Even for a city that seems to reinvent itself every few years, the landscape of Dubai could change immeasurably by 2020, if all goes according to plan. While the city has marched south along the Arabian Sea shoreline in the last decade, a large desert landscape is still awaiting development. If Dubai wins the rights to hold the World Expo in seven years time, a 438 hectare site in Jebel Ali will play host to one of the planet’s biggest events.
Dubai Trade Centre – Jebel Ali – as the site will be known, is equidistant from the centre of the city and Abu Dhabi. It will be sandwiched between what will eventually be the world’s biggest airport, Al Maktoum International, and the world’s third biggest port. But far more importantly than that, a Dubai win would represent the first time that the Expo has been held anywhere in the Middle East, North Africa and South Asia region.
“It would be life-changing for Dubai,” says Hamad Buamim, the director general of the Dubai Chamber, the industry body that represents the private sector in the emirate. “I can see that in 2020, with Expo 2020, that the whole area will be like what we see in the middle of Dubai today. You can see that Dubai has been successful in doing the same thing with areas like Internet City in the past, so in a few years, I think we can do even better than that.”
More buildings, more hotels, more roads, a mammoth convention centre and metro links are all on the cards. And expectations are massive; Buamim says that if the bid is secured, the emirate will be expecting roughly 25 million visitors a year by 2020, a huge jump on the roughly nine million tourists who made their way to the emirate in 2012.
Also in the running to host the event are cities in Thailand, Russia, Brazil and Turkey, all of which are, like the UAE, emerging and fast-growing economies. The competition is tight, and with the results expected to be announced in November this year, the Dubai team certainly isn’t complacent. But it also has some heavy hitters backing its bid, including Sheikh Ahmed bin Saeed Al Maktoum, who is chairing the bid’s higher committee, and Minister of State Reem Al Hashimy, who is the managing director.
“We believe that the only place [to hold the event] is Dubai; we have the infrastructure and we can build even bigger infrastructure going forwards,” Buamim adds. “And, of course, if you take the UAE as a country, it’s the second-biggest Arab economy, an open one, it’s growing, and it’s well-connected with the rest of the world. Safety and stability is very important – and if you look around the Middle East, the UAE is one of the few areas that has that vital element.”
If promoting Dubai’s Expo bid was Buamim’s only job, he’d still have his hands full. But that’s just a small item on a to-do list that seems to be growing by the day. He’s a regular traveller, marketing Dubai’s businesses to the world, and in turn trying to get international firms to set up shop in the emirate. And he also acts as a go-between between the private sector and the government, offering the chamber’s advice on laws and regulations, and trying to cut down on the amount of red tape that local firms have to put up with.
If the World Bank is to be trusted, then Buamim is doing a pretty good job. Every year the agency publishes global rankings that rate each country in terms of their ease of doing business. The UAE ranked 40th in 2011, but shot up to 26th place last year, putting it in second place in the region behind Saudi Arabia, which dropped to 22nd place from twelfth place in 2011. The report praised the UAE for streamlining some start-up processes, implementing an online system for paying and filing taxes, and reducing the time it takes for firms to get an electricity connection.
“There were a lot of improvements in the legal parts,” says Buamim. “We always say starting a business in Dubai is very good and that’s where we score high, but there are a lot of challenges when it comes to closing a business or where there are disputes.”
According to the World Bank rankings, where the UAE falls behind is in the areas of protecting investors, enforcing contracts and resolving insolvency. Much of that could be resolved when the long-awaited companies law comes out. That hefty piece of legislation - which has 383 clauses – is currently being discussed by the Federal National Council (FNC), which looks set to debate the law for an unprecedented third week.
Buamim says he is confident that the new legislation will be passed soon. “I follow up on this subject all the time,” he says. “I have said it could be by the end of summer, but possibly even before that. To be able to benefit as a business community, we need it along with the bankruptcy law and the foreign investment law.”
One issue that doesn’t look like it will be signed off in the near future is the plan to offer some foreign firms majority ownership of their companies outside the UAE’s free zones. In discussing the companies law, the FNC has hived off this section of the legislation and instead put it alongside the foreign investment law, which will be discussed later. But the Dubai Chamber boss says that this doesn’t mean the law has been sidelined completely.
