Interview: Khamis Juma Buamim
How can Dubai ensure that its maritime industry remains attractive to foreign investors?
KHAMIS JUMA BUAMIM: Policy formulation needs to be growth driven rather than development driven. In general the UAE environment has been quite fluent, relaxed and attractive to the industry, and this has been reflected by the number of international players establishing new business activities in the UAE. To ensure that this continues, we must not burden the growth cycle with excessive regulation, which is precisely what happened to the industry in Europe. Prohibitive regulations prevented many companies from producing a feasible pricing structure, triggering the shift from the West to East and North to South that is occurring throughout the global maritime economy. Policies need to be aligned with what the business wants because that drives growth. It does not mean that under any circumstances we undermine the environment or let the marketplace run itself, merely that regulatory bodies ensure the operating framework is applied correctly and efficiently.
What are the biggest challenges to further growth in the UAE maritime industry?
BUAMIM: The UAE’s banking sector has not yet taken full advantage of the industry. If you look at the size of the ship financing business around the globe and compare it with the UAE relative to the size of its maritime industry, we are clearly lagging behind. Ship financing, whether of new, secondhand or converted ships, is a lucrative industry with attractive returns and secured risk. It has been an opportunity missed when one considers that the maritime sector is the second-largest contributor to the country’s GDP after the oil and gas industry. Most countries with successful maritime sectors have reliable local sources of finance, whether its Singapore with its local financing engines, or China with its mammoth banking infrastructure. Discussion has been ongoing between the marine and banking sectors in the UAE, and progress has been made, but more needs to be done to make local project financing viable.
What challenges will Tasneef have as a new shipping classification body, as it competes with other long-established industry associations?
BUAMIM: The real question surrounding Tasneef is how rapidly it will be able to grow. Tasneef is filling a void, as it is the first classification society to be established in the GCC region and its establishment will lead to significant maturation of the regional shipping industry. It is already well placed and has a large inventory of ships registered under its system.
Through its ability to support enterprises involved in shipbuilding and repairs, Tasneef could easily become one of the most important bodies in the UAE. There are currently 9000 ships in the country and yet only around 380 are registered under the UAE flag. So while international classification societies have traditionally dominated, it has been primarily due to the lack of a local alternative. The market now has that alternative and we expect to see results, although it will be a gradual shift. Over 70% of the ships in the region pass through Dubai, so it is merely a matter of clearly communicating the advantages of joining.
How could the UAE incentivise investment and better support firms in the maritime sector?
BUAMIM: The UAE needs an internationally compliant, unified maritime regulatory framework under federal law. Overlapping legislation and a lack of a sound, national legal structure for the industry is deterring greater investment in Dubai and the UAE. Such legislation would not only benefit the shipping industry, but also tourism and the economy as a whole.
The movement of ships along the national coastline should not be hindered by conflicting jurisdictions. In the end, such overlap creates bureaucratic hurdles that only frustrate business. If laws were unified under the National Transport Authority, this would advance the maritime industry and precipitate funding, insurance, reinsurance, business and project management, keeping millions of dollars in the UAE that, today, go abroad.
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