For Ras Al Khaimah (RAK), 2008 was another year of solid growth at home and abroad, in keeping with the emirate's plans to expand and diversify its economy, and in spite of some of the problems that have afflicted the region following the global financial crisis.
The RAK government was an early convert to the concept of economic diversity, though the strategy was somewhat forced upon the emirate due to its lack of energy resources. The emirate's oil fields are almost tapped out, with an estimated 400m barrels left - just 0.4% of the United Arab Emirates' (UAE) total reserves. Similarly, natural gas reserves amount to around 34m cubic metres - nowhere near enough to meet RAK's domestic demand.
Despite minimal identified reserves, efforts are under way to locate new fields. In late November, the government announced it had granted a 25-year concession to a subsidiary of RAK Petroleum to explore and develop an 850 sq km block along the emirate's coastal strip, with seismic testing to begin in the new year.
Though short on oil and gas, RAK makes up for this in part by having a wealth of mineral deposits. Large reserves of limestone and other natural resources feed the emirate's growing cement industry. Indeed, out of 13 cement producers currently operating in the UAE, five are based in RAK, with a sixth firm announcing plans in November to construct a $200m plant close to the RAK airport.
Though the cement industry saw profits trimmed in 2008 due to price capping and competition from overseas producers, it remained a key sector in the emirate's economy.
In March, RAK's industrial base was broadened with the opening of a $50m steel production facility at Al Ghail, with a capacity to turn out 500,000 tonnes of reinforcement bars per year. Along with the emirate's cement plants and quarries, the steel factory is allowing RAK to cash in on the construction boom across the Gulf region. Though the global financial crisis has taken some of the heat out of the sector, RAK will remain a leading supplier to the building industry in the UAE and beyond.
While seeking to boost industrial capacity, the emirate has also set its sights on further developing its tourism sector. RAK Tourism, the state body in charge of supporting and promoting tourism, has laid out plans to attract 2.5m visitors to RAK annually by 2012. The emirate is to more than double the 1800 hotel rooms currently available, with 3700 rooms scheduled for 2012 and as many as 20 new five-star hotels set to open their doors over the next five years.
According to Khater Massaad, chief executive officer of the RAK Investment Authority (RAKIA), hotel development has significantly progressed as the emirate works to accommodate the rising numbers of domestic, regional and international tourists.
"There is still so much room for expansion in this sector and we are looking forward to establishing partnerships with more world-renowned hotel brands in the future," Massaad told local media in July.
One segment of the tourism sector RAK is looking to enter is the meetings industry. In May, local property developer Rakeen unveiled the final plans for the $400m RAK Convention and Exhibition Centre. Expected to be completed in 2011, the complex will feature five exhibition halls, three hotels and a shopping mall complete with cinemas, food court and covered parking.
During 2008, RAK continued to expand its overseas assets portfolio. At the beginning of December, RAKIA paid $65m to Georgia to acquire the remaining 49% stake in the Black Sea port of Poti, having bought an initial 51% earlier in the year. The authority has plans to invest a further $200m to construct a new terminal at the port, increasing its cargo handling capacity to between 35 and 40m tonnes, up from the existing 8m tonnes.
Additionally, Sheikh Saud bin Saqr Al Qasimi, crown prince and deputy ruler of RAK, announced plans in October for the emirate to expand its investments in the Democratic Republic of Congo (DRC). RAK has already committed $910m to projects in the DRC, including a five-star hotel and convention centre, while in March it set aside $250m to develop copper and cobalt mines and smelters in the southern province of Katanga.
In February, RAKIA - along with the state's industrial arm, RAK Minerals and Metals Investments - signed a Memorandum of Understanding (MoU) with Indonesian officials to develop an integrated industrial and logistics hub at the port of Tanjung Api-Api in Sumatra. Along with developing the port itself, an industrial park is being planned with smelting and metals production plants, as well as agro-based business facilities.
RAK has also been working to position itself as an alternative to Dubai as a centre of commerce and industry. As of now, there are some 5000 firms registered in the RAK Free Trade Zone (FTZ), 1500 more than the year before. Companies operating out of the zone - which is comprised of separate parks focusing on technology, industry and business activities - are able to benefit from all of the services available in nearby Dubai, such as a high-grade transport network and infrastructure, but at a far lower cost.
However, one of the biggest obstacles to RAK's programme of economic expansion and diversification is a shortage of electricity. The government is moving to solve the problem, announcing plans at the end of July to build four new power stations over the next three years, with a combined capacity of 740MW.
Other sources of energy are also being investigated, with some private companies, especially those in the cement sector, converting their plants from gas to coal.
Though the emirate lacks the financial and energy resources of most of its neighbours, RAK continued on its course to establish itself as a business and industry centre in the Gulf in 2008. While the emirate is likely to be affected by the slowdown in the global and regional economy in the coming year, the government's steady pace of development means RAK has a strong foundation from which to work in the harder times expected in 2009.