“The subject is too early to be decided,” says Buamim. “I know the government is addressing the importance of continuing to attract foreign investment, particularly from the companies that have the technology and the capital to add value to the economy.”
In line with proposed legislation on business disputes, there has also been a natural drop-off in squabbles between local firms during the last year as the economy has improved. Both arbitration and mediation cases overseen by the chamber have fallen off as Dubai’s property market has recovered. Buamim says that mediation cases have halved since the peak of the real estate crash.
Overall, the numbers for last year were pretty impressive. The chamber saw its membership figures rise by 20 percent to over 140,000, while the value of exports and re-exports rose by 9 percent to $11.4bn. In a year where trade was largely dictated by geopolitics, the biggest losers were Iran and Syria, while exports to Iraq (up 350 percent), Libya (up 300 percent) and Turkey (up by around 100 percent) more than made up the shortfall.
“These markets – especially Iraq and Libya – are hungry for everything,” says Buamim. “Whether it’s food and beverages, building materials, machinery, cars and spare parts, it’s all growing. We estimate a good growth in Egypt, we hope we will be able to see bigger growth across the whole year, and in Yemen also.”
With trade accounting for around a third of Dubai’s economy, the sector is a vital one. Already in 2013, the numbers look good; there was a 13 percent rise in exports in January. While the Gulf is clearly an important market for Dubai’s goods – with around 50 percent of all exports heading to GCC countries – the Dubai Chamber is focusing on emerging markets. To that end, it is opening satellite offices in Baku (Azerbaijan), Addis Ababa and Erbil this year. Buamim says that the long list of office locations also being considered includes Almaty (Kazahkstan), Belarus, Libya, Johannesburg, Angola, Nigeria, the other GCC countries, China, India and Sao Paulo.
Also on the cards is a plan to offer international membership of the chamber to firms that are not actually based in Dubai, another first for the UAE in the region. And the chamber also has its eye on convincing some of the big multinational firms that don’t currently have operations in Dubai to come to the emirate.
“We are planning to go to these companies, invite them to come to Dubai, and showcase the benefits,” says Buamim. “Usually when we market Dubai we do a kind of mass marketing – it’s a kind of shotgun strategy. But what we are planning to do is shift to snipers; we’ll target these firms and try to pull them into Dubai by offering certain incentives, including access to nearby markets.”
On the macroeconomic side, the director general says that he thinks Dubai’s economy will grow by between 4 and 5 percent this year, which is strong when compared to average global economic growth of 2 percent in 2013.
At the same time, however, there are areas of concern for private sector firms that operate in Dubai, particularly with regard to the cost of doing business here. While inflation is currently low, the rise in the emirate’s property values – estimated at 19 percent by Jones Lang LaSalle last year – has raised fears of another bubble. But Buamim doesn't agree.
“We see prices currently at the rebound stage; we believe it will stabilise,” he says. “We don’t expect this growth to continue - whenever you go to the bottom, you always rebound to something more acceptable. So around a 20 percent rebound is more realistic. I think the recovery has already happened, and I don’t see it going beyond the second half of 2013.”
As Buamim points out, the recovery has affected different areas of the property market in different ways. Prices are still depressed in the commercial sector due to a supply overhang, for example. And while residential rents and prices may be soaring in premium areas, far-flung districts with little infrastructure haven’t seen a rise in demand. One area that certainly needs further attention is speculation, which caused the real estate bubble in the first place.
“I believe that what happened in 2007, I don’t think it will be repeated going forward,” Buamim says. “I understand that there a lot of limitations to offplan assets and I know that RERA in Dubai put a lot of systems and policies in place in the last few years that will definitely prevent any kind of speculation.
“We expect to see some speculation, and some speculation is not bad for the economy in general. But it has to be limited and I don’t think it will be allowed like it was before.”
While Buamim certainly has a lot on his plate at the moment, all that could change if the Expo 2020 bid comes through. As the private sector will take on the burden of building all the new infrastructure, he can expect to see far more companies join the chamber in the coming years.
But after a convivial hour spent in his company, one certainly gets the impression that he can more than handle the pressure.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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