that this is just the beginning because the potential here is great, and customers expect their suppliers to offer them the latest products. There is no compromise here on quality. There are no differences between what we offer in the Middle East and what we offer in the US, Japan, and Western Europe. Custom-ers want to build their own solutions now. The customer indicates his improvement needs, and we discuss together the specifi-cations of the new clinical laboratory, and we build it, first as a concept, then in re-ality. We call it “Dreamlab.” In Abu Dhabi we are currently building one of the larg-est highly-automated laboratories in the whole region. It is a top-of-the-line labo-ratory that can be showcased globally. ●

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INTERVIEW

More from the LabTBY talks to Abboud Bejjani, Regional Director, Middle East, Africa, & Pakistan at Abbott Laboratories S.A., on the significance of Dubai, product development, and international growth plans.

BIOGRAPHYAbboud Bejjani joined Abbott in 1998 as Financial Planning Manager for the Middle East Region, progressing through positions of increasing responsibility in finance until becoming Regional Finance Director, Middle East and North Africa in 2001. He later took the position of Country Manager for the Gulf and Levant Region in 2005, before assuming his current position. He has a Master’s degree in Accounting and Finance from Saint Joseph University in Lebanon.

1 Abboud Bejjani, Regional Director, Middle East, Africa, & Pakistan at Abbott Laboratories S.A.

Abboud Bejjani

TBY What is the history of Abbott Laboratories in the region?ABBOUD BEJJANI Abbott has a long history in the Middle East and has been in the re-gion for many decades. Abbott is consid-ered among the first few pharmaceuticals that came to the region and maintained its goal to advance medical science to help people live healthier lives by addressing important health needs from infancy to the golden years. We work closely with our partners across the Middle East, with a presence in every country.

What is the significance of the UAE in terms of your Middle East operations?Our Middle East and Africa office is based in Dubai, which hosts all of our divisions, ranging from nutritional products, labo-ratory diagnostics, medical devices, and pharmaceutical therapies. We are the mar-ket leaders in most of our divisions, work-ing passionately and thoughtfully translat-ing science into lasting contributions to health.

What is the focus of your product develop-ment in the region?In the UAE and the region, we ensure avail-ability of our best products. We have been pioneers in introducing many medicines that are first in their categories. One such latest introduction is Humira, the first fully-human monoclonal antibody for the treatment of immune mediated inflamma-tory disorders like rheumatoid arthritis, ankylosing spondylitis, psoriatic arthritis, psoriasis, Crohn’s disease, and ulcerative colitis. Previously, we have introduced first in class products in neonatology, an-esthesia, and HIV/AIDS therapy areas. We also have several innovative products in

the pipeline for chronic kidney disease and hepatitis C. The company supports disease awareness and educational activities with the public, through our partnerships with government, specifically the Ministry of Health (MOH) and other major institu-tions. We have realized that the public lacks disease awareness, and many times the de-lay in diagnosis allows the disease to reach an advanced stage where its management becomes a challenge to the healthcare pro-viders. Our three main focuses in the UAE and the region are to register new products as early as possible, educate the healthcare providers through training, seminars, and workshops, and help the public by design-ing programs in association with health-care professionals who address disease education. On the other hand, we bring many opportunities to the residents living in the region, by offering and creating job opportunities.

What trends have you witnessed in the past five to 10 years in terms of the services and products you deliver?In the past five to 10 years the market has expanded rapidly leading to firstly, a vol-ume increase of companies, and secondly, to a more customer-centric approach. For example, doctors are satisfied with the professional educational services they are receiving from companies, however they would like to see more patient education programs, since an empowered patient would lead to a better patient outcome. Thirdly, we’ve begun to see increased gov-ernment participation in building health-care structure. The government has taken aggressive action to restructure the system through privatization, compulsory insur-ance implementation, and changing the medical coverage from the government into a model closely aligned with social security.

What are your growth plans for the UAE and wider regions?We’re seeking to expand globally and re-gionally to improve our focus and support to patient care and services. The existing Proprietary Pharmaceutical Division (PPD) of Abbott Laboratories will be separated by 1Q2013 to begin independent operations under the name of AbbVie, a new research based pharmaceutical company. In the past, we hired many overseas expatriates from the US, Europe, and Canada, but this is no longer the case. We are employing

residents of the countries from the region as part of our effort to build a base of lo-cal talent. We have been very successful in this endeavor, and we hope to continue in the future. The company aims to expand in terms of introducing new products as fast as possible. The Middle East is on our list of emerging markets, with good growth op-portunities. This country is a hub that has a large pool of talent from across the globe, and we are keen to invest in the right peo-ple and build a brighter future. ●

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INTERVIEW

An Open MindTBY talks to Rashad Hassan Al Moosa, Joint Managing Director & Partner of Gulf Drug, on the local healthcare industry, core services, and staying competitive.

BIOGRAPHYRashad Al Moosa joined Gulf Drug in 2001, working as a Financial Analyst. In 2003 he was appointed CFO, and in 2011 was delegated by the Board of Directors as Joint Managing Director. He has a Bachelor’s degree in Business Administration from Suffolk University in the US.

1 Rashad Hassan Al Moosa (right), Joint Managing Director & Partner of Gulf Drug

Rashad Hassan Al Moosa

TBY How has the local healthcare industry evolved over the history of Gulf Drug?RASHAD HASSAN AL MOOSA The country is still young. If you compare the UAE to other countries of the same age, the UAE is far ahead of the game. However, if you compare it to the Western world, there is still a lot of room for improvement. There have been investments from both the government and private sectors, but the investment is not enough. You can get the best equipment and have the fanciest hos-pitals, but you still require the people to manage them and the doctors to provide healthcare. There are two aspects: one is the products and devices a medical pro-fessional uses, and the other is the knowl-edge. The knowledge base takes time to build and will take a few more decades to be solidified. A knowledge base cannot be acquired through money; it has to be built over time.

What are your core services?We are in the top 10 pharmaceutical dis-tributors in the UAE. We are in the top three medical equipment agents and ser-vice providers in the UAE and also the top three medical consumables providers in the country, including one of the largest turnkey project providers in the country. From the moment a hospital is planned, the contractor builds the basic infrastruc-ture for the hospital, which is the cement and steel, and we do the rest; pretty much everything from communications to the operating theaters, recovery rooms, and even the waiting lounges.

As a local company, how do you compete with huge, multinational enterprises offering the same services?There are two factors. First we try to un-derstand the local market. Second we aim to fully understand the agency laws, which protect local companies. This legislation is good and bad at the same time; the coun-try is not that large, and the law protects local businesses from being overtaken by the globalization movement and interna-tional ownership, which local companies have no chance to compete against. The law is bad because many newcomers in the market have a difficult time, although those who have a good concept or product usually succeed. In the medical field, the investments required to bring a product to the market are usually very high, and the competition is so fierce that the returns

are limited. In pharmaceuticals, we gross anywhere between 8% and 10%. Our mar-gins are set by the Ministry of Health and are pegged once every year or two. In this way, we absorb the currency fluctuations. This means that at certain stages it is pos-sible to lose the whole gross margin, and we would have to pay from our pockets to provide medicine to the market. Out of so-cial concern, this is one good thing about being a local company; we have a social responsibility to make sure this medicine is available on the market because it can save lives.

What are the benefits of controlling the cost of pharmaceutical products?One aspect is for the expatriate community not to pay too much for their medication, but at the same time it is for those UAE citizens who choose not to go to the gov-ernment hospitals, where UAE citizens get their medication and healthcare for free. Otherwise, UAE citizens have to acquire medication at a higher cost if they do not carry private healthcare insurance. Price controls help the consumer. However, certain medications are not worth bring-ing to the market for multinational com-panies, since the margins are very slim, and the competition is tough. Most of the medication in the country has a generic version, and it is up to the consumer to choose which he or she wants to use. With branded medicines, the customers knows that the product is 100% what it says it is, but generics could be made in Asia or Eastern Europe; we do not guarantee their effectiveness.

How does the market in the UAE compare to the surrounding markets?Every country protects its own pharma-ceutical market by default. The UAE is more open-minded than most GCC coun-tries. For example, in the UAE a Qatari can own a pharmaceutical drugstore. A UAE citizen may not own a drugstore in Qatar, so the UAE is much more open-minded when it comes to business than most of its counterparts in the region, and its laws are ahead of most other countries. The only country that would be comparable would be Oman, but it’s not a large market com-pared to the UAE or Kuwait. The medicine in UAE is 30% cheaper than in Kuwait, on average, although Kuwait is on the same level as the UAE when it comes to oil ex-ports and GDP. ●

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HUSSAM YACCOUBGeneral ManagerInternational Flowers and Fragrances Middle East

SALAH MALEKManaging DirectorMaquet Middle East

MARWAN ABDULAZIZ JANAHIExecutive DirectorDuBiotech

THE IDEAL CHOICEOur business aims to build close ties to the consumers in order to anticipate their needs and understand their tastes. DuBiotech was the ideal choice for IFF, with incredible infra-structure that is unique in the region.

THE ADVANTAGESThe buildings in DuBiotech provide the infrastructure we needed, as it is very important for us to have access to a clean and sterile air flow. We change the air eight times per hour for the purposing of evaluat-ing fragrances. The air must be clean to carry out this process.

THE PRODUCTAs a flavor and fragrance com-pany, we cater to many indus-tries in Dubai. The region is very diverse. Flavor-wise, we develop sweet flavors for prod-ucts such as juices and snacks; scent-wise we cover every-thing from personal care to home care and fine and beauty care.

HOME SWEET HOMEDubai has been extremely welcoming with the free zone legislation in general, and Du-Biotech was the natural choice. When we arrived we were an under-resourced company with only three people, and today we are 40 people. DuBio-tech actively advised us from the start, facilitated the jour-ney of creating the legal entity and helped us where we lacked experience.

THAT GROWTHThe Middle East in general is a very attractive place today. Maquet’s global revenue gen-erally is driven out of Latin America, Singapore, the Mid-dle East, India, and China. Just to put things in perspective, in four years we have grown our revenue from $7 million to close to $90 million.

ROOTSOur initial roots were in medi-cal furniture. Then we evolved into therapy over the course of 180 years. We are trying to transform our business into a therapeutic company that is focused on better patient out-comes, and we took this di-rection with the acquisition of Siemens Life Support Division in 2003.

CREATIONThe creation of DuBiotech was announced in 2005 by UAE Vice-President and Prime Min-ister, and Ruler of Dubai His Highness Sheikh Mohammed Bin Rashid Al Maktoum. The vision was for Dubai to be a hub for the life sciences indus-try and to encourage research in this area.

ON TRACKTo date we have delivered two projects, the first being the lab-oratory building and the sec-ond the warehousing complex. The goal that we are working toward now is to attract mul-tinationals and companies that have products ready to access the market immediately.

EXTRA SUPPORTMany companies have really innovative technologies that they want to bring to the mar-ket, and to build a presence they need support from the Ministry of Health and other authorities. We bridge the gap between the government and the wider industry to advise the government and sup-port its understanding of new technologies.

With the vision to turn Dubai into a life sciences hub, DuBiotech was established in 2005. It continues to attract attention.

Engineering InnovationROUNDTABLE: DuBiotech

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u Well-known as a technology and media hub, Dubai is quietly making strides as a regional center for education. As the Emirate invests in free zones specializing in the education sector, the number and quality of educational institutions is on the rise.

Top of the ClassREVIEW: Education

Keeping pace with the rapid population growth in Dubai, the education sector is quickly ex-panding to meet upped demand. In 2011, there were more than 230,000 primary and second-ary school students and more than 43,000 higher education students in Dubai. By in-vesting heavily in infrastructure at all levels of education, Dubai Municipality hopes to educate the rising generation of Emiratis, as well as at-tract students from neighboring countries for top-notch university education. At the same time, the Emirate is hoping to expand the num-ber of schools and teachers at the primary and secondary levels in order to meet the growing demand for high-quality education. Although the majority of education in Dubai is private, the municipal government plays a role via its regulatory and advisory organiza-tion, the Knowledge & Human Development Authority (KHDA), in maintaining quality stan-dards and ensuring that education institutions follow government regulations and are held ac-countable in a transparent manner. “The gov-ernment commissioned KHDA as a local body to monitor the sector, primarily in private educa-tion and the key stages of schooling” Dr. Ab-dulla Al Karam, KHDA’s Chairman of the Board of Directors and Director General explained to TBY. “Our role is basically as a regulator for the sector, to maintain the pace of education at the same speed as everything else in Dubai.”

PRIVATE EDUCATION DOMINATESMaking up approximately 88% of all primary and secondary schools in Dubai, private schools dominate the primary and secondary education scene. Of the total student population, 207,500 students—the great majority of whom are not UAE citizens—are enrolled in 148 private pri-mary and secondary schools. In contrast, pub-

lic schools, for which attendance is only open to UAE citizens, accounted for 43% of Emirati stu-dents in 2011, down from 61% in the 2003-2004 school year. This increase in private education, despite the fact that public education in Dubai is free, is largely due to the perception that the quality of private education is higher, there is better access to English language instruction, and that private schools are more conveniently located, according to survey data from the Dubai Schools Inspection Bureau. Although most private school students in Dubai are instructed based on the UK curricu-lum—and this was the fastest growing segment of private schools in 2011—there are 13 differ-ent curricula offered in Dubai private schools. However, over 90% of private school students are taught according to UK, Indian, US, or UAE educational standards. At higher levels of sec-ondary education, many UK- and US-oriented schools offer courses within the scope of the International Baccalaureate (IB) Diploma Pro-gram. Across the spectrum of private schools, the majority of classes are gender integrated at 59%, while 22% are exclusively male and 19% female only. There is a wide discrepancy in price for private education in Dubai. While about half of all private school students pay less than

The American University in Dubai was founded in 1995 as a branch campus of the American InterContinental University in Atlanta, Georgia. It became a private institution in 2007 and is located next to Dubai Media City, Dubai Internet City, and the Palm Islands.

Image: Liz Lawley

Source: KHDA

Primary and Secondary Education Overviewin numbers

NUMBER OF PRIVATE SCHOOLS

148NUMBER OF STUDENTS IN PRIVATE SCHOOLS

207,118NUMBER OF EMIRATI STUDENTS IN PRIVATE SCHOOLS

29,752 AVERAGE CLASS SIZE

25STUDENT TO TEACHER RATIO

16:1

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AED10,000 per year in tuition fees, some 8% of students pay more than AED45,000 per year. According a 2011 report on private education in Dubai by KHDA, tuition for schools using Ira-nian, Pakistani, Philippine, and UAE curricula charge an average of AED15,000 per year, but there is no program that teaches IB courses with tuition less than AED29,000 per year. The over-all average teacher to student ratio in Dubai is 16:1. Schools were able to keep pace with the 7.1% growth in student enrollment in 2011, in-creasing the total number of teachers to 13,180, a y-o-y growth of 7.6%.

HIGHER EDUCATION INSTITUTIONSMuch more than merely access to glamorous hotels, impressive skyscrapers, or world-class shopping, Dubai offers post-secondary stu-dents a doorway into a globally connected world city with abundant business and profes-sional opportunities. A 2012 report concerning higher education from the KHDA argues that Dubai’s tertiary student population has shown steady growth over the past four years despite the economic slump worldwide. Growing 10% in y-o-y terms from 2011 to 2012, Dubai boasts a total of 43,212 students attending its 52 insti-tutions of higher learning. Of these, 43%, or 18,708 students, are Emirati, and they make up the largest group of higher education students in Dubai by nationality. The Emirati student population, which has grown 11% from 2010 to 2011, is approximately 55% male. This figure stands in contrast to the UAE as a whole, where over 70% of the students in higher education are women, according to a recent working paper from the Dubai School of Government. Compared to the other emirates, students in Dubai have the highest CEPA English scores and the lowest rate of male “no shows” in second-ary education. This trend, which also correlates with the substantially higher per capita income in Dubai, indicates that young male Emiratis from Dubai outperform their peers in the other emirates. Other nationalities studying in higher edu-cation institutions in Dubai include Indian, Pakistaki, Iranian, other Arab, and African stu-dents. Similar to primary and secondary level

of education, the number of private universities and colleges in Dubai dwarf the number of pub-lic ones; there are only three federal institutions in Dubai: Dubai Men’s College, Dubai Women’s College, and Zayed University. The federal in-stitutions, while not exclusive to Emiratis, have low rates of foreign-student attendance. In terms of subject matter, business degrees lead higher education in Dubai, with approxi-mately 39% of all university students enrolled in a total of more than 160 degree or certificate programs for business administration. Other popular subjects include information technol-ogy, engineering, and media and design. There are only a few higher education programs in Dubai offering natural and physical science, architecture, or education. However, the au-thorities are aiming to boost support for educa-tion programs in the coming years in order to continue to meet the demand for more teachers at the primary and secondary levels. Zafar Siddiqi, Chairman of Murdoch Uni-versity, outlined to TBY the level of growth in the education sector and how higher education institutions in Dubai were affected by the eco-nomic crisis. Noting the resiliency of the educa-tion sector in Dubai, Siddiqi said, “the crisis did not affect our operations. In fact, the number of our students continued to grow during that period... in general, we reported an average in-crease in the student population of about 15%-20% per year.” Dr. Al Karam of KHDA made a similar point in an interview with TBY, saying that “the economic crisis did not hit the school system too hard, because they are run privately. Growth matched the growth of the popula-tion... in the region, the demand for private education will rise.” This continued growth has allowed universities to increase staff size and employ a greater number of expatriates. Siddiqi added that, “talented people like to locate here. We have found a lot of interest in professors and lecturers who are currently living in Australia and want to live in Dubai to discover the culture and influence students with their knowledge.”

DEVELOPMENT OF FREE ZONESThe municipal government’s focus on the es-tablishment of free zones is a major factor in ››

Dubai offers post-secondary students a doorway into a globally connected world city with abundant business and professional opportunities.

Zafar SiddiqiChairman, Murdoch University“For many living in the Middle East, the trends associated with a Western education are fee increases and visa restrictions, and Dubai doesn’t experience these issues. Given the proximity of Dubai to the region, Middle Eastern people prefer to send their offspring here.”

