Season of change: The Arab Spring has the potential to create new economic opportunities for the emirate

 

In his introductory remarks at the 2011 Global Arab Business Meeting (GABM), held at the Al Hamra Convention Centre in Ras Al Khaimah in October 2011, Sheikh Saud bin Saqr Al Qasimi, the ruler of RAK, spoke of new opportunities created by the unrest that has swept through North Africa and the Middle East in 2011 and early 2012. “The real challenge is how we can provide good governance to the people, which I believe begins with transparency,” he said. “Governments should have the courage to bring in transparency, which allows them to address challenges rather than accumulating problems.” Sheikh Saud’s remarks highlight an important aspect of the demonstrations – in a handful of relatively wealthy Middle Eastern nations, including the UAE, the Arab Spring has opened up new space for political dialogue and, potentially, long-term economic growth. At the 2011 GABM, business leaders from all over the Arab world expressed cautious optimism about the opportunities for sustainable expansion created by the ongoing protests. The idea that the Arab Spring will act as a catalyst for political reform and economic expansion is increasingly prevalent. According to a mid-2011 report by the Economist Intelligence Unit, annual real GDP growth in the Middle East is expected to average 4.8% for the period 2012-15, nearly twice the projected rate in North America and second only to Asia.

MOVING FORWARD: In the short-term future, the region’s major hydrocarbons-producing countries – the UAE, Saudi Arabia and Qatar, in particular – stand to benefit the most from the Arab Spring. With instability elsewhere in the region, these countries should gain both from investors looking for stable markets and, to a lesser degree, tourists looking for new destinations. The UAE, which has been working to improve public participation in government since 2005, is poised for rapid economic expansion.

TIME TO SHINE: RAK in particular has made a name for itself in recent years as a secure and stable place to do business, especially in the industrial sector. RAK has benefitted from ambitious development initiatives by Sheikh Saud, who has worked to guarantee good governance and transparency in an effort to encourage economic growth. The emirate boasts a number of growth drivers and other competitive advantages that should stand it in good stead in the post-Arab Spring economic climate. Like the rest of the UAE, RAK’s local population boasts relatively high incomes for the region. The emirate’s financial sector, dominated by the National Bank of RAK (RAKBANK), fared well in the wake of the international economic downturn (see Financial Services chapter). Lending at RAKBANK continued largely unabated through 2009 and 2010.

RAK’s financial industry is underpinned by the thriving local industrial sector. The emirate’s numerous industrial zones, operated by the RAK Investment Authority (RAKIA) and RAK Free Trade Zone (RAK FTZ), are well positioned to benefit from foreign firms that are looking to set up shop in the UAE due to instability elsewhere in the region. The Arab Spring has been especially hard on small and medium-sized enterprises (SMEs). Both RAK FTZ and RAKBANK have worked to cater to SMEs in recent years, which bodes well for those looking to relocate to the UAE.

BY THE BOOK: RAK’s reputation as an up-and-coming regional leader in higher education could also be a major advantage in the wake of the Arab Spring. Sheikh Saud has worked to boost research activities in the emirate. In 2009 the École Polytechnique Fédérale de Lausanne (EPFL), a major Swiss technical university, partnered with RAKIA to open a campus in RAK.

The government has also worked to improve the quality of education on offer in RAK, encouraging a focus on teaching creative thinking and practical professional skills. This focus bodes well for RAK’s ability to benefit from the rapidly changing regional economic climate. Taking into account the focus on education, the burgeoning industrial sector and the UAE’s advantages, RAK is well positioned to capitalise on the new economic opportunities created by the Arab Spring.

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