The Report: Dubai 2018

Economy

Dubai’s economy is among the most diversified in the region, thanks to factors such as a highly attractive business environment that has brought in large amounts of foreign investment. Despite producing little oil, growth has been affected in recent years by the knock-on effects of the fall in international oil prices and a consequent slowdown in neighbouring hydrocarbons-dependent territories. However, this has benefitted other sectors, such as transport, tourism and other indirectly related activities. A moderate oil price recovery in 2016, plans to step up infrastructure investment ahead of Expo 2020 and further diversification of the economy by boosting manufacturing output mean the emir- ate has one of the most dynamic short- and medium-term growth prospects in the region.

This chapter contains interviews with Hamad Buamim, President and CEO, Dubai Chamber; Abdul Latif Al Zayani, Secretary-General, GCC; Liam Fox, UK Secretary of State for International Trade; and Raja Easa Al Gurg, President, Dubai Business Women Council, and Managing Director, Al Gurg Group.

Banking

Dubai is home to some of the Middle East’s largest banks, as well as its major financial free zone. The emirate’s financial institutions have largely recovered from a rise in non-performing loans in the wake of the 2008 financial crisis, and are well capitalised and liquid despite a recent rise in delinquencies in the small and medium-sized enterprise segment. A new bankruptcy law and a recently launched credit bureau are set to underpin sustainable lending growth, and segments like Islamic banking and new financial technologies, with its advancement of blockchains, are helping to drive expansion and improve access to credit.

This chapter contains interviews with Khalifa Mohammed Al Kindi, Chairman, Central Bank of the UAE; Bernd van Linder, CEO, Commercial Bank of Dubai; and Abdulla Qassem, Chairman, Network International.

Capital Markets

Dubai is home to a domestic stock exchange, an international market with one of the largest concentration of sukuk (Islamic bonds) in the world, as well as equity futures and three derivatives platform operators: the Dubai Gold and Commodities Exchange, Dubai Mercantile Exchange and Nasdaq Dubai. The emirate continues to attract major international sukuk listings and all of its exchanges are in the process of expanding their product offerings, including moves into areas such as index funds and real estate investment trusts, and various new types of derivatives contracts.

This chapter contains interviews with Essa Kazim, Chairman, Dubai Financial Market; Hamed Ali, CEO, Nasdaq Dubai; and Abdulfattah Sharaf, Group General Manager and CEO for the UAE, HSBC Bank Middle East.

Islamic Financial Services

A major international centre for Islamic finance, Dubai has more sukuk (Islamic bonds) listings by value than anywhere else in the world. The emirate is also home to Dubai Islamic Bank, the oldest – and third largest – fully fledged Islamic bank. The sector continues to develop rapidly, with local sharia-compliant banks registering faster growth than their conventional counterparts, although expansion could lose momentum in 2018. Efforts are under way to position Dubai as a centre for the halal economy generally and as a leader in the Islamic digital economy.

This chapter contains an interview with Adnan Chilwan, Group CEO, Dubai Islamic Bank.

Insurance

Intense competition, low penetration rates and a strong bias towards non-life products characterises Dubai’s insurance sector, with ratings agencies agreeing that there is robust medium-term growth potential for the emirate’s underwriters. S&P Global ratings predicts 10% per annum growth in gross written premiums for the UAE insurance sector in 2017 and 2018, compared to anticipated GDP growth over the same period of 3-3.5%. AM Best, a US-based ratings agency, noted an improvement in earnings coupled with solid premium growth when it compared the performance of listed companies in 2016 to the previous year. Among the key drivers of premium growth have been new federal regulations on motor insurance, as well as the introduction of compulsory health insurance for all residents of the emirate.

Innovation & Investment

Building on its reputation as a global city, regional financial centre and showcase of smart technology, Dubai is forging an economic future based on investment in forward-thinking ideas. As part of this strategy, the emirate is set to welcome millions of visitors to Expo 2020, which is aimed at creating an international platform to foster creative thinking on development goals for the MENA region and South-east Asia. The emirate’s leaders are already looking beyond the horizon at the impact modern science and technology can play in the UAE Centennial 2071 objectives, which offer an outlook for the long-term work planned to solidify the country’s reputation as a world leader.