Source: KHDA

Fields of Graduate Studyfrom Dubai higher education institutions

BUSINESS 56%SOCIETY, LAW, & RELIGION 13%ENGINEERING 7%MEDIA & DESIGN 6%INFORMATION TECHNOLOGY 8%HEALTH & MEDICINE 4%EDUCATION 1%TOURISM & HOSPITALITY 1%ARCHITECTURE & CONSTRUCTION 3%NATURAL & PHYSICAL SCIENCES 1%

Types of Higher Education Institutions in Dubai

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1 Silicon Oasis2 Dubai International Financial Centre3 Dubai Healthcare City

15 Dubai International Academic City

10 Dubai Knowledge Village

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the development of Dubai’s education sector. In order to increase the specialization and quality of education, the Dubai Municipality formu-lated the free zone concept as a way to incen-tivize education infrastructure development and entice foreign partners to enter the higher education sector in Dubai. Another goal of the free zones, according to Dr. Al Karam was to “fuel the need for the future workforce,” allow-ing the UAE to rely less heavily on expatriates in education and other sectors. The first free zone, the Dubai Knowledge Village (DKV) was estab-lished in 2003. The aim of the DKV is to create a dedicated area for higher education and provide incentives to foreign partners, such as allowing 100% foreign owned entities within the zone and providing discounts on property and con-struction costs within this area. This initiative has borne substantial investments in education from both within the UAE and also abroad, and the number of higher education institutions utilizing the benefits of the free zone initiative has exploded from five in the DKV in 2003 to 31 institutions in 2011. The success of the DKV inspired the mu-nicipal government to establish additional free zones with yet further specialization and focus. By 2012 Dubai had created three additional free zones, including the Dubai International Finan-cial Centre (DIFC), the Dubai Healthcare City (DHCC), the Dubai International Academic City

(DIAC), and Silicon Oasis. By 2012 the number of higher education institutions outside of free zones stood at only 18 private organizations and three federal universities. The DKV boasts the highest number of higher education insti-tutions at 15. The second most developed free zone is DIAC, established in 2005, which hosts 10 universities. DHCC, DIFC, and Silicon Oasis host six institutions that hew closely to the in-dustrial focus of each zone. The unique opportunities and benefits af-forded to institutions that locate in the free zones have allowed Dubai to attract a variety of high-profile institutions and international programs in a short time. The Dubai Munici-pality took another significant step in 2011 by establishing the KHDA as the official regulator and data collector for institutions operating in the free zones. Centralizing accountability and monitoring of education institutions with the KHDA ensures a focus on high-quality educa-tion and also streamlining degree certification for graduates who plan to work in Dubai. The Dubai Municipality also established the Univer-sity and Quality Assurance International Board (UQAIB), made up of higher education experts from a round the world, in 2008. The UQAIB aims to ensure that Dubai’s institutions of high-er education adhere to international standards for university curriculum and programs and can maintain accreditation in partner countries. ●

Abbott is a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. Our products span the continuum of care, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies. Our comprehensive line of products encircles life itself - addressing important health needs from infancy to the golden years.

Throughout our 120+ year history, Abbott people have been driven by a constant goal: to advance medical science to help people live healthier lives. It’s part of our heritage. And, it continues to drive our work. Today, approximately 90,000 employees around the world share the passion for Turning Science Into Caring.

www.abbott.com

The unique opportunities and benefits afforded to institutions that locate in the free zones have allowed Dubai to attract a variety of high-profile institutions and international programs in a short time.

174 HEALTH & EDUCATION

INTERVIEW

On the LearnTBY talks to Dr. Abdulla Al Karam, Chairman of the Board of Directors & Director General the Knowledge & Human Development Authority, on the role of the KHDA and growth in the education sector.

BIOGRAPHYDr. Abdulla Al Karam is the Chairman of the Knowledge and Human Development Authority, a Dubai government department created in 2007 to ensure standards and improve accessibility to education and learning, as well as nurture human resource development. Between 2002 and 2006 he served as CEO during the establishment of Dubai’s Knowledge Village. He has held many positions across government and also has experience in both corporate and academic spaces.

1 Dr. Abdulla Al Karam, Chairman of the Board of Directors & Director General the Knowledge & Human Development Authority

Dr. Abdulla Al Karam

TBY When and why was the Knowledge and Human Development Authority (KHDA) established?ABDULLA AL KARAM KHDA was established in April 2007, with a local decree from the government of Dubai. An education coun-cil had been in place for about 18 months prior to this. The government realized that education needed to keep pace with the demands of modern society. The govern-ment commissioned the KHDA as a local authority to monitor and improve the de-livery of education, particularly in the pri-vate sector and the key stages of schooling. We also have a remit to look at the growth of early learning, higher education, and training centers. Our role is basically as a regulator for the sector; we work with other departments to ensure that educa-tion keeps up with the pace and demands of development in Dubai.

How do you work in collaboration with other entities in the Knowledge Village and Aca-demic City?In 2002, there were very few private uni-versities. The government had the idea of creating an Academic City cluster, where regional branch campuses of interna-tional universities could be set up in the free zones of Dubai. Dubai-based students would initially attend these universities, to be followed by students in the region. The plan is that we will be able to provide locally educated talent to meet the needs of the labor market, rather than bringing in people from abroad. Students do leave Dubai after high school, whether for social or financial reasons. Between 2003 and 2005, there was not a great impetus to im-prove higher and further education—there was a real need to set up these small cities and centers to advance the cause of aca-demia and professional training institutes. Since then, these cities have expanded to house many branch campuses. Our role at

KHDA is to quality assure these institutions and encourage them to provide courses that meet the diverse demands of Dubai’s future labor force.

What work are you doing to promote interna-tional education in Dubai?The history of private international edu-cation here goes as far back as the 1960s. At that time, a group of Indian traders re-quested to set up a community school for the Indian expatriates who had settled in Dubai. The government provided land, and this was the birth of the first private school in Dubai. After that, the British who had settled in Dubai requested a British school be built. In the 1970s, US citizens expressed an interest in building an American school. Historically, private schools were set up for business reasons, geared toward cer-tain communities. As more people came to Dubai in the 1980s and 1990s, the number of private schools continued to increase. However, the real turning point occurred in the 2000s with the establishment of free zones. Also around that time, operators were legally entitled to own properties. As a result of these government decisions, many expatriates chose to stay in Dubai for a longer time, and the population grew by more than 10% per year. As a result of these initiatives, 87% of all education in Dubai currently takes place in the private sector. Over 50% of Emirati nationals also attend private schools. About 13% of students in private schools (25,000) com-mute to Dubai from other emirates. Driven by national and expatriate demand, Dubai currently boasts the greatest number of branch university campuses in the world.

How do you foresee the growth of the educa-tion sector in Dubai?Schools in Dubai are very diverse. There are 13 different international curricula operating, with most students attending Indian, UK, and US curriculum schools. We have to bear in mind the business models of each school. There are commu-nity schools, embassy schools, and philan-thropic schools; some are non-profit while others are operated for profit. We also have to understand the different sizes of schools. The KHDA oversees schools of 50, 500, 5,000, and 10,000 students. The fees are also very diverse. From 2001-2008, there was an average of 7% growth in school en-rolments each year. Between 2008-2011, we registered 4% annual growth, mainly

in the private sector. We are also seeing a consistent increase in the number of stu-dents enrolled in higher education. Fun-damentally, our education system differs from many places in the world in that it is not mainly provided by the government. In the face of the global financial crisis, many countries have greatly reduced their edu-cation spending. But because our schools are privately run, the school system was not hit too hard. More people came than left during the economic crisis, maintain-ing a natural growth. In the region, the demand for private education will rise. As GDP grows, more people will want to en-roll their children in private schools. ●

1

Abbott is a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. Our products span the continuum of care, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies. Our comprehensive line of products encircles life itself - addressing important health needs from infancy to the golden years.

Throughout our 120+ year history, Abbott people have been driven by a constant goal: to advance medical science to help people live healthier lives. It’s part of our heritage. And, it continues to drive our work. Today, approximately 90,000 employees around the world share the passion for Turning Science Into Caring.

www.abbott.com

HEALTH & EDUCATION 175

Dubai2012

INTERVIEW

Precious TimesTBY talks to Dino Varkey, Group Executive Director & Board Member of GEMS Education, on the role GEMS has played in the development of Dubai’s education sector.

BIOGRAPHYDino Varkey is the third generation of an education-driven family that has been motivated by providing access to quality education for over 53 years. He is an honors graduate with a Bachelor’s degree in Business Studies from the University of Sheffield, a Young Presidents’ Organization (YPO) member, and Education Co-chair of the YPO’s Dubai Chapter.

1 Dino Varkey, Group Executive Director & Board Member of GEMS Education

Dino Varkey

TBY In what ways has Dubai been paving the way for the region as a center of educational excellence. What role has GEMS played in the growth of the sector?DINO VARKEY Very early on the Dubai gov-ernment realized that it needed to diversify the base of its economy. Whenever you are looking at diversifying the base of an econ-omy, you are talking about bringing in a class and a pool of investors and a diverse range of sectors. The underlying labor market in Dubai is very much expatriate driven. In that kind of a scenario, diversifi-cation of the economy in terms of building something that will truly secure the future of a nation cannot be done without build-ing underlying world-class infrastructure, especially around education and health-care. It is a thing of pride for the Emirate that the largest privately held K12 educa-tion company in the world has grown its roots out of Dubai.

What factors enabled GEMS education to go from overseeing the education of 600 students to 100,000 in just over four decades?I think a lot of it has to do with the envi-ronment and the culture that has been cre-ated in Dubai and the UAE. The reality is it has always been a place that has rewarded people with passion, commitment, and an underlying drive to make something more of their lives, and Dubai has been incred-ibly welcoming of that kind of family and that kind of person. The environment it created, whether from a regulatory per-spective or from a governmental perspec-tive, has always had the visibility and predictability of the investment climate in mind. All of those things have allowed us to build a truly global multinational that has its roots in Dubai.

The private educational sector in the GCC has been predicted to grow three fold in the next decade. Do you predict that applying to the UAE specifically?I think if we are looking at the macroeco-nomic factors, I do not know whether it is going to be three fold, but what is certainly the case is that within the rim of North Af-rica and South Asia there are the youngest populations in the world. If we look at the underlying education gap that exists, that also means that you simply cannot put up schools fast enough. So the reality is that, certainly in the context of growth more generally in the Gulf, Dubai will continue to see the pace of growth because it is still

the only hub that any multinational foreign company can look to in order to bring in great people. Relative to everything else in the region, it is still the hub of choice, so from that perspective Dubai is unlikely to see a saturated education market for some time.

How important are public-private partnerships for the growth of the industry, and how active is GEMS in this regard?They are very important. It is certainly a tried and tested model in many parts of the world where the value, efficiencies, accountabilities and, certainly in our case, over 50 years of educational experience can be brought to bear in order to reform and improve the education system of a country. It is something we have experi-ence of in other parts of the world, spe-cifically in Abu Dhabi, but less so in Dubai. Dubai is probably the best example of a private education market; it is likely the most developed private sector education market, certainly on the K-12 side.

What kind of trends have you seen in the de-mographics of student enrolment?We have 151 different nationalities in our schools in Dubai, so there is a lot of diver-sity. Are we seeing a significant shift in terms of the nationalities that are coming through? Not necessarily any specific nu-ances, but there is still pretty consistent growth. However, over the last three-year period from 2009 until 2012, our inter-national curriculum schools grew 52%, from 21,000 students to 32,000 students. Our Indian curriculum schools, which are more affordable generally, grew by 13% from 42,506 to 48,233, and they could have grown more if not for the fact that we were at capacity. Even in the year of the global downturn we increased enrolment by 5%, so the whole perception regard-ing people leaving Dubai in great numbers was unfounded. What happened during the downturn was just netted off, so it just equalized. ●

Dubai is unlikely to see a saturated education market for some time.

1

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176 HEALTH & EDUCATION

PETER HILL Headmaster, Dubai College

FIONA COTTAMPrincipal & CEO, Jumeirah College

Dubai’s blossoming education sector offers opportunities for students to study a range of international curricula.

TBY talks to the heads of two local education institutions on the significance of Dubai and growth predictions.

What is the history of Dubai College?

PETER HILL Dubai College was set up by the late Sheikh Rashid Bin Said Al Maktoum, who was the ruler of Dubai. We started in a pair of villas in 1978. We were then gifted this land in an area that was noth-ing but desert. We started building around 1980 and occupied the first two buildings of the school in 1982. Since then we have developed the school slowly by extend-ing it almost every year. We now have a very comprehensive school with resources probably as good as any other top school in the world. We are a non-profit school, and any surplus that we have at the end of year goes straight back into the school for development and curriculum works. We charge fees that have to be approved by the Knowledge and Human Development Authority (KHDA). We have followed a re-fined and reformed version of the English national curriculum at Key Stage 3 (KS3).

The Key to KnowledgeQ&A: Local Educators

In terms of the selection, we have approxi-mately 450 applicants for 132 places in Year 7. Our GCSE results place us in 35th posi-tion in terms of all the schools in the UK. In terms of our A-level results we come in around 60th. We are a very high-perform-ing school and are a member of the Head Masters Conference (HMC) for schools in the UK. We also place great importance on co-curricular programs, especially in sports, drama, and music, which we think are very important educationally. Approx-imately 65% of the student population is British, but we also have 40 other nation-alities represented.

What do you think makes Dubai’s education sector so attractive?

FIONA COTTAM It is the diversity of the population. Such a large percentage of the population is not native, so we are mostly visitors. Yet, people are trying to create their own sense of cultural identity within this community. For the British commu-nity, for example, there are a lot of Brit-ish curriculum schools. It is the same for the Indian community and the American community. I think it helps for each of us to establish our bases and provide the ex-pertise that we need. This is a unique melt-ing pot of different cultures.

According to a recent report by Booz & Co, the private school sector in the Gulf is predicted to grow three fold over the next decade. What do you think the potential for growth is in Dubai?

PH In terms of a market for primary schools, there is, in supply and demand terms, a huge market. What the profit-making schools are concerned about at the moment is that they have limited incentive to establish new schools because of the fee freeze. However, one way around that is when establishing a new school you are not affected by the fee freeze. You can set your own starting fee, within reason, and then you can go on from there. The interesting thing is that there are more franchising schools coming out to the region. We al-ready have Repton School, which is now an established successful school in Dubai. Brighton College also just opened in Abu Dhabi. However, what is interesting at the moment is that they seem to be moving down the road to Abu Dhabi rather than to Dubai. They find the ability to expand in terms of facilitates very much restricted here. As a non-profit school, we rely purely on an annual fee. We have a five-year development plan that is not presently being driven by build-ing infrastructure. It is being driven in terms of learning. We just don’t have the money to develop any further at the mo-ment—until we are allowed to develop in terms of market forces, we can’t go any-where. The supply and demand is there, but it is not a free market in that way and with our fees. One never really knows what inflation is in the UAE; it always seems to be very low, but all I know is that ever since we have had a freeze on our fees, costs have been going up around us, such as for food, maintenance, and energy.

FC There are over a 100 private schools in Dubai. We have seen the growth directly as a company, as we opened a brand new school in September 2011. Six months ago, it did not have any students enrolled. The day that it opened it had nearly 1,200. That shows both the desire from parents for high-quality education and also the very transient nature of Dubai. It is develop-ing, from our perspective, as a hub where many families base their children while one part of the partnership perhaps works elsewhere. That is driven not just by trans-portation systems, but also its closeness in terms of the Far East and yet its proximity to Europe at that halfway point. You can see why it has got the potential to grow even further when you look at how much it has grown in the last five to 10 years. ●

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NICHOLAS VAN DER WALTExecutive Director, Hult International Business School

EHSAN RAZAVIZADEHRegional Director MENA and Head of Dubai Centre, Cass Business School, City University London

Dubai’s business education sector is warming up to cater for the entrepreneurs of tomorrow.

TBY talks to two industry heads on Dubai as a location for a business school, faculty development, and long-term targets.

Why was Dubai chosen as a location for your business school?

NICHOLAS VAN DER WALT There are several reasons why we chose Dubai, but the prin-ciple reason is that we have selected areas, which are considered major innovation or trade hubs. For example, we opened a campus in San Francisco, which is both an innovation and trade hub. Next, our Lon-don campus is based in the world’s finan-cial center, as well as, the trade hub of the future. Shanghai is similar to Dubai, in that it has consistently performed as a powerful economy in its region. We seek locations such as Dubai, which enjoys a stable and efficient government with a business-friendly environment and is a key hub in the Middle East. We also looked at the economic performance of other countries in the region, but we felt comfortable with what we were offered in Dubai.

On CampusQ&A: Business Schools

EHSAN RAZAVIZADEH This decision to set up in the MENA region and Dubai in par-ticular was influenced by various personal, cultural, and institutional factors. First of all, we live in a culture in which most of our parents usually push us to become a doctor, engineer, or lawyer. This is our fantasy. When I was studying at Cass, I realized that it was in a very unique posi-tion because it has very good links with the City of London. In fact, the Lord Mayor of London is the Chancellor of City University London, of which Cass is a part. There was a constant interaction between the real world finance and banking sectors and the student experience. This is something that was not really happening in this part of the world. I personally thought that we needed something like Cass for the region and for Dubai in particular.

How is your faculty formed?

NVDW We have a faculty based in Dubai, but some faculty members will rotate to teach in Boston, London, San Francisco, and Shanghai. We also invite other pro-fessors from around the globe to teach particular courses. For example, we have a top, prize-winning professor from Har-vard University that flies to Dubai to teach a course three times a week. Her focus is on consultancy work, including advising several governments in Eastern Europe on their financial structure. This professor is a practitioner, researcher, and consultant at the leading edge of her field, and our

students benefit tremendously from this opportunity. We also have a professor who led innovation practice at Motorola, and we have several other professors who are working for the world’s top consulting firms. Many professors are interested in teaching at Hult. Many of our past faculty members also decide to come back and teach. Others have set their careers up for a traditional university structure, but have done work in an industry environment and enjoy classroom engagement. The class-room offers a network, potential friend-ships for life, and the satisfaction of learn-ing and teaching. Professors feel that they are giving back to both their own genera-tion and the next, when students will fulfill their aspirations.

ER All of our faculty members teach at Cass in London and fly in to Dubai to meet and teach the students. Most faculty mem-bers work across teaching, research, and consultancy. As a result, they are con-stantly working in industry, gaining real world experience, and bringing this to their teaching. The degree that we give out here is as if you had studied in London with the same program, curriculum, and faculty.

What is your long-term outlook?

NVDW I think there will be growth through very hard work in the sector; we will implement good marketing strategies and build effective industry relationships. Our challenge is to attract the best faculty that feels at home in both the classroom and the boardroom. We want people who can walk out of the classroom and into the boardroom, maintaining respect in every area of life. This is the primary challenge for us; finding people with PhDs and ad-vanced degrees who are top teachers with very strong industry experience. We take our professors very seriously.

ER We are very committed. We have already invested and developed an MBA, which is 100% deliverable in Dubai. This means if you cannot leave your job or family due to cultural reasons or timing, then the Cass EMBA is the right choice for you. We will continue recruiting high profile students for both our EMBA and MSc programs, and we will be expanding our Executive Edu-cation and consulting business according to the region’s future demand. ●

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TOURISM & RETAIL

REVIEW

INSIDE 179 Setting the Record Straight - REVIEW | 184 Khalid A. Bin Sulayem, Director General of the Department of Tourism, & Commerce Marketing - INTERVIEW | 186 Salah Al Qassim, Advisor to the Dubai Culture & Arts Authority - INTERVIEW | 189 Gerald Lawless, Executive Chairman of Jumeirah Group - INTERVIEW | 190 In the Fast Lane - Q&A: Business & Leisure Hotels | 192 Sami Nasser, Vice-President of Operations at Sofitel Middle East, Egypt, & Indian Ocean - INTERVIEW | 193 Come Stay with Me - Q&A: Luxury Hotels | 194 Equine to a Tee - Q&A: Golf & Racing | 196 Shopping Paradise - FOCUS: Retail | 198 Laila Suhail, CEO of Dubai Events & Promotion Establishment (DEPE) - INTERVIEW | 199 Colm McLoughlin, Executive Vice-Chairman of Dubai Duty Free - INTERVIEW | 200 Anurag Agrawal, Managing Director of Canon Middle East - INTERVIEW | 201 Anan Fakhreddin, CEO & Member of the Board of Damas - INTERVIEW | 202 That Little Something - Q&A: Luxury Retail

u Dubai set a new record in terms of foreign visitors and nights spent in one of the Emirate’s nearly 600 hotels and hotel apartments in 2011. The upward trend continued in 2012, as Dubai remains one of the world’s 10 most-visited cities.

