The Report: Abu Dhabi 2013
While hydrocarbons continue to make up the lion’s share of the emirate’s GDP, oil revenues are supporting long-term efforts to diversify the economy. Under the Abu Dhabi Economic Vision 2030 strategy, the emirate is working to build a knowledge-based economy, with a focus on boosting activity in a handful of key non-hydrocarbons sectors, including tourism, manufacturing, logistics, health care, education, financial services and telecommunications. Going forward, Abu Dhabi looks set to remain a key part of not just the UAE’s economy, but also the broader regional economic framework.
Country Profile
Over the past 40 years, Abu Dhabi has grown into a major economic power in the Middle East. A series of ambitious long-term development policies have transformed the emirate, turning it into a regional economic, political and cultural heavyweight. The country profile includes information about Abu Dhabi’s geography, climate, population and political system. This chapter features an interview with Sheikh Hazza bin Zayed Al Nahyan, National Security Advisor and Vice-Chairman, Abu Dhabi Executive Council; and an interview with Kim Sung-hwan, Minister of Foreign Affairs and Trade in the Republic of Korea. There are also viewpoints with David Cameron, the UK Prime Minister; and Janet Napolitano, US Secretary of Homeland Security.
Explore chapterEconomy
Thanks in large part to high oil prices and an increase in its hydrocarbons production, Abu Dhabi continued its economic recovery in 2011 and 2012. Hydrocarbons remain at the centre of the emirate’s economy, accounting for nearly half of its GDP and almost 90% of government revenues in 2010. However, the emirate has been channelling its substantial oil earnings into other sectors so as to reduce its reliance on hydrocarbons in the long term. Indeed, the non-oil sector has exhibited fair growth in recent years as a result of this strategy, rising by 5.4% in 2010 and 7% in 2011, reaching Dh334.3bn ($91.1bn) in the latter year. Another feature of Abu Dhabi’s changing economic landscape is the continued efforts to promote private sector employment. The government is looking into a range of measures to create jobs in the private sector, including encouraging a culture of investment and entrepreneurship among young people, and the promotion of small and medium-sized enterprises. This chapter includes interviews with Nasser Alsowaidi, Chairman, Department of Economic Development (DED); Butti Ahmed Mohammed bin Butti Al Qubaisi, Director-General, Statistics Centre – Abu Dhabi (SCAD); and Mahmood Ebraheem Al Mahmood, CEO and Chairman, ADS Holding.
Explore chapterBanking
Operating within the largest banking sector in the GCC, Abu Dhabi’s banks have thrived, and today the UAE capital is home to some of the most successful lenders in the country. Recent years have seen a number of regulatory changes brought in. These include more prudent credit risk management policies, new controls on lending activity, and changes to the nature of banks’ concentration of risk levels. The central bank’s new regulations on retail lending, for example, aim to establish a more transparent relationship between banks and their customers and boost the overall credibility of the banking system. Looking ahead, the government’s commitment to sizeable infrastructure projects underpins the future growth of the banking sector. Still, the increasingly competitive nature of the domestic banking market will continue to drive the established trend of revenue diversification. This chapter includes an interview with Ala’a Eraiqat, CEO, Abu Dhabi Commercial Bank.
Explore chapterCapital Markets
While it has been another challenging year for Abu Dhabi’s capital market, some developments in the fixed-income segment, new equities listings and a raft of regulations that promise to add more depth to the market have ensured that it was also an interesting one. The significant regulatory steps taken over the past year, supplemented by a pipeline of reforms still to come, form the framework for the future expansion of the Abu Dhabi Securities Exchange (ADX). Yet more functionality will come with an upgraded trading platform planned for the second half of 2013. Of course, like all exchanges in the region, the ADX faces a challenge in attracting new listings and liquidity, but while mixed results are expected in the short term, the long-term prospects of the ADX remain as strong as ever. This chapter includes interviews with Rashed Al Baloushi, CEO, Abu Dhabi Securities Exchange (ADX); and Nazem Al Kudsi, CEO, Invest AD. It also includes a viewpoint with Mohammad Al Murtada Al Dandashi, Partner & Managing Director, Al Ramz Securities.
Explore chapterIslamic Financial Services
A significant proportion of the UAE’s Islamic financial services sector is based in Abu Dhabi. Home to two of the three largest Islamic banks in the country, three of its most successful takaful (Islamic insurance) firms and a multitude of sharia-compliant investment funds, the emirate is also emerging as an important regional centre of Islamic financing. Moreover, demand for Islamic mutual funds is rising, with sharia-compliant funds accounting for 27% of the UAE’s total of 89. In addition, demand for new investment products has driven a rise in the sukuk (Islamic bond) market. Looking ahead, while Abu Dhabi’s takaful players face potential challenges as a result of regulatory reform, particularly with regard to new solvency standards, a low penetration rate and increasing awareness of insurance products’ utility shows the potential of the domestic takaful market. This chapter includes an interview with Tirad M Mahmoud, CEO, Abu Dhabi Islamic Bank.
