Fahad Al Gergawi, CEO of Dubai FDI, tells The Worldfolio what are the main drivers of Dubai’s conducive business ecosystem, the main investment opportunities ahead for American investors in view of Expo 2020, and the flexibility free zones offer multinational corporations and small and medium-sized companies to relocate.
How would you describe the economic development of Dubai and its transformation from a small settlement in the Dubai Creek to one of the top destinations for FDI? What has been the role of foreign investment in the economic evolution of the emirate?
From the early days the leadership in Dubai has linked the emirate’s development to an outward-oriented strategy emphasizing on trade and entrepreneurship.
Dubai has been built and continues to be expanded with a vision of establishing the city as the best destination for people from all over the world to live and do business.
Uniquely receptive to new ideas and cultures, Dubai was able to create a dynamic and evolving investment landscape over the years and attract businesses and entrepreneurs from all over the world.
The most significant testimonials for Dubai’s ability to accelerate growth and ensure the best returns on investment have been our homegrown brands. For example, companies like Emirates, Dubal and Emaar emerged as leaders in their class hardly a decade from their launch.
Convinced by the stability and sustainability of business in Dubai and the government’s commitment to diversifying the economy, a growing number of investors and multinationals have been moving to Dubai.
In 2014, Dubai attracted AED 29 billion (US$7.89 billion) in foreign direct investment, mainly in the infrastructure and services sectors.
You recently said: “Our objective is to present the new thrust areas of Dubai’s economic development strategy to U.S. businesses and highlight the potential for enhanced bilateral trade and investment.” What is the outcome of your recent 10-day tour in the United States?
Bilateral engagement between the United Arab Emirates and the U.S. has been going past many milestones in recent years.
Trade between the UAE and U.S. reached AED 91.3 billion (US$24.9 billion) in 2014 as the UAE remained the top export destination for the U.S. in the entire Middle East and North Africa (MENA) for the sixth year in a row.
Dubai is moving to the next level of growth where it aims to be positioned as a knowledge-based economy.
We have articulated our ambitions and potentials across critical sectors such as aviation, technology, clean energy and services.
Our mission to the U.S. was part of our efforts to establish collaborative partnerships and investment initiatives in knowledge-based industries, which we believe can stimulate economic activity globally.
Our mission covered four major cities – Boston (Massachusetts), Atlanta (Georgia), Chicago (Illinois) and the national capital Washington, D.C.
As an investment development agency we presented the advantages of doing business in Dubai to industry leaders, trade and investment bodies and government officials, also demonstrating how Dubai FDI can channel foreign investment inflow into a growth ecosystem in Dubai.
The real outcomes of our mission will be reflected in strategic business partnerships, FDI inflows and an increasing diversity of enterprises in the near future.
What is the expected impact of Expo 2020 in terms of investment inflows and what steps are being implemented to ensure that private investment will promote long-term stability rather than creating a bubble to burst?
The Expo 2020 is one of the projects Dubai has incorporated to its strategic development initiatives, which demands world-class expertise and an unprecedented level of investment.
In the next few years, as Dubai moves closer to the Expo 2020, there will be unprecedented demand for a range of goods and services.
Obviously, this translates into infinite opportunities for the global private sector, to showcase their innovations on a global stage.
Dubai expects 25 billion dirhams in total investment in Expo-related infrastructure, and work on various landmark initiatives is in full swing already.
In spite of an unstable global economy, Dubai’s GDP registered an average 4% growth during 2010-2014. Such economic resilience was achieved through a high degree of economic diversification and structural reforms being progressively implemented with due consideration to global trends as well as sustainability and stability.
Contrary to the perception that Dubai’s economy was over-dependent on real estate, the government has been promoting high-growth sectors, particularly trade, tourism and logistics, while also breaking new paths across Islamic economy, smart technologies and clean energy.
Free zones present pros (e.g. any company registered inside the Dubai free zones can have 100 per cent foreign ownership) and cons (any company set up inside the free zone must confine their business activities to these zones only). How would you describe the free zones model, and what would you say are the free zones showcasing the highest potential for American investors?
Dubai pioneered the free zone concept in the region and since then the city has continued to introduce a growing number of free zones tailored to the needs of specific industries and economic activity.
Dubai’s pre-eminence in trade, transport and logistics is essentially linked to the successful free zone model it has been pursuing since the 1970s.
Consequently, free zones have emerged as major drivers of the expanding services portfolio and job creation in Dubai, also reinforcing the city’s hub status.
As sophisticated as they are, the free zones also present a simple means of doing business in Dubai. With their sharp focus on client needs, the free zones help investors set up and reach out to clients with exceptional speed and efficiency.
At the same time, persistent focus of the Government of Dubai on enhancing overall competitiveness and the ease of doing business have ensured that mainland Dubai has equally attractive propositions as the free zones for investors.
Free zone companies also have the option of opening a branch in mainland Dubai through a local service agent.
We believe Dubai is an advantageous location for U.S. firms to expand across new geographies and export their critical know-how in strategic sectors such as logistics, financial services, aviation, technology and healthcare.
Dubai World Central, which has dedicated logistics and aviation clusters, as well as Dubai Airport Free Zone, Dubai Internet City, Dubai Silicon Oasis, Dubai International Financial Centre and Dubai Healthcare City, to name a few, present vast opportunities for U.S. investors to explore.
What are the main initiatives Dubai FDI is undertaking in support of Dubai Integrated Energy Strategy (DIES) 2030 and Vision 2021?
Dubai FDI is a founding member of the Dubai Green Economy Partnership (Dubai GEP), established to co-ordinate efforts towards making Dubai a global gateway for green investment and trade.
Dubai GEP is in fact the first multi-stakeholder and cross-sector partnership to promote the transition to a green and low-carbon economy in the Middle East.
Dubai GEP will play a major role in achieving the goals of Dubai Integrated Energy Strategy 2030, which aims to reduce energy demand 30% by 2030 and diversify the energy mix with 71% from natural gas, 15% from solar energy, 7% per cent from nuclear and 7% per cent from clean coal.
In line with the emphasis on innovation and smart development in the Dubai Plan 2021, the Dubai GEP Strategy proposes a collaborative engine of its founding members and a sustainable business framework resting on three key pillars – a green economy innovation center, a gateway for green investment and trade, and an effective communication strategy.
Since its launch in 2012, Dubai GEP has launched strategic initiatives and programs to enable the growth of green trade and investment and accelerate the adoption of green technologies, products and services across regional and global markets.
Dubai FDI is complementing such initiatives by encouraging U.S.-based companies to come to the Dubai and set up shop to respond to the growing demand for green technologies.
Recently, a Dubai GEP delegation visited Cleantech San Diego in California to explore collaboration in promoting green technologies, products and services worldwide.