What is the significance of GBF ASEAN in the current scenario, and how will it help advance economic ties between Dubai and the GCC with the ASEAN region?
It is indeed timely for the GBF ASEAN to be organised as the global economy progressively emerges from the Covid-19 era. This is no doubt an evolutionary process and there are still certain encumbrances that prevent a full opening and restoration to the pre-Covid status quo. The GBF ASEAN plays a significant and catalytic role in facilitating the opening up process between the economic blocs of the GCC and ASEAN.
ASEAN has established itself as a significant economic grouping with it 10-member alliance having a population of 640 million with a total GDP of $3.08 trillion, which comprises the sixth largest market in the world and third largest global workforce. By 2030, if the plan for a single economy materialises, it will rank fourth amongst economic powers. In 2022, ASEAN is expected to grow at a respectable five per cent as it emerges out of the Covid-19 economic slowdown. Conversely, the GCC is another important economic bloc with a combined GDP of $3.6 trillion and the most important oil producing region in the world. The GCC has proven reserves of 497 billion barrels of crude oil representing approximately 34 per cent of the world’s total. Asia receives 66 per cent of GCC’s total crude exports and 70 per cent of oil products. GCC producers account for about 50 per cent of ASEAN’s oil imports, with Singapore, Malaysia and Indonesia being the top three purchasers of GCC oil. The top two oil exporters from the GCC to ASEAN are Saudi Arabia followed by the UAE. Therefore, the dependence of ASEAN on GCC sources for energy is a bedrock of the growing relationship between the two regions.
What sectors have the most potential for cooperation between the two sides?
Resulting from the relationships established in the trade of crude and oil products, various downstream activities are taking place to further tap into opportunities in the oil sector in ASEAN. These include:
Saudi Aramco’s involvement in the Pengerang refinery and petrochemical joint-venture in Johore State adjacent to Singapore,
ADNOC’s agreement with Pertamina in Indonesia supplying LPG and sulphur in a four-year deal worth $2 billion,
ADNOC’s MOU with Pertamina to develop a crude petrochemical complex in Balongan, Indonesia and supply of naphtha to Indonesia’s largest petrochemical complex,
Kuwait Petroleum’s 35.1 per cent stake in the $9 billion petrochemical refinery in Vietnam
Oil demand in ASEAN is expected to grow by around 12 per cent over the next five years, representing the second highest growth rate in the world after Sub-Saharan Africa. Therefore, there would be opportunities to increase the volume of trade in crude and oil products. Oil logistics and engineering support services will be an area for more cooperation and collaboration particularly between the UAE and Singapore. UAE companies such as Horizon Terminals operate actively in Singapore and conversely ASEAN companies such as PEC Ltd, Rotary Engineering, JAS and Consort Bunkers have oil logistics and engineering facilities in Fujairah, Dubai and are expanding to Abu Dhabi.
Both regions, particularly the UAE and Singapore, are targeting IT as an important sector for growth. The UAE has appointed a Ministry of Artificial Intelligence and deployed a satellite probe to Mars, indicating the seriousness with which the country is pushing its IT and technological boundaries. The IT sector includes a focus on healthcare, medtech, smart city planning and solutions, agritech, robotics, data analytics, smart manufacturing and artificial intelligence.
Singaporean companies such as Surbana Jurong, ST Engineering and SemCorp are able to play a value-added role in smart city planning and solutions and are already active in various projects in both Dubai and Abu Dhabi.
Renewables is a sector in which both Singapore and the UAE, as well as GCC and ASEAN as a whole, have placed importance in their strategy to diversify dependence from fossil fuel as part of their clean energy objectives. Masdar is a sterling example of the UAE government’s commitment to renewables and energy conservation. Massive solar power plants in Abu Dhabi and Dubai, nuclear energy in Abu Dhabi are further examples of this strategy to reduce dependence on fossil fuel. ASEAN countries, particularly Singapore, have made renewables particularly solar a significant area of expansion, which offers collaboration opportunities.