Explore chapterInsurance
Local insurers in Abu Dhabi have weathered a turbulent two years, during which they have been compelled to make the transition from an era of rapid economic expansion to one of more muted growth. Yet the sector has met the challenge of declining investment income while continuing to show healthy profit – a clear indication of the air of optimism that currently prevails within the emirate’s insurance community. A growing population, a relatively low penetration rate and a number of infrastructure developments in the pipeline form the basis of the future growth of the emirate’s insurers. Indeed, a double-digit compound annual growth rate is forecast for the UAE insurance sector until 2015. And although Abu Dhabi’s insurers face a number of challenges, chief among them a difficult investment climate and a wave of regulation that promises to fundamentally alter the way in which they assess their business, the drivers for growth within the domestic market make for a sanguine outlook.
Explore chapterEnergy
A string of investments in both conventional and alternative resources is ensuring that Abu Dhabi sits at the very centre of the global energy map. The UAE increased production by approximately 14.2% during 2011 to 3m bpd of crude and condensate, faster than any other country in the GCC region. Yet despite vast reserves promising more than 80 years of production at current rates and conditions, and with some 93% of the UAE’s natural gas reserves located in Abu Dhabi, the government is nevertheless keen to develop the latest in enhanced oil recovery technologies to maximise its onshore and offshore assets. Additionally, the government aims to draw 7% of the emirate’s total generation capacity from renewable sources by 2020, a target that surpasses those of all neighbouring Gulf countries and which is expected to keep up the pressure for large investments in utility-scale projects over the coming years. This chapter includes interviews with Abdulla Nasser Al Suwaidi, Director-General, Abu Dhabi National Oil Company (ADNOC); and Mohamed Al Hammadi, CEO, Emirates Nuclear Energy Corporation (ENEC). It also features a viewpoint with Sultan Al Jaber, CEO, Masdar.
Explore chapterUtilities
With rapid population growth and an increasingly diverse economy, demand for utilities – including electricity, water and wastewater services – has grown considerably in recent years. The sector will need to continue expanding at around 6-10% to meet growing water and electricity demand, meaning that utilities provision remains a top priority. Furthermore, while the vast majority of Abu Dhabi’s electricity today is generated by gas-fired power plants, the government remains committed to the development of renewable energy sources; the emirate plans to have 7% of its electricity-generating capacity sourced from renewables by 2020, with solar power featuring prominently in the mix. In addition to these developments, Abu Dhabi is taking steps to encourage a reduction in consumption, with energy conservation an increasingly high priority. This chapter includes interviews with Abdulla Saif Al Nuaimi, Director-General, Abu Dhabi Water and Electricity Authority (ADWEA); and Nicholas Carter, Director-General, Regulation and Supervision Bureau.
Explore chapterIndustry
The government of Abu Dhabi continues to invest in a series of large industrial developments as it endeavours to diversify the economy beyond hydrocarbons, a key aim of its Economic Vision 2030. In the coming five years, growth in the sector is likely to be driven primarily by expanded upstream activity. Aluminium is seen as a segment ripe for expansion, with a number of new companies setting up shop in the emirate and a unique “hot metal road” being built as an efficient aluminium transit system. The petrochemicals sector is also seeing massive expansion, though uncertainties in the global economic climate could temper its growth in the long term. In retail, total retail space is expanding at one of the fastest rates in the region. International brands are looming larger, especially at the top end of the market, where expensive cars and other luxury goods are being sold at record volumes. And while concepts that work well in other parts of the world – such as e-commerce – are not necessarily guaranteed a strong future in Abu Dhabi, the fact that so many developers and retailers are pouring into the emirate is a strong indication of its growth potential. This chapter includes interviews with talks to Mohammed H Al Qemzi, CEO, ZonesCorp; Suhail Al Ameri, CEO, General Holding Corporation (SENAAT); and Khaled Salmeen, Executive Vice-President, Abu Dhabi Ports Company.
Explore chapterAerospace and Defence
With a long-term aim of building up its aerospace and defence industry, the government is focusing on establishing a local aviation centre to develop capacity and attract investment. An important element of this is international linkages, which will be essential to the success of both the aerospace and defence industries in the emirate. The UAE’s good relations with most of the world mean restrictions on export of technology to the country are unlikely to prove too onerous. More specifically, within the sector naval shipbuilding is seen to hold particular potential as a future growth area for the UAE – welcome news for the strategists of economic diversity. With military spending on the increase across the GCC, there could be plenty of work for the shipyards in the years ahead. This chapter includes an interview with Homaid Al Shemmari, Executive Director, Mubadala Aerospace.