Setting the Record Straight

All indicators for Dubai tourism were up in 2011, which contributed an estimated 31% to GDP, according to the Department of Tourism and Commerce Marketing (DTCM). The Emirate at-tracted some 9.3 million hotel guests and cruise passengers, which represents a 10% increase compared to the previous year. The majority of visitors, over 7.2 million, stayed in hotels, while over 1.8 million opted for a hotel apartment, an increase of 11% and 6%, respectively. MasterCard’s 2011 Destination Cities by In-ternational Visitors ranking listed Dubai as the world’s ninth most visited city. Topping the list were London (20.1 million), Paris (18.1 million), and Bangkok (11.5 million). The sec-ond most visited city in the MENA region was Cairo with 3.7 million visitors. Over one-third of Dubai’s tourists came from the Arab world, among them nearly a million Emiratis and 1.6 million GCC nationals, including some 685,000 Saudi Arabian citizens. The UK contributed 673,000 visitors, the leading European coun-try of origin. In total, 2.3 million Europeans visited Dubai, followed by 2.16 million Asians, mostly Indians (700,000), Iranians (476,000), Pakistanis (221,000), and Chinese (193,000). Another leading source market was the US, as some 462,000 US citizens visited Dubai in 2011.A visitor’s average stay remains relatively short, even though it increased by 12.5% to 3.6 days in 2011. Most people come for a long weekend of sunbathing and shopping, while the aver-age business conference does not last more ››

The Burj Khalifa is the tallest building in the world, and took five years to complete. The total cost of the project was $1.5 billion, and its construction returned the title of the world’s tallest freestanding structure to the Middle East, which the Great Pyramid of Giza last claimed in antiquity.

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than three days, and a typical holiday package booked in London includes up to seven nights in Dubai. In addition, many people visit the Emir-ate as a stopover on their way to other destina-tions. Dubai is home to the world’s fourth busi-est airport, with more than 150 airlines flying to over 220 destinations across the globe. Annual passenger traffic reached 50.98 million in 2011 and is projected to amount to 56.5 million in 2012 and 98 million by 2020. The number of nights spent in Dubai’s hotels and hotel apartments grew by 22% to amount to nearly 23.3 million, which pushed the aver-age occupancy rate from 70% in 2010 to 74% in 2011. The number of tourist accommodation establishments also increased, from 573 in 2010 to 575 in 2011, bringing Dubai’s total capacity to nearly 75,000 rooms. Although the Emirate is also home to some 120 two-star hotels, no less than 65.5% of all accommodation belongs to the luxury four- and five-star market segment.An Ernst & Young benchmark survey of the Middle East hospitality market concluded that Dubai’s high-end hotels enjoyed an aver-age occupancy rate of 87% and a Revenue Per Available Room (RevPAR) of $241 in 2011. Dubai apartments recorded the highest occupancy rate with 95%, while Dubai Beach posted the highest RevPAR ($332) in the region. It also had the highest average room rate with $398, while the MENA average amounted to $191. The hospitality sector’s overall revenue in 2011 rose by 20% to a new record level of AED15.9 billion ($4.33 billion), 84% of which was generated by hotels. This represents a 4.6% increase compared to the previous record of AED15.2 billion set in 2008. In doing so, the ho-tel sector seems to have finally and fully recov-

ered from the recession triggered by the 2008 financial meltdown, which saw Dubai’s hotel revenues fall by 18% the following year. According to Stewart Coggans, Vice-Pres-ident of Jones Lang LaSalle Hotels Middle East and North Africa, Dubai benefited on the one hand from the economic recovery in main source markets, such as Europe, and on the other from the political turmoil in the region. The popular uprisings known as the Arab Spring caused destinations such as Cairo, Da-mascus, and Bahrain to lose appeal. The Ernst & Young survey showed that the average occu-pancy rate in Cairo’s luxury hotels dropped to 30%, in Sharm al-Sheikh to 56%, and in Beirut, which is suffering from the fallout of the con-flict in neighboring Syria, to 60%. Other factors that play a role are the Emir-ate’s relative affordability when compared to the pre-2008 peak prices and its increasing appeal for upcoming markets such as China, India, and Eastern European countries like Russia. Meanwhile, as life in Cairo gradually returns to normal, the armed uprising in Syria continues. Countries such as Kuwait, the UAE, Qatar, Bahrain, and Saudi Arabia in May 2012 also called upon their citizens to avoid travel-ing to Lebanon, traditionally one of the region’s top holiday destinations, certainly in summer. Consequently, Dubai remains a welcome alter-native for thousands of Arab holiday goers, as was illustrated by the DTCM figures for 1Q2012. The key performance indicators showed, among other things, a 9% increase in guest numbers, a 22% hike in room nights, and a 12% rise in the average length of stay.

RETAIL & ENTERTAINMENT HAVENHome to dozens of malls and megamalls, in-cluding the world’s largest, Dubai remains a global retail hub. In a 2010 survey among for-eign visitors, 80% of respondents replied that shopping was one of the reasons to go to Dubai. Of particular importance is the annual Dubai Shopping Festival (DSF). First organized in 1996, the DSF generally takes place in February. Travel agents, tour operators, and hotels sell the festival and often offer special rates. Likewise, the national carrier Emirates offers discount fares and allows for excess luggage. “We’re still crunching data, but the DSF in 2011 attracted 4 million festival-goers who to-gether spent more than $4.1 billion on retail, travel, and hospitality in one month—that’s around 1 million people spending $1 billion a week,” said Laila Suhail, CEO of Dubai Events and Promotions Establishment (DEPE), which is tasked with promoting Dubai as a year-round shopping, tourism, and entertainment desti-nation. “The DSF was an important factor for more than eight out of ten regional and inter-national visitors when choosing Dubai as their travel destination,” she added. Other events DEPE helps organize include Eid in Dubai, Ramadan in Dubai, and Dubai ››

Dubai is home to the world’s fourth busiest airport, with more than 150 airlines flying to over 220 destinations across the globe.

1 Dromedaries taking a break near Dubai

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Chris PerryGeneral Manager, Wild Wadi Waterpark“A large segment of our guests consists of overseas visitors to the city and our hotels. We have also noticed an increase of guests from the GCC, which is consistent with what the rest of Dubai is seeing this year.”

Summer Surprises (DSS). Launched in 1998, the latter aims to promote and position Dubai as a summer destination. The festival sees GCC residents and other tourists flock to the city in a search for bargain deals in the over 6,000 stores participating in the annual event. “Now that Dubai is firmly established as a leading destination for retail, our focus is on sustaining this success whilst growing the complementary events, festivals, and enter-tainment sector, which is a natural fit for the Emirate,” said Suhail, adding “we are already recognized as the leading city for events in the Middle East.” A variety of major sports events takes place in Dubai every year, including the Dubai World Cup, an increasingly popular horse racing event, the Dubai Duty Free Tennis Championships, and the Omega Desert Classic golf competition. In addition, the Emirate plays host to numerous cultural events. The Egyptian superstar Amr Diab performed last March. Jennifer Lopez will hit the stage in November 2012, and top DJ Paul Oakenfold is scheduled for December. In that same month, the annual Dubai International Film Festival will take place. Furthermore, Dubai offers sea and beaches, deserts safaris, a growing number of museums and art galleries, the Emirates Mall’s indoor ski slope, and, of course, the world’s tallest building, the 829.84-meter-tall Burj Khalifa. Dubailand deserves special mention, as it offers a variety of sports and entertainment venues that in 2011 attracted some 13 million visitors.

EXPANSIONDubai has come a long way in a very short pe-riod of time. People tend to forget that there was not a single hotel in the Emirate as late as the 1950s. The international airport was inaugurat-ed in 1959, while the first hotels only opened in the late 1960s. The 1980s witnessed the creation of such key institutions as Emirates Airlines and, in 1989, the Dubai Tourism Board, which would later become the DTCM. The first annual DSF took place in 1996, and a year later the ho-tel management company Jumeirah Group was established. Part of Dubai Holding, the Jumeirah Group has played a pivotal role in putting Dubai on the

world tourism map. “Since the opening of our first property, Jumeirah Beach Hotel in 1997, we have worked closely with both Emirates Air-lines and DTCM to promote Dubai as a luxury destination,” said Gerald Lawless, Executive Chairman of Jumeirah Group. “The opening of our flagship hotel, Burj Al Arab in 1999, fol-lowed by the opening of Madinat Jumeirah in 2004, reinforced Dubai’s image as a world-class year-round holiday destination.” The company has, since 2005, embarked on a path of expansion both in Dubai and abroad. In 2011, the company expanded its international portfolio from 10 to 20 hotels with new proper-ties in, among other cities, London, Shanghai, Istanbul, and Rome. In 2012, it is set to open new hotels in Baku and Kuwait, as well as the Jumeirah Creekside Hotel in Dubai. It is hardly the only new hotel to open its doors in Dubai. It is estimated that an ex-tra 4,000 luxury hotel rooms will be added to Dubai’s hospitality market by the end of 2012, and another 19,000 over the next few years. Later in 2012, for example, the world’s tallest hotel will open its doors in Dubai. The two-tower JW Marriott Marquis Dubai measures 355 meters and will add 1,608 rooms to the market. “This will be the first Marquis outside the US and it will be Marriott’s largest hotel out-side North America,” said Rupprecht Queitsch, General Manager of JW Marriott Marquis Dubai, adding, “it will cater to the business commu-nity. There is a distinct shift toward business, and some predict that by 2014 or 2015 Dubai will receive more than 50% of its clientele for business. We have over 5,000 sqm of banquet facilities and two ballrooms, the largest being 1,400 sqm with 60-80 meter high ceilings.” Other examples include the 559-room Hilton Conrad Dubai, which is also scheduled to open later in 2012, while Four Seasons Hotels and Resorts is to build a resort property at Jumeirah Beach that should open in mid-2014. However, the most outlandish development, if realized, is no doubt the half-submerged Water Discus Hotel, which offers rooms with an underwa-ter view on marine life. It arguably illustrates Dubai’s re-found confidence. With the tourism sector back on track, dreams of grandeur are not far away. ●

Number of Hotels in Operation by type, 2011

Source: Department of Tourism & Commerce Marketing

ê 120êêêê 76êêêêê 63êêê 61êê 50Guest House 17

Number of Available Hotel Roomsin thousands, 2011

5ê

4ê

3ê

2ê

1ê

GUEST HOUSE

50 10 15 20 25

Total Residence Nights & Hotel Guestsin millionsUnited Arab EmiratesOther GCC CountriesOther Arab CountriesAsian and African CountriesEuropean CountriesAmerican CountriesOceanian Countries

9

8

7

6

5

4

3

2

1

0Residence Nights Guests

Source: Dubai Statistics Centre

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INTERVIEWKhalid A. Bin Sulayem

Find the SourceTBY talks to Khalid A. Bin Sulayem, Director General of the Department of Tourism, & Commerce Marketing, on Dubai’s tourism strategy and the bid to host World Expo 2020.

BIOGRAPHYKhalid A. Bin Sulayem joined the Dubai Commerce and Tourism Promotion Board in 1989, and was Director of the Board before becoming its CEO in 1993. In 1997, the board transformed into the Department of Tourism, Commerce, & Marketing, and he was appointed Director General.

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TBY How does the strategy of the Department of Tourism, Commerce, & Marketing (DTCM) tie into Dubai’s integrated 2015 strategy?KHALID A. BIN SULAYEM All sectors of the economy and the corresponding governing bodies contribute to that strategy. Over the past few years, Dubai’s tourism numbers have been very positive compared to many other destinations. The sector is growing, and the results have been pleasing. We have made several changes according to various global issues. At the moment, the sector is one of the leading segments boosting the economy. The government and the private sector work closely to achieve the targets we set.

Dubai currently has some of the highest hotel occupancy rates in the world. What factors have led to this success?There are a number of reasons. Looking at the steady annual growth we’ve experi-enced for many years, we have built Dubai as a tourist destination. Marketing is done through our overseas offices. We have cho-sen the right markets and reviewed our work and changes year after year. We are up to date with the changes happening in other markets, and we are evaluating our source markets. We consider our opportu-nities very carefully. Looking at the aver-age global performance, Dubai is far ahead. Working together with the private sector and the other government organizations, we were able to achieve success through marketing campaigns that suit each mar-ket. With the exception of the 2008-2009 period, when our source markets suffered financial troubles, we have always had good occupancy rates. The right things happen in Dubai because we enhance our products in the right way and the right place and also launch new products.

How have your source markets changed and developed?Up until now, and for the past two de-cades, Europe had been one of our main markets. The UK is one of our main mar-kets, and Saudi Arabia is also one of our strategic markets. However, now we can see that the value of the pound has fallen. In Australia, it’s the other way around; the value of the Australian dollar has been much higher in the last few years, and that is a market where we are advertising Dubai. This is part of the evaluation that we do when we consider a market; we look at the economy, the value of the currency,

the aircraft capacity, and the competitors’ offerings.

Are there any sectors in the hospitality seg-ment for which the DTCM is trying to attract FDI?We are always trying to attract FDI. How-ever, local involvement is so great that we find that those investments are actu-ally enough to support the tourism sector. The hotels and resorts are mainly funded by local investment. In terms of related services, there is large interest from for-eign investors, who are active in various segments.

What can Dubai offer as a venue for interna-tional events?When you consider the primary require-ments that event organizers from around the world are seeking in a destination, Dubai delivers it all. It’s almost as if Dubai was designed specifically for events. Firstly, it’s easy to get to. With Emirates Airlines, the ease of access is incompa-rable to most other destinations. Dubai International Airport also offers services and conveniences that make arriving and departing from Dubai easy and enjoyable. The recently expanded Dubai International Conference and Exhibition Centre offers over 90,000 sqm of flexible event space. Additionally, Dubai has over 74,000 hotel rooms to fit all types of delegates’ budgets. The city has exciting excursions, unique catering venues, in addition to cultural and heritage sites that bring it all together. Getting around Dubai is also well planned with the use of any of our ground handlers or the Dubai Metro, which connects Dubai International Airport, the convention cen-ter, and over 18,000 hotel rooms on the Red Line. The DTCM has focused on in-creasing its share of this market by creating the Dubai Convention Bureau. This section of the DTCM is solely focused on bringing more MICE opportunities to the Emirate.

What do you think the World Expo 2020 would bring to Dubai from a tourism perspective?The primary sectors that are greatly affect-ed by hosting a World Expo are infrastruc-ture, retail, and tourism. Tourism stands to gain a great deal by hosting this event, with an expected attendance of 25 mil-lion visitors. The impact that this amount of visitors has on a destination over a six-month period is truly staggering. The tourism projects that are developed for this

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1 Khalid A. Bin Sulayem, Director General of the Department of Tourism, Commerce, & Marketing2 Dubai’s blend of old and new is a big tourist pull

large-scale event will also have a legacy affect on the region. Many cities that have hosted the event in the past are still ben-efiting from the expo, even 50 or more years after the event, such as the case with Seattle, which is this year celebrating the 50th anniversary of the event taking place. As a candidate city and hopefully the host city, promotional campaigns around the bid and event will be included in all of the DTCM’s overseas activities.

Dubai is a very cosmopolitan location. How do you work to keep the Arabian spirit alive?We’ve been building Dubai as a tourism destination for over 23 years. Everything is highly controlled, and people understand each other. The cultures have blended very well. Dubai has been cooperative with the international community for many years, with many people from every region do-ing business here. This integration hasn’t created any conflicts or clashes among the population, and the transition has hap-pened very smoothly. People have come to respect and appreciate what we have here.

What is the significance of the Green Tourism Award?Green tourism is of course now a trend for many cities. For us, tourism is one of the main sectors we are developing, and green tourism is attractive for a large segment of people from around the world. When we presented the Green Tourism Award to our partners, we received many requests from organizations and individuals to take part from across Dubai and the UAE. The devel-opment of green tourism is very important

for people and it is also a useful marketing tool for us.

How will the impact of knowledge transfer im-pact the tourism industry?Our product has become better, and the demand is growing. However, our source markets are still suffering from terrible economies. We have to monitor the market to make quick changes and launch rapid promotional activities. Our flexibility is what is helping us grow actively in the area, and this evaluation is happening on a daily basis. The knowledge transfer is helping us better understand how the markets are evolving and changing, and this in turn has led us to better select our targets.

What are the key events and activities hap-pening for the DTCM in 2012?We will be marketing Dubai as a tour-ism center in different and direct ways. Our strategy from a few years ago cannot function as such today; we have to update our targets and plan. We will seek new markets, and we are hoping to be present in markets where we haven’t been before, such as Latin America, where we are doing events and exhibitions. We are establishing an office base in Latin America. The poten-tial in Latin America is greater than it was before, especially as Emirates has opened new destinations throughout the conti-nent, and we work closely with the airline to develop new routes. We are also seeking to open up in markets such as Belgium and Spain. We are entering new markets and enhancing our current markets through increased representation. ●

DTCMin numbers

Total passengers through Dubai Airport

50.94 millionHotel occupancy levels

86%Rooms available

74,613Average room rate

$262

We will be marketing Dubai as a tourism center in different and direct ways.

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INTERVIEWSalah Al Qassim

Desert OasisTBY talks to Salah Al Qassim, Advisor to the Dubai Culture & Arts Authority, on culture, the arts, and heritage in Dubai.

BIOGRAPHYAfter acquiring a Bachelor’s degree in Mass Communications from UAE University in 1984, Salah Al Qassim began his career at the UAE Ministry of Education heading the Media Department. His position in the education sector extended to developing and presenting television programs on Dubai Television, which focused on education issues, society, parenting, and history. He then pursued further higher education and acquired a PhD Degree in Mass Communications from the University of Wales, UK, in 1995. Before joining Dubai Culture and Arts Authority as Advisor, he served as the Secretary General of Dubai Cultural Council, where, over four years, he designed and executed a number of cultural programs and managed a wide array of activities aimed to drive excellence in the cultural and artistic arenas.

