How new initiatives are increasing Dubai's investment and travel appeal

 

Covering a total area of 83,600 sq km, the UAE borders Saudi Arabia to the west and south and Oman to the east. The country’s coastline stretches approximately 1318 km from the south-eastern shore of the Gulf, nearly reaching the Strait of Hormuz in the north. Most of the country is situated along the Gulf, aside from Fujairah and parts of Sharjah, which sit along the Gulf of Oman.

By area, Dubai is the second largest of the emirates behind Abu Dhabi, covering around 4110 sq km in total. A series of land reclamation projects beginning in the early 1990s increased the emirate’s geographical area by 200 sq km and also contributed to an expansion of its coastline. The UAE has only one naturally occurring waterway — Dubai Creek, which extends 14 km into the heart of the emirate, dividing that part of the city into Deira to the east and Bur Dubai to the west.

Climate

Dubai’s climate can be described as tropical desert, with the year divided between winter and summer months. Winter spans the months of October to May, with the maximum average temperature reaching 23°C in January and February, while summer runs from June to September, with average maximum temperatures normally peaking in August around 39°C. However, in 2017 the emirate experienced a heat wave, with temperatures reaching highs of 50°C. The weather is humid near the coast, but becomes progressively drier further inland. As is typical of desert climates, temperatures can drop substantially at night.

Demographics

According to the Dubai Statistics Centre (DSC), the emirate’s total population reached 3.19m by the end of December 2018. The emirate’s population has more than doubled since 2000 — growth that is largely attributed to an influx of foreign expatriates settling in the UAE. As of the end of 2016, Emiratis made up 9% of the population, while expatriates accounted for the remaining 91%. As a result, the emirate is especially ethnically diverse and dozens of languages are spoken by people from around the world. This multinational workforce has served the emirate well; however, the majority of foreign workers in Dubai are male, which has skewed the emirate’s gender mix. In late 2016 men accounted for nearly 70% of the population at 1.9m, according to DSC figures. As is the case with other countries in the Middle East, albeit to a slightly lesser extent, Dubai’s populace is very young. Around 43% of the emirate’s population is 29 years old or younger, while nearly three-quarters (74%) is younger than 39 years of age.

HISTORY: While little is known about the area that is now the UAE in antiquity, its inhabitants lived a nomadic life sustained through fishing, herding and date farming. In 1959 a team of Danish archaeologists unearthed a settlement and cemetery dating back to the third millennium BCE.

The findings at the site belonged to the Umm Al Nar civilisation, which was active between 2600 BCE and 2000 BCE in what is now Oman and the UAE. By the time of the rise of both the Sasanian and Byzantine empires, Dubai had become a regional centre for fishing and trading, situated along trade routes between the West and East.

In the 16th century the Portuguese became active in the Indian Ocean and wider region, commandeering the lucrative commerce of Arab merchants in the area. The decline of Portuguese influence coincided with the rise of Dutch, British and French commercial penetration into the broader region, principally in the form of the Dutch East India Company and the British Empire’s East India Company.

Trucial States

By the 1760s the British were conducting routine patrols of the region to assert their naval dominance, thereby ensuring the protection of their primary trade route to India. In 1820 Dubai, the other local sheikhdoms and some parts of what is modern-day Oman signed a general maritime treaty with Britain to form the Trucial States, an official protectorate of the British Empire. The treaty was considered to be a major defeat for the Ottoman Empire at the time.

Concurrently, during the 1800s the area known as Dubai was inhabited by the Bani Yas, a respected nomadic Arab tribe that assumed power in the region. When members of the Bani Yas seceded from Abu Dhabi, the Al Maktoum family, which today rules Dubai, settled in the emirate in 1833.

The Trucial States alliance lasted until the 1960s, when the British announced plans to leave the Gulf by the end of 1971. This provided the catalyst for the political union that gave birth to what is now the UAE. Talks regarding the founding of the new federation were first conducted between Sheikh Zayed bin Sultan Al Nahyan, the ruler of Abu Dhabi at the time, and Sheikh Rashid bin Saeed Al Maktoum, the ruler of Dubai from 1958 until his death in 1990. The federation was then extended to include the other Trucial sheikhdoms of Ras Al Khaimah, Sharjah, Fujairah, Umm Al Quwain and Ajman. The UAE was officially formed in February 1972.

