The UAE after the crisis…

The country is striving to make sure it learns from past experiences, specifically after the 2008 crisis
By Mohammad Sultan Janahi
Mon 30 Sep 2013 11:13 AM

The relief we are
currently experiencing in Dubai is something we were longing for a while. The
small emirate is currently experiencing a fast recovery across all sectors. We
are all simply trying to do things better and learn from past experiences,
specifically after the 2008 crisis. The subject matter in meeting rooms, print and
virtual media, as well as government decisions is all related to providing a
better Dubai to the world. Whether it was real estate, banking or foreign
direct investment; they are all covered in our to-do list. We want to refrain
from repeating the scenario which took place post the 2008 global financial
crisis. Dubai now is trying operate in accordance with the reputation it worked
hard on securing: excellent infrastructure, government services and proper
regulations.

Some may say that a
bubble is forming again, completely ignoring the figures and the changes which
had been implemented. Government Related Entities do not have the freedom to
borrow spontaneously anymore, such matters are subject to the oversight of the
related government department. Furthermore, we are expecting a massive
injection to our economy in November, after the concerned committee makes its
decision to (undoubtedly) award Dubai to host the World Expo 2020.

In order to further
emphasise Dubai’s objective to be a leader in providing world-class government
services; the one and only His Highness Sheikh Mohammed bin Rashid Al Maktoum,
Ruler of Dubai announced that he will personally host a farewell party to
anyone (domestic government departments heads) who fails to proceed with
Dubai’s development.

Sheikh Mohammed was
referring to the Mobile Government (“mGovernment”) initiative which is due on
May 2014. Basically, Dubai is now seeking to evolve its services from the
Electronic Government (“eGovernment”) system which was launched in 2000 to the
mGovernment where the public will be able to engage in any government service
using their smartphones.

Ultimately, the
objective is to provide a one-stop-shop for all government services. Currently,
one can actually register/renew his or her business license using a smartphone
application.

In addition,
real-estate developers’ offices, such as Emaar, are being raided again by
anxious investors during the launch of any project sales. All units are usually
sold-out before the end of the first day of placing them on offer. Dubai
currently is the home to 81,500 hotel rooms with a year-round average low in occupancy
rates of 70 percent and as high as 95 percent during peak seasons, Dubai had
the world’s highest average in year-round occupancy rate of 82 percent in 2011.

The Sheikh Mohammed
bin Rashid City alone, which is part of Dubai’s 2030 vision, is expected to add
an additional 100 hotels. Also, most of the projects which were put on hiatus
as a result of the 2008 crisis have been revaluated and launched again.

On an alternative
note, the same group which are describing Dubai’s recovery as a bubble tend to
heavily criticise the federation of the UAE and the level of cooperation
between its seven emirates. They refer to the cut-throat competition between
individual emirates, specifically Dubai and the federation’s capital Abu Dhabi.
For example, they describe Abu Dhabi’s new financial free-zone, Global
Marketplace Abu Dhabi, as an unnecessary project and a message to Dubai with
its established Dubai International Financial Centre (“DIFC”). This group
completely ignored the macroeconomic effect of two international financial
centres in one country.

In essence, the
playing-field (where the actual competition is taking place) will ultimately be
within the UAE’s economical umbrella. Major international financial
institutions, the ones with an eager interest to expand in the region or operate
an outstation to gain access to the eastern/western markets, will have to make
a decision of where to set-up. Instead of thinking about country A or country
B, the automatic question is going to be Dubai or Abu Dhabi, as these cities
had established themselves as the industry’s main hubs. Lucky for the UAE,
these cities just happened to be in it. Coincidence? Most likely not.

The only reason that
the financial free zones example has been brought up in this piece is because
you are reading Arabian Business. Otherwise, the list is quite long and it
would have certainly hit the words ceiling. The UAE has been silently
exercising this strategy across numerous sectors for decades with an objective
to become a major global competitor.

In 2013, the index
compiler Morgan Stanley Capital International (“MSCI”) upgraded the UAE to
“Emerging Market” status from “Frontier Market”. The upgrade is expected to
attract a new wave of investors, specifically funds with a focus on emerging
markets. Accordingly, this may push the International Monetary Fund to increase
its 2013 economic growth expectations in regards to the UAE for the second time
in less than 12 months, currently at 3.6 percent.

Miles away from the
spotlight is a new up and coming city in the UAE, the emirate of Fujairah. The
city somehow escaped media scrutiny considering its strategic geographical
location. The emirate is the UAE’s (along with Qatar, Kuwait and Bahrain) port
operations safe-haven. In circumstances that the Arabian Gulf would not be able
to accommodate any import/export activity due to any political reason, Fujairah
is the closest seaport to the Indian Ocean for four members of the Gulf
Cooperative Council. Port operations are vital for these oil-based economies
due to the significant role it plays in the oil trading logistical process. The
UAE is conscious about the latter and has been actively investing in
infrastructure in and towards the emirate, including roads as well as public
and cargo railways. International port operator DP World had already undertaken
the responsibilities of Fujairah Port.

In a highly volatile
and an increasingly political Middle East, the UAE is doing an excellent job
maintaining stability and the highest growth rates in the world. For a reason
only known to God, international news agencies miss the opportunity to report
on the UAE’s good fortune, and for another godly reason, they are always the
first respondents on the scene to overstate any negative headline. However and
perhaps the following could not be explained by any natural or superior power,
international news agencies somehow manage to pick up on negative publicity on
the UAE during very interesting times; such as at the peak of the crisis when
investors were moving their investments from the west to the east. As mentioned
above, we are weeks away from November which is when the Bureau of
International Expositions will commune to announce the host of the 2020 Expo,
will we pick up on any cynical coverage about Dubai or the UAE in the next
couple of months??

Mohammad Sultan Janahi is a social affairs commentator from Dubai, United Arab Emirates.

m.janahi90@gmail.com

On Twitter: @jna7i

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