TBY Dubai Culture is leading a renaissance of the cultural scene in Dubai, transforming the city into a hub of culture, arts, and heritage. How is Dubai unique in the region with regard to its efforts in culture?SALAH AL QASSIM As home to some of the world’s most iconic achievements, Dubai has gained a reputation as a multicul-tural center of creativity and innovation, a reputation that global art institutions have recognized. With dedicated cultural and artistic spaces, and over 70 galleries active throughout the year, Dubai’s thriving arts community has sparked increasing interest throughout the region, in part because of its geographic location and the emergence of knowledgeable collectors with more sophisticated tastes from the region and across the globe. Today, Dubai has earned a firm spot on the global art-commerce map. Furthermore, a committed govern-ment demonstrating its support in the form of funding, community involvement, and educational programs—as highlighted by Dubai Culture’s various initiatives in-cluding the Sheikh Mohammed Bin Rashid Al Maktoum Patrons of the Arts Awards—has produced a conducive environment to promote all aspects of culture and the arts. Established and emerging artists have both found recognition here and abroad, for example, by taking center stage at the second appearance of the UAE pavilion at the Venice Biennale. The continued growth of the cultural scene in Dubai is most ap-parent in the Al Quoz Industrial Area, now home to many art galleries, rehearsal spaces for musicians and performers, as well as photography and design studios. This development is similar to the begin-nings of such artistic hubs as Factory 798 in Beijing, where industrial areas have be-come a haven for an arts industry to thrive in. This, in addition to the Gate Village in the Dubai International Financial Centre, is a pulsating community for art and culture. Two major annual art fairs, Art Dubai and the SIKKA Art Fair, and several film, litera-ture, and theater festivals fill up the city’s arts calendar.

What strategies do you conduct to keep the essential Arabian spirit alive while promoting more internationalization?We, at the Dubai Culture and Arts Author-ity, believe in remaining firmly rooted in our Arabian identity throughout our fur-ther progress toward wider global recog-nition in the cultural scene. By initiating

several pioneering projects we have broad-ened and deepened public engagement with the arts, culture, and heritage. The most crucial function of the Authority is to build on the city’s cultural identity and protect its national heritage, while con-tributing to the transformation of Dubai’s cultural and artistic landscape. To achieve this, the Authority has formulated policies to preserve and foster the heritage and tra-ditional facets and assets of the city, while collaborating with global art centers and government entities that will play an inte-gral role in enhancing cultural knowledge and promoting global dialogue on culture and the arts. Dubai Culture has announced several initiatives that strengthen the his-toric and modern cultural fabric of Dubai including Khor Dubai, a living museum; activities at Al Bastakiya; Dubai Next; heri-tage week, and heritage centers in schools.

How would you assess Dubai Culture’s contri-bution to intercultural dialogue?Dubai Culture is committed to enhancing awareness of culture and arts in Dubai by fostering robust dialogue with the public to generate interest in the sector, while creating and implementing a strong mar-keting strategy. Each initiative led or sup-ported by the Authority spearheads and encourages both the public and private sector to play an active role in promot-

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The most crucial function of the Authority is to build on the city’s cultural identity and protect its national heritage, while contributing to the transformation of Dubai’s cultural and artistic landscape.

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1 Salah Al Qassim, Advisor to the Dubai Culture & Arts Authority2 Art Dubai is the largest and leading art fair in the Middle East. This year’s fair was held on March 21-243 The old merchant quarter in the Bastakiya district

ing Dubai’s true cultural and artistic es-sence. The Sheikh Mohammed Bin Rashid Al Maktoum Patrons of the Arts Awards is a pioneering and trail-blazing initiative that further strengthens the active par-ticipation of patrons, the building blocks of the cultural landscape. The effect and importance of patronage is now highly visible, with increased involvement from the private sector across all key disciplines. The success of Dubai Culture’s focus to promote cultural and arts patronage has been further underlined with a noticeable increase in the support of patrons to vari-ous art forms in the city. In the third cycle in 2012, some 44% of those honored were new patrons, apart from a 17.5% overall increase in patrons, underscoring the in-creased interest among organizations and individuals in driving the arts sector. Of total patrons, 15% comprised government departments and organizations, a 75% in-crease compared with the first cycle. ●

Image: Christine Olson

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1 Jumeirah Group’s Burj al-Arab building was one of the first globally recognized icons for Dubai2 Gerald Lawless, Executive Chairman of Jumeirah Group

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INTERVIEW

In the StarsTBY talks to Gerald Lawless, Executive Chairman of Jumeirah Group, on the rise of Dubai as a luxury holiday destination, expansion plans, and MICE tourism.

BIOGRAPHYGerald Lawless has helped establish Jumeirah as one of the premier luxury hotel brands in the world. He joined the company in 1997 after a 23-year career with Forte Hotels. He is a Graduate of Shannon College of Hotel Management in Ireland, and holds an Honorary Degree of Doctor of Business Administration in Hospitality Management by the Johnson & Wales University in Rhode Island, US. He is a member of the Executive Committee of the World Travel and Tourism Organization, member of the Aviation, Travel, and Tourism council of the World Economic Forum, and fellow member of the Institute of Hospitality. He is also a Non-Executive Director at the Travelodge Board, where he represents Dubai Holding and serves as the Chairman of the Board of Governors of the Emirates Academy of Hospitality Management.

Gerald Lawless

TBY What role has Jumeirah Group played in the rise of Dubai as a luxury holiday destination?GERALD LAWLESS Since the opening of our first property, Jumeirah Beach Hotel in 1997, we have worked closely with both Emirates Airlines and the Department of Tourism and Commerce Marketing to pro-mote Dubai as a luxury travel destination. The opening of our flagship hotel, Burj Al Arab in 1999, followed by the opening of Madinat Jumeirah in 2004, reinforced Dubai’s image as a world-class, year-round holiday destination. As the Jumeirah and Emirates brands expand their global reach, we are continuing to promote Dubai in new overseas markets, such as China, Russia, Brazil, and the US.

Where is the group planning to expand and why? When we began our international expan-sion in 2005, we identified the “key let-terhead cities” around the world, which became the priority destinations for our expansion. Just like an airline, a success-ful hotel brand should be represented in a number of “tier one” locations, such as London, Frankfurt, Shanghai, and New York. Over the past 12 months we have re-inforced our presence in Europe by open-ing five new hotels: Jumeirah Frankfurt, Jumeirah Grand Hotel Via Veneto in Rome, Jumeirah Port Soller Hotel & Spa in Mal-lorca, Pera Palace Hotel Jumeirah in Istan-bul, and Grosvenor House Apartments by Jumeirah Living in London. Going forward we plan to open new hotels in the Asia-Pacific and MENA regions to ensure that our brand is represented in all key markets. Over the past year, we have expanded our portfolio internationally from 10 hotels at the beginning of 2011 to over 20 hotels at the beginning of 2012. These include new

properties in Abu Dhabi, Dubai, the Mal-dives, Shanghai, Frankfurt, Istanbul, Lon-don, Mallorca, and Rome.

How has Jumeirah Group managed to main-tain its position at the head of the industry? Our hotels in Dubai are the market leaders in terms of occupancy rates and revenue per available room (RevPAR). The beachfront resorts recorded extended periods of full occupancy averaging at 84.4% during the first four months of 2012, while RevPAR—the industry standard for measuring rev-enue in relation to rooms available—has grown by 18.7%. Jumeirah’s city hotels have also regained their leading position with an average occupancy rate of 85.5% and RevPAR growth of 8.4%. Over the years, our hotels and resorts have gained a reputation as the finest in the city, and therefore we enjoy a high ratio of return guests. Sirius, our loyalty program, has also proved to be highly successful. Jumeirah has also hosted and sponsored a number of prestigious events that truly showcase the very best of the properties and the destina-tion. These include Art Dubai, which takes place in Madinat Jumeirah every year, and the Dubai International Film Festival. On the sponsorship side, Jumeirah is very proud of the achievements of Rory McIlroy, our Global Brand Ambassador, who is now recognized not only as one of the top golf-ers in the world, but as one of the top sports personalities.

What role has the food and beverage aspect of the group’s operations played in the business?The business of food and beverage has been an essential part of Jumeirah’s suc-cess. We now operate over 100 restaurants, bars, and lounges in our hotels in Dubai. We also have a dedicated restaurant divi-sion, which is in charge of a number of res-taurant licenses. Some of these have been developed in-house, such as the noodle house, which is now represented on a franchise basis in a number of countries in the Middle East, and will soon be opening outlets in the UK, Russia, and Morocco. Additionally, Jumeirah operates several restaurants under a license agreement with Caprice Holding, such as The Ivy Dubai, The Rivington Grill, and Scott’s, which is due to open later this year at Jumeirah at Etihad Towers in Abu Dhabi. These restau-rants provide an authentic London dining experience and have proved very popular with our guests.

Dubai is also a hub for MICE tourism. Is this an important revenue generator for Jumeirah?MICE tourism forms an integral part of our business. Jumeirah offers one of the larg-est MICE facilities in the region and we are delighted with the results we achieve. Our hotels in Dubai host a number of high-profile events, such as the World Economic Forum’s Global Agenda Council meetings, the Arabian Hotel Investment Conference, Leaders in Dubai, and Dubai International Film Festival. ●

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SCOTT BUTCHERGeneral Manager, Park Regis Kris Kin Hotel

MOHAMED AWADALLAArea Vice-President, Time Hotels

Dubai’s hotel segment is diverse enough to suit a wide variety of travellers from business to pleasure. Getting noticed in the segment isn’t always easy.

TBY talks to two hotel managers on changing visitor dynamics, MICE tourism, and marketing strategies.

What trends among business and leisure trav-elers have you observed recently in terms of their origin?

SCOTT BUTCHER Our customer profiles are changing as we move to a more business-style hotel. It is therefore important that our service standards match the desires and expectations of these seasoned trav-elers. We have, therefore, recently intro-duced our managing excellence program to ensure that our service delivery is focused on particular areas of the guest experience. This also obviously applies to the leisure traveller as well. When we first opened, the hotel was very popular in the Saudi Arabian, GCC, and Asian markets. Now the UK is our largest source market, with sig-nificant numbers also from Germany and the US. We still, however, receive signifi-cant numbers from Saudi Arabia, the GCC, and India.

In the Fast LaneQ&A: Business & Leisure Hotels

MOHAMED AWADALLA At Time Hotels we have a large number of regular guests, especially from Saudi, Kuwait, and Qatar. We run half of our occupancy on a long-term and half on a short-term basis, and since the beginning of 2011 have enjoyed an average 90% occupancy. Overall, 2011 was a very good year for the Dubai hospi-tality sector, and we saw a lot of business returning, in part due to the Arab Spring. Everything shifted to Dubai, including many tourists—evidenced by a number of Egyptian tour operators moving their op-erations to Dubai. The Emirate is an ideal pit stop for people from all over the GCC on their way to Europe, and they see Dubai as an essential stop-off location. With num-bers climbing over the last year we have naturally considered the possibility of a decrease in guests once the Egyptian mar-ket stabilizes, but overall we believe that Dubai is such a strong destination that it will not suffer greatly.

What are your expectations for the MICE tour-ism sector?

SB MICE is an important market segment and we are devoting more of our sales and marketing resources to it to ensure that we gain our fair share. In future, we will be working closely with all parties in this segment.

MA The Emirate is the number one exhi-bition destination in the Middle East, and the segment will continue to attract strong

numbers and is a particularly excellent asset for Dubai. Keeping this in mind, a plan is underway by TIME Hotels Manage-ment Company for an extension adding three more venues to the profile at flagship property TIME Oak Hotel & Suites located at Tecom Al Barsha. A 400-sqm space has been allocated at the hotel for an extension of meeting rooms with adjustable parti-tions not only adding additional spaces for corporate business events, but also provid-ing a bigger ballroom area for larger eve-ning gatherings. This extension will cover the demand of MICE business and will en-able the hotel to accommodate requests for a bigger space.

How does your hotel define itself in terms of the heavy competition in the Emirate?

SB The Park Regis is a very young brand in terms of major hotel groups. We are there-fore innovative in our approach to business opportunities. Due to our smaller size and less formal management structure, we are quick to react to business opportunities.

MA Being away from the beach strips does not hinder our success; it allows us to ca-ter a different segment of the market. We offer more affordable accommodation. As we do not have a liquor license, our hotels are generally quieter and consequently more appealing to certain segments. In-creased competition does not worry us, as we believe that more choice makes Dubai even more attractive. It creates options for

The UK is our largest source market, with significant numbers also from Germany and the US. Scott Butcher

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travelers both in terms of availability and in price range. Well-trained staff is the key to success, and as long as you have that you will keep getting business. A broad range of hotels offer almost identical facilities – what attracts people to one over another is the service differentiation. We look after our staff so that they can look after our customers. We also have a strict pricing strategy and we stick to it – we don’t hold our guests to ransom during busy periods by increasing our prices. This means that we build loyalty and get repeat business because we are trusted and have a good rapport with our guests. Repeat guests are very valuable, because they already know the hotel and what to expect.

What has the hospitality sector’s experience been like after the offset of the global liquidity crisis? What changes have you seen now that the global economic indicators are improving?

SB The hotel industry is very resilient and I think that there is now more optimism than there has been for a while. Initially with the GFC, there were significant cuts in all forms of expenditures and rates dropped. However, with confidence re-suming, rates are on the rise. Investment is being put back into the industry, and this is very positive.

MA We had to drop the rates a lot during the crisis, which was very hard for us as the running costs alone in Dubai are extremely high. Rates, staffing costs, maintenance charges—all of these add up, and we did find it difficult to cover costs and create revenue. Prior to the crisis hotels made very large profits and investors became used to extremely high returns, and when the crisis came it was of course a shock. We were lucky because our shareholders un-derstood that it was a period that required endurance, and sure enough we came through that period. Revenues are now up again and we hope that next year we will be able to achieve double-digit growth.

How has the apart hotel concept helped to change the accommodation picture for business?

MA Our hotel apartments are ideal for busi-ness people passing through Dubai for a fi-nite period. Even for those people moving to Dubai on a more permanent basis, we have noticed that, post-crisis, people are hesitant to commit to long-term leases. Our serviced apartments are the perfect compromise as the rate includes all servic-es and necessities, but on a contract with a break clause which allows for comfort without fear of over commitment.

Are you hoping to move into other parts of the GCC region?

MA We aim to expand from the UAE into the Saudi Arabian market. The Saudi market is huge and the entire industry is eyeing it for expansion, but it is very difficult. You need a very strong local partner, and you have to know how to approach the business. We are ready to move as we have both the re-sources and the drive. ●

Being away from the beach strips does not hinder our success; it allows us to cater a different segment of the market. Mohamed Awadalla

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INTERVIEW

Comfort TimeTBY talks to Sami Nasser, Vice-President of Operations at Sofitel Middle East, Egypt, & Indian Ocean, on Dubai as a brand, MICE tourism, and growth plans.

BIOGRAPHYSami Nasser has over 20 years of hospitality operational experience, working as a General Manager for various brands within Accor in several countries, followed by a position as Director of Operations in Poland. Over the years his knowledge has also been enriched by academic studies. He has several diplomas in hotel business management from Accor Académie, as well as strategic marketing and hotel revenue management from Cornell University.

1 Sami Nasser, Vice-President of Operations at Sofitel Middle East, Egypt, & Indian Ocean

Sami Nasser

TBY Dubai has successfully branded itself as a top destination in the region for leisure and business travelers. What are the strengths of the Emirate in the region?SAMI NASSER The most notable service in-dustry in the UAE is its tourism business. The city of Dubai has been transformed from a small desert town into a towering metropolis. Tourism has become so im-portant to this nation that it even accounts for over 30% of Dubai’s GDP. The Middle East has in many ways become one of the leaders in luxury hotel industry, and has always shown a strong desire to grow.

Where is the Sofitel brand planning to expand in the region and what motivates the choice of the targeted destinations?Sofitel is firmly establishing its hotels in the region, thanks to Sofitel Abu Dhabi and Sofitel Dubai JBR. We are extremely confi-dent in the expansion of our brand in the region. All keys cities in the Middle East are targeted, including in Saudi Arabia, Qatar, and Jordan.

Dubai International Airport receives flights from more than 260 destinations. What trends among business and leisure travelers have you observed recently in terms of their origin?Initial results show that the luxury travel industry follows the same trends as the luxury sector in general, although luxury travel is not commonly categorized within the luxury industry. Not only are luxury travel sectors distinguished by uniqueness, brand imagery, and high price levels—the main guiding principles of the luxury sec-tor—but they are also impacted by the same trends. A clear distinction between ultra-luxury and affordable luxury has been ob-served, together with the development of personalized services, a move away from ostentation, the increasing importance of web-based media, and progressively more attention to green and ethical social prin-ciples. Above all, as with the luxury sector in general, the demand for luxury travel is expected to grow, especially in relation to emerging economies. Dubai has a reputa-tion for being a center of luxury tourism, and competition in this bracket is very high.

What strategies has your hotel followed in re-defining luxury and establishing strong brand recognition in a competitive market?The perception of luxury is continu-ously evolving. Now we’re seeing a move away from ostentation toward authentic-ity in the travel experience, and a call for sustainability and environmental conser-

vation as an integral part of the offerings for affluent travelers. On the distribution side, the greater use of online tools will have an effect on the sales process and on communications. A shift toward a more self-sufficient approach in travel planning is therefore expected, plus increased influ-ence from social media in the decision-making process.

What has the hospitality sector’s experience been like after the offset of the global liquidity crisis? After years of turmoil, the hospitality in-dustry is on the mend. Although operating performance has begun to recover, op-erators, investors, owners, developers, and managers are approaching their segments with a new air of caution and fresh ideas. A global recovery in hotel operating fun-damentals is now a fact. Although many global markets have been slow, demand has returned and boosted occupancy.

Dubai is also a hub for MICE tourism. Is this an important revenue generator for you and what further opportunities for development in this respect do you see? Dubai is the regional hub for most of the regional and international corporations. MICE tourism is a crucial segment as it brings additional revenues to our hotels in terms of food and beverages and meetings. It forms approximately 15% of our over-all business mix. For ongoing and further development, we participate in most of the international MICE exhibitions to pro-mote our hotels along with the destination. IMEX in Frankfurt, EIBTM in Spain, as well as several MICE forums give us the oppor-tunity to establish contact with worldwide MICE buyers. ●

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As more attention falls on the GCC as a tourist and business destination, Dubai is developing its luxury hotel offering.

TBY talks to two industry executives on the significance of the region, expansion plans, and investment trends.

Where does the JW Marriott Marquis brand fit within the wider Marriott group? Why was now chosen as the right time to bring the brand to the Middle East?

RUPPRECHT QUEITSCH JW Marquis is the primary luxury brand for this hotel. The brand is designed for the businessperson who expects everything to work at 100%. However, the hotel is not like a Ritz-Carl-ton, which usually has a rich environment with original paintings and heavier fur-niture. The JW Marriott Marquis is more contemporary, with luxury apparent in the

Come Stay with MeQ&A: Luxury Hotels

RUPPRECHT QUEITSCHGeneral Manager, JW Marriott Marquis Dubai

RUDI S.K. JAGERSBACHERPresident Middle East and Africa, Hilton Worldwide

service. There are only a handful of Mar-quis hotels worldwide, but they are usually present as a large hotel in the city center, as well as business and convention hotels. This will be the first Marquis outside the US, and it will be Marriott’s largest hotel outside North America. It will be Dubai’s largest hotel, and will cater to the business community and the meeting community, which is an added feature of Dubai. The convention sector has picked up a lot of business. Meetings are getting larger, and Dubai is starting to be on the radar of large meeting organizers in pharmaceuticals, the automobile industry, and consultancy. The hotel is targeted to open in 4Q2012, while phase II will open a year or two later. We will be opening much of the banquet, restaurant, and bar outlets at the start, with only the facilities in the second tower to come on later.

What is your expansion strategy in the region?