Explore chapterTransport
As it continues to develop and diversify its economy, transport is playing a central role in the long-term development of Abu Dhabi. Transport and storage contributed approximately Dh20.62bn ($5.6bn) to the emirate’s economy in 2011, or 2.6% of GDP. Aviation in particular is expanding rapidly; the UAE is set to invest $19bn on new aviation infrastructure as it positions itself as a regional business centre and attracts growing numbers of tourists. Upgraded maritime links will also boost Abu Dhabi’s commercial image and improve its global competitiveness. Lastly, key improvements to public transport look set to boost growth, while a comprehensive transport framework envisions the construction of a 17-km metro line by 2020. Not only does the growing population mean investment is required to keep Abu Dhabi City moving, but transport in the broader sense occupies a significant position in both the emirate’s economic diversification strategy. This chapter includes interviews with Abdulla Rashed Al Otaiba, Chairman, Department of Transport (DoT); and Ali Majed Al Mansoori, Chairman, Abu Dhabi Airports Company (ADAC).
Explore chapterConstruction & Real Estate
After a period of rapid growth in 2008 and early 2009, the construction sector has settled into a more moderate pattern in recent years. However, 2012 began on a positive note; in January 2012 the Executive Council announced that it had approved a range of projects, including some that had previously been put on hold, covering housing, health care and education, in addition to major transport infrastructure development. In real estate, a number of commercial and residential projects have come onto the market, bringing prices down to a level more comparable with those in neighbouring Dubai. Abu Dhabi’s retail and industrial segments are also expanding; mall space is expected markedly by 2015, while industrial real estate has much potential for growth thanks to the government’s focus on establishing the emirates as a centre for industrial activities and transport. This chapter includes an interview with Majid Al Mansoori, Chairman, Department of Municipal Affairs (DMA).
Explore chapterAl Gharbia
As government plans come to fruition, Al Gharbia – the western region of Abu Dhabi – will be a model of responsible and sustainable development for desert and arid coastal environments. Indeed, under Plan Al Gharbia 2030, the region’s economy is forecast to double in size, and the population set is to increase from 185,000 in 2010 to 450,000 by the end of the plan. Already a hive of activity in the energy and industrial sectors, other areas of the economy – notably tourism, logistics and agriculture – are proactively being positioned for healthy growth. More specifically, the region is home to extensive hydrocarbons reserves, 7% of global oil reserves and 3% of natural gas deposits. At the same time, energy developments in the region are focusing on solar and nuclear power plant plans, major areas in which Al Gharbia will change the energy landscape of Abu Dhabi. This chapter includes an interview with Sheikh Hamdan bin Zayed Al Nahyan, Ruler’s Representative in the Western Region.
Explore chapterAl Ain
The city of Al Ain is sometimes known as “the Garden City”, and with good reason. While the UAE is largely composed of desert, Al Ain sits in the centre of a large oasis that it shares with the neighbouring Omani town of Buraimi and which has sustained human settlement for thousands of years. Now, diverse economic activity is offering new opportunities aerospace supplies production, food processing and tourism – all areas which the government hopes to develop in Al Ain. Furthermore, retail space, office space and hotel rooms are all set to increase under bold plans for the city’s expansion. Indeed, Al Ain had a population of only 338,000 in 2005, but this is expected to rise to 627,000 by 2020 as a result of growth, reaching 1m by 2030, as new jobs attract residents.
Explore chapterEducation
While the emirate currently maintains one of the more respected educational systems in the region, the sector continues to develop and possesses tremendous potential for sustainable and long-term growth. Recent efforts have focused on upgrading the present academic system by reducing gaps between vocational education and industry and between secondary and tertiary education. Several organisations are working together to identify skills shortages and create vocational training programmes, and new partnerships aimed at strengthening research between academia and industry are being forged across and beyond the sector. Encouragingly, Abu Dhabi has also seen a significant increase in student enrolment numbers in recent years. The figure rose by 22% between the 2005/06 and 2010/11 academic years. At the same time, the sector has seen a significant rise in the number of private universities offering higher degrees. This chapter includes interviews with Sheikh Nahyan bin Mubarak Al Nahyan, UAE Minister of Higher Education and Scientific Research; and Mugheer Khamis Al Khaili, Director-General, Abu Dhabi Education Council (ADEC).
