Back to the Fu­ture

Af­ter a free fall in 2009, the UAE econ­omy is bounc­ing back, with Dubai and Abu Dhabi – the real en­gines of growth – lead­ing the way back to the fu­ture.

Southasia - - FRONT PAGE - By Javed An­sari

The UAE was speed­ing full power ahead – hurtling to­wards the fu­ture with a su­per vi­sion and a su­per-am­bi­tious pro­gram that few other coun­tries around the world could match. Then the fi­nan­cial cri­sis of 2009 oc­curred, on the heels of the big­ger in­ter­na­tional fi­nan­cial melt­down of 2008, the econ­omy of the UAE was all but crip­pled and the un­con­trolled growth ground to a painful halt.

Things came to a point when wanted sec­tions in the UAE’s news­pa­pers be­came leaner, pas­sen­ger queues at im­mi­gra­tion coun­ters at air­ports be­came smaller, the teem­ing souks and malls be­came de­serted, traf­fic on roads thinned down and ho­tel oc­cu­pancy shrunk to a bare min­i­mum. In fact, there were in­stances when ex­pa­tri­ate work­ers from In­dia and other South Asian coun­tries just left their cars at air­port park­ing lots and qui­etly took flights back home. As had al­ways been feared, the bub­ble had burst.

Of late, traf­fic on Sh. Zayed Street is com­ing back to nor­mal which means that the UAE has bounced back. Those who have been through it all, no­tice an air of con­fi­dence all around. There are smiles on faces and the feel­ing is rife that it is busi­ness as usual.

Over­all, ever since the 1970s, the UAE had proven to be a promis­ing

lo­ca­tion for con­tin­ued growth. The fi­nan­cial cri­sis of 2009, in fact, proved to be s shocker for an oth­er­wise com­pla­cent econ­omy which has sur­vived be­cause of its in-built re­silience and is now emerg­ing from the hole it had dug for it­self.

It is also re­mark­able that in­stead of be­ing bogged down, the busi­ness and in­vestor class in the Emi­rates re­fuses to be licked and is re­or­ga­niz­ing it­self be­cause it is re­ally op­ti­mistic about achiev­ing growth de­spite all the pres­sures. What this trans­lates into is the sort of de­vel­op­ment which will have more chances of sur­viv­ing sim­i­lar frights in fu­ture. Now en­trepreneurs will tread with care where fund­ing is con­cerned. And, as in the case of Dubai, there will now be no rack­ing up of bil­lions of dol­lars of debt to fund su­perla­tive projects.

It is said that 30 years on from when it ap­peared on the global map, this fed­er­a­tion of seven gulf emi­rates is to­day the long­est sur­viv­ing suc­cess­ful ex­per­i­ment in this kind of na­tion-build­ing any­where in the world. From the largely desert-bound Tru­cial States, the UAE has blos­somed into a full-fledged coun­try that of­fers its peo­ple all the ameni­ties of life and has, at the same time, carved for it­self an im­por­tant role in the global com­mu­nity.

Dubai makes an im­pact on the

world’s psy­che with its fa­mous man­made is­lands and huge skyscrap­ers like the Burj al Khal­ifa while Abu Dhabi hosts For­mula 1 rac­ing and has built the Sheikh Zayed Grand Mosque which cel­e­brates the rich cul­tural diver­sity of the Is­lamic world and com­bines the his­tor­i­cal and mod­ern val­ues of ar­chi­tec­ture and art. The mosque is the eighth largest in the world.

The UAE is also known for its large ports and lo­gis­tics fa­cil­i­ties based in Dubai and Abu Dhabi, the fi­nan­cial cen­tre and tourism in­dus­try of Dubai and the en­ergy re­serves of Abu Dhabi. The five emi­rates – Shar­jah, Aj­man, Umm alalQuwain, Quwain, Ras al Khaimah and Fu­jairah – com­ple­ment what Abu Dhabi and Dubai of­fer. They are grad­u­ally adding to the cul­tural diver­sity and busi­ness dy­namism of this in­creas­ingly im­por­tant Arab coun­try.