RUDI S.K. JAGERSBACHER We opened nine hotels in 2011 and signed a further 18 properties —so, despite the challenges faced, it was one of our best years yet. Dur-ing 2012, we have already established two new hotels in Lebanon and a further hotel in Doha, Qatar, with plans to add to our

portfolio in Egypt and UAE. The new Con-rad Dubai hotel is a key opening for us this year and will bring an outstanding, luxury property with large conference and func-tion offerings to the heart of the buzzing Sheikh Zayed Road area of the city.

What is unique about your space for business and leisure that the hotel is bringing to the market?

RQ Well, for one it is a two-tower inven-tory with 800 rooms each, meaning we will have 1,600 rooms in total. There are not many hotels where you can house large conventions. For example, we just received a business booking for 700 rooms next year. That is large, and not many hotels can manage such an event all in the same loca-tion. We have over 5,000 sqm of banquet facilities, and then we have two ballrooms, the largest being 1,400 sqm with 60-80 meter high ceilings. The hotel will feature nine restaurants and five lounges, a large recreation area, and a large spa. It is im-portant also for the business traveler to re-lax; today’s businessperson is also a leisure traveler, and today’s leisure traveler is also a businessperson. People are doing busi-ness at the beach, and someone who does business all day may go to the beach in the evening. Tourism is very intermingled, and we cater to both segments.

What trends do you foresee in terms of investment?

RJ We see great possibilities for our mid-market brands in a number of markets and from a capital point of view it requires much lower investment. Regarding indi-vidual regions, we have enjoyed growth in the UAE as it became something of a safer haven during the recent political turmoil. Currently, Saudi Arabia is our biggest ex-pansion market with 14 hotels in the pipe-line and more to come in the future. As previously mentioned, we’re also looking forward to the exciting prospect of explor-ing opportunities in new and existing mar-kets across Africa. I also predict more suc-cess for our loyalty program Hilton Honors. Currently standing at 30 million members worldwide, the program is a proven and trusted advantage for us, as guest members make up an increasing percentage of hotel occupancy and, in turn, the same guests are also customers in the individual food and beverage outlets in our hotels. ●

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CHRISTOPHER MAYGeneral Manager, Dubai Golf

FRANK G. GABRIEL JR.CEO, Dubai Racing Club

Both golf and racing have flourished in Dubai despite environmental challenges, and are continuing to attract more viewers as well as participants.

TBY talks to two industry experts on what makes the Emirate a center for golf and racing, environmental challenges, and the future of the sports sector.

What makes Dubai so attractive as a golfing destination?

CHRISTOPHER MAY Dubai has some of the best golf courses in the world, and every year there are some major tournaments hosted here. These include the DP World Tour Championship and the Omega Dubai Desert Classic, which is in its 24th year and attracts some of the best players in the world. Previous winners of the Omega Dubai Desert Classic have included golf-ing greats such as Tiger Woods, Ernie Els, and Fred Couples. The golf courses and the quality of service is a big driver, but we can also not forget that there are great hotels, great shopping facilities, and great airlines. As a total package, Dubai is a very attrac-tive golfing destination, proven by the growing numbers of people coming to the region specifically to play golf.

Equine to a TeeQ&A: Golf & Racing

What makes racing such an inherent part of the local spirit?

FRANK GABRIEL The history of the Thor-oughbred is closely linked to the GCC region by the three original Arabian stal-lions that helped to develop the breed. All Thoroughbreds trace their lineage to one of these three Arabian stallions; the Godol-phin, the Darley, or the Bylery Turk. The Maktoum family, headed by His High-ness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Min-ister of the UAE and Ruler of Dubai, has a long history in horse racing. This dates to 1967 when Sheikh Mohammed and Sheikh Hamdan attended their first race in New-market. That was the seed that has grown to include the success of Dubai Racing Club (DRC).

How sustainably can you run a grass golf course in this part of the world?

CM If you go back to the very beginning, desalinated water was used to irrigate the courses. We now use only a very small amount of desalinated water—98% of the water that we use to irrigate is now treated sewage effluent (TSE), and that is some-thing that we worked hard to achieve with Dubai Municipality. It really is the right thing to do, and with population growth we are now able to do that. It has reduced our carbon footprint significantly, and it has reduced the cost of operation also, but it is still a very expensive part of our busi-

ness, because we use a lot of water. But us-ing TSE is something that is a lot greener, and putting in a new irrigation system will mean that we will use a lot less water.

How do the unique environmental challenges here affect how you run the racing calendar?

FG Due to the climate we are limited to racing from November through to March, but this is also to our benefit. This time of year is the perfect window to attract horses from Europe, Hong Kong, Singapore, and South America. In 2013 DRC will celebrate the 10th year of the Dubai World Cup Car-nival, which is a season of racing that at-tracts some of the greatest horses in racing. It is 10 race nights, from the first week in January and leading up to the Dubai World Cup, and the carnival annually attracts over 250 horses from 15 different countries training and racing here in Dubai for two to three months. Not only do we attract the horses, but their owners and trainers from all over the world are also staying in Dubai from a few weeks up to three or four months. This is because of the quality of the facilities, the racing, and the prize money, with over $10 million offered dur-ing the 10 nights of the Dubai World Cup Carnival. The weather and the quality of our racing combine to create what is the best season for horses and the horsemen. The success of the racing serves to increase the awareness of Dubai and the UAE.

What does the future hold?

CM Grass golf courses have been in exis-tence here for just 24 years, and there has been huge development and a huge amount of growth. Yes, there is still a lot of growth to happen, and there have been a lot of new golf courses built in the last five years, but with 50,000 rounds of golf being played in March 2012, the industry is looking strong.

FG The goal of the DRC is to maintain the highest standards of racing by attracting some of the world’s greatest horses and horsemen to compete in the racing seasons held at Meydan. The success of the DRC goes beyond the success of Dubai World Cup night. We are working to provide en-tertainment and racing as a sport that will not only attract the current fans that have a love for racing, but also spectators who are looking to experience racing for the first time. ●

www.timehotels.ae

Welcome to TIME Hotels. We’re new. We’re different. We’re friendly. By new, we mean just that! TIME Hotels is the new name in hospitality across the region. By different, we mean that our team is entirely focused on placing you at the centre of everything we do. By friendly, we mean that our promise to you, over and above great service, high standards and value for money, is bright smiles and heartfelt greetings backed by our helpful nature. Call us toll free on 800 HOTELS.

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www.timehotels.ae

Welcome to TIME Hotels. We’re new. We’re different. We’re friendly. By new, we mean just that! TIME Hotels is the new name in hospitality across the region. By different, we mean that our team is entirely focused on placing you at the centre of everything we do. By friendly, we mean that our promise to you, over and above great service, high standards and value for money, is bright smiles and heartfelt greetings backed by our helpful nature. Call us toll free on 800 HOTELS.

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Time_Business Year_210x275_Woman_1.pdf 2/12/12 4:17:36 PM

1 The Dubai Mall is the world’s largest shopping mall in terms of total area2 Emirati household spending has reached $23,000 per annum 1

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With more mall space per capita than any other city in the world, it should come as no surprise that the wholesale and retail trade in 2011 contributed some 30.7% to Dubai’s GDP. This could grow by 5.1% annually to reach $47.6 billion by 2015.

Shopping ParadiseFOCUS: Retail

Dubai is the second most targeted city for international retailers, concluded CBRE’s 2012 How Global is the Business of Retail? survey. CBRE mapped the presence of 326 of the world’s top retailers across more than 200 cities around the globe to identify trends in retail expansion. London claimed pole position, attract-ing 55.5% of the international retail brands surveyed, followed by Dubai (53.8%), New York (43.9%), Moscow (43.7%), Paris (43.7%), and Hong Kong (40.5%). “Retail has been one of the fastest growing indus-tries and one of the leading drivers of eco-nomic growth in the UAE in recent years,” said Hamad Buamim, Director General of the Dubai Chamber of Commerce and Industry, mainly due to the rising popula-tion, expatriate wealth, strong household consumption, modern retail concepts, and a thriving tourism sector. The population of Dubai broke the 2 million mark in 2011 and is expected to amount to some 3 mil-lion by 2020. Average Emirati household spending totaled $23,000 per annum fol-lowed by Western, other Arab, and Asian households with an average of $19,500, $13,500, and $10,000, respectively. Dubai’s retail landscape is dominated by malls and megamalls, which by the end of 2011 offered 2.58 million sqm of floor space, compared to, for example, 4.1 mil-lion sqm of mall space in Paris and 1 mil-lion sqm in London. Of course, both Paris and London offer more than just malls. On the other hand, if population size is taken into consideration, Dubai has 1,385 sqm of shopping space per 1,000 people, which far surpasses the US with 1,028 sqm and

Europe with 231 sqm per 1,000 people, ac-cording to property brokers Cushman & Wakefield. There is but limited construction on the Dubai retail front. Not more than 5,700 sqm of retail space is scheduled for com-pletion in 2012, with no major projects ex-pected before 2015. Currently, nearly 60% of Dubai’s total retail space is in large cen-ters such as the Dubai Mall and Mall of the Emirates. Situated at the foot of the world’s tallest manmade building, Burj Khalifa, the Dubai Mall is the world’s largest shop-ping center. The size of 50 football fields, it is home to some 1,200 retail outlets, two department stores, and over 160 food and beverage outlets. But, like any modern shopping facility, the Dubai Mall offers more than retail. It boasts an ice skating rink and a 22-screen cinema, while the 275-meter-long foun-tain in front of the complex serves up daily spectacles shooting water up to 150 me-ters into sky. The mall’s most dominating feature is the Dubai Aquarium. Measuring 51 x 20 x 11 meters, it is one of the largest fish tanks in the world, home to more than 33,000 aquatic animals, including over 400 sharks and stingrays. Partly thanks to such extra features, the Emaar-owned Dubai Mall became the world’s most-visited shopping and leisure

destination in 2011, attracting more than 54 million visitors, a 15% increase when compared to 2010, and surpassing the 50.2 million annual visitors to New York City. Owned by Majid Al Futtaim Proper-ties (FAP), Dubai’s second biggest mall is the Mall of the Emirates (MAP). It has a total surface area of some 600,000 sqm, over one-third of which concerns retail. It is furthermore home to 520 stores and 80 cafés and restaurants. In addition, the mall offers the Magic Planet family en-tertainment center, a 550-seat, two-level theater, a 14-screen cinema complex, and Ski Dubai; 22,500 sqm of year-round snow offering five runs, the longest of which is 400 meters. The Emirates’ third biggest mall is also owned and run by FAP. The Deira City Center offers 120,000 sqm of retail space, a gaming area, and an 11-screen cinema complex. It attracts some 20 million visi-tors a year. Faced with the competition of such modern megamalls, Dubai’s older, smaller malls are suffering and will have to reinvent themselves by investing in leisure and entertainment facilities. Any account of Dubai’s retail scene would also be incomplete without men-tioning the Dubai Shopping Festival (DSF). Organized since 1996, the one-month shopping and entertainment event in ››

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Your Company HereTBY talks to Laila Suhail, CEO of Dubai Events & Promotion Establishment (DEPE), on the mandate, working with the public and private sectors, and opportunities for FDI.

What was the strategy behind the widening of DEPE’s mandate in 2011? In 2011, DEPE expanded its remit to take a more comprehensive role in the management of Dubai’s events and festivals industry, as well as support corresponding growth across the retail sector. With DEPE’s track record and heritage in managing retail-focused festivals and events—and as a result of our work as an advocate for the public sector with private sector partners—the Dubai Government recognized that DEPE was best placed to take greater responsibility for the wellbeing of our retail and events sectors.

Who are some of your key partners? DEPE is committed to streamlined collaborations betwee government, represented by DEPE, and its strategic partners in the private sector. DEPE has always maintained an excellent and solid partnership with some of the main national entities. Some of these entities have been supporting DEPE’s events and festivals continuously since 1996. Our role is to grow the retail and events sectors, which of course has a direct and indirect impact on other industries, including tourism and hospitality. For that reason, DEPE works closely with a representative committee of 24 government bodies and agencies to help us fulfill our mandate and effectively coordinate activity across the public sector.

What current opportunities would you say exist for foreign investors?Dubai International Airport is within four hours flight time for 2 billion people, many of these in the fast emerging markets of India and China, where a growing middle class is increasingly looking to travel, with shopping and entertainment high on their holiday agendas. In 2011, the Dubai Mall became the world’s most-visited shopping and leisure destination, welcoming more than 54 million visitors during the year, an increase of about 15% over 2010. The Emirate is now not only a must for global brands, but increasingly the first place for international retailers looking to expand outside of their home markets.

2011 attracted some four million visitors, who spent over $4.1 billion on retail, travel, and hospitality. According to Jones Lang LaSalle (JLLS), the average store rent per square meter in Dubai amounted to some $513 in 2011. The property consultancy firm expects the presence of megamalls in Dubai’s retail landscape to gradually decline in the com-ing years. “A lot of the mega retail projects that were planned during the boom years were put on hold or canceled after the fi-nancial crisis of 2009,” Craig Plumb, the firm’s head of research for the MENA re-gion, told The Wall Street Journal in March 2012. He expects a shift toward smaller malls and retail projects targeting tourists and residents alike. The biggest project on hold since 2009 is the Mall of Arabia. The brainchild of Dubai Holding, it was set to offer a gross leasable area of some 372,000 sqm, which would have made it both Dubai’s and the world’s largest mall. Meanwhile, Emaar announced it was to construct a 93,000 sqm extension to the Dubai Mall, while Dubai-based property developer Nakheel has a renewed interest in building the Palm Mall at the Palm Jumeirah Island off the coast of Dubai. It is also aims to extend the Ibn Battuta Mall and Dragon Mart. So far, however, the firm has not publicized any further details. Regarding future growth, Dubai, on the one hand, will have to reckon with in-creased competition within the region, es-pecially from Abu Dhabi and Qatar, which follow a Dubai-like growth model based on retail, tourism, and entertainment. The amount of retail space in Abu Dhabi is

set to almost double to 1.8 million sqm by 2015. On the other hand, there is increas-ing demand. Fuelled mainly by growing population and tourism numbers, retail sales in the UAE alone are forecast to grow from an es-timated $31.01 billion in 2011 to $41.22 bil-lion by 2015, according to Business Monitor International (BMI). Automotive sales are also expected to increase by some 49% to 600,672 units by 2015. Sales of consumer electronics are set to grow from $3.15 bil-lion in 2011 to $3.97 billion by 2015. Food sales are forecast to grow by 36.1% to $10.52 billion by 2015. Fashion and cloth-ing is another major market. The 2011 Re-tail Apparel Index found that the UAE had the highest fashion clothing sales per capi-ta per annum in the developing world. The report attributed that to “high disposable income and immense fashion conscious-ness.” While store-based retail will continue to dominate the sector in the coming years and generate the most revenue with a share of 97.3%, non-store based revenue will gradually increase by some 18%, as more and more households have access to broadband internet access. Carrefour, for one, launched its first online store in September 2010. The drift from bricks and mortar retail facilities to their virtual rivals is likely to pose a challenge to Dubai’s re-tailers. However, with retail so much in-tertwined with the city’s tourism industry, the future impact of online retail will likely be muted. ●

3 Damas processes between 10 to 11 tons of gold on an annual basis

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INTERVIEW

Carry-on ShoppingTBY talks to Colm McLoughlin, Executive Vice-Chairman of Dubai Duty Free, on the development of the global duty free business, Dubai as a retail hub, and challenges facing the sector.

BIOGRAPHYBorn in 1943, Colm McLoughlin began his retailing career in the 1960s, working at Woolworths, before moving back to Ireland to work for Shannon Duty Free. In 1983 he was invited by the government of Dubai to set up Dubai Duty Free.

1 Colm McLoughlin, Executive Vice-Chairman of Dubai Duty Free

Colm McLoughlin

TBY As Executive Vice-Chairman of what is now one of the largest airport retailers in the world, what can you say about the develop-ment of the duty-free industry?COLM MCLOUGLIN The duty-free indus-try was born in Shannon in 1947, because that was the first refueling stop for flights crossing the Atlantic and going on to Eu-rope. In the first year the industry brought in something like $20,000, and today the industry is worth $40 billion. Half of that money comes from airport operations, the other half comes from border shops, cruise liners, and the like. The govern-ments in Dubai and Ireland entered into a six-month contract in 1983, and a team of people was sent here to set up Dubai Duty Free. I was part of that 10-man team. The plan was to write a procedural manual, set up the operation, and then leave. During that time, myself and a couple of other people were asked if we would stay on, and

we agreed to stay for two years; we’re still here 28 years later. We started with 100 staff, and we still have 52 of those 100 staff working for us. In total now we have 4,000 employees. In the first full year of business in 1984, we had sales of $20 million. In 2011 we had sales of $1.46 billion, and we are the single biggest airport retailer. That has been helped along the way by the fact we have been growing, our penetration has increased, and of course the traffic through the airport has been increasing. We cur-rently serve 51 million people through here yearly, and the projections for 2020 are for this to hit 95 million.

The majority of airports lease retailing space. What was your motivation in taking a different approach when establishing Dubai Duty Free?In Dubai we operate all the retail activities at the airport and we have 18,000 sqm of space. We think our model suited Dubai better than the concessionaire approach because 28 years ago Dubai was very small. It needed marketing, it needed promotion, and also it needed input into the commu-nity. Dubai Duty Free was one of the first companies in Dubai to take on that mar-keting role and position Dubai as a growing and important stop-over and destination for international travellers. Our famous advertising strapline of “Fly Buy Dubai” and our tentative steps into sports mar-keting way back in the 1980s helped raise the profile of Dubai, the airport, and, of course, the duty free operations. Our model has also worked extremely well for the development of the airport, and we work closely with Dubai Airports and other stakeholders on rolling out de-velopment plans. Concessionaires would not have the same overall objectives that we have, such as the long-term promotion of Dubai or the setting up of a charity foundation that we established in 2004. We think that our model has been successful and it has worked out better than the alternative would have done. Around 75% of every-thing we sell we buy from local suppliers and distributors, many of whom were the original shop owners at the airport. So from the point of view of the Dubai econ-omy, our contribution is significant. Al-though we buy everything locally and can get speedy deliveries, we still need to have a logistics and distribution center here which covers 27,000 sqm. The handling of our stock is 70% automated, otherwise we

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The handling of our stock is 70% automated, otherwise we couldn’t cope with the quantity of stock that we deal with.

couldn’t cope with the quantity of stock that we deal with. We sold 17 million pieces of merchandise in 2011. In November we registered 62,000 transactions every day at our points of sale. That’s fairly average for us. We deliver between 500 and 1,000 pallets to the duty free area every day from here, all of which are shrink-wrapped, x-rayed, secured, put into sealed trucks, and delivered.

