|Boosting Dubai's Economic Growth On All Levels|
His Excellency Abdul Rahman Saif Al Ghurair, Chairman, Dubai Chamber of Commerce & Industry talks about the different aspects of the economy in Dubai. He also highlights a number of initiatives that has been recently launched by Dubai Chamber with an aim to enhance this economy and provide a sustainable environment as well as support key players such as traders, investors and SMEs.
How do you assess the economic situation in Dubai?
Dubai’s current economic situation is positive. We experienced growth across all key economic pillars last year as well as many supporting sectors, and we have continued to see positive figures for our members’ trade so far this year. The mood amongst Dubai Chamber’s members is positive and we expect this to strengthen as we move closer to the World Expo 2020. In fact, a recent study with our trade members found that 51% of those surveyed expect sales to increase because of Expo 2020.
Which sectors are driving the Emirate’s growth?
Trade, tourism, logistics and financial services continue to lead economic growth in Dubai. These are supported by others including retail, construction and real estate. With regards to the economic pillars, last year Dubai’s non-oil trade grew by about 8% from 2012 to exceed AED1.32 trillion ($359 billion), which was a rise of AED94 billion on the previous year. India topped Dubai's major trade partners with a total trade volume of AED137 billion, with China second (AED135 billion) and the US third (AED86 billion). The tourism sector saw a 10% increase in tourist numbers to 11 million, with the number of passengers travelling through Dubai International Airport rising by 15.2% to 66.4 million passengers. Aviation continued to be the strongest driver in the logistics sector, especially with the opening of the Al Maktoum International Airport to passengers last October. Meanwhile, the finance sector performed well, with a total trading volume of 127.19 million shares and bonds on Dubai Financial Market. In equities, the DFM General Index rose 107.7% during the year, making it the second best performing exchange globally, and the FTSE NASDAQ Dubai UAE 20 index was up 86.6%.
What are your endeavours with regard to developing the trade sector in specific?
Dubai Chamber has several different initiatives that support the trade sector specifically. Last year the number of certificates of origin we issued rose by 10% to reach 824,000. Moreover, Dubai Chamber is the national guaranteeing and issuing agency for ATA Carnets in the Emirates. Last year the UAE issued and received a total of 2,242 ATA Carnets worth AED1.9 billion. Dubai Chamber issued 104 ATA Carnets worth AED100 million, which is a 57% increase on 2012. Our SME Exporter of the Month initiative continues to be popular. This celebrates the achievements of our trade members who have demonstrated strong performance in a month. Meanwhile, we have invested in our online services to make things easier for our members. We offer a range of e-services, including membership registration and renewal, issuance of certificates of origin, authentication of documents and e-payment and integrated services provided in partnership with other organizations. Recently, we also launched a smartphone application on iOS and Android platforms, which provides users with information about Dubai Chamber products and services, upcoming events, press releases and Chamber TV archive. Users can locate the closest Dubai Chamber branch to their location, apply for jobs and register for upcoming events. This falls in line with the “Smart City” initiative from His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.
Our latest initiative is to make our commercial transactions simpler by introducing an exclusive prepaid card in association with the Commercial Bank of Dubai (CBD) as Dubai Chamber is no longer accepting cash since April 1st. Dubai Chamber customers can apply for the free Visa prepaid card from the CBD in Dubai Chamber’s headquarters.
How is Dubai Chamber of Commerce and Industry strengthening its presence abroad?
As I previously mentioned, Dubai Chamber is active both locally and globally in forging new partnerships for the benefit of the business community in the emirate and to attract new business to Dubai. Last year, Dubai Chamber received a total of 238 delegations and had meetings with 916 delegates; organized 31 business networking events with more than 13,500 businessmen; and established its second representative office in Addis Ababa, Ethiopia. Then, in January just gone we opened our third international office in Erbil, Kurdistan. Similar to our two other international offices, this will work to increase two-way trade and investment with the local market and Dubai. It is also a gateway into the surrounding region, in this case other parts of Iraq and neighbouring Turkey. Moreover, last year we launched our International Business Network, which offers online membership to companies based anywhere in the world in addition to access to some of Dubai Chamber’s services. This initiative continues to grow and will do in line with Dubai’s rising prominence as an advantageous business and investment destination.
How do you evaluate the progress of export and re-export over the last two years?
Looking at key Dubai Chamber data over the past two years shows that exports and re-exports have experienced strong and consistent growth. The value of our members’ exports and re-exports increased by 8% last year to AED290 billion. In 2012, our members’ exports and re-exports increased by 9% to a value of AED 268 billion. Meanwhile, another indicator is the number of certificates of origin issued, which saw a 10% increase in 2013 to reach 824,000. In 2012 the number of certificates of origin issued increased by 7% to reach 748,000. The main destination for our members’ exports and re-exports throughout this period has been Saudi Arabia, which last year had exports and re-exports worth a value of AED 89.5 billion. This is an annual increase of 25% from 2012’s value of AED 71.6 billion. Correspondingly, the Saudi Arabia’s share of our member’s total exports and re-exports rose to 31% from 2012’s figure of 27%.