For ex­am­ple, ac­cord­ing to a re­cent study, the num­ber of mil­lion­aires in the UAE is pre­dicted to grow by 13.5 per­cent by the end of 2013. The study fore­casts that the coun­try will boast a to­tal of 54,600 mil­lion­aires by the end of 2013 and by 2017 the num­ber will in­crease 34 per­cent to 69,000, with their wealth ris­ing 48 per­cent to $269bn.

It would be in­ter­est­ing to men­tiomen­tion that the seven emi­rates to­geth­to­gether rep­re­sent the third bigge­biggest econ­omy in the Mid­dle East, af­ter Saudi Ara­bia and Iran. Only Qatar has a higher GDGDP per capita in the re­gion. The UAE oil re­serves to­tal ababout 98 bil­lion bar­rels, al­mal­most as big as Kuwait's clclaimed­imed re­serves. Of the emi­rates, Abu Dhabi has most of the oil with 92 bil­lion bar­rels while Dubai has just 4 bil­lion bar­rels and Shar­jah has 1.5 bil­lion bar­rels. Most of the oil is found in Abu Dhabi’s Zakum field which is the third largest in the Mid­dle East.

In com­par­i­son to the other coun­tries of the Gulf Co­op­er­a­tion Coun­cil (GCC), the econ­omy of the United Arab Emi­rates is one of the most dis­persed and the least de­pen­dent on the en­ergy sec­tor, al­though the rev­enue gen­er­ated by sales of oil and gas com­prises a sig­nif­i­cant pro­por­tion of the bud­get. This de­pen­dence is par­tic­u­larly strong in Abu Dhabi, which earns 55% of its GDP from sales of car­bo­hy­drates. How­ever, the emi­rate wants to re­duce this pro­por­tion to 35% by 2030 through di­ver­si­fi­ca­tion of its econ­omy.

The fi­nan­cial cri­sis of 2009 had a neg­a­tive im­pact but growth re­sumed fast. The Port of Jebel Ali in Dubai is the sev­enth-largest in the world. By

From the largely desert-bound Tru­cial States, the UAE has blos­somed into a full-fledged coun­try that of­fers its peo­ple all the ameni­ties of life and has, at the same time, carved for it­self an im­por­tant role in the global com­mu­nity.

2030 the vol­ume of goods pass­ing through this port is ex­pected to in­crease by more than seven times, which will leave be­hind both the ports of Shang­hai and Sin­ga­pore. Jebel Ali now also has the Al Mak­toum In­ter­na­tional Air­port, which is planned to be­come one of the world’s ma­jor such fa­cil­i­ties in the years to come. The lo­ca­tion of the UAE be­tween Europe and Asia has, in fact, cre­ated con­sid­er­able po­ten­tial for the de­vel­op­ment of lo­gis­tics, ports and air­ports as a highly sta­ble and prof­itable busi­ness in the long term.

It’s tra­di­tional ver­sus mod­ern when things are seen in the Abu Dhabi ver­sus Dubai per­spec­tive. Abu Dhabi is a force to be reck­oned with by any stan­dards. It may be tra­di­tional but it is also mod­ern. The av­er­age net worth of Abu Dhabi cit­i­zens is $17 mil­lion and the city has in­vest­ments of $1 tril­lion around the world.

Com­par­a­tively, Dubai can be termed as an eco­nomic bas­ket case – and more lib­eral. It be­came bloated on real es­tate and rapid growth, cre­at­ing a bub­ble that al­most de­stroyed it when the crunch came. The ex­ter­nal debts of a range of Dubai com­pa­nies were said to have hit some some $80 bil­lion and this sent the world into a panic. It was Abu Dhabi’s cash that bailed Dubai out.

In terms of en­ter­tain­ment, the most pos­i­tive way to look at it in the case of Abu Dhabi would be through its cal­en­dar of events. The city has be­come known in the re­gion for ma­jor mu­sic con­certs (in­clud­ing the Killers, Cold­play and Aero­smith) while sport events are also a ma­jor draw. It of­fers For­mula One car rac­ing, it hosts FIFA World Club Cup events and now even has a proper cricket sta­dium for ICCrec­og­nized Tests, ODIs and T-20s.

