Lost credibility
Djibouti’s move to illegally seize Doraleh Container Terminal, owned and operated by DP World, will badly damage the country’s reputation among foreign investors and affect foreign investment inflows into the country. On the other hand, DP World’s financials and its reputation won’t be affected by Djibouti’s unlawful act.
dubai — The Djibouti government’s move to illegally seize the Doraleh Container Terminal owned and operated by DP World will badly damage the country’s reputation among foreign investors and affect foreign investment inflows into the country for acting against a company that operates dozens of ports in different continents around the globe successfully and professionally.
Dubai-based DP World and the Djibouti government had signed a deal to design, build and operate the terminal under 30-year concession deal but the East African country’s government resorted to a campaign to force the global ports operator to renegotiate the terms of concession.
According to DP World, the government has been trying to use the law against concession contracts since December 2017 so it issued a final demand that the contract be renegotiated by February 21, 2018, and the termination of that contract by a presidential decree on February 22, and expropriation of all of the assets of Doraleh Container Terminal.
In addition to direct FDI to develop a state-of-the-art port for the country where it holds 33.33 per cent stake in the port with a capacity of 1.25 million TEU (twentyfoot equivalent units), DP World’s investments also created hundreds of direct and indirect jobs for the citizens of Djibouti as it relies heavily on FDI, which fell from $286 million 2013 to $160 million in 2016. According to the Unctad, FDI represented 94.5 per cent of country’s GDP in 2016.
In contrast, DP World has seen its business growing year-on-year. In 2017, DP World handled 70.1 million TEU across its global portfolio of container terminals in the full year 2017, with gross container volumes growing by 10.1 per cent year-on-year. From its Europe, Middle East and African region, it handled 29.35 million TEU last year as compared to 26.33 million TEU in the previous year. Its 2016 profits grew by 28 per cent to $1.1 billion.
In terms of business climate, Djibouti ranked 171st out of 190 economies in the 2017 Doing Business report of the World Bank. This reflects the country’s approach towards foreign investors and its policies towards attracting the investments from multinational players such as DP World.
Known for its good reputation and professionalism, DP World’s ports run very successfully and accident-free — thanks to continuous upgrades of the facilities and investments in the state-of-the-art infrastructure equipped with latest
We believe that every community we work with is part of the dP World family Sultan Ahmed bin Sulayem, Group chairman and CEO of DP World
technologies. The company has always been welcomed with open arms by the governments around the world as it successfully operates 78 marine and inland terminals across 40 countries.
Therefore, the Djibouti government’s move will not affect the ports operator’s profitability as it is a small contributor to its massive operations but the East African country will lose its image as investorfriendly in the eyes of foreign giants and will affect its efforts to attract foreign investment in the long run.
The Dubai-based global ports operator is present in both developing and developed countries, employing thousands of people there and also consisting upgrading the facilities it is operating with the latest state-ofthe-art technologies in a smooth and accident-free environment.
Recently, it signed a $3 billion deal with India and the government of Jammu and Kashmir to explore opportunities to develop trade infrastructure there.
“We believe that every community we work with is part of the DP World family,” Sultan Ahmed bin Sulayem, group chairman and CEO of DP World and chairman of Ports, Customs and Free Zone Corporation, recently said.