Dubai, Asharq Al-Awsat—As Dubai increasingly positions itself as a hub for the global Islamic economy, companies in the Emirate have looked to expand abroad to take advantage of new trade and business ties.
Supporting the Emirate’s businesses is the Dubai Chamber of Commerce and Industry (DCCI), which has been working on projects to encourage foreign companies to do business in Dubai and to encourage Dubai-based businesses to expand internationally, particularly in the Gulf Cooperation Council (GCC) states and Africa.
Asharq Al-Awsat spoke with Hamad Buamim, the director-general of DCCI. He emphasized the ties between Dubai and Saudi Arabia, as well as the other GCC member states, that are playing in the development of Islamic industries in Dubai.
Asharq Al-Awsat: What is your strategy for the next five years?
Hamad Buamim: The DCCI is the official representative of Dubai traders in the private sector and the Emirate of Dubai more generally. Our focus is mainly on the trade sector, and traders represent two-thirds of the Chamber’s membership, whether they be involved in retail or other types of business. We have approximately 150,000 members. DCCI is one of the largest chambers of commerce in the Middle East and Africa, and we benefit greatly from Dubai’s economy and a large business presence in the city. DCCI members hail from all over, and we are very proud of the approximately 20 free trade zones embraced by the city.
Additionally, we are representatives of businessmen and work as liaisons to the government, often in the field of law, in order to create a motivating work environment. We are working very hard to create a competitive business environment in Dubai while also supporting business growth and promoting the Emirate as a global trade center. At the same time, we are working to promote other forms of trade, such as tourism. There are various roles and initiatives that we are carrying out in each specific sector.
Recently, in order to keep up with developments in the city, we formed a plan for 2012 based on the future of business and took into account relevant recent changes. Before 2008, local companies focused on domestic markets and supported the “revolution” that resulted from the construction of new infrastructure, hotels, and so on. At the end of 2008, thanks to the global financial crisis, demand decreased and many companies located in Dubai began to orient themselves globally, focusing on markets in Saudi Arabia, Qatar, East Africa and elsewhere. Today, most of these businesses trade in foreign countries, representing a major shift over the past five years. Therefore, DCCI has had to take on a new role in order to represent trade in Dubai. Chamber members are anxious to expand into the Saudi, African, East and Central Asian markets and we help support them. DCCI now has an office in Ethiopia in order to support this expansion. We also have an office in Baku in Azerbaijan, as well as in Erbil in Iraq. We hope to have an office in Saudi Arabia some time soon, as we currently boast 20 offices outside of Dubai.
Our major objectives include helping companies from Dubai enter foreign markets, while also attracting foreign companies here. Thus we launched the “Big Hundred” initiative, which is aptly named. Theoretically, any city that calls itself an economic hub must be home to 70 percent of the region’s major companies. In order to be a tourism hub, this must be true as well, regardless of whether the companies are Iraqi or Saudi Arabian or Egyptian. When we began this initiative, I focused on Europe and America, but I noticed a gap in companies within the region having a presence in Dubai, especially Saudi Arabian and Asian ones. It is in our interest to attract these types of companies, because when they move to a city they naturally attract small businesses as well. For example, if we bring companies such as SABIC to Dubai, we may be able to bring companies that support their work as well. Our focus is on companies that work in key trade sectors already present in Dubai, namely trade, tourism, finance and transport logistics. Our policy is to approach these large companies and offer them facilities as part of the “Big Hundred” initiative. Our most important role is to support members of the DCCI.
We’ve recently launched another project called Business Voice, through which we will talk about difficulties in starting businesses and meeting financial goals. We seek to communicate with those responsible, and government entities are in control of many issues, among them changing laws or procedures within the Emirates.
Q: How do you view increased interaction with some of the more active companies in the region, whether they be regional companies or ones that you have targeted?