Explore chapterHealth
The introduction of compulsory medical coverage and a significant population increase have fuelled the growth of Abu Dhabi’s health care sector in recent years, with a number of new facilities opening. This expansion is expected to continue, with both the government and the private sector planning new hospitals for the near future. Indeed, although efforts continue to expand the private sector’s participation in the industry, government subsidised facilities still accounted for 74% of inpatient encounters in 2011. Meanwhile, the implementation of mandatory coverage is reshaping the sector; about 98% of UAE nationals and foreign workers living in Abu Dhabi have medical insurance, a rate that is unparalleled in the GCC region.
Explore chapterAgriculture
Like much of the Gulf region, Abu Dhabi is largely made up of desert, and as such, agriculture accounts for only a small proportion of the economic output of the emirate – less than 1% of GDP. Despite Abu Dhabi importing the majority of its food, the sector is set to witness important developments in areas such as aquaculture, organic food and water conservation. Date production continues to be a key pillar of agriculture; in 2008 the UAE produced 755,000 tonnes of dates and exported 280,000 tonnes – making it the fourth-largest producer and single largest exporter that year. Overall, population growth and rising affluence mean that the sector is likely to become increasingly important going forward. This chapter includes interviews with Rashed Mohamed Al Shariqi, Director-General, Abu Dhabi Food Control Authority (ADFCA); and Khadim Abdulla Al Darei, Managing Director, Al Dahra.
Explore chapterTelecoms & IT
In tandem with the increasing diversification of Abu Dhabi’s economy, the information and communications technology (ICT) industry has come to take on a more prominent role, featuring a much broader range of businesses than was the case even five years ago. Telecoms companies in the UAE are continuing to invest in the country’s physical infrastructure, which is among the most advanced in the world, while the public continues to show a growing appetite for data services, which are driving the telecoms market, as margins on voice services fall. One key feature of the IT sector is the government’s efforts to encourage greater use of IT via e-government and e-learning. ICT is now a full and integral part of the national curriculum in the UAE, and the government is moving to introduce greater use of computers in schools in a bid to enhance overall learning as well as improving e-literacy. This chapter includes an interview with Ahmad Abdulkarim Julfar, CEO, Etisalat Group.
Explore chapterTourism
As one of the 12 strategic sectors identified in Abu Dhabi Economic Vision 2030, tourism plays a central role in the government’s plan to reduce the economy’s reliance on the hydrocarbons industry. To this end, Abu Dhabi has invested heavily in the sector in recent years, creating more attractions to draw tourists, as well as building hotels and expanding the national airline. Indeed, the tourism sector has grown steadily, as reflected in the consistent increase in the number of hotel guests; the emirate hosted more than 2.1m visitors in 2011 alone. This figure is set to continue to rise, with the authorities targeting 3.2m by 2015. To cater for – and bring about – this uptick, the sector is witnessing major developments in entertainment, retail, global sports events and large corporate functions. The government is also keen to develop the meetings, incentives, conferences and exhibitions (MICE) segment, aiming to more than double its economic impact by 2020. This chapter includes an interview with Sheikh Sultan bin Zayed Al Nahyan, Representative of the President of UAE and Chairman, Culture and Media Centre.
Explore chapterMedia & Advertising
Recent growth within the media and advertising sector has highlighted the potential of local creative industries. Indeed, going forward the industry is expected to expand considerably, with advertising projected to top $94m in 2015. However, the sector is also undergoing a number of important changes. Newspaper and radio advertising, for example, is expected to decline slightly between 2011 and 2015, while the use of mobile phones to access digital content, we well as the popularity of social media sites are trends that are reshaping the sector. Furthermore, in recent years social networking has overtaken news and information as the most popular online activity among UAE internet users. Abu Dhabi and the wider UAE are also seeing continued efforts to expand the availability of Arabic-language content, another key theme within the sector. This chapter includes an interview with Noura Al Kaabi, CEO, Abu Dhabi Media Zone Authority – twofour54.
Explore chapterTax
This chapter provides an overview of tax regulations in Abu Dhabi. It includes information on corporate taxation, foreign investment incentives and free trade zone advantages for foreign businesses. It also provides a guide to intellectual property law and import taxation.
Explore chapterLegal Framework
This chapter outlines the general rules for establishing a business in the emirate, including the key corporate, labour and property laws relevant to companies doing business locally in Abu Dhabi. The chapter also includes an overview of the judicial structure, as well as information on arbitration and appeals.
Explore chapterThe Guide
This chapter provides an overview of Yas Island, which hosts several of the emirate’s major touristic attractions and accommodation options. The chapter also provides a listing of Abu Dhabi’s other leading hotels and resorts, as well as useful telephone numbers and facts for visitors, including information about language, visas, currency and more.
Explore chapterTable of Contents
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