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UAE to open up transport and financial sectors

Ahmed Al Banna, deputy director-general of Dubai Chamber of Commerce and Industry, who was addressing a seminar organised by the newly formed Indian Business & Professional Council (IBPC) in Dubai on Wednesday, said that the UAE team is negotiating on various issues bilaterally as well as with the WTO team currently. And it is likely that very soon some of the sectors including transportation of all types and financial services sectors will be opened up, he added.

He also pointed out that keeping the WTO obligations in view, some of the UAE laws have been ratified and some are under the ratification process.

"Transparency in our laws will attract back migrant investments and these are among some of the advantages of being a member of WTO," he said.

Al Banna said that like some of the other countries, UAE will also seek protection for infant industries and there will be those areas in manufacturing where UAE nationals will continue to own 51 per cent. But these will also depend on how the negotiations take place, he added.

Pointing to some of the disadvantages of WTO membership, he said it does not cover oil and gas trade. And in all likelyhood it will reduce local exports into the international markets as competition will be fierce. For the UAE the abolishing of subsidies on agriculture could raise the food import bill of the country, while the local pharmaceutical industry will be also hit because of the intellectual property rights obligations.

Ausaf Abbas, managing director of private client group of Merrill Lynch Middle East and Europe, who also addressed the seminar and spoke on global investor strategy, said that investors need to sit up and take a note of alternative investment strategies given the depressed market conditions. He said that in the near future return on equity investing is not going to be in double digit and would stay around eight per cent, while return on fixed income would be around five per cent and cash two per cent.

He also said that the times are now for taking a disciplined approach towards investing and look at a longer term horizon for calculating returns.

Talking about the Indian budget, Ashok Wadhwa, managing director of Ambit Corporate Finance, said that the country's fiscal deficit has become a cause of concern and if it is not tackled can cause a lot of trouble for the economy. But he was bullish on the performance of the manufacturing sector of the Indian economy and said that for the first time it now looks that India might find its place among leading manufacturing countries in the region.

Wadhwa said that there was need for more public spending at this point of time and some growth in inflation as long as it stayed below five per cent was good for the economy. But he added that India needs more incentive for equity investing.

Nikhil Kapadia, senior vice-president of DSP Merill Lynch, who addressed the seminar on Indian equity markets, said that the Indian economy is looking up and one of the indications of the confidence in the economy was the rising NRI deposits with a lot of smart money coming into the country.

NRI deposits are up from $13.5 billion in 2000 to $17.2 billion in 2002, while the total NRI investments in India are now at over $30 billion, he added.

Kapadia also felt that the Indian equity markets are poised for an upturn with the interest rates being kept low. He said this will not only help the corporates perform better, but it will also lead to equity investing in the country.

Earlier George Joseph, Consul-General of India, in his address congratulated the newly formed IBPC, and said that merging the three different Indian business associations into one was a milestone achievement.