Recently, we’ve seen a lot of communication. For example, market relationships with Ethiopians before our presence in the country were simple and based on trade, but today we’ve moved five companies established in Dubai and the UAE to Ethiopia, where they now have offices to facilitate trade. We’ve attracted some traders in East Africa thanks to our presence there, and the role of the African Union has been very important in connecting us with companies outside of Ethiopia. Similar patterns have resulted in other regions. Trade with Ethiopia from 2012–2013 has come to represent the largest African market for Dubai, and today we have expanded to Angola, Nigeria and Kenya, as well as other countries across the continent. We hope to help these offices increase their business, while also aiding companies working in Iraq and Azerbaijan. It should be noted that many companies have managed to expand into Saudi Arabia without much help from DCCI. However, the Chamber’s presence will help support small and medium enterprises to move to the country, and we hope for our future office to provide opportunities for advancement to companies there, as well as access to resources on founding a company through our representatives.
The Saudi market is the largest for DCCI members, with an estimated ratio of exports reaching 31 percent of the total and valued at AED 75 billion (USD 20.4 billion) over the past 10 months. This represents a growth rate of 24 percent. The Saudi market has risen from its place as the third largest for DCCI members to the first. If we look at the GCC measurements, 55 percent of our exports go to Saudi Arabia. We expect these exports to reach a value of UAE 90 billion (USD 24.4 billion) by the end of this year as a result of growth initiatives implemented by the Saudi Arabian government. The trade sector was negatively impacted in 2009, but from 2010 onward the annual growth rate of trade has hovered around 15 percent. We expect this trend to continue, especially in light of the fact that many Saudi companies are being encouraged to establish branches in Dubai.
I have been keeping up with the numbers, and over 700,000 tourists have visited Dubai over the past six months. This number is expected to reach 1.5 billion by the end of the year, and we don’t really call them “tourists” because they are moving internally. This phenomenon had a positive impact on trade and retail. The Saudi Arabian tourist is taking on a more global role, and this helps the hotel, restaurant and service industries. Many say that the UAE and Dubai tourist market is limited, but it is clear that the Saudi market is proving that assumption wrong. Saudis who carry out business in Dubai have access to a large, unique market and their companies are treated like national ones. We also hear from members of DCCI that Saudi Arabia is one of the easiest places to open a business in the region.
Q: What actions have you taken to attract Saudi companies, or to encourage companies located in Dubai to open offices in the Kingdom?
We have a very strong relationship with various Saudi Chambers of Commerce. We are working on joint projects to encourage employment and to establish companies in Saudi Arabia in order to take advantage of the business climate in Dubai. We often exchange delegations and hold workshops and seminars to promote various projects. A lot of our cooperation has taken place in the Eastern Province, as well as Jeddah and Riyadh. In the city of Caldmam, for example, we were provided with facilities to establish industrial projects that the Kingdom needed, mainly in the very competitive fields of infrastructure and energy.
Saudi Arabia is worth more than its exports: if we looked at the import–export figures, Saudi Arabia is the sixth-largest trading partner to Dubai, behind India, China, America, and other countries that we import from. Saudi Arabia is Dubai’s primary export market, yet these measurements take into account trade only. If we looked at more sectors like the service and tourism industries, it becomes clear that Saudi Arabia is one of Dubai and the UAE’s most crucial business partners.
Q: What is the added value for companies that move to Dubai?
Dubai is a meeting point for many countries and a large amount of international companies are located there. We host many events, exhibitions and galleries, of which there are over 100 in the city, and all of this provides an opportunity to attract employees. Many Westerners pass through Dubai, as it is a hub connecting more than 200 countries by plane. Saudi businessmen who want to enter the US or African markets often pass through Dubai for business, thanks to the plentitude of direct flights. This is especially applicable to businessmen who ship goods by air or sea, and their presence in the city bodes well for the hotel and service industries. Saudi Arabia is actively investing in the retail sector, as we have 10 million tourists and brands are expanding. Saudi Arabian citizens and GCC nationals are treated like citizens in UAE in terms of property and other aspects of the law, and this fact help their companies take full advantage of their presence in Dubai.
