Dubai, a stable place to do business

LONDON — There was a distinctly upbeat atmosphere at Tuesday’s ‘Invest in Dubai’ event hosted in London by the Arab British Chamber of Commerce (ABCC), in partnership with the Government of Dubai, Department of Tourism and Commerce Marketing, and the Dubai Multi-Commodities Centre (DMCC).

By Denise Marray

Published: Fri 24 Jun 2011, 11:07 PM

Last updated: Tue 7 Apr 2015, 4:51 AM

Opening the proceedings, ABCC Secretary-General and Chief Executive, Dr Afnan Al Shuaiby described Dubai as “a safe-haven for investment.”

Ahmed bin Sulayem, Executive Chairman of DMCC, pointed out that 3,000 licenced member companies now operate within the Jumeirah Lakes Towers (JLT) free zone, reflecting the attraction of Dubai as a liberal, tolerant and stable place to do business. DMCC Chief Operating Officer, Guatam Sashittal said that Dubai offered a secure, regulated investor friendly environment. Speaking of the JLT Free Zone with its 25,000 strong population (10,000 employees and 15,000 residents), he noted that broad assistance was available to prospective investors so ensure a quick and efficient set up.

Gavin Maude, Chief Executive Officer of consultancy Pemberton Partners, was impressed with the assistance his company received in setting up its office in the JLT free zone. He noted that it is essential to put the time and personal effort into the set up stage, as ‘remote’ negotiation didn’t yield the desired results. This point was underlined by Fayha Sultan, Marketing Manager, Government of Dubai Department of Tourism and Commerce Marketing, UK and Ireland. “The Arab culture lives on relationships”, she said. “It is very important to see the person — to know the person. They are welcoming and hospitable. They don’t like distance and cold relationships — so that’s why being there and talking to the right people is very important.” She saw great potential for investors across a broad range of business sectors, especially health, education and tourism.

Reflecting on the past decade in Dubai, Ahmed bin Sulayem said that he himself had initially had reservations about some of the major developments. “With Dubai Marina — people were saying ‘that’s impossible — that won’t happen’ and I was one of those people. I just couldn’t envisage it — Dubai was so empty — but little did I know that people would jump into it.” He recalled how Palm Jumeirah, while it was still just a plan on paper, sold out in just three days. “That was a big eye opener for me”, he said.

Noting that he has “gone through four managements at the DMCC” in his ten years with the organisation, he said that he really appreciated all the work that had been done to date and the work of the current team “in pulling through the hard times in Dubai and globally and coming out of it with the debt paid on time and with company registrations making records year on year.” Such achievements he said were the “biggest compliments” that free zones or government entities could pay His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. “Last year was our best year with 725 companies registered and now six months into 2011 we are close to equalling the record of last year”, he said.

Regarding the spectacular Almas Tower, Ahmed bin Sulayem said that the strategy of “refusing to entertain any brokers, property groups or speculators” in the initial purchase of office space had paid off. “During the three-day phase for DMCC registered companies, followed by a three-day phase for DMCC potential companies, we sold out to end users within a couple of hours”, he said.

Limits were placed on the amount of space companies were allowed to purchase, with allocations matched to their operations, and resale was restricted to DMCC members. DMCC also pledged to give full refunds in the event of units not being ready on time. “That was a huge risk as the property laws were not yet established — so when the Tower was built and they moved it was a ‘big mountain of my back’ as we no longer carried the risk”, he said.

The decision by Diamdel, a subsidiary of De Beers, to open an office in the JLT free zone is regarded by Ahmed bin Sulayem as a significant endorsement of its success. “Diamdel didn’t come because I sold the concept to them — they came because the confidence is there and they see a long term relationship”, he said. Diamond trade volume in 2002 was just $5 million compared with a massive $36 billion in 2010, making Dubai the fourth largest diamond hub in the world after Antwerp, Tel Aviv and Mumbai.

The Tea Trading Centre with its packaging and blending facilities has proved very successful with over 10.6 million kilos of tea traded through Dubai last year. “Mombassa as a trading hub at first glance thought Dubai was a threat to it and then shortly afterwards became a member of the Dubai Tea Trading project in the DMCC — because they realised they could expand and add credit and reach to their business”, said Ahmed bin Sulayem. He added that. “We have established relations with Rwanda because they didn’t want to lose their identity; when their tea was sold through Mombassa it was packaged as Kenyan tea, which they didn’t like very much.”

Looking at Dubai as a whole, Ahmed bin Sulayem said, “I would like to see more competition in Dubai and more diversity in products in general.” He added that it was important for Dubai “to capitalise on what it has already built.” With regard to DMCC he said: “It’s not just the sale of tax free, cost effectiveness, it’s also the confidence we have built and continue to build.”

Looking at the banking sector, Oliver Cornock of the Oxford Business Group, said that according to the International Institute of Finance (IIF), the unrest in the region may have “encouraged investors to divert their holdings to the UAE.” This year to March 2011 he said, “the country as a whole has seen its deposits rise more than 14 per cent — a significant boost for such a short time.” He added, however, that some caution is necessary as “although deposits increased roughly 7.5 per cent, loans increased by 2.2 per cent, indicating that the banks may be biding their time.” He also noted that Dubai’s $500 million bond issue “was very well taken by international investors, raising more than $1.8 million.”

With regard to real estate he said that “Dubai is still one of the most desirable places to have an office, commanding higher rents than New York City, Singapore and Paris. He noted that real estate deals were picking up again. “In the first quarter of this year they hit $8 billion, a 20 per cent increase compared to the previous quarter”, he said.

Tourism numbers, he added, are expected to rise by 17 per cent over last year to just under eight million, with one million expected from England alone. Tourism spending, he added is “set to hit around $7.5 billion, making Dubai’s growth rate among the fastest in the world, led only by Istanbul and Barcelona.” The unrest in the region has impacted hard on countries such as Tunisia where visitor numbers have halved this year, and Egypt “whose visitors are down by 35 per cent on an optimistic assessment”, he said.

With Saudi Arabia planning $82 billion on new construction and Qatar planning more than $50 billion for stadiums and infrastructure in preparation for the 2022 World Cup, that can only be good news for Dubai Aluminium (Dubal), he added. The recent announcement by Emirates Aluminium, a partnership between Dubal and Abu Dhabi’s investment firm Mubadala, to invest as much as $4.5 billion to expand operations to meet higher demand also points to a positive outlook for the industry, he observed.

Ahmed bin Sulayem has a note or warning to the UK. “I believe the UK to an extent has raised taxes too high, as a solution to counter its challenges. That has pushed some of the top businesses and banks to spread their assets to other areas. No multi-national is going to put all its eggs into one basket in one country.” He added that with regards to skills and talent, “people are not going to work hard and use their expertise in a place, which takes most of their earnings in revenue.”

Abdelslam El Idrissi, the ABCC’s Director of Trade Services, summed up the mood when he said, “Wake up Britain — there’s a market for you to go for — don’t rest on your laurels — go for it!”


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