This chapter contains an interview with Yousuf Al Shaibani, Director-General, Mohammed bin Rashid Space Centre.

Transport

With increasing road, air and maritime transport movements, and the recent launch of a new five-year plan for the emirate’s transport industry, Dubai’s reputation as a major transport centre in the Middle East has continued to grow. In 2016 the emirate saw growth in aircraft, air passenger and air freight movement, as well as in the total number of Dubai Metro and bus system passengers, while the economic contribution from the maritime shipping segment has also increased. The emirate’s success in these and other transport and logistics-related areas over the past decade can be attributed largely to the rapid implementation of ambitious development strategies, with the Roads and Transport Authority launching 29 initiatives under the government’s smart city initiative between 2014 and 2016.

This chapter contains an interview with Mattar Al Tayer, Director-General and Chairman of the Board of Executive Directors, Roads and Transport Authority.

Maritime

Over the past half-decade Dubai has risen into the upper echelons of the global maritime industry. In April 2017 it was named the fifth-most competitive maritime cluster in the world, and the 10th maritime capital overall by the Norway-based Menon Business Economics Group, which publishes a bi-annual report on the international maritime industry. The report measures various cities on attractiveness and competitiveness, technology, finance and law, ports and logistics, and shipping. As the 10th-highest-ranking centre, Dubai was rated best in the MENA region. Furthermore, this is a notable rise from the previous edition, published in 2015, in which Dubai ranked 13th overall. The report predicts that Dubai will continue to grow in importance in coming years, becoming the sixth most-important maritime centre by 2022.

This chapter contains an interview with Sultan Ahmed bin Sulayem, Chairman, Dubai Maritime City Authority.

Construction & Real Estate

In 2017 Dubai was on the cusp of what is widely expected to be a multi-year building boom. Driven most immediately by preparations for Expo 2020, the construction of new and improved infrastructure and major event spaces constitutes an important component of the construction pipeline for the foreseeable future. At the same time, Dubai’s steadily increasing population, the rising number of incoming visitors and strong investment growth in recent years have fuelled an influx of new residential areas, hotels and warehouses.

This chapter contains an interview with Hussain Sajwani, Chairman, DAMAC Properties.

Tourism

With a significant number of new hotels set to open, a raft of private sector-led investments in leisure and business facilities, and the government’s ambitious transport infrastructure development plan well under way, Dubai’s tourism industry is poised for a period of considerable growth in 2018. While the emirate has long been a tourist destination in the Middle East and a key stopover point for international air travellers, under the government’s current sector blueprint Dubai is set to become one of the most popular destinations in the world. The emirate’s reputation is fuelled by the rising number of tourist arrivals in recent years, with many local players optimistic that Dubai will meet its medium-term target of 20m tourist arrivals annually by 2020.

This chapter contains an interview with Mohamed Almulla, CEO, DXB Entertainments.

Retail

Dubai is one of the world’s leading shopping capitals, and the retail and wholesale sector is the biggest single contributor to the economy. Local iconic malls are constantly reinventing themselves, searching for new brands and experiences to attract global consumers to spend on fly-and-buy excursions. The relationship between retail, real estate, air transport and tourism is key to the emirate’s value proposition for consumers and investors. The market’s ecosystem is driven for the most part by the franchise model, which integrates global brands and privately owned family firms to represent their interests in the country and region. The emirate also serves as the base of operations for regional retail and wholesale giants that may have started with a single small shop in Damascus, Basra or Manama, while local brands are using the location to spread across the region.

This chapter contains an interview with Colm McLoughlin, Executive Vice-Chairman and CEO, Dubai Duty Free.

Energy

The economy of Dubai may be considered an outlier for the region, for although its growth and prosperity has been fuelled by its proximity to oil, its own modest hydrocarbons endowment accounted for just 1.3% of GDP in 2016. While its oil-rich Gulf neighbours have long recognised the need to diversify their economies, Dubai’s leaders understood decades ago that the emirate could only prosper by innovating and tapping a range of revenue streams. Dubai operates as a centre for oil and gas trade and is home to many companies servicing the energy industry. Its government-owned oil and gas companies have an international footprint