Dubai Duty Free invests a huge amount in de-veloping infrastructure. What challenges does the business face in this respect and what fur-ther developments are underway?We invest a lot in Dubai. We built a head office, where we have 6,000 sqm of space. In addition to this, we have a 27,000-sqm distribution center. We are in the process of finalizing a five-star hotel here in Dubai that will be managed by Jumeirah Hotels. We’re owned by the government, but we are given a great deal of freedom to make our own commercial decisions. I am very privileged to report directly to HH Sheikh Ahmed Bin Saeed Al Maktoum, who is the President of the Dubai Civil Aviation Au-thority and Chairman of Dubai Duty Free. His Highness is also the head of Emirates Group, and heads up several important entities here. He is a fantastic boss to have and has always been incredibly supportive of our operations. ●

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INTERVIEW

BIOGRAPHYAnurag Agrawal was appointed Managing Director of Canon Middle East in 2009. With over 15-years experience in the regional market, he has been with Canon Middle East for 10 years handling various assignments. He joined Canon in 2000 and has been responsible for various sales, marketing, and service-oriented initiatives through his different assignments in Canon.

1 Anurag Agrawal, Managing Director of Canon Middle East

Big GunsTBY talks to Anurag Agrawal, Managing Director of Canon Middle East, on regional operations, Dubai Internet City, and trends in the consumer electronics market.

Anurag Agrawal

TBY Where does Canon Middle East sit within the global Canon network, and how important is Dubai strategically in terms of your regional operations? ANURAG AGRAWAL Canon Middle East contributes close to one-third of Canon Europe’s emerging markets’ business volume and manages sales, marketing, and technical support activities across 45 countries in the Middle East, including Saudi Arabia, Egypt, and the UAE, as well as East and North Africa. Canon has been doing business in the Middle East for more than 40 years, enabling us to establish a very powerful brand with strong local roots. Within the context of our regional operations, Dubai serves a very impor-tant role. We set up a representative office in Dubai in 1998 to help channel partners with additional on-the-ground support and from there Canon went on to establish a full subsidiary with extensive logistics facilities in 2001. Subsequently, we chose Dubai as our Middle Eastern headquarters as it enjoys close proximity to the regional markets we operate in. Additionally, Can-

on Emirates was also established in 2007 to consolidate and reinforce Canon’s po-sition in the region through an integrated structure. The company is responsible for Canon Business Solutions in the UAE and all related activities, including direct sales, marketing, and services, which will bring Canon’s global strength to the UAE. Canon Emirates’ presence is an important step to-wards the realization of Canon’s potential in the UAE.

Why did you choose Dubai Internet City as a base for your operations and what are the main benefits of operating within this location?Canon Middle East moved into its head of-fice at Dubai Internet City (DIC) in 2002. As the region’s largest dedicated ICT cluster in the MENA region, DIC was a natural fit for us. DIC has big ICT and multinational companies that provide state-of-the-art technology and solutions and it was fitting for us to join like-minded companies. The move allowed us to consolidate our market stronghold and bolster our reputation fur-ther. Over the years, we have developed a great relationship with the DIC team, and share with them our vision for innova-tion and sustainable growth. Canon has partnered with DIC on several environ-mental projects, including our combined celebrations for Earth Day.

What indicators are you watching to observe how the global economy will develop?There is a wide spectrum of generic mac-

ro-economic indicators that we constantly monitor to analyze the economic environ-ment where we operate. This includes gross domestic product (GDP), growth of GDP, rate of inflation, and per capita income. Broadly speaking, the outlook for demand across our different business segments is positive. If we were to look at the print industry as one example, globally the print industry is estimated to be worth $640 bil-lion and drives $3.8 trillion in related ser-vices. Here, in the Middle East, the region’s printing industry is expected to grow 5% just in 2012, according to the Printing and Publishing Group (PPG). This is on the back of technological advancements and the high contribution of over $2.3 billion by the UAE print industry alone. In addition, according to Canon’s fourth Insight Report: The Bigger Picture 2012, 70% of buyers view print to be as effective as or more effective than any other media in the communica-tions mix. To take another example, the global digital cameras market is expected to reach 155 million units by 2017, accord-ing to a report by Global Industry Analysts. Some of this growth will be driven by the MENA markets. Another trend that we observe is a demand for increasing con-vergence of technologies. For instance, we used to have separate machines for faxing and calling, and now there’s the tele-fax. Just a few decades ago, a photocopier was just meant to photocopy. Today’s photo-copiers are multifunctional workhorses that can copy, print, and scan. There is rarely a medium- to large-sized enterprise that does not have a multifunction device (MFD), reflecting the competitiveness and flexibility within modern business envi-ronments. Moreover, consumers and cor-porates are demanding more added value such as document security and internet connectivity that are driving a new breed of all-purpose office equipment. ●

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INTERVIEWAnan Fakhreddin

The StandardTBY talks to Anan Fakhreddin, CEO & Member of the Board of Damas, on the gold industry, the company’s IPO, and projects in the pipeline.

BIOGRAPHYAnan Fakhreddin is the CEO of Damas, previously having worked as the Dubai-based Managing Director for Middle East and Turkey at the World Gold Council. He has also worked with the Diamond Trading Company, and began his career with American Express International, holding the position of Regional Manager in Saudi Arabia. He holds a BA in Business Administration from Yarmouk University in Jordan.

1 Anan Fakhreddin, CEO & Member of the Board of Damas

TBY How has Damas’ relationship with the Dubai gold industry evolved?ANAN FAKHREDDIN Damas is a 105-year old company that started in Damascus. The story of Damas goes well with the story of Dubai. Damas began to grow exponen-tially in the 1970s, opening up wholesale and positioning an international brand. We have expanded into international jew-elry, diamond jewelry, and other precious stones, but we are still gold jewelers. We process around 10 to 11 tons of gold every year. At any given time, we have around 6,500 kilograms of gold at our branches, which demonstrates how important gold is to Damas. We have grown from being a UAE-based company focused mostly on Dubai to a multinational player. Over the last few years, and as a result of the global recession, we have focused on our global footprint. We are now focusing on the GCC market, which is considered to be our core market—we officially have businesses with about 12 markets in the region. Looking at the retail side, we have four different formats, and this is our main advantage. We have diversified across different levels. Considering the UAE business, we are in almost every product category—we offer 18-karat, 21-karat, and 22-karat gold in addition to diamond jewelry and watches. We have just announced a joint venture with a different company to propagate the five or six branches Tiffany has in the UAE. Considering this second segment of our diversification, we are present in many markets.

How did the IPO change the company’s direc-tion? Do you foresee more local companies opting to float their shares?Becoming a public company created huge pressure—as you know, listed companies are usually under the spotlight. I believe that the challenge was to transform from a family-run business to a listed company, especially in building policies and proce-dures that reflect corporate governance.

The IPO did consume a huge amount of energy from the company, but we gained a testimony on behalf of the business model of Damas. The capital markets believed in Damas to the extent that people were paying money to buy our shares. Within the context of family businesses, every company needs to be evaluated separately. Floating a business obviously has its own advantages, including access to capital markets and raising money. At the same time, there are certain challenges, such as transitioning from being a family-based culture to one where individuals make de-cisions about structures and system poli-cies and procedures, ensuring corporate governance and dealing with related par-ties. The ability to transform this culture is a key factor in terms of deciding whether to go for an IPO or not.

How has the company’s strategy adapted to deal with fluctuating gold prices? The greatest impact on us was the weak-ening in demand from certain segments, especially in the lower end of the mar-ket. Gold became out of reach for certain groups. In the past, we used to see lower-income consumers buying gold; this has stopped in the last two or three years. There was an immediate demand from our clientele for lighter jewelry, and this is why the last couple of launches we have done introduced the new technology of laser cutting, which allows us to produce a piece weighing 3 grams. We gained the ability to produce a full three-piece set of 18-karat gold jewelry that weighs only 6 or 7 grams. There was a lot of pressure to produce lighter jewelry that still looked nice. In terms of consumer segments, we have seen a small percentage of the con-sumer base focused on investments in the belief that gold prices will continue to rise. This has resulted in more demand for the 22-karat segment, where there are better investment formulas. We see an increasing demand for small bars and gold coins.

What plans are in the pipeline for 2012?The takeover process is complete and many of the issues we were dealing with have been solved. Now there is a lot more focus on the business, and our attention is on the management and organization of the com-pany. We have very ambitious plans for the coming three years. Our ability to in-troduce new designs and reinvent certain goals that we have is being improved every

day. By August or September 2012, we will begin launching new consumer initia-tives, in-house plans, and general goods to satisfy the consumer demand that we are seeing. We are now looking at ways to re-invent our retail presence. We understand that some of our shops have been there for a long time, and we are looking at ways to rebuild our concept and look after the consumer needs and desires. In the com-ing months, we will start working on the retail format that we currently have now and begin to renovate. ●

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MOHAMMED ABDUL RAHIM AL FAHIMGroup CEO, Paris Gallery

ABDULMAGIED AHMED SEDDIQIChairman, Ahmed Seddiqi & Sons

Known internationally as a luxury shopping center, Dubai’s retailers look to go that extra mile to provide top-class customer service.

TBY talks to two luxury retailers on their approaches to the business and plans to expand their offerings.

What is your approach to luxury retailing?

MOHAMMED AR AL FAHIM When it comes to luxury, a person always wants to feel great about his or her appearance. Look-ing beautiful and smelling nice is very important. Environment is part of the ser-vice, however. You can find cosmetics or perfumes anywhere you like. A customer can have a tea or coffee, but it is different depending on the environment. However, they also expect to receive more in terms of service and feeling, so that it feels worth that price. Now, when it comes to cosmet-ics and perfume, it is the same thing. We know that our customers expect a differ-ent standard of service. However, it is not

That Little SomethingQ&A: Luxury Retail

necessary to pay a little bit extra for that higher service, and this is what we try to maintain. The price of perfumes and cos-metics are all standardized and unified globally. We sell the products at a price and do not charge extra for the higher service and the ambiance of our store. We provide an environment with a lot of space, so that customers can have personal privacy while shopping and feel comfortable to walk around, browse, rest, and so on. It does not feel like going into a busy, crowded con-venience store. We merchandise our prod-ucts through large personalized wall units that create a different feeling from smaller shops elsewhere in Dubai or Europe. Just like Dubai is the hub and destination for luxury, Paris Gallery is the destination for luxury when it comes to this sector of business. Customers know what they get in Paris Gallery. The brands know where to go to present themselves to their customers in the right way, and that is why Dubai is important.

ABDULMAGIED AHMED SEDDIQI We have cli-ents from a broad range of demographics, age and nationality because of the wide range of our brand portfolio. Our UAE-based clients are mainly locals and we have many clients who visit us from overseas to buy a certain pieces. In addition we also

cater to the mass wave of tourists who visit the UAE throughout the year. We have cli-ents whose grandfather and father used to buy from us, and now generations later, we still have them as clients. With growth and change in any market, the demands and expectations of clients have changed and evolved with time. Today, we also see more watch collectors based in the UAE then a few years ago, and this has been a result of educating the market and bring-ing in exclusive and unique pieces to the UAE through Ahmed Seddiqi & Sons. With a portfolio of over 50 Swiss watch brands, it is easy for us to cater to the needs of our clients. Of course, we have witnessed the appreciation of complications over the years and this is primarily due to the increase of UAE based watch collectors, many of whom are UAE nationals.

How do you plan to expand?

MF We do have a plan for the Middle East and the neighboring countries that are close to the Middle East. We are currently looking at Saudi Arabia, Bahrain, Qatar, and Syria. We have plans to expand in the Middle East and outside the region. Our team is also already in Baku, Azerbaijan, trying to work out a business plan. Iraq is interesting to us, but we are waiting. Iraq has very big potential in terms purchasing power, country size, and the need for lux-ury. Turkey is another possibility. Then, later on, Lebanon and Egypt—when the time comes.

AS The company brand has become a desti-nation, and that is enough for us. Dubai is a business center and we are based in Dubai, so all of our main activities are here. Being a family business we want to have our own people running the business, not neces-sarily the entire operations, but certainly to be on the top and to manage. We now have the capacity for more managers, and we do wish to move more into Abu Dhabi. I believe we should focus on developing here in our own country. You cannot be strong everywhere. We have clients who come from all over the world who know us and come to us. The trust that our clients have bestowed on us over the years is something that we treasure. We have built our reputa-tion over the past 60 years, and achieved this through hard work, honesty, and the excellent service that we offer to our clients. ●

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EXECUTIVE GUIDE

INSIDE 203 The Set Up - REVIEW: Legal | 208 Mahmud P.K. Merali, Managing Partner of Merali’s (formerly Baker Tilly Merali’s) - INTERVIEW | 209 Number Crunch - REVIEW: Accountancy | 212 Be In the Know - ROUNDTABLE: The Ins & Outs of Setting Up Shop | 213 When in Dubai...

The Set UpREVIEW: Legal

u Doing Business in Dubai requires planning and research, but investors need not worry, as it is an overall straight-forward process.

GENERAL INFORMATION ABOUT BUSINESS REGISTRATIONPrior to operating any business in Dubai, the steps outlined below must be undertaken in order to meet the legal requirements of all con-cerned government authorities and to guaran-tee maximum commercial benefit for the busi-ness owner:• Determine, inthebeginning,thecategory/categories (commercial, industrial and/or pro-fessional) and type of business activity/activi-ties to be practiced. Please determine all related business activities that can be included within each business license, subject to a maximum of ten activities per license.• Determine the appropriate business legalform for your business taking into consideration the desired business activities and the number and nationalities of the business owners.• Confirmall the requirementsof the licenseto be issued.• Determinethetradenameofthebusiness.• SubmitanapplicationtotheDepartmentforan Initial Approval and register the trade name, either by a personal visit to the Department Offices and its external branches or through the internet services that are available on our website.• After getting the initial approval you canlease premises and contact the counter of the Planning Department of Dubai Municipality in order to verify that this said premise is suitable for the business.• Prepareall requireddocumentsand submitan application to the Department or one of its external branches to pay the required fees to obtain a final license.• SubmitanapplicationtooneoftheDepart-ment external branches for a signboard permit for a business trade name as required by the economic regulations.

Terms & Conditions on Operating Economic Activities in the Emirate of Dubai—UAE NationalsUAE nationals may operate all commercial, pro-fessional, and industrial activities when they fulfill all terms and conditions. They may carry

on activities through any of the following legal forms:• IndividualEstablishment.• Limited/JointLiabilityCompany.• Private/PublicShareholdingCompany.• CivilBusinessCompany.

Nationals of Gulf Cooperation Council (GCC) CountriesGCC nationals may carry on most commercial, professional and industrial activities, when they fulfill all terms and conditions (except for activities of Haj and Umra, trade agencies, houses of disabled and old people, community service, and journals and magazine publishing and printing houses as they are limited only to UAE nationals). They may carry on activities through any of the following legal forms:• IndividualEstablishment• Limited Liability Company: two or moreGCC nationals may establish a Limited Liabil-ity Company to practice a specific commercial activity. However, if there are one or more partners who are not GCC nationals in this case one or more UAE national partners are required, with a shareholding of not less than 51% of the paid-up capital.• Private/Public Shareholding Company:three or more GCC nationals may establish a private shareholding company to practice a specific commercial activity. However, if there are one or more partners who are not GCC na-tionals in this case one or more UAE national partners is required, with a shareholding of not less than 51% of the paid-up capital.(For Example: GCC partner, foreign partner, it is a requirement to have a partner from the UAE).• Civil Business Company: two ormore GCCnationals may establish a civil business com-pany to practice a specific profession without a Local Services Agent. However, if there are one or more partners who are not GCC nationals, a Local Services Agent who is a UAE national shall be appointed or included as a partner.

Nationals of Other CountriesNationals of other Arab or foreign countries ››

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may carry on economic activities through any of the following forms:• Individual Establishment: itmay be estab-lished to practice any professional activity, only by appointing a Local Services Agent who shall be a UAE national.• Limited Liability Company: this kind ofcompany shall be established to carry on any commercial or industrial activity, including one or more UAE partners whose shareholding shall not be less than 51% of the paid-up capital.• Private Shareholding Company: this kindof company shall be established to carry on any commercial or industrial activity, includ-ing one or more UAE national partners whose shareholding shall not be less than 51% of the paid-up capital.• Civil Business Company: two ormore per-sons may establish a civil business company to practice a profession, provided that a Local Services Agent, who must be a UAE national, is appointed or included as a partner.

Foreign CompaniesAny company incorporated outside the UAE may operate any commercial, industrial, or professional activity through one of the follow-ing legal forms:• BranchofaForeignCompany.• Limited Liability Company: this kind ofcompany shall be established to operate any commercial or industrial activity, including one or more UAE national partners whose share-holding shall not be less than 51% of the paid-up capital.• Private/Public ShareholdingCompany: thiskind of company shall be established to operate any commercial or industrial activity, includ-ing one or more UAE national partner whose shareholding shall not be less than 51% of the paid-up capital.

Annual FilingsUnder the UAE Commercial Companies Law, most companies or branches are required to have their accounts audited locally, and these accounts will then need to be filed with the appropriate Emirate-level authorities on an an-nual basis as part of the license renewal filing process. There is also an annual license renewal fees to be paid, which is based on the type of license, entity, and its activities. A similar re-quirement is for the free trade zone entities, although the requirements and fees vary and need to be considered based on the legal entity set up and its location.

AUDIT & ACCOUNTANCYJoint-stock and limited-liability companies must appoint one or more auditors. All legally incorporated companies have to file their au-dited financial statements with the Ministry of Economy or relevant authority in order to renew their trade licenses. There are no excep-tions available or restrictions on appointment

of auditors. Companies generally prepare their accounts on a calendar year basis, and banks are specifically required to do so by the Central Bank of the UAE. Listed companies (including banks) are re-quired to file quarterly reviewed financial state-ments and annual audited financial statements in both English and Arabic with the Securities and Commodities Authority (SCA), which pub-lishes the quarterly and annual financial state-ments on its website. Banks, including branches of foreign banks, are also required to file audited annual financial statements and regulatory re-turns with the Central Bank of the UAE and publish them in a local newspaper. There is no specific language requirement for the purpose of maintaining books and re-cords, although books are generally maintained in English. International Financial Reporting Standards is mandated by SCA and the Central Bank of the UAE and adopted as the default GAAP by all other companies.

LEGAL BUSINESS STRUCTURES

Individual Establishment:An Individual Establishment is an establish-ment owned by a sole proprietor to operate an economic activity (commercial, professional, industrial, agricultural, or real property). An establishment’s financial liability is linked to the proprietor, who shall be responsible for all of its financial obligations.

Civil Companies• ACivilCompanyundertakesdirectlyaspe-cific profession as its target and partners de-pend, for their earnings, on the practicing of activities that involve the use or investment of intellectual faculties more than depending on speculation, materials, or others’ work.• UnderDubaiLocalOrderNo.63of 1991onlicensing professionals and tradesmen in the Emirate of Dubai, it is allowed for a number of normal individuals to practice a service or pro-fessional activity as distinct form, a commercial one, the business takes the form of a “Business Partnership” in accordance with the provisions of the rules (from 683 to 690) of the Federal Civil Dealings Law. Professional companies may be 100% foreign owned. However, it is necessary to appoint a Local Service Agent.• The obligations of the local service agenttoward his principal and third parties shall be restricted to rendering the usual experience in order to enable him to practice the professional or craftsmanship work without holding any re-sponsibility or financial commitment in respect of his principle’s business or activity inside the Emirate or abroad. The relations between the two parties shall be regulated by any agency agreement.

