Dubai becoming a knowledge-based economy

While in 2015 the world’s emerging countries and fastest-growing economies suffered due to low commodity prices and currency depreciations, Dubai still enjoyed steady GDP growth at around 4% and an increased drive towards consolidating its position as a knowledge-based economy. With a well-diversified model and a set of transformation-oriented projects worth some Dh300bn ($81.7m) in the pipeline, 2015 was worth its designation as the “year of innovation”. The issuing of the Dubai Open Data Law and the creation of Dubai Smart City were among some of the flagship initiatives driving this transformation.

Achieving Objectives

Not only did the year witness the launch of new initiatives, it also saw the consolidation of ongoing projects. Dubai recently achieved its first goal on the path towards becoming the global capital of the Islamic economy, overtaking the world’s leading financial centres in the listing of sukuk, or Islamic bonds, on its exchanges. Going forward new schemes such as the Emirates Global Centre for Accreditation will further bolster Dubai’s status as a centre of Islamic finance. Also in 2015 the emirate’s aviation sector has continued to expand, as Emirates Airlines celebrated its 30th anniversary, Dubai International Airport overtook London Heathrow International as the world’s busiest airport for international passenger traffic, and the development of Al Maktoum International Airport, in Dubai South, continues apace.

Future Focus 

Dubai was not immune from the economic headwinds that buffeted the world economy in 2008-09, nor was it insulated from the fall in global oil prices that began in 2014. Yet 2016 finds the emirate prepared for the current economic situation and looking toward the future. Eight new ministers, five of whom are women, have joined the federal government in a significant 2016 reshuffle. There are now a total of 29 ministers and fewer ministries, which have been consolidated in areas such as foreign affairs and education. The average age of the new ministers is 38. The youngest, the new minister of state for youth affairs, is 22 years old. The government has announced that the new Cabinet will be forward facing, and focus specifically on the future, youth and happiness, a well a developing education and combating climate change. The Cabinet’s new generation of ministers is designed to take the country into the future on a firm footing.

The government has also significantly shifted how it communicates with the populace, seeking to connect more through social media. For example, when announcing the 2016 reshuffle Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai and prime minister of the UAE, issued a statement via Twitter and later followed up with a more detailed letter on business networking site LinkedIn. The post went viral, with the US, UK and Canada being among the top five countries that viewed it, and it has been seen as evidence of the Dubai government’s efforts to better connect with the general population and youth in particular, especially in light of the new youth council.

Creating Jobs 

For 2016, the government has approved a budget of Dh46.1bn ($12.5bn) for the emirate, which will create more than 3000 jobs for Emiratis. This amount is a 12% increase on 2015, and includes an operating surplus of Dh3.4bn ($925.5m). The government intends the budget to focus specifically on spending to stimulate economic growth, raise the efficiency of its departments and concentrate on offering improved health and social care for citizens and residents. About Dh16.6bn ($4.5bn) is set aside for infrastructure, sport and economics, which is an increase of Dh1.8bn ($490m) on 2015 and includes allotments to assist in the preparations for Expo 2020. Dubai plans to maintain current levels of investment in infrastructure over the next five years.

The National reported that a total of 37% of budget spending, or Dh16.9bn ($4.6bn), will be directed towards health care, education, housing and community development, compared with Dh14.3bn ($3.9bn) spent in 2015. The majority of government revenue, approximately 74%, is expected to come from fees and fines. Taxes, such as Customs intake and duties on foreign banks, represent 19% of the budget.

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 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, and lay between trade routes between the West and East. In the 16th century the Portuguese entered 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 known as 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 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 seven emirates that make up the country retains a substantial degree of political autonomy. The federal government, based in the capital city of Abu Dhabi, manages a number of areas at the national level, such as 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 individual emirate is also allowed to set its own pace in terms of local development and diversification.

At the same time, a certain percentage of each emirate’s revenues are 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 example, 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 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 29 government ministers. The CoM, which is overseen by the prime minister and two deputy prime ministers, plays an advisory role to the FSC, in addition to overseeing the operation 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 federal draft 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 on 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 a handful of new constitutional amendments both extended representatives’ terms – which had previously been limited to only two years – to four years, and expanded the council’s responsibilities to include oversight of the UAE’s involvement with international conventions, among other changes. The FSC plans to continue extending the FNC’s powers in the future.

The federal judicial branch of government, meanwhile, 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.

Business Environment 

The UAE business environment is regarded as one of the most open in the Gulf region and this is reflected in the country’s rankings in the World Bank’s “Doing Business 2016” report. Overall, the UAE is ranked 31st out of 189 countries, which is a slight improvement over its position at 32nd in 2015. It also ranked highest in the MENA region, including over fellow GCC member states Bahrain (65th) and neighbouring Saudi Arabia (82nd). The UAE was also well ahead of economies outside the region such as Spain (33rd), Japan (34th) and Luxembourg (61st).

The UAE excelled in four areas: paying taxes (1st), dealing with construction permits (2nd), getting electricity (4th) and registering property (10th). The union also ranked 18th in terms of efficiency at enforcing contracts. However, it did exhibit weaker performance in terms of starting a business (60th), resolving insolvency (91st), getting credit (97th) and trading across borders (101st), which all saw downgrades and affected its overall rank. Starting a new business in the UAE requires, on average, six procedures and eight days and will cost 6.2% of income per capita.

Geography 

The UAE occupies about 83,600 sq km and 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, although Dubai accounts for less than 100 km of the stretch. Most of the country is situated along the Gulf, aside from Fujairah and parts of Sharjah, which sit along the Gulf of Oman. The emirates of Abu Dhabi and Sharjah border Dubai in the south and north, respectively. 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. Fine white sand and gravel blankets the UAE’s terrain, which is generally flat. To the east of Dubai sand dunes gradually grow larger and redder from the iron oxide found there. The UAE does not have any naturally occurring waterways, except for 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 is a tropical desert climate, with the year divided between winter and summer months. The former runs from October to May, with the maximum average temperature reaching 23°C in January and February. The latter runs from June to September, with average maximum temperatures peaking in August at 39°C. Near the coast the weather is humid and gets steadily 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 around 2.5m by year-end 2015. Since 2000 Dubai’s population has more than doubled, almost entirely as a result of foreign expatriates settling in the UAE. As of the end of 2015, Emiratis made up around 11% of the population, while expatriates accounted for the remaining 89%.

As a result, the emirate is especially ethnically diverse and dozens of languages are spoken there 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. By the end of 2015 men accounted for nearly 70% of the population at 1.7m, according to the DSC. 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 74% is younger than 40 years of age.

Language 

Arabic is the official language of the UAE, but many other languages are spoken in daily life. English, as the language of business throughout the region, is ubiquitous, while also being 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. The emirate has such a diverse population that a variety of other languages may be heard, including Chinese, Farsi, Spanish 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.

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