Sheikh Mohammed talks to Invest Dubai

Q: Dubai has been implementing a strategic plan aimed at diversifying its economy away from the energy industry and pursuing policies conducive to foreign investments. What is your assessment of the emirate's achievements so far? And are you satisfied with the pace of developments?

A: For many years now, we have been implementing a development plan aimed at diversifying our economic structure away from oil and launching policies capable of attracting investments.

Our efforts in this domain were crowned by our economy becoming one of the region's most dynamic and diversified. This was also marked by an increase in the contribution of the non-oil sector in our GDP to over 90 per cent.

Furthermore, our economic development over the years was distinguished by a comprehensive growth in all sectors, while simultaneously enjoying higher levels of interaction with international markets.

One of the most prominent developments witnessed by the emirate over the past few years, was its emergence as a tourist destination attracting visitors from all over the world.

It also developed from a mere trading hub for the Gulf and the Middle East regions, into an increasingly important international hub serving a vast area extending from Central and South Africa to the Subcontinent and the CIS countries.

We are now seeking to consolidate our achievements by striving to review and upgrade our legal structures and promote an institutional culture, which supports the development of all sectors.

Simultaneously, we are continuously upgrading and developing our country's infrastructure and the standards of services provided by government departments and other public institutions. This exercise aims at reaching superior levels of efficiency in performance and uprooting all forms of bureaucracy and routine.

Q: The success of Dubai and its emergence as a major regional economic hub has traditionally depended on a close partnership between the government and the private sector. Do you believe that this relationship is still viable?

A: Today, when we look back to what has been achieved in the past few decades, we realize that Dubai - where citizens and residents alike enjoy a very open and dynamic attitude towards trade - prospered by providing an environment conducive to the growth and prosperity of businesses.

Even before the discovery of oil when resources were very scarce, the government strived to provide an efficient mix of projects and policies, which helped the private sector play a major role in the development process.

The Dubai Creek dredging project was one such venture, which our late father Sheikh Rashid bin Saeed Al Maktoum, insisted on carrying out, despite the lack of necessary funds.

Sheikh Rashid was totally convinced of the project's vital role in promoting trade in the emirate, an industry totally controlled by the private sector. The project was a qualitative leap that allowed the local trade to attain an increasingly important regional role.

The same is true for all the other projects which were implemented in the emirate over the following decades - beginning with the Rashid and Jebel Ali ports, to the Dubai World Trade Centre and the Dubai International Airport and recently the Dubai Internet, Media, and Healthcare cities. All these projects aimed at providing additional growth opportunities for the private sector and promoting overall economic development.

We believe that the role of the government should be restricted to legislation and regulation, in addition to the continuous development of the infrastructure - thus making the private sector the engine of the development process.

This approach allowed the government to develop a unique partnership with the private sector - a relationship we are very keen to maintain.

Q: The Dubai Government has cultivated a reputation of keeping its promises and commitments, thus earning the confidence of major multinationals and the local business community. Do you think that the end results justify the heavy burdens shouldered by the government to maintain this momentum?

A: We consider this confidence as one of our most priceless resources and accomplishments, because it represents the achievement of a close partnership and co-operation over many decades.

We are keen to maintain and strengthen this reputation through a closely-knit series of measures and policies, ranging from maintaining intensive investment in infrastructure to easing formalities and developing legislation.

In tandem, we always maintain close contact with the business community. I personally insist on meeting the leaders of different industries and senior officers of multinationals, regional and local corporations, to listen to their opinions, ideas and suggestions and to their grievances in order to remove all obstacles to their activities.

We believe that governments should adopt the standards in force in the private sector, as far as efficiency and services are concerned.

In today's world, where barriers and borders are falling, and where competition is reaching record levels, cities and states reneging on their commitments and promises, risk and may jeopardise their future prosperity. But those who keep their word will reap the highest rewards.

Q: Major initiatives launched by the government such as the Dubai Shopping Festival and Dubai Internet City and Dubai Media City, have accelerated the emirate's economic growth. Do you think that such government initiatives will always distinguish the economy of Dubai, and why? What other large-scale future projects can you tell us about?

A: With the world ushering in a new phase of development in which the standards of competition and excellence have changed, new types of challenges have emerged. Dealing with these challenges require radical changes in the prevailing focus and methods.

In addition to our general direction towards limiting our economy's dependence on oil revenues, we had to develop new industries and markets to maintain the vitality of our economy.

The government's initiatives represented a qualitative leap in this respect. The Dubai Shopping Festival was an innovative regional initiative, which lent an increasing momentum to tourism, shopping and services, while the Media and Internet cities greatly boosted the region's drive to embrace the principles of the new economy.

We now expect the Dubai Healthcare City to turn our country into an international centre for medical care and health services.

Those initiatives, combined, had a very clear impact on the economy. In addition to their direct contribution in creating huge business opportunities, they helped maintain our competitive edge as an increasingly important regional hub serving a large geographic area, which includes the Middle East, the Subcontinent, Central Asia, CIS countries and North and East Africa.

Along with this strategy, we are planning more major initiatives which will serve several economic sectors, and which will be announced in due course, once on-going intensive surveys are completed.

Q: While the initiatives launched by the government over the past few years have had a local and regional character, some of its more recent ones (i.e. The Dubai International Financial Centre), seem to suggest international ambitions. What is your vision of Dubai's role in the international business arena?