According to investors’ strong confidence in Dubai, how will foreign investments increase in the near future?
Consistent with the continuing economic recovery of Dubai, our Dubai Traders Outlook Survey 2014 pointed to significant improvement in the outlook of Dubai’s traders for the year ahead. According to the survey, the mean expectation rating for 2014 rose to 6.5 points on a scale of 1 to 10, which is higher by 0.5 points than 2013. This represents the highest ratio of positive expectations in recent years. The survey indicated that 60% of traders expect market demand to be very good or good, greatly outnumbering the 6% who expect market demand to be poor or very poor. In the meantime, expectations for sales are also generally positive. This is a good indicator of the current mood in Dubai and will help attract new investment. We also expect more foreign investment in the run up to Expo 2020.
What is your opinion about doing business online?
Embracing online technology is something that all modern businesses need to do in order to stay competitive today. The UAE accounts for about 60% of the share of e-commerce in the region. Today, traders very well know the importance of operating a modern business as well as having an online presence which gives maximum exposure to their products 24/7. Also, the ability to spend online has created a profound advanced effect on the broader economy while improving the efficiency and availability of products without the need to build extensive networks of physical stores. Dubai Chamber offers many of its services online and has also launched a portal in collaboration with Alibaba.com to help our members gain access to international markets through the virtual marketplace.
Which initiatives are you adopting to promote e-commerce in the region?
Dubai Chamber, in association with Alibaba.com, a leading global e-commerce platform, launched an e-commerce portal, www.dubaichamber.com/alibaba, to help our members access new online markets. The portal serves businesses across the entire MENA region, providing a unique opportunity for companies to create new market prospects and to sell their products and services to businesses worldwide. Alibaba.com has 36 million registered users from more than 240 countries and regions and showcases 2.8 million supplier storefronts. Through the Alibaba.com collaboration portal, Dubai Chamber members have the opportunity to create a virtual catalogue of their products free of charge. This will give them maximum global exposure and allow them to expand and manage their business wherever they are. The benefits offered to companies include increased exposure to potential global customers, the opportunity to become part of a dynamic networking group, and to interact with companies that are already successfully trading on the Alibaba.com website to share knowledge and experience.
What do you foresee for Dubai’s economy in the next few years?
Progress over the next six years will be led by Dubai’s Expo win. This should provide a modest lift to GDP growth, leading up to the period and a more material one around the event itself. It is estimated that the total impact of Expo will be worth $23 billion (24.4% GDP) spread over the period 2015 to 2021. This includes total spending by Dubai, participants and visitors, as well as the impact on the supply chain and consumption. While this equates to annual 3.5% GDP, the bulk is likely to materialize around the event in 2020. In terms of job creation, an estimated 277,000 jobs will be created. 40% are expected to be in the hotel and restaurant sector (for the six months of the Expo) while 30% will be in the construction sector, peaking in 2018-19. The remaining 30% are in tertiary sectors such as transport and logistics, business services and retail.
How do you perceive Dubai as the world capital of Islamic economy?
Dubai offers a range of advantages for the Islamic economy and this will be a significant driver for Dubai’s economy in the future. The Islamic economy is not just Islamic finance but halal food, lifestyle, education, tourism and standardization and certification. Dubai’s strategy is built on seven pillars, supported by 46 initiatives to be launched in 2014. These pillars are: the establishment of Dubai as an international centre for Islamic finance; halal industries; halal tourism; the Islamic digital economy; the capital of Islamic art and design; a centre for Islamic economy standards and certification; and an international centre for Islamic information and education. Some of the initiatives, launched already, are the Dubai Global Sukuk Centre; the Dubai Centre for Islamic Finance; the Global Islamic Economy Summit; and the Islamic Economy Award.
Dubai has the right skills and assets to achieve its vision to become the capital of the Islamic economy. In October 2014, Dubai will host the 10th session of the World Islamic Economic Forum, organized by Dubai Chamber. This is a big event for Dubai and will help to position the emirate accordingly. Also, last year Dubai Chamber organized the first Global Islamic Economy Summit (GIES), under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. GIES 2013 was the first forum to cover the full scope of the Islamic finance sectors and halal industries, including food, travel and lifestyle. Business leaders who have inspired the future of the Islamic economy were recognized with an award at the 2013 summit opening. The 14 award categories included microfinance; halal food; travel; media; and SME development. Please give us more details about the “Guidelines for Enhancing SME Finance”.