Government

Under the constitution of the UAE, which was originally written jointly by the rulers of Dubai and Abu Dhabi in 1971, each of the country’s seven emirates retains a substantial degree of political autonomy. However, the federal government, which is based in the capital city of Abu Dhabi, is tasked with managing a number of areas at the national level. These include security, defence, foreign relations, fiscal policy, monetary policy, labour relations, air traffic control, immigration, communications regulation and education standards.

Outside of these areas, each emirate operates on an individual basis. In some cases, federal and local regulators and other government organisations work together. For example, the Dubai Health Authority, which develops and manages the emirate’s health sector, works with the federal Ministry of Health. Each emirate is also allowed to set its own pace in terms of local development and diversification, though a certain percentage of revenue is put towards the federal budget.

In practical terms, Dubai has the freedom to focus almost exclusively on the development of its economy. Furthermore, due to their status as the original founding members of the UAE, Dubai and Abu Dhabi hold a number of additional powers at the federal level and are considered to have more influence over national affairs than the other five emirates. For instance, the rulers of Dubai and Abu Dhabi hold veto power on the Federal Supreme Council (FSC), the presiding national body in the UAE, which is made up of the rulers of the seven emirates.

Additionally, as a result of Sheikh Zayed’s leading role in the formation of the country in the early 1970s, the ruler of Abu Dhabi traditionally serves as president of the UAE, while the ruler of Dubai serves as prime minister and vice-president. As such, the current president is Sheikh Khalifa bin Zayed bin Sultan Al Nahyan, who took the position after the passing of his father in 2004. Sheikh Mohammed bin Rashid Al Maktoum has been prime minister and vice-president since 2006.

Political Organisation

The federal government is organised into three branches: the executive, legislative and judicial. The executive branch consists of the FSC and the Cabinet, which is officially known as the Council of Ministers (CoM), and is made up of the nation’s 31 ministers. The CoM is overseen by the prime minister and two deputy prime ministers, and plays an advisory role to the FSC, in addition to supervising the operations of the UAE’s federal ministries.

The legislative branch comprises the Federal National Council (FNC), a 40-member, partially elected body consisting of representatives from all seven emirates. Since the UAE’s first public elections in 2006, half of the members of the FNC have been elected by an electoral college, which is composed of prominent citizens selected by the FSC. The other 20 members of the FNC are appointed directly by the FSC. The number of representatives each emirate sends to the FNC is based on the emirate’s size and population. Dubai and Abu Dhabi, as the most populous and largest emirates, each send eight representatives, while Sharjah and Ras Al Khaimah each send six, and the remaining three emirates send four representatives each. The FNC, which plays an advisory role to the federal government, has the power to review and amend draft federal laws and amendments before they are put before the CoM and FSC for approval. Other tasks carried out by the FNC include reviewing ministers’ job performance, and developing and discussing the federal budget.

Key Body

The FNC has benefitted from the FSC’s efforts over the last decade to boost public participation in the government. For 34 years, following the creation of the FNC in the early 1970s, representatives were appointed by the FSC. However, in 2006 a 6000-strong electoral college elected 20 members of the council in what were the UAE’s first public elections. By the time the second round of elections took place in September 2011 the electoral college had grown to include 129,000 prominent individuals. The last FNC elections were held in October 2015 with a 35% voter turnout.

In line with this expanded representation, the FSC has also worked to boost the FNC’s powers in recent years. In 2008 several new constitutional amendments both extended representatives’ terms – which had previously been limited to only two years – to four years, and increased the council’s responsibilities to include oversight of the UAE’s involvement with international conventions, among other changes. The FSC has plans to continue extending the FNC’s powers.

The federal judicial branch of government comprises the Federal Supreme Court and Courts of First Instance, both of which operate independently of each other and are separate from the other branches of government, as laid out in the constitution. The Federal Supreme Court engages primarily with federal-level disputes. The Courts of First Instance, which include a variety of local and regional courts that are spread throughout the federation, handle civil, personal status and commercial cases at the local level.

Language

Arabic is the official language of the UAE, but other languages are spoken in daily life. As the language of business throughout the region, English is present through all levels of government. Road signs, restaurant menus, and a large portion of the media are all presented in Arabic and English. However, given the significant Pakistani, Indian and Filipino expatriate populations living in the UAE, Urdu, Hindi and Tagalog are all frequently spoken as well. The diverse population in the emirate means a variety of other languages may also be heard, including Spanish, Chinese, Farsi and Russian.

Religion

While Islam is the official religion of the UAE, religious freedom is enshrined in the constitution, and this is reflected in the diversity of religions practised by the country’s large expatriate population. Christians, Buddhists, Hindus, Sikhs and members of other religious communities are all present within Dubai and the wider UAE.