A: I see Dubai promoting its status as one of the world's most prominent centres in finance, business, tourism, aviation, IT, media, services, trade and industry. I also see the emirate maintaining its appeal as the prime option for multinationals and as a magnet attracting the best-qualified professionals in all fields.

Although this might look a very ambitious goal to some, I can assure you that we are accustomed to pursue extremely ambitious goals and persevere to attain them.

Emirates airline - one of the world's best success stories in the airline industry - is just an example of how we work.

Furthermore, Dubai became one of the world's fastest growing tourist destinations, to the point that we are now preparing to receive around 15 million tourists by the year 2010.

The emirate has also became one of the most important centres for international exhibitions and conferences, as proven by its hosting of the annual meetings of the IMF and the World Bank in September 2003, in addition to scores of other annual meeting of multinationals and international exhibitions.

Q: Are you concerned about rising regional competition, especially now that many countries in the region are trying to emulate Dubai's success?

A: To the contrary, we consider this an incentive to become even more creative and responsive in our initiatives. Furthermore, regional competition pleases us because we see it as a positive sign of the development of the whole region. Competition benefits all parties because it promotes more innovation and a sense of initiative.

While fully confident that the UAE will always play a vital role in the service of the region's economies, we are also committed to keep working in order to provide an ideal business environment that will offer perfect opportunities for growth and prosperity.

In addition to the country's highly sophisticated infrastructure and excellent facilities and incentives, we are keen to keep the momentum and build upon our competitive edges, in order to maintain our leading position in all fields.

Q: How do you envisage the role of foreign investment in the future of Dubai's economy? Do you think that the prevailing investment environment has evolved sufficiently or is there further need for improvement?

A: It is a well-known fact that the emirate has an extremely flexible and efficient trade and economic legal structure, an ideal investment environment and an ultra-modern infrastructure.

The emirate also attracts international investors and multinationals due to its simple government formalities, the absence of bureaucracy and its efficient communications and transport facilities.

Dubai-based companies also benefit from the active role the emirate plays in the re-export trade, making it the most prominent re-export centre in a region with over two billion consumers, encompassing the Gulf, the Middle East, Africa, the Subcontinent and the CIS countries.

As for foreign investments, we are seeking long-term investments. We are not interested in short-term ones. We believe that the emirate's regional status opens huge opportunities for multinationals interested in the region's markets and its neighbouring areas.

Q: Does the government intend to further open the local economy to foreign investments, and in which industries?

A: We are always reviewing local regulations and laws in order to develop them into more attractive proposals for both local and foreign investments. We are striving to attract investments to all sectors.

Q: Some of Dubai's flagship companies such as Emirates airline, Dubal, Dubai Ports and Jumeirah International are in the government's hands. Does the government intend to disinvest from these ventures in the near future?

A: Although we are not discounting this option in the future, we do not see a need to privatise such enterprises now. As you know, privatisation imposes itself whenever there is a need to reduce the public sector's dominance of the economy in favour of the private sector, or when losing state corporations become a burden on public finances.

None of these factors apply to the said corporations. Our economy is not suffering from a dominance of the public sector. The said corporations are operating in accordance with the efficiency norms adopted by the private sector, and they are, moreover, making profits.

Q: Which economic sectors do you believe will lead Dubai's economy in the future?

A: According to the Dubai Vision 2010 master plan, we have identified three major sectors, which, we believe, will play a pivotal role in the prosperity of the local economy in the future.

These are tourism, IT and media - in addition to traditional industries such as trade and services, which were behind the emirate's prosperity over the past few decades.

Q: Although unemployment among the country's nationals is negligible, it could become an issue in future. What are your thoughts on dealing with the issue?

A: The UAE is not facing an unemployment problem per se. But we are aware that the increasing number of graduates and the rate of the population growth in general, call for creating more job opportunities suiting our citizens.

Government institutions have so far managed to absorb the majority of the national workforce, leading to a high level of saturation. We, therefore, feel that the private sector should absorb increasing numbers of national employees over the coming years.

We must, however, point out in this respect, that we have provided all the means leading to the growth and prosperity of private businesses. Our avoiding the restricting of access to expatriate employees should be met with a kind of commitment by private sector corporations, which should consider the employment and training of nationals as a sort of investment in the future.

Nationals have a proven track record of being highly competent and efficient in different environments. The past few years have also witnessed a consistent upgrading of the curriculum of academic institutions in the country to ensure that graduates are qualified in the topics that meet the requirements of the labour market. We are extremely keen to make sure that this on-going process continues.

On its part, the one-year old Mohammed Bin Rashid Establishment for Young Business Leaders, aims at encouraging young nationals to launch their own businesses by providing finance and all other sorts of support and backing, including the requirement that government departments have to purchase no less than five per cent of their requirements from such businesses.

The Establishment has successfully launched scores of such businesses. It has approved the concepts and proposal of hundreds more, pending the receipt of their feasibility studies. We expect many such enterprises to become major conglomerates in the future.

Q: Large real estate projects allowing foreign ownership (i.e. Palm Island, Jumeirah Beach Residence and Emaar Properties projects), have been very well received by nationals and expatriates alike. Are you considering expanding the scope of such real estate projects?

A: Foreign ownership of real estate is a relatively recent development in Dubai. This new experiment met with large success, which we consider as a vote of confidence by nationals and expatriates alike, in the future of UAE, the region and its growth prospects.

We are still in the evaluation stage, and we must thoroughly weigh all the positive and negative implications, before taking any decision about expanding and its appropriate timing.