Legal Forms of Commercial CompaniesThe legal forms of commercial companies, pur-

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suant to Federal Law No. 8 of 1984 as amended, are summarized below.

General Partnership• A general partnership is an arrangementbetween two or more partners whereby each of the partners is jointly and severally liable to the extent of all their assets for the company’s liabilities.• OnlyUAEnationalsareallowedtobepart-ners in a general partnership.• Thenameofthecompanyshallbemadeupof the name of all partners, and its name might be limited to the name of one or more partners and adding a word to modify the presence of the company. In addition to that, the company may have a special commercial name, if the name of a person other than the partners was men-tioned in the name while he is aware of that, the said person shall be responsible in partnership for the company’s obligations.• All partners shall be considered a dealer,and the bankruptcy of any partner leads to the bankruptcy of all partners.• Thecompanysharesmaynotberepresentedin negotiable certificates.• Partnersareseverallyresponsibleinalltheirmoney for the company’s obligations and any agreement to the contrary might not be made against Third Parties.• The company administration shall be un-dertaken by all partners, unless the company contract or an independent contract assigns the administration to a partner or to a non-partner party.

Simple Limited Partnership• A simple limited partnership is a companyformed by one or more general partners liable for the company liabilities to the extent of all their assets, and one or more limited partners liable for the company liabilities to the extent of their respective shares in the capital only.• OnlyUAEnationalsareallowedtobegeneralpartners.• Thenameofthecompanyshallbemadeupof the name of one or more of the limited part-ners, adding a word to modify the presence of the company. In addition to that the company may have a special commercial name.• The name of the limited partner may notbe mentioned in the company name. If it was mentioned with his knowledge of that, he shall be considered a partner for Third Parties in good faith.• The simple limited partnership shall be apartnership for all partners and shall be subject to all the rules of partnerships, based on the following:

1. The simple liability contract shall include, in addition to the other data, the name of each limited partner, his surname, nationality, date of birth, country, capital share, and the part paid of it.

2. The limited partner is only liable toward the company’s debtors with his capital share.3. A limited partner may not intervene in company administration-related issues related to others even if upon authorization, he may rather require a copy of the loss/profit accounts and the balance sheet and check the validity of the data by reviewing the company’s records and documents by himself or by a representa-tive from any of the partners or others provided that this does not harm the company.4. If the limited partner violates the above-mentioned ban, he shall be responsible in all businesses for all the obligations resulting from his business.5. The limited partner may be held responsible in all his money for all company’s obligations if the business administration he carried out leads others to believe that he is one of the ultimate actual partners, in which case the rules and regulations of the actual partners shall apply to the limited partner.6. If the limited partners carried out any of the banned administration business based upon an explicit or implicit authorization from the part-ners, such partners shall be held responsible with him for the obligations resulting from such acts.7. Limited partnership shall issue resolutions in consensus of all partners and limited partners, unless the contract states a majority, and the majority in number shall be considered, unless otherwise stated.8. Resolutions to amend the company contract shall not be passed unless duly approved in consensus of all partners and limited partners.

Private Joint-stock Company• Anumberof founders,not less than three,may establish a Private Joint-stock Company.• ThesharesofaPrivateJoint-stockCompanycannot be offered to the public or for the Public Subscription.• Thefoundersmustsubscribeallcapital,andthe minimum requirement for such capital is AED2 million.• APrivateJoint-stockCompanyissubjecttoall rules and regulations pertaining Private Joint Stock Companies, except for rules and regula-tions of the Public Subscription.• APrivateJoint-stockCompanymaybecon-verted into a Public Joint-stock Company, in order to do so the following conditions must be satisfied:

1. The nominal value of the issued shares is fully paid up.2. A period of not less than two financial years has expired.3. During the two years preceding the applica-tion for conversion, the company has achieved net profits distributable to the sharehold-ers whose average is not less than 10% of the capital.4. A resolution of the extraordinary assembly ››

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for the conversion of the company is adopted by a majority of three-quarters of the company capital.

Limited Liability Company (LLC)• A Limited Liability Company is one withlimited liability, where the number of partners may not exceed 50 and should not be less than two. Each of the partners shall only be liable to the extent of his share in the capital. The part-ners’ participation should not be represented by negotiable certificates.• ThenameoftheLimitedLiabilityCompanyshall be taken from its purpose or from one or more of the names of partners, the statement Limited Liability Company shall be added to the company’s name, stating the company’s capital.• Other than the insurance, banking, andinvestment businesses for others, the Limited Liability Company shall be entitled to practice any legal business.• ThecompanymaynotresorttoPublicSub-scription to make up its capital or to increase it or to get the necessary loans, and it may not is-sue any negotiable stocks or shares.• The minimum share capital shall beAED300,000 divided into equal shares with a minimum face value of AED1,000 per share.• Shares may not be divided, and if severalpeople owned it, they shall choose one to be an individual owner against the company, and it

may fix for the share owners a time for such se-lection, provided that after that date, the share may be sold to its owners, in which case part-ners shall enjoy a priority in purchase.• Losses and profits shall be divided equallyamong shares unless otherwise herein stated.• The share of each partner shall be trans-ferred to his heirs and those mentioned in the will shall be treated as heirs.• A Limited Liability Company can beman-aged by a manager/managers that may be se-lected from among the partners or any other parties providing that they do not exceed a total of five persons.• The manager/managers shall be appointedby memorandum of association or by a separate management contract for limited/unlimited terms. If the manager/managers are not ap-pointed as stated in the above paragraph, the General Assembly of the partners will appoint them.• Unless otherwise stated in the MOA, thecompany manager shall enjoy full powers of administration, and the manager’s acts shall be binding to the company, provided that it is sup-ported with stating the capacity he enjoys.• Themanager’sresolutionshallbeasrespon-sible as that of the company board, all condi-tions in the company contract contrary to that shall be invalid.

Partnership Limited with Shares (PLS)• APartnershipLimitedwithSharesisacom-pany formed by general partners who are joint-ly liable to the extent of all their shares for the company liabilities and participating partners who are liable only to the extent of their shares in the capital.• Forthegeneralpartners,thecompanyshallbe a general partnership, and the general part-ner shall be a dealer even if he did not enjoy such capacity before entering the company; all general partners must be nationals.• The capital of Partnerships Limited withShares shall be divided into negotiable equal shares.• Thecompanyshallbenamedafterthenameof one or more of the general partners. Its name may be added to another innovative name or a name derived from its purpose.• Therulesrelatedtotheincorporationoflim-ited liability partnerships shall apply to Part-nerships Limited with Shares, according to the following:

1) All general partners and other founding par-ties shall sign the MOA and its regulations, and their resolutions shall be as effective and valid as the founders of the limited liability companies.2) Names of the general partners, their sur-names, nationalities, and countries shall be stated in the company contract and its regulations.3) The minimum share capital requirement for limited partnership is AED500,000.

The minimum share capital requirement for limited partnership is AED500,000.

1 Dubai’s free zones make investing easy

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4) The documents issued by Partnerships Lim-ited with Shares shall be subject to the same rules of the documents issued by Limited Li-ability Partnerships.

Foreign Companies• Excludingtheforeigncompanieslicensedtopractice business in the country’s free zones, foreign company’s may not practice main busi-ness in the state, and may not establish branch-es unless licensed to do so by the Ministry of Economy after obtaining the approval of the concerned authorities, which shall specify the business it is licensed to practice, provided that such license may not be issued unless the com-pany has a national agent, and if the agent was a company, it shall hold the state’s nationality and all its partners shall be nationals.• The obligations of the agent towards hiscompany and third parties shall be limited to rendering the services required for the compa-ny without holding any responsibility or finan-cial commitment in respect of his company’s branch or office business or activity inside the Emirate or abroad.• Foreign companies licensed towork in thestate based on the provisions of the above para-graph may not start their business in the state unless they are registered in the Foreign Com-panies Register at the Ministry of Economy.• Theofficesandbranchesofaforeigncompa-ny shall be the headquarters of its business and

its business shall be subject to the provisions of the law.• Foreign companies, offices, and branchesshall have an independent budget, independent profit/loss accounts, and shall have an auditor.• If the foreigncompanies,or theirofficesorbranches, practiced their business inside the state without carrying out the above-men-tioned provisions, the persons practicing such business shall be personally and collectively responsible.

FREE TRADE ZONESInvestors also have a choice to set up opera-tions in one of the free trade zones in the UAE. A free trade zone is a geographical area within the UAE that has been established by the UAE government to generally encourage FDI into the UAE and, as such, there are generally no foreign ownership restrictions, unlike “onshore” enti-ties. That is, foreign investors can set up 100% fully owned entities in the free trade zones. The principle drawback of a free trade zone is that strictly, entities registered in the free trade zone are not permitted to conduct commercial activities in the UAE, outside of the free trade zone. Currently, there are over 25 established free trade zones in the UAE, of which the majority are in the Emirate of Dubai. The free trade zones also provide a choice of establishing either a company or a branch. ●

A free trade zone is a geographical area within the UAE that has been established by the UAE government to generally encourage FDI.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

TBY would like to thank Merali’s Chartered Accountants & Registered Auditors for compiling this analysis.

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INTERVIEWMahmud P.K. Merali

Applying StandardsTBY talks to Mahmud P.K. Merali, Managing Partner of Merali’s (formerly Baker Tilly Merali’s), on accounting standards, auditing issues, and structural reforms in Dubai.

BIOGRAPHYMahmud P.K. Merali is a Fellow of the Institute of Chartered Accountants of England & Wales, a Certified Public Accountant in Kenya, and a Certified Public Accountant in Zambia, as well as an Associate Member of the Institute of Taxation in the UK. Currently a Managing Partner of the Baker Tilly Merali Group, he is the Regional Head for Middle East & South East Asia, and takes the lead as the group’s International and Financial Consultant.

1 Mahmud P. K. Merali, Managing Partner of Baker Tilly Merali

TBY How developed are the UAE account-ing standards requirements for auditing practices? MAHMUD P. K. MERALI Presently, the Com-mercial Companies Laws do not specify any accounting standards framework for the preparation of financial statements. The Central Bank of the UAE has made it man-datory for banks to prepare their accounts as per International Financial Reporting Standards (IFRS). Listed companies pre-pare their accounts according to the IFRS. In the absence of any specific standards framework in the UAE, most of the prac-ticing firms apply IFRS in the preparation of audited financial statements, and apply International Standards of Auditing in the conduct of the audit of financial state-ments. The Real Estate Regulatory Agency (RERA) of the Land Department also rec-ommends that the financial statements of buildings owners’ associations should be prepared according to IFRS.

Did the global economic crisis place greater importance on the need for strong internal au-diting and risk management procedures?As economic conditions change, so too must risk management priorities. That is why internal auditors should consid-er—first and foremost—whether they are aligned with the strategy and direction of the company. By focusing on the com-pany’s long-term strategy, understanding the impact of short-term initiatives on this strategy, and aligning itself accordingly, the internal audit function can better po-sition itself to monitor and address risk management activities throughout the organization.

How is the Strata Titled and Jointly Owned Property legislation governed in Dubai, and how prevalent is this type of ownership in the Emirate? What kind of auditing issues should owners be aware of?Dubai’s Jointly Owned Property Law (Law No. 27 of 2007) establishes a framework for the development and sub-division of developments into such units and com-mon parts, with the sub-division known as “jointly owned property.” Each de-velopment in Dubai comprises not only a number of units, but also common parts designed for common use by unit own-ers and occupants. Regulations have been introduced to enforce the law, and among other things, they provide that an owners’ association of all the unit owners is respon-

sible for the management, operation, and maintenance of common areas. For each development, the developer must file a “jointly owned property declaration” with the Land Department. RERA made it man-datory to submit the annual audited finan-cial statements of owners’ associations.

In terms of business challenges, what sort of reforms to the framework do you think would enhance the development and resilience of the economy?The reform of insolvency and creditor/debtor regimes can improve economic ef-ficiencies and strengthen market resilience in times of crisis. Reforming the insolven-cy law to provide a clear, predicable, and transparent means for a company to reor-ganize would benefit the national economy and all UAE companies by reducing the cost of capital for UAE companies over the medium- to long-term. A bankruptcy law already exists. However, it has not been tested by any company, which means there is much uncertainty in legal circles about how it could be applied in reality. Best practice corporate governance provisions can play an important role in stimulating investment in the UAE and enhancing the confidence of investors. ●

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u The presence of incentives and the absence of many taxes contribute to the ease of doing business in Dubai.

REVIEW: AccountancyNumber Crunch

TAXATION IN THE UAEThe federal government of UAE has not pro-mulgated any tax laws. Most of the individual Emirates have issued corporate tax decrees, but, in practice, taxes are only imposed on oil and gas-producing companies at rates set forth in their government concession agreements, and on branches of foreign banks at rates set out in specific tax decrees or fixed in agreements with the Rulers of the Emirates in the branches they operate. The income tax decrees that have been en-acted in each Emirate provide for a tax to be imposed on the taxable income of all bodies corporate wherever incorporated, and their branches that carry out trade or business at any time during the taxable year through a per-manent establishment in the relevant Emirate. Corporate bodies are taxed if they carry on trade or business directly in the Emirate or indirectly through the agency of another corporate entity.

TAXATION IN DUBAIAccording to the Dubai income tax decree, all companies carrying on trade or business in Dubai are required to pay tax on their earnings. The rates of tax are on a sliding scale up to a maximum of 55%.

In practice however, only:a) Oil and gas producing companies pay tax at rates specified in the relevant concession agreement. Oil companies also pay royalties on production;b) Branches of foreign banks pay tax at a flat rate of 20% on annual profits. The taxable income of banks is calculated by reference to their audited financial statements.

The Dubai Income Tax Ordinance of 1969 and the Dubai income tax decree (and its amend-ment in 1970) specifies that an organization that conducts trade or business in Dubai shall be subject to taxation as follows:

Taxable Income

EXCEEDING AED

NOT EXCEEDING AED

RATE %

0 1,000,000 EXEMPT

1,000,001 2,000,000 10%

2,000,001 3,000,000 20%

3,000,001 4,000,000 30%

4,000,001 5,000,000 40%

5,000,001 - 50%

A “chargeable person” is a body corporate wherever incorporated, or each and every branch thereof, carrying out trade or business of any type during an income tax year through a permanent establishment situated in the Emir-ate, whether directly or through the agency of another body corporate (not entitled under an agreement with the Ruler to an exemption from liability to income tax). Two or more such branches of a body corporate so carrying out trade shall each be treated as separate charge-able persons. The fact that a body corporate has a secondary body corporate carrying out trade or business through a permanent establishment in the Emirate shall not in itself constitute that parent body corporate as a chargeable person.

“Carrying out trade or business” means:a) Selling goods or rights in such goods in the Emirate;b) Operating any manufacturing, industrial, or commercial enterprise in the Emirate;c) Leasing any property located in the Emirate; ord) Rendering services in the Emirate (excluding the mere purchasing of goods, or rights in such goods in the Emirate).

A chargeable person in Dubai shall be charged taxes on a sliding scale as described above ex-cept that the tax so charged shall be reduced by the credit aggregate of oil dealt in for that fiscal year so long as the total of all reductions granted to all chargeable persons in that fiscal year shall not exceed the credit aggregate of oil dealt in for that fiscal year. Taxable income is computed after the de-duction of all costs and expenses incurred by a chargeable person earning that income. Deductible costs and expenses include the acquisition cost of goods, the expenses of oper-ating the business, allowances for depreciation, obsolescence and exhaustion of both tangible and intangible assets, and losses sustained by the chargeable person in connection with the business.

INVESTMENT INCENTIVESDubai has free zones that offer tax and busi-ness incentives aimed at making Dubai a global business and commercial center. The incentives usually include tax holidays for a guaranteed period (most free zones offer a tax holiday of 50 years), 100% foreign ownership, no customs duty within the free zone, and “one-stop shop” administrative services.

WITHHOLDING TAXThere are no withholding taxes in the UAE. ››

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

TBY would like to thank Merali’s Chartered Accountants & Registered Auditors for compiling this analysis.

PERSONAL INCOME TAXNo personal taxation currently exists in the UAE.

CAPITAL GAINSThere is no capital gains tax in the UAE. For tax-paying entities, capital gains are taxed as part of business profits.

CUSTOMS DUTYCustoms duties are very low and there are many exemptions and levied generally at the rate of 5%. Goods imported and intended for re-export often benefit from customs duty as do manufacturers on the import of their ma-chinery, raw materials, and spare parts used for industrial purposes.

VALUE-ADDED TAXThere is no value added tax in the UAE at present.

SOCIAL SECURITYThe UAE does not impose social security taxes on expatriates. UAE-national employees con-tribute to retirement and pension funds in ac-cordance with specific regulations.

MUNICIPAL TAX & PROPERTY TAXMunicipal taxes are imposed on hotel services and cinemas. Service charge percentages vary among the Emirates. A service charge of 5% to 10% is charged on food purchased in restau-rants. Hotels charge a 10% to 15% service charge per night on room rates. These charges are usu-ally included in the customer’s bill, which the municipality will collect from restaurants and hotels. Hotels also charge an additional 15% charge on the services they provide. In most of the Emirates, property tax is pay-

able by residential and commercial tenants by reference to the annual rent of residential prop-erty, generally at a rate of 5% and for commer-cial property at a rate of 5% to 10% payable to the local municipality.

REAL ESTATE SALE & PURCHASE FEEA sale registration fee of 1% of the value of the sale is imposed on the seller, payable to the Dubai Land Department. A purchase registra-tion fee of 1% of the value of the sale is payable by the buyer of the property. The rate can differ in other emirates.

FOREIGN-EXCHANGE CONTROLSThere are no exchange controls on the remit-tance of profits or repatriation of capital and there are virtually no restrictions on foreign trade.

TAX TREATIESThe UAE has entered into tax treaties with several countries, including Algeria, Armenia, Austria, Belarus, Belgium, Bulgaria, Canada, China, the Czech Republic, Egypt, Finland, France, Germany, India, Indonesia, Italy, Leba-non, Malaysia, Mauritius, Morocco, Mozam-bique, New Zealand, Pakistan, Poland, Roma-nia, Singapore, South Korea, Spain, Sri Lanka, Syria, Tajikistan, Thailand, Turkey, Ukraine, and Yemen. Treaties have been concluded with Bosnia-Herzegovina, Jordan, Luxembourg, Malta, Mongolia, the Netherlands, Philippines, the Seychelles, Sudan, Tunisia, and Uzbekistan, but they have not formally entered into force. ●

1 Value-added tax is absent in the UAE

In most of the Emirates, property tax is payable by residential and commercial tenants by reference to the annual rent of residential property.

From June 2012, existing clients of Baker Tilly Merali’s in Dubai will continue to be serviced by Merali’s under its own brand and will benefit from the high level of service to which they have become accustomed.

—Geoff BarnesCEO and PresidentBaker Tilly International

Mr. MAHMUD MERALIPrincipal Partnermpkmerali@bakertillymeralis.commeralis@meralis.co.ukDxb: + 971 50 273 7030UK: + 44 7 86 032 3264

CONTACT US

Baker Tilly Meralis is a firm of chartered accountants and management consultants providing the highest quality of professional service to their clients. With offices in Kenya, Uganda, Rwanda, Iraq, Sri Lanka & Maldives clients enjoy the advantages of a local, client-focused service model, combined with the breadth of resources you would expect from a global organization.

