Transport, healthcare key to Dubai's future

by This email address is being protected from spam bots, you need Javascript enabled to view it on Saturday, 30 May 2009

FUTURE JOBS: Transport will be an important part of Dubai's future economy. (Getty Images)

Transportation, healthcare, education, tourism and financial services are to be the key planks of Dubai’s economy going forward post-crisis, according to the governor of the Dubai International Financial Centre (DIFC).

In a statement published on Saturday Omar Bin Sulaiman said the emirate would see a structural shift in the economy during the next few years towards more sustainable sectors.

Jobs within the transport industry were already set to grow with 2,000 new employees needed for the Dubai Metro when it opens in September, plus 1,500 staff for Dubai Duty Free in Terminal 3 at Dubai Airport, he said.

Related: Hospital builds total $14bn across Gulf despite crisis

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Meanwhile, Dubai Health Care City and other healthcare projects in the emirate would require thousands of healthcare workers once they opened, Sulaiman added in a speech to the Dubai Chamber of Commerce on Thursday.

The shift was not unexpected but was happening more quickly than anticipated, as a result of the global crisis, he explained.

"This shift in the relative importance of various sectors of the economy is, in fact, a central component of the Dubai Strategic Plan 2015, but it's happening more quickly than envisioned by the plan, largely due to the impact of the global crisis," Sulaiman said.

Some firms and employees in the real estate sector had, and would, suffer as a result of the change in focus, he acknowledged.

But, opportunities within the new sectors would soon open up.

"While there has been a loss of jobs in real estate and related sectors for example, positions are opening up in healthcare, education, hospitality, financial services and trade."

The move would also make Dubai an improved place to live as these sectors impacted directly on residents' quality of life, Sulaiman told the meeting.

"We are blessed to be living in an open and flexible market economy that allows us to adjust quickly in the face of rapidly changing global conditions," he said.

"As a result, we soon will begin to see signs of a mature economy taking shape in Dubai and the UAE."

Sulaiman’s comments were mirrored at the same event by Hamad Buamim, director general of Dubai Chamber of Commerce and Industry, who stated that the emirate’s economy was starting to see the first signs of recovery.

Latest findings and figures showed that profit rates in the banking sector had only dropped by four percent, while assets had increased by two percent, and Dubai’s population had grown eight percent, Buamim told delegates.

"Despite the crises Dubai's current exports are still growing in comparison with the exports of 2007, since 2008 was an exceptional year of growth and 2007 is the norm and we still expect to see more growth" he concluded.

READERS' COMMENTS

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structural change
Posted by Philip on Monday 1 June 2009 at 09:53 UAE time

I agree it is not structural change it is refinement of existing policy. Money earned here should not go out of the country i.e expats earnings are by all possible means kept in the country unlike yesteryear where most expats got to save a little and send money home. all services and living costs are increased therefore all the money you make goes back in to the local economy and you build the country plus the local economy gets the money back.

Not really a structural change in economy
Posted by Dude, Dubai, United Arab Emirates on Sunday 31 May 2009 at 06:08 UAE time

What Mr. Omar Bin Sulaiman pointed for in his statement don't represent a structural shift in the economy as it still around services industries which known to be vulnerable to economic shifts. Apart from the two healthcare services and Education which usually sustain demand during both economic cycles the rest are not sustainable and are extremely vulnerable to economic cycles.

Transport, especially Dubai Metro is a local service offered by the government of Dubai and there is no export of such service out of Dubai to generate foreign currencies. This part is dependant on the population living in Dubai and welling to use the service.

Airport/Duty Free shops are almost fully dependant on transit passengers flying through Dubai Airports which is exposed to economic cycle. So the risk is still there that Dubai income from this industry is not sustainable.

Also demand on tourism industry is elastic to level of income which is dependant on the state of the global economy in general and local economies of countries from which tourist comes to visit Dubai.

Healthcare services in Dubai can be described as local services which is not geared toward delivering / offering healthcare services to healthcare visitors from abroad. Dubai healthcare city seems is out of business for now (this need to be confirmed but many suppliers who sold them renewable services was surprised by rejection to renew contracts due the nonexistence of the legal entity they have signed with contracts earlier). The other part there is no vision and detailed plan on how Dubai Healthcare city will become a center for medical services in the region. Things like having a medical school, a university hospital, research centers, local doctors is almost not there which is key factor in setting up a sustainable and competitive world class healthcare services.

Same thing apply for Education Services. The least to say that they need to ensure not only you attract big names to open a branch in Dubai but also you need to build an education system from schools up to university that will offer outputs that are competitive at global level and is a local one.

Financial Services in Dubai is a replica and follow the same models of other financial centers around the world. DIFC needs to offer something that is a new concept and a new model to open up new routes outside the failed financial sector which contributed largely in the current economic crises. Look to Bahrain, they established an international financial harbor for Islamic Financial Institution.

Dubai may need more than these 4 sectors to survive and have a sustainable economy structure. Examples maybe:

1. Generate Electricity from Wind, Solar, and Wave energy and export it starting with local emirates, Oman, and then move into a regional grid with other countries to export it to Europe. You can use these offshore developments which failed to sell to build on these projects.
2. Light Industries which includes high tech industries. After all these new free zones where built up, the vision is down to a real estate project without any real link between the name and who are operating within these zones.
3. Pharmaceutical Industries which will play key role in the success of the healthcare sector in Dubai as well as globally. These companies in the region were one of victim of the real estate bubble which sucked down the cash from banks and attracted private investors.

Despite the fact that this statement is a good indicator that there is a thinking process is going on behind closed door but I do believe it is a premature to say this is the way forward for Dubai. You can say there is a shift when the plan for what is next covers services & industrial sectors and ensure that the economy will be a victim of another round of become rich quickly from real estate sector.

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