Company News » In a grain of sand

Few people in the West know how many emirates there are in the United Arab
Emirates, let alone what their names are. In fact, the country is a federation
of seven emirates or sheikdoms: Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al-
Khaimah, Sharjah and Umm Al- Qaiwain. The UAE has a population of 2.8 million,
and a land area of 83,600 square kilometres. Interesting for geographers, but
let’s cut to the chase.

The UAE is reckoned to hold one-fifth of the world’s known oil reserves –
enough to last for 100 years at current rates of production. Most of the oil
lies below the sands of Abu Dhabi, which rating agency Moody’s describes as the
driver of the UAE economy.

Even though there has been some diversification, in 2004 oil and gas still
directly accounted for 33% of GDP, 77% of consolidated government revenue, and
92% of exports (excluding re-exports and free zone exports).

In the light of last year’s hikes in oil prices, GDP is expected to have
grown by 25% in 2005 as against almost 18% for the previous year. In revenue
terms, it’s boom time in the UAE.

Within the UAE, Dubai boasts the most stunning economic development story in
the Persian Gulf, the Middle East as a whole, and quite possibly the world. It
is the fastest growing city on the planet. The value of current construction
projects under way could be as much as $100bn (£57.5bn).

Dubai’s response to the dwindling of its oil wealth (relative to that of Abu
Dhabi, for example) has been to diversify into other sectors – on a massive
scale. Its port facilities, already among the largest in the world, have grown
rapidly. The vision is for Dubai – positioned as it is between Asia, Africa,
Europe and the Middle East – to become the world’s shipping hub. The emirate’s
tourism sector has also leapt ahead, attracting a spectrum of visitors from
families to golfers and the super-rich.

Political and regulatory environment

Although the UAE is generally more liberal and open than neighbouring Saudi
Arabia in its acceptance of western investment, values and practice, there are
still drawbacks. The UAE capital, Abu Dhabi, for example, only opened up its
property market to outside investors last year.

The UAE is keen to be seen as all round business friendly. The World Economic
Forum puts it at number 18 for growth competitiveness in a list of 117
countries, just below Germany, New Zealand and Korea. In the World Bank’s ease
of doing business ranking, it is 69th of 155 countries, and on the Corruption
Perceptions Index it ranks number 30 among 158 countries.

Doing business there

Many companies choose to set up in Dubai’s free zones, such as the Internet and
Media Cities. This can be relatively quick: it takes around two months to apply
for permission to set up, get local government approval for the business plan
and a licence to operate.

Practically speaking, this means using the government services office in the
free zone, which deals with all the government departments to obtain approvals.
It is efficient, although licences and permits can cost several thousand pounds.

The alternative is to set up as an onshore company. In this case, foreign
nationals may own only 49% of the company, with 51% owned by a local partner.
Such partnerships can be difficult to unwind if the arrangement doesn’t work

Management/accountancy staff

Professional and managerial staff are typically expatriates, many of them
from the UK, although headhunters and recruiters are also busy trying to move
people between companies within the UAE or from elsewhere in the Gulf, such as
Kuwait and Bahrain.

“Finding staff here with the right skills is well-nigh impossible,” says
Matthew Ranson, a committee member of the Dubai-based British Business Group.
“There are some good local people, many of whom have been educated at overseas
universities and business schools, but more often than not it is a matter of
bringing in expatriates.”

Ranson adds that the development of Dubai International Financial Centre has
exerted extra demand for staff to work at financial services companies setting
up at the centre.

Making a success of business

Despite appearing to have adopted the American model of runaway capitalism and
economic development, religious, ethical and family values are important in

While Dubai may be liberal and open for business, it does not tolerate some
behaviour. In this regard, though, it is more comparable to Singapore than Qatar
or Saudi Arabia, say.

It is important to dress presentably in the UAE and show respect for the fact
it is a Muslim country where prayer five times a day is common, which may
dictate the way diaries are organised.

The more traditional local men may consider it inappropriate to shake hands
with a woman. In the new industries such as media and design, things are more
informal, and suits and ties have given way to jeans and sweatshirts. This is
not the case in banks, government departments and other formal situations.

Case study: Sand hassle

UK management engineering and development consultancy Mott MacDonald played a
key role in one of the largest maritime development projects in Dubai.

Dubai Marina will eventually consist of 50 tower blocks, providing retail and
leisure accommodation as well as luxury apartments. Mott MacDonald was lead
engineer in phase 1 of the project, which was completed in 2004. Its job was to
provide the overall structural and building services design for a 10- hectare
site with six residential tower blocks and related infrastructure.

On a flat waterside site where the temperature can hit 50 degrees Celsius in
the summer, the project posed twin challenges of structural stability and energy
efficiency in the cooling of the building.

Mott MacDonald describes the fast-track timescale as a major challenge. “It
required careful planning by the building services design team, with
consideration of the systems requirements and technical development as they
worked well ahead of the architectural design. This enabled the direct
procurement of major plant items such as generators, chillers, air handling
systems, life safety systems and building management systems.

“Mott MacDonald also had to specify, package and analyse the tenders of these
procured items to ensure the customer received a high-quality installation while
still addressing commercial considerations.”

Today, the six towers – each between 20 and 37 storeys high – look down on
the marina and are one of Dubai’s most prestigious landmark sites.

Mott MacDonald meanwhile is still in Dubai, working on the Mall of Emirates
project. When compete, the development will embrace 350 stores, a 14-screen
cinema and entertainment centre, and a snow park. Projects in Dubai are huge and
meeting the challenges they pose requires extraordinary skills.

Inflows and outflows

Exports $50.0bn
Re-exports $22.3bn
Crude oil $22.1bn
Imports $38.1bn
Consumer goods $15.2bn
Capital goods $12.6bn
Intermediate goods $5.3bn
Net foreign direct investment $9.0bn

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