Dubai's wealth and the greening of the Emirates

Contemporary Review, July, 1995 by Habeeb Salloum

Dubai is the second leading oil producer of the United Arab Emirates' seven states, but much of its wealth is founded on a free economy which is ever on the increase. Between 1986 and 1993, non-oil trade grew at an annual rate of more than 17 per cent to reach $17.5 billion.

In commerce, Dubai is fast becoming the principal city for business and trade in the oil-rich Gulf region. Almost every world shipping company sails into its huge ultra-modern harbour and more than sixty airlines stop in its international airport - second only to Tokyo in the number of daily transit passengers.

Situated between the East and West, the city has for centuries been a convenient stopping off point for global traders. Ever-increasingly prosperous and politically stable, this dynamic UAE state has a trading image established by being involved in commerce for many years.

Since the Medieval Ages, vessels, from the ancient dhows to today's huge merchant ships, have crowded the city's 10 mile long Creek. In the past, goods from the Far East, Indian sub-continent and Africa - a fair amount smuggled - were unloaded and carried by camel caravans to the desert hinterland and beyond.

Today, the pattern of trade has greatly increased and somewhat changed. Besides being an importer, Dubai has now become one of the major re-export centres in the world, serving a market of one billion people, covering the Middle East, the republics of the former Soviet Union, East and South Africa and the countries of the Indian sub-continent. The end of the Cold War has dramatically raised Dubai's contacts with the countries of the former Soviet Union, creating an influx of visitors who spend $1 billion annually in the UAE.

What has set Dubai on the road to progress and affluence is a buoyant and prosperous domestic market and the astuteness and entrepreneurial ethos of its people, developed from their long trading heritage. According to Sultan Ben Sulayem, Chairman of Dubai Port Authority, Dubai traders are shrewd businessmen who have always been able to trade well beyond the geography of the Gulf area.

This inherited ability for commerce by its people is complemented by the far-sightedness of its rulers who, when the modest revenue of oil began to flow in, used the wealth to build an excellent infrastructure for their state.

In addition, the government's enthusiasm in slashing red tape, which plagues businesses in many parts of the world, greatly facilitated the luring in of much foreign investment. Of course, what also helped immensely were that profits and incomes were free from taxation, foreign exchange controls were non-existent and there was a fully convertible currency.

Industrialists and all types of other businessmen wishing to trade, invest or establish factories will find that Dubai has excellent up-to-date telecommunication systems with the outside world. Telephone, telex and fax services are very efficient. There is direct dialling to 203 countries and major international couriers are well represented and offer competitive rates.

Sophisticated facilities of all kinds abound. There are a wide range of skilled labourers and a tolerant social environment in which to work. English ranks at par with Arabic and superb leisure conveniences, like the three golf courses, fine white-sandy beaches, top class accommodation, superb eating places, lively entertainment and spirited nightlife, ensure that investors rarely have difficulty in attracting suitable staffs from all over the world.

For investors, topping all these drawing cards is Jebel Ali, one of the largest free ports in the world. Joined with Port Rashid under the Dubai Port Authority, Jebel Ali's 67 berths, occupying almost 10 miles of quays, along with Rashid's 35 berths, boast excellent handling facilities and a reputation for being the most efficient ports between the Far East and Europe. Built in the 1970's to maintain Dubai's commercial eminence, they handle, yearly, around two million tons of cargo. In container activity, they are among the world's top ten in terms of berths and top 20 in container traffic.

The heart of an expanding commercial world-centre, Jebel Ali, with its largest man-made harbour in the Middle East, has been made very inviting for commerce by the laws enacted to draw in business. Any newly established firm in the Free Zone has 15 years of freedom from taxation and this can be renewed for a further 15 years. In addition, the company can be 100 per cent foreign owned - outside the Zone, 51 per cent local participation is required - and is exempt from foreign duties. There are no taxes, either corporate or personal, and a 100 per cent repatriation of both profits and capital are permitted.

Energy is abundant and inexpensive and there is a high level of administrative support from the Free Zone Authority. Also, to facilitate the flow of goods, there is a fast intercontinental road network connecting the free zones of Oman, Saudi Arabia, Qatar, Bahrain and Kuwait. These investment temptations have already attracted over 750 large companies m expected to rise to 1,200 by the year 2,000 - like Black and Decker, Sony and other well-known firms.