But if en­ter­tain­ment is the ques­tion, Dubai edges out big brother, what with its bars, restau­rants and night­clubs, plus a whole host of sport­ing events, from golf to ten­nis, horse rac­ing and cricket plus in­ter­na­tional trade ex­hi­bi­tions and an in­ter­na­tion­al­lyrec­og­nized air show. The city has also held many big name mu­sic acts like El­ton John and St­ing, not to men­tion In­dian and Pak­istani en­ter­tain­ers.

Abu Dhabi has made sig­nif­i­cant in­vest­ments in the de­vel­op­ment of its Cor­niche area and has also made mas­sive strides in build­ing pub­lic beaches which has rev­o­lu­tion­ized beach go­ing in the cap­i­tal. Dubai has plenty to of­fer in terms of beaches but mainly for peo­ple who can af­ford pri­vate get­aways. Ho­tels dom­i­nate own­er­ship of much of the orig­i­nal coast­line in Dubai, while the new beaches (on the palm, mostly) are the pre­serve of apart­ments and vil­las.

Traf­fic in Abu Dhabi city, how­ever, is noth­ing short of a night­mare. There is daily chaos on ac­count of var­i­ous ma­jor de­vel­op­ments, giv­ing way to a sys­tem that just doesn’t seem to work. One tiny er­ror or ac­ci­dent and the en­tire net­work grinds to a halt. Dubai is not great ei­ther and this is some­thing the UAE gov­ern­ment re­ally must look into.

It’s not all hunky dory across the UAE be­cause with all the good things, you also find the bad – the seamy side of un­bri­dled growth - reck­less driv­ing on high­ways, dis­hon­est land­lords, in­ef­fi­cient real es­tate staff, crime on the streets and sex­ual ha­rass­ment, ram­pant hypocrisy, id­i­otic po­lice of­fi­cers, bu­reau­cratic nin­com­poops and lazi­ness all around.

It is true though that glob­al­iza­tion, ur­ban­iza­tion and dig­i­ti­za­tion are the key trends that are shap­ing the fu­ture of the UAE which is fast earn­ing for it­self an in­ter­na­tional ap­peal since has been pro­moted to the emerg­ing mar­ket sta­tus. This rec­og­nizes the coun­try’s strat­egy to di­ver­sify its econ­omy and be­come a re­gional hub for global busi­ness and tourism.

The UAE of­fers a sta­ble, ef­fi­cient and pro-busi­ness en­vi­ron­ment, avi­a­tion con­nec­tiv­ity to more than 200 cities and prox­im­ity to the world’s largest sov­er­eign wealth funds. There is also sig­nif­i­cant in­vest­ment in in­fra­struc­ture which is im­por­tant for at­tract­ing tal­ent since the coun­try’s strate­gic lo­ca­tion gives it ac­cess to 50 per cent of the world’s pop­u­la­tion within five hours.

With its global avi­a­tion con­nec­tiv­ity, friendly time zone, world-class in­fra­struc­ture and ser­vices, com­bined with a di­verse pop­u­la­tion and tal­ent pool, the UAE has no ri­val in the Mid­dle East as a lo­ca­tion for to­day and tomorrow. It of­fers a unique op­por­tu­nity that needs to be har­nessed, de­vel­oped and in­vested in – be­cause all in­di­ca­tors are that the coun­try is on the fast track back to the fu­ture.

Afghanistan Aus­tralia Bangladesh Bhutan Canada China France Hong Kong In­dia Afg. 50 A$ 6 Taka 65 NU 45 C$ 6 RMB 30 Fr 30 HK$ 30 Rs. 65 Ja­pan Korea Malaysia Mal­dives Myan­mar Nepal New Zealand Pak­istan Philip­pines ¥ 500 Won 3000 RM 6 Rf 45 MMK 10 NcRs. 75 NZ$ 7 Rs. 150 P 75 Saudi Ara­bia Sin­ga­pore Sri Lanka Thai­land Tur­key UAE UK USA SR 15 S$ 8 Rs. 100 B 100 Lira. 2 AED 10 £3 $ 4.9

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