Dubai Cham­ber iden­ti­fies pri­or­ity in­vest­ment sec­tors

The Pak Banker - - MARKETS/SPORTS -

Avi­a­tion, lo­gis­tics, Is­lamic fi­nance, en­ergy, hos­pi­tal­ity, retail and real es­tate are key sec­tors in the Com­mon­wealth of In­de­pen­dent States (CIS) that of­fer op­por­tu­ni­ties for GCC in­vest­ment, a re­port re­leased by the Dubai Cham­ber of Com­merce and In­dus­try showed to­day.

Ti­tled 'A Com­mon Wealth: Build­ing Gulf-CIS ties', the re­port show­cases trade re­la­tions be­tween GCC coun­tries and the CIS. The re­port was launched dur­ing the first CIS Global Busi­ness Fo­rum, be­ing held in Dubai on Wed­nes­day and Thurs­day. Ha­mad Buamim, pres­i­dent and CEO of the Dubai Cham­ber, said: "The re­port will serve as a roadmap for GCC in­vestors. The re­port of­fers in­sights on the pre­vail­ing eco­nomic and busi­ness en­vi­ron­ment in the CIS and ex­am­ines its re­la­tions with GCC coun­tries."

"The re­port sees con­sid­er­able op­por­tu­ni­ties for en­gage­ment in the CIS re­gion by Gulf-based in­vestors, es­pe­cially in light of the ex­ist­ing diplo­matic, cul­tural and com­mer­cial ties and the air links de­vel­oped through low-cost air travel pro­vided by fly­dubai and Air Ara­bia," he added.

The re­port said the CIS and Gulf re­gions have wit­nessed co­op­er­a­tion in ar­eas of in­vest­ment pro­tec­tion and dou­ble tax­a­tion treaties, many of them re­cently rat­i­fied, to sup­port fu­ture com­merce. The re­port has iden­ti­fied Be­larus as the most proac­tive CIS coun­try in de­vel­op­ing com­mer­cial treaty re­la­tion­ships with GCC coun­tries, fol­lowed by Rus­sia and Uzbek­istan. On the GCC side, the UAE and Kuwait have been the most proac­tive, it said.

The re­port said trade flows be­tween the GCC and the CIS are mod­est, to­talling $8 bil­lion in 2014.

Al­most all of this trade is be­tween a few coun­try pairs, mainly Saudi Ara­bia and the UAE with Rus­sia and Ukraine, as well as the UAE with Turk­menistan. Th­ese five sets of bi­lat­eral flows, both im­ports and ex­ports, made up 83 per cent of to­tal trade be­tween the two re­gions, the re­port said.

The re­port has high­lighted the ma­jor role of the UAE's low-cost air­lines as ma­jor con­nec­tors of the re­gions. Ac­cord­ing to the re­port, Air Ara­bia has five routes to Ar­me­nia, Ukraine, Kaza­khstan and Rus­sia, but fly­dubai is dom­i­nant, serv­ing 19 des­ti­na­tions across the CIS.

As a re­sult of this net­work, fly­dubai, com­bined with on­ward flights from Emi­rates, con­nects many CIS coun­tries with the rest of the world, par­tic­u­larly Africa and South Asia, the re­port said. Gulf lo­gis­tics firms are also ac­tive in ground trans­port, fa­cil­i­tat­ing trade flows.

One area of par­tic­u­lar in­ter­est in the CIS is Is­lamic fi­nance, given that the re­gion has an es­ti­mated 82 mil­lion Mus­lims, more than twice as many as the GCC. Many Cen­tral Asian coun­tries have a Mus­lim ma­jor­ity, al­though Rus­sia with 17 mil­lion Mus­lims, who rep­re­sent only 12 per cent of its pop­u­la­tion, has more Mus­lims than the other coun­tries, with the ex­cep­tion of Uzbek­istan.

Ac­cord­ing to the re­port, the hy­dro­car­bon sec­tor lies at the core of most CIS and GCC economies and has wit­nessed the most en­gage­ment be­tween the two re­gions. With some Gulf coun­tries fac­ing a short­age of gas to meet do­mes­tic power de­mand, they are ex­plor­ing new sources of gas from the CIS re­gion, par­tic­u­larly Rus­sia.

GCC firms have been ac­tive in con­sumer-fac­ing sec­tors in the CIS, draw­ing on ex­per­tise from Gulf mar­kets in ar­eas such as hos­pi­tal­ity and retail fran­chises. Most GCC retail firms have so far over­looked the CIS, fo­cus­ing on the Middle East and Africa for ex­pan­sion.

Un­der cur­rent eco­nomic cir­cum­stances, oth­ers are un­likely to en­ter now as the de­pre­ci­a­tion of the Rus­sian rou­ble and other cur­ren­cies presents a chal­lenge for firms sell­ing im­ported brands, given re­duced lo­cal con­sumer spend­ing power, it said.

In the hos­pi­tal­ity sec­tor, Dubai's Jumeirah Group, which al­ready man­ages a ho­tel in Azer­bai­jan's cap­i­tal Baku, is de­vel­op­ing a new ho­tel in St Peters­burg. Dubai, with its net­work of flight con­nec­tions across Rus­sia and the CIS, is the key driver of CIS de­mand for real es­tate.

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