The firm prides itself in that it has a team of qualified & experienced professional staff with a client portfolio both in the private and public sector of distinguished and highly respectable clientele all over the world.

With a professional yet individualistic approach, the work ethic in the firm is that of hard work, honesty, professional excellence and trust.

Baker Tilly Meralis provides a range of accountancy and business advisory services to assist you with a full spectrum of advice from compliance to facilitating growth locally and internationally so Plan with Us.

Plan with us... for a global solution

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From June 2012, existing clients of Baker Tilly Merali’s in Dubai will continue to be serviced by Merali’s under its own brand and will benefit from the high level of service to which they have become accustomed.

—Geoff BarnesCEO and PresidentBaker Tilly International

Mr. MAHMUD MERALIPrincipal Partnermpkmerali@bakertillymeralis.commeralis@meralis.co.ukDxb: + 971 50 273 7030UK: + 44 7 86 032 3264

CONTACT US

Baker Tilly Meralis is a firm of chartered accountants and management consultants providing the highest quality of professional service to their clients. With offices in Kenya, Uganda, Rwanda, Iraq, Sri Lanka & Maldives clients enjoy the advantages of a local, client-focused service model, combined with the breadth of resources you would expect from a global organization.

The firm prides itself in that it has a team of qualified & experienced professional staff with a client portfolio both in the private and public sector of distinguished and highly respectable clientele all over the world.

With a professional yet individualistic approach, the work ethic in the firm is that of hard work, honesty, professional excellence and trust.

Baker Tilly Meralis provides a range of accountancy and business advisory services to assist you with a full spectrum of advice from compliance to facilitating growth locally and internationally so Plan with Us.

Plan with us... for a global solution

ROUNDTABLE: The Ins & Outs of Setting Up ShopBe In the Know

STEVE WILLIAMSCEOGulf Finance

LENDERS LOVE SMEs

Lenders love to have SME cus-tomers, but when it comes down to it, they are not always as keen, and able, to lend them money. My incoming plan was to build a finance company that exclusively focused on lending money to small businesses.

OPTIONSIf you want to trade within Dubai, you must be a wholly owned company. If you want to use Dubai as a hub from a logistics prospective, or if you want to practice certain activi-ties, such as medicine or pro-fessional services, then you can trade within the free zones. If you want to take a product and sell it into Dubai, then you have to be on-shore.

CAMPAIGNING FOR CHANGEThere needs to be legislation that allows a company to de-clare bankruptcy without the owner going to prison, so that they can stick around and work towards resolving their prob-lems. We are a big campaigner for that.

AYMAN AL WADIChief ExecutiveAl Wadi

RICHARD A. SMITHManaging Director Charterhouse Lombard Dubai

DEBT MANAGEMENTThe main strategy we use for debt management is to under-stand the reason for default, and then our goal is to come up with a set of practical tai-lored solutions that suit the debtor and the creditor cir-cumstances. In some cases we find ourselves obliged to do the debt collection through a legal procedure by our law firm.

NOTE FOR STARTUPSStart-up companies need to be aware of all the challenges ahead. We at AL WADI benefit from our long experience in debt, legal, and risk manage-ment to advise the investors proactively while their busi-nesses grow and expand.

HOW IT’S DONEWe run a smart free due dili-gence to find out if the debt is collectible or not, abroad or domesticly, and collectible over long, medium, or short term. The defaulters can be of two types: some are not ca-pable to pay; others misuse the crisis trying to delay the pay-ments to save their cash.

HOW TO GET STARTEDThere are a number of ways for non-UAE nationals to establish a business presence accord-ing to UAE law, which include branches and representative offices of foreign commercial companies, limited liability companies, professional firms and sole proprietorship, or complete business start-up through one of the free trade zones.

GOOD GUIDEWe can guide clients through the entire business start up process including advice on and assistance with the cor-rect commercial structure, type of trade license, sourcing an appropriate local sponsor or service agent, identifying suitable office space, process-ing residence visa applications, opening bank accounts, and relocation of families.

A LOT TO OFFERThe UAE has a lot to offer those wishing to start new ven-tures or established businesses wanting to establish a presence in the Middle East including no corporate, income, capi-tal gains, property, or wealth taxes, and it is easy access to finance.

Dubai’s liberal investment scheme can be complicated. Three experts look at some of the details of setting up a business in the Emirate.

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Where to StayWhen in Dubai...

room service, laundry. DINING A se-lection of 13 restaurants & lounges including Aqua Lounge, Kitchen 6, Positano, Tong Thai, Rang Mahal, Izakaya, The Lounge, Center Stage, La Farine, The Vault, Kork, Velocity, & Prime 68.

07 Dusit Thani133, Sheikh Zayed RoadT +971 4 343 3333www.dusit.comROOMS 321 hotel rooms & suites, including executive rooms & suites supported by the Club Lounge. GUEST SERVICES High-speed in-ternet service, airport transfer, visa assistance, currency exchange, business center, 24-hour room service, butler service, laundry/dry cleaning services, valet parking, car rental, covered multi-story car park, nurse & doctor on call, fitness center & jacuzzi, swimming pool &

ecutive, & suite rooms. GUEST SER-

VICES Business center & services, recreation facilities & spa, barber shop & beauty salon, car rental, shopping, concierge, multi-lingual staff, room service, tour desk, beach & water sports. DINING 12 restau-rants & bars including Axis Lobby Lounge, Bice, Bice Sky Bar, Cuban Bar, H20 Poolbar & Restaurant, Har-tisan, Oceana, Pachanga, Studio One, & Wavebreaker.

06 JW Marriott MarquisSheikh Zayed Road, Business Bay T + 971 4 414 0000www.marriott.comROOMS 684 rooms including 120 suites on 82 floors. GUEST SERVICES 28 meeting rooms, 55,488 square feet of total meeting space, one con-cierge level, fitness recreation & spa facilities, baby-sitting services, car rental, barber/beauty shop, 24-hour

info@gloriahoteldubai.comwww.gloriahoteldubai.comROOMS 1,010 1- & 2-bedroom as well as a number of 3-bedroom suites & deluxe hotel apartments in four styles. GUEST SERVICES Cof-fee shops, restaurants, gym, sauna, steam room, 22-meter swimming-pool, kids-pool, kids-play-area, ja-cuzzi, squash-courts, mini football area, 24-room service & concierge, business center, high-speed internet & wireless internet. DINING All day dining at La Terrace, Casual dining at Le Grand Café & The Pool Bar, & Turkish cuisine at Harput Café.

05 Hilton Dubai Jumeirah ResortJumeirah WalkT +971 4 399 1111info.jumeirah@hilton.comwww.hilton.comROOMS A selection of deluxe, ex-

01 Park Regis Kris Kin HotelSheikh Khalifah Bin Zayed St (Opp. Burjuman Centre), Bur DubaiT +971 4 377 1111kriskin@parkregisdubai.comwww.staywellgroup.com ROOMS 390 superior & deluxe rooms ranging in size & style, luxu-rious Burj Suites & extremely spa-cious two-bedroom suites. GUEST

SERVICES Conference & banquet fa-cilities, business center & Executive Lounge, rooftop outdoor swimming pool, ladies salon, recreational & fit-ness facilities, free shuttle bus, car parking & valet. DINING Asian dining at Kris on the 19th Floor Restaurant & Wine Bar, French cuisine & all-day dining at Le Metro is the hotel’s in-ternational all-day-dining restaurant, coffee & light meals at Marhaba Café, & sports & casual dining at The Grandstand Bar.

02 Time Oak Hotel & SuitesAl Barsha facing “The Greens”T +971 4 437 7888welcome.oak@timehotels.aewww.timehotels.aeROOMS 161 1-, 2-, & 3-bedroom suites ranging from 81 to 160 sqm. GUEST SERVICES Meeting rooms, 24-hour security & concierge, wire-less internet, business center, recre-ation facilities & spa, 24-hour room service, parking, laundry service. DINING Four restaurants, including poolside fare at Waves Lounge, buf-fets at Petals, casual fare at Vanilla Café, & local flavor at the Queen of Sheba “chill out terrace”.

03 SofitelJumeirah Beach ResidenceDubai MarinaT +971 4 448 4848/432 8456h6146@sofitel.comwww.sofitel.comROOMS 398 rooms & 40 suites—12 prestige & one imperial. GUEST SER-

VICES Sea views from every room, fitness center, beach access, & treatment room. DINING Five bars & restaurants including Rococo Italian restaurant, AOC French Brasserie, plus poolside, colonial-style & Irish bars.

04 Gloria HotelSheikh Zayed RoadT +971 4 399 6666

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sun deck, hair salon, gift & souvenir shop, outside catering, baby-sitting, shuttle bus service, florist. DINING The Delicatessen, The Benjarong, & PAX dining outlets combine Asian hospitality & elegance with beautiful surroundings & the finest cuisines.

08 The Radisson Blu ResidencePlot 392-269 Street KDubai MarinaT +971 4 435 5000info.marina.dubai@radissonblu.comwww.radissonblu.com/hotel-dubaimarinaROOMS A selection of deluxe studio, 1- & 2-bedroom residences for long & short stays. GUEST SERVICES Outdoor pool, fitness center, grocery delivery, secretarial services, baby-sitting services, butler services, car parking, newspaper delivery, gro-cery delivery, complimentary shuttle service, & free high-speed internet access. DINING Siamin restaurant serves authentic Thai food.

09 Four Points SheratonSheikh Zayed RoadT +971 4 323 0333sheikhzayed.dubai@fourpoints.comwww.starwoodhotels.comROOMS 135 Classic rooms, 67 pre-ferred rooms, 67 Business Suites & a selection of executive 1-, 2-, & 3-bedroom apartments. GUEST

SERVICES High-speed internet ser-vices, recreation facilities, business center, car rental, car parking, beau-ty salon, 24-hour front desk & con-cierge, visa assistance, live enter-tainment, medical services, laundry. DINING Traditional home cooked food at Luigi’s Italian Restaurant & the Moroccan Dining Room & Lounge, Charlie’s Pub for lunch or refreshing beverages & panoramic views at the rooftop Pool Bar.

10 Sheraton Dubai Creek Hotel & TowersBaniyas Street/Creek RoadT + 971 4 228 1111reservationsdubaiuae@sheraton.comwww.starwoodhotels.comROOMS 262 guest rooms & suites, including Sheraton Club guest rooms with Club Lounge access. GUEST SERVICES High-speed in-ternet access, recreational services, business center, computer rental, car parking & valet, barber, 24-hour

front desk, childcare, laundry, ex-press check in & check out, 24-hour concierge, welcome drinks, medical services, multilingual staff. DINING The Lobby Café & Pool Side Snack Bar, Creekside serving Japanese cuisine, Vivaldi serving Italian cui-sine, Ashiana seving Indian cuisine, & the Chelsea Arms for sports, en-tertainment, & international cuisine.

11 Ramada DowntownBoulevard St, Dubai DowntownT + 971 4 330 7330/04 F + 971 4 303 9555/9411/9415reservations@ramadad-owntowndubai.comwww.ramadadowntowndubai.comROOMS 181 Junior Suites, 1-, 2-, 3-, & 4-bedroom suites or penthouse, ranging from 60 sqm to 250 sqm. GUEST SERVICES High-speed wire-less & broadband internet, full-sized kitchens with all amenities, 24-hour room service & housekeeping. DIN-

ING All day dining at the Orchid Res-taurant & Cafe.

12 Chelsea Tower Hotel ApartmentsSheikh Zayed RoadT +971 4 343 4347info@chelseatowerdubai.comwww.chelseatowerdubai.comROOMS 281 apartments available in 1-, 2-, & 3-bedrooms for both short & long stay. GUEST SERVICES Airport transfers, nine-story car park, 24-hour concierge & security, business center, room service, fully-equipped fitness center, swimming pool with outdoor Jacuzzi, & travel desk. DINING Chelsea Garden Res-taurant & Cafe.

13 Grand Millennium Hotel Sheikh Zayed Road-Exit 36Al Barsha South-TECOM-Media CityT +971 4 429 9999sales@grandmill-dubai.comwww.millenniumhotels.ae/grandmillenniumdubaiROOMS 343 rooms including su-perior & club rooms, & royal & two bedroom suites in 10 different styles. GUEST SERVICES High-speed inter-net, recreational facilities, business services, room service, concierge, laundry. DINING The Atrium, Dante Italian Restaurant, Toshi Asian Res-taurant, Belgian Beer Café, Crystal Bar, Juzz Bar.

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Helpful HintsSome survival tips that will help get you through the first few days in the country.

Only wear beach clothing at the beach or in resort areas. It may cause offense in other public areas.

Eid al-Adha is a religious holiday running over five days beginning on the 24th of October.

Although the official lan-guage is Arabic, English is widely spoken in Dubai.

UAE National Day is held on the 2nd of December, and the festivities can extend over a few days.

The Emirati dirham is the national currency; 1 dirham equals 100 fils. The dirham is pegged to the US dollar at around USD1:AED3.67.

Pink-topped taxis are only for women and children, and can be specially reserved.

If hiring a car, make sure it has an orange “SALIK” tag on the front window for use on toll highways.

Although taxis are widely available, the Dubai Metro can make transport along the main axis of the city quicker.

Be careful when exiting air-conditioned buildings in summer if you wear glasses. Fogged up lenses are not uncommon.

Shopping is never a prob-lem in Dubai, with most stores open from 10.00 am to 10.00 pm.

Dubai offers a wide range of cuisine to suit all tastes. For a real treat, try some of the authentic South Asian restaurants.

Major international sporting events tend to be held be-tween November and March to beat the heat.

If hailing a taxi from the street is not your style in the sum-mer heat, you can call one on 04 208 0808.

The working week is from Sunday to Thursday, al-though there are some companies that are open on Saturdays.

Alcohol should only be con-sumed in designated zones, typically in areas attached to hotels and resorts.

Eating, drinking, or smoking in public is not recommend-ed during the holy month of Ramadan.

Three-pronged British-style 220 V plugs are used in Dubai. Adapters are widely available.

$1.00:AED3.67

Howdy

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Useful NumbersWhen in Dubai....

EMERGENCY SERVICES

POLICE 999

AMBULANCE 999

FIRE 997

TOURIST SECURITY 800 4888

EMERGENCY SERVICES 04 223 2323

GENERAL SERVICES

ASK DUBAI (GOVERNMENT INQUIRIES) 7000 4 0000

CALL BOOKING & ENQUIRY 151

FAULT REPORTING 170/171

INTERNET COMPLAINTS 800 5244

MOBILE PHONE ENQUIRIES 101

TELEPHONE ASSISTANCE 100

TELEPHONE DIRECTORY 180/181

CAR RENTAL & TAXIS

AVIS RENT-A-CAR +971 50 454 8187

BUDGET RENT-A-CAR +971 50 656 8722

EUROPCAR RENT-A-CAR +971 50 651 6781

HERTZ RENT-A-CAR +971 50 738 5459

CARS TAXI 800 4825

DUBAI TAXI +971 4 208 0808

GOLDEN TAXI +971 4 336 5444

NATIONAL TAXI +971 4 336 6611

AIRLINES & FLIGHT INFORMATION

DUBAI INTERNATIONAL AIRPORT +971 4 224 5555

FLIGHT INFORMATION +971 4 216 6666

AEROFLOT +971 4 222 2245

ALITALIA +971 4 224 4281

CATHAY PACIFIC +971 4 294 5550

DELTA +971 4 220 0216

EMIRATES +971 4 295 3333

GULF AIR +971 4 216 6855

KLM +971 4 224 4747

KUWAIT +971 4 228 1106

LUFTHANSA +971 4 216 6855

QANTAS +971 4 203 3792

TURKISH +971 4 211 2528

UNITED +971 8000 441 5492

CHAMBERS OF COMMERCE

AMERICAN BUSINESS COUNCIL +971 4 340 7566

BRITISH BUSINESS GROUP +971 4 397 0303

DUBAI CHAMBER OF COMMERCE & INDUSTRY +971 4 228 0000

FEDERATION OF UAE CHAMBERS OF COMMERCE & INDUSTRY

+971 4 221 2977

INTERNATIONAL CHAMBER OF COMMERCE +971 4 220 8288

CONSULATES

AFGHANISTAN +971 4 398 8229

ALGERIA +971 4 344 4377

ANGOLA +971 4 344 7541

AUSTRALIA +971 4 508 7100

AZERBAIJAN +971 4 235 5232

BANGLADESH +971 4 272 6966

CANADA +971 4 314 5555

CHINA +971 4 394 4733

CYPRUS +971 4 359 2279

DENMARK +971 4 348 0877

EGYPT +971 4 444 5566

ERITREA +971 4 222 0323

FINLAND +971 4 282 3338

FRANCE +971 4 332 9040

GERMANY +971 4 397 2333

INDIA +971 4 397 1333

INDONESIA +971 4 398 5666

IRAN +971 4 344 4717

ITALY +971 4 331 4167

JAPAN +971 4 331 9191

JORDAN +971 4 397 0500

KAZAKHSTAN +971 4 339 7156

KENYA +971 4 342 8111

KUWAIT +971 4 397 8000

KYRGYZSTAN +971 4 297 1449

LEBANON +971 4 397 7450

LITHUANIA +971 4 344 1644

MALAYSIA +971 4 335 5528

NETHERLANDS +971 4 632 1920

NEW ZEALAND +971 4 331 7500

NORWAY +971 4 621 1221

OMAN +971 4 397 1000

PAKISTAN +971 4 397 3600

PALESTINE +971 4 397 2020

PANAMA +971 4 226 3366

PERU +971 4 422 7550

PHILIPPINES +971 4 634 5664

QATAR +971 4 398 2888

ROMANIA +971 4 394 0580

RUSSIA +971 4 328 5347

SAUDI ARABIA +971 4 397 9777

SINGAPORE +971 4 222 9789

SOMALIA +971 4 272 2559

SPAIN +971 4 626 9544

SRI LANKA +971 4 398 6535

SUDAN +971 4 263 7555

SWITZERLAND +971 4 329 0999

SWEDEN +971 4 345 7716

SYRIA +971 4 266 3354

TAIWAN +971 4 335 8177

THAILAND +971 4 349 2863

TURKEY +971 4 331 4788

UK +971 4 397 1070

US +971 4 311 6000

UZBEKISTAN +971 4 394 7400

VIETNAM +971 4 398 8924

YEMEN +971 4 397 0131

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Call us for further details and your reservations

Close to everything you wish for...and far from the ordinary

The Gloria Hotel is the perfect choice of stay be it business, leisure or family. The hotel features spacious 1, 2 and 3 bedrooms suites with living and dining room, private balcony offering panoramic views of the sea, Jumeirah or Sheikh Zayed Road and is fully equipped with the latest facilities.

On the doorstep of Dubai Internet City Metro Station and within easy reach from Knowledge Village, Tecom & Jebel Ali Free Zone, as well as JBR, Dubai Marina, Jumeirah Beach and major shopping malls it is ideally located.

Welcome to the award winning Gloria Hotel - Dubai's largest All Suites hotel.

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