Halal food manufacturing and distribution offers opportunities for Singaporean, Malaysian and Indonesian F&B companies. We have already witnessed companies such as IndoGuna investing substantially in Dubai in establishing halal food manufacturing facilities. Major halal food products manufacturers in Singapore and Malaysia are keen to explore distribution of their products in the burgeoning GCC market using the UAE as a base.
Under the Operation 300bn, the UAE has targeted manufacturing as a key area of growth and attracting FDI. ASEAN is a major manufacturing base and the change of supply chain configurations offer opportunities for ASEAN manufacturers to establish manufacturing bases nearer to markets such as the GCC. The UAE offers the ideal platform and incentives particularly under this agenda, to attract such companies.
Do you think economic collaboration is the key to economic recovery post-Covid era?
Economic collaboration is essential for economic recovery in the post-Covid era. The pandemic will lead to greater regionalisation and lesser globalisation as supply chains reconfigure processes, together with more emphasis on security and dependency of supply rather than minimising lead-time and lowering costs. Logistic hubs will emerge at a regional level to develop flexible and adaptable supply chains and product integration. Sub-systems and component suppliers will assemble and deliver in their own backyard. We are fortunate to have good bilateral trade relationships between ASEAN countries and the GCC countries with Singapore having established the GCC-Singapore FTA. Therefore, ASEAN companies should take advantage of these dynamics to explore and crystalise investment and trading opportunities between the two regions.
What are the competitive advantages Dubai can provide to ASEAN companies? And, vice versa.
The major competitive advantages of Dubai are the following:
- Pro-business environment with increasing incentives and liberalisation such as the 100 per cent foreign ownership
- Political stability and strong security
- Pragmatic and visionary leadership
- First world infrastructure
- Excellent global connectivity. Dubai is one of the world’s top aviation hubs providing air travel connectivity to all parts of the world with Emirates being the world’s largest airline
- Jebel Ali is one of the largest ports in the world and the leading port in the Middle East
- A liberal policy towards expatriates with a conducive working and family environment
- Providing a natural gateway to the GCC, MENA, Africa, Central Asia and Europe.
The major competitive advantages of ASEAN are the following:
- One of the oldest and stable geo-political alliances in Asia
- Population of 640 million with a total GDP of $3.08 trillion
- Pragmatic and visionary leadership
- Pro-business and investor-friendly environment
- Strong global connectivity
- Complementary economic structure with countries such as Singapore having excellent service infrastructure, matched with strong natural resources, manufacturing capabilities and significant population sizes in the other ASEAN countries such as Indonesia which collectively constitute a vast consumer market.
What are you expecting out of GBF ASEAN, and do you think the forum will pave the way for a long term cooperation?
The GBF ASEAN can be a platform to foster long-term cooperation and greater connectivity between ASEAN countries and companies and the UAE / GCC. It is important to sustain this by having regular events that expand B2B connectivity, provide networking opportunities, encourage business delegations and continuously explore greater G2G facilitation and support for companies in both regions.
What is your opinion about Expo 2020 Dubai, and how it will help in changing the world in the future?
Expo 2020 Dubai is a showcase for the world as to what Dubai and the UAE has achieved. The three themes of Sustainability, Mobility, and Opportunity are very much in vogue with what the world needs. The various country pavilions and other pavilions showcase the best of breed in products, technology, aspirations of the global community in facing the challenges of the future. The ability of the Dubai authorities to stage this event despite the major constraints caused by Covid-19 has to be applauded and commended. It is further testimony of the resilience of the country and resolve of the leadership to continuously move forward and progress despite the challenges faced. Dubai has shown ingenuity and perseverance of humanity, which are essential traits for surviving and flourishing despite the challenges we face as a global community. The splendour, impressive infrastructure and efficiency of Expo 2020 Dubai will be long remembered, and appreciated.