As a result of this religious mix, in 2015 the federal government issued the Anti-Discrimination Law, which criminalises all forms of discrimination on the grounds of religion, caste, creed, doctrine, race, colour or ethnic origin. Islam still strongly influences and informs daily life in the UAE, with the Sunni tradition being the dominant form of the religion practised in the emirate. The country’s legal code was developed as a combination of international legal practices and sharia law.

Economic Objectives

Dubai was not immune to the economic headwinds that buffeted the global economy in 2008-09, nor was it insulated from the fall in oil prices that began in 2014. Despite persistently low international commodities prices, however, Dubai is predicted to experience steady GDP growth, anticipated at 2.9% in 2018 and 3.7% in 2019.

The emirate has increased its drive towards consolidating its position as a knowledge-based economy, as demonstrated by the Dubai Open Data Law, which was passed in 2015 and makes non-confidential data accessible to researchers, and the launch of the Smart Dubai initiative, which has streamlined and digitised a number of processes in the emirate. Dubai has also been collaborating with other emirates on a broad portfolio of diversification-oriented projects at the federal level.

In addition to launching new initiatives, Dubai worked in 2018 to advance ongoing projects. Dubai has continued meeting its targets on the path towards becoming the global capital of Islamic finance, near doubling the number of sukuk (Islamic bond) listings on its exchanges since 2017. New sukuk issuances in the emirate reached over $6.4bn in the first three quarters of 2018, in comparison to approximately $3.7bn in the same period of 2017. Moving forward, the collaboration between Dubai Islamic Economy Development Centre and Nasdaq Dubai to create and implement sukuk-related initiatives will further bolster the emirate’s status as a global centre of Islamic banking.

In 2018 the emirate’s aviation sector also continued to expand, with Dubai International Airport achieving a passenger traffic volume of 8.37m in August – the highest volume of passenger traffic of any airport globally. Meanwhile, expansion work at Al Maktoum International Airport has continued, with the new facility set to meet a passenger traffic target of 146m annually by 2025.

Business Environment

The UAE business environment is regarded as one of the most open in the Gulf, and this is reflected in the country’s rankings in the World Bank’s “Doing Business 2019” report. Overall, the UAE is ranked 11th out of 190 countries on the ease of doing business index, which marks an improvement over its position at 21st in 2018. It was also the highest-ranked country in the MENA region, including over fellow GCC member states Bahrain (66th) and Saudi Arabia (92nd).

The UAE was also well ahead of advanced economies outside the region such as Spain (28th), Japan (34th) and Luxembourg (66th). The UAE excelled in four areas: paying taxes (2nd), getting electricity (1st), dealing with construction permits (5th) and registering property (7th). The country also ranked 15th in terms of protecting minority investors, and exhibited a stronger performance from 2017-18 in terms of starting a business (25th) and getting access to credit (44th), but a weaker performance in resolving insolvency (75th) and trading across borders (98th). Starting a new business in the UAE requires, on average, 4.5 procedures and 8.5 days, and will cost 13.4% of income per capita.

Creating Jobs

For 2019 the UAE government approved a balanced federal budget of Dh60.3bn ($16.4bn). This represents a 17.3% increase on 2018, and focuses on health care, education, social development and human capital formation. The majority of the budget, 42.3%, has been allocated for social development projects, while 17% of the overall budget will go towards education and 7.3% towards health. Of the remaining outlays, 37.4% has been earmarked for government affairs, with Dh1.7bn ($462.7m) to be spent on federal infrastructure projects, Dh1.6bn ($435.5m) to go towards housing and Dh2.5bn ($680.5m) being set aside for policies to further enhance and support the nation’s regional and global relations.

Future Focus

Following a reshuffle announced in October 2017, there are now 31 ministers in the UAE Cabinet. The changes introduced six new ministers, as well as a number of new ministry portfolios and structural changes to existing portfolios. There are now nine women serving on the Cabinet, including Shamma Al Mazrouei, the minister of state for youth, who became the youngest government minister in the world at 23 years of age. The government has announced that the Cabinet will be forward-facing and focus specifically on youth and happiness, as well as developing education and combating climate change. The Cabinet’s new generation of ministers has been designated the task of taking the country into the future on a firm footing by strengthening relations with its citizenry. The government has also shifted its methods of communication with the populace, seeking to connect more using social media and various other digital communications.

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Cover of The Report: Dubai 2019

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This article is from the Country Profile chapter of The Report: Dubai 2019. Explore other chapters from this report.