In the UAE, SMEs contribute an estimated 40-46% of nominal GDP, while accounting for approximately 90-95% of registered firms in Dubai. Despite the integral role SMEs play in Dubai’s economy, the global financial crisis and local debt difficulties have impaired their ability to obtain financing and therefore continue growing. As banks in the UAE have been forced to reduce their overall risk exposure and instead focus on recapitalization, the small business segment has been negatively affected. Yet intervention by various federal and local authorities has ensured that banks have recovered sufficiently to the point where they are able to once again extend credit to worthy enterprises. The predominant concern voiced by SMEs in Dubai and the wider UAE is a wide lack of sustainable financing options. The amount of bank loans going to small businesses in proportion to total credit outstanding is miniscule.
Dubai Chamber has been working to facilitate a dialogue between our SME members and banks in the Emirates. We have done this through roundtable discussions and meetings. However, our main contribution towards enhancing this area has been the formation of the SME finance taskforce, which sought to facilitate an increase in the provision of funds. A result of this taskforce was the publication of the Guidelines for SME Finance document that provides information and guidance to SMEs when applying for credit facilities. In the intervening time, Dubai Chamber is working to increase the number of local entrepreneurs. Our initiative Tejar Dubai was launched last year to encourage the next generation of Emirati entrepreneurs. The initiative, under the patronage and support of His Highness Sheikh Majid bin Mohammed bin Rashid Al Maktoum, Chairman of Dubai Culture and Arts, is the first in the UAE to offer a specialized program and platform for young Emiratis to help them establish their own sustainable businesses to foster entrepreneurship and private sector growth. Not only does the initiative provide young UAE nationals with access to an extensive development program, including classroom learning, on-site training, mentoring and business advice, but it gives candidates networking opportunities with local and international business leaders and access to investment capital.
Please tell us about your CSR initiatives aiming to enhance environmental performance and support the local community.
Promoting corporate social responsibility is the cornerstone of the Dubai Chamber’s sustainability efforts. With membership rising to 153,000 in 2013, the Chamber has a critical role in encouraging business models that provide long-term economic, social and environment benefits. We do this through our Centre for Responsible Business (CRB), which celebrates its 10th anniversary this year. CRB has a number of initiatives which are helping to embed sustainability across the business community. In 2013, participation in CRB programs increased substantially. Membership of the Sustainability Network, an action-orientated business network committed to advancing corporate social responsibility, increased from 35 to 51. The Engage Dubai program got 17 new community partners, a 154% increase, and 20 new corporate members. The CRB and its members launched 11 task groups to drive forward understanding and develop practical tools on corporate social responsibility and sustainability. The Sustainability Network was instrumental in the increase of events from 34 in 2012 to 49 in 2013 – this formed the basis of embedding corporate social responsibility in the business community through networking and knowledge sharing. At the Dubai Dialogue Sustainability Matters Conference in 2013, the CRB donated AED 20,000, on behalf of the speakers and panellists, to the UAE Red Crescent Society in support of the UAE-operated Syrian refugee camps in Jordan. Centre for Responsible Business also implements the CSR Label which is a free diagnostic framework as well as a learning and development tool that helps companies define and improve their CSR strategy, policies and management practices. The year 2013 saw a sharp rise in the number of companies advised within the CSR Label framework.
Since its launch in 2010, the CSR Label has advised 187 companies, of which 90 were advised in 2013. Last year Dubai Chamber won four awards, including the prestigious ‘Best CSR Project’ award at the World Chambers Congress, making it first among all chambers of commerce for its CSR efforts. The Chamber head office became LEED Platinum certified for existing buildings, another first in the Arab world.
What are your future plans in line with the Expo 2020?
Dubai Chamber was actively involved in supporting the Expo 2020 bid, discussing across platforms how the private sector could help the emirate win. During foreign visits and while receiving overseas delegations, the Chamber promoted the advantages of Dubai by highlighting its leading economic sectors like trade, tourism, logistics and finance and its world-class infrastructure. Dubai Chamber will continue to play this active role in highlighting the investment opportunities for the business community because of Expo 2020. Furthermore, we will continue with our international expansion plans and we hope to have up to 20 offices in the next three to five years.
** Interview conducted by Jenny Kassis
About H.E Abdul Rahman Saif Al Ghurair:
H.E Abdul Rahman Saif Al Ghurair is the Chairman of Dubai Chamber of Commerce & Industry and Board Member of Abdul Rahman Saif Al Ghurair Investments LLC and Dubai Economic Council. H.E was elected in March 2008 by the Chamber’s Board of Directors for his valuable efforts and commitment to promoting Dubai as an international business hub. In October 2010, he was re-elected in his position as Chairman of Dubai Chamber of Commerce & Industry.