Q: Are you seeing a growing number of UAE companies operating out of Saudi Arabia?
This has happened quite a bit. As I mentioned, trade grew 24 percent last year. This means if merchants were selling goods valued at AED 100 million per year, now that number is up to AED 124 million, and this growth is constantly increasing at a rate of 20 percent annually. We can look at the example of construction or service companies, many of which were able to win the chance to take on projects in Saudi Arabia and have a larger market share there than in the UAE. Saudi Arabia has undoubtedly provided many opportunities for growth to various companies, thanks to infrastructure projects. The Saudi market is one of the Gulf’s largest, especially in terms of consumers. There are great business opportunities to be had, and we try to offer added value for companies coming to Dubai through their taking advantage of the Saudi market.
Q: Do you expect this relationship to continue throughout 2014?
We expect the relationship to continue for the next five years, thanks to our economic development plan.
Q: DCCI helped organize the recent Global Islamic Economy Summit. How does this fit with plans to make Dubai an Islamic economy hub?
Throughout this past year, Sheikh Mohammed bin Rashid Al Maktoum, the Vice President of the UAE, Prime Minister, and Ruler of Dubai, launched an initiative to make Dubai the world capital of Islamic economics. If someone had asked where this capital was, there is no definitive answer, although there is a lot of activity taking in Malaysia, Turkey and even Riyadh. Each place has its particular strengths, but the real question is how Dubai can become a reference. The output of Islamic economies hovers around USD 8 trillion, and if we add in Shari’a-compliant funds that number reaches USD 10 trillion. The food market is estimated at USD 658 billion and the global travel market around USD 126 billion. These numbers clearly point to big opportunities, and we strive to offer them to companies that are interested in Islamic economics through a series of government projects to be launched over the next three to four years.
Dubai has all the ingredients of an Islamic economic capital: a strong economy, a focus on the financial sector, especially banking and insurance, and the halal food market. Malaysians have been very successful in this regard, but many opportunities remain to be exploited in terms of travel—many hubs exist today. This summit will be held for the first time this year, and we hope it will become annual. We will have an opportunity to discuss challenges, opportunities, and recommendations for building Dubai as an Islamic economy capital, and we hope all the countries of the world will participate. This means implementing new economic frameworks and discussing legislation that will provide services at Islamic standards, which are different from those of other services.
Q: Do you think that Dubai’s current infrastructure is suitable for an Islamic economy?
The city’s existing infrastructure supports this initiative already, as we are an area where companies and economists meet. We hope to achieve our goals through building up even more infrastructure and opening our economy. The government’s development perspective will be key, and this is the ingredient of the equation we really expect to contribute to building an Islamic economy in Dubai.
Q: Does DCCI contribute to legislation and building a financial base to lay down the groundwork for Islamic banking?
Yes, but we want to do more and take better advantage of financial centers in Malaysia and London in order to expand our assets. Another feature of Dubai is our free trade zones, whose legislation competes with that of traditional areas. We really hope to work with federal legislation to achieve our goals, and this will be one of the strategic themes addressed in the opening session of the conference.
Q: Do you expect to see high growth rates for companies registered with DCCI?
We grow at a rate of almost 9 percent each year, and 10,000 new companies have signed on with us since the beginning of the year. We expect this number to become 12,000 companies by the end of the year. The economy of Dubai is booming, and more and more companies are being established constantly, especially those focusing on services.
Q: What are the main challenges you face right now?
Legislation is one of the things we want to see more development in, in order to keep up with international best practices. Dubai and the UAE in general do live up to these standards year after year, but we still face many obstacles on issues related to the courts and resolving commercial disputes. Further, we want to focus on inflation—during the last five years there has been none, but this issue may prove a challenge over the next year. I don’t think the numbers will be very high, but it is something companies must be aware of. In human resource departments, there will be a demand for talent and thus an increase in cost across an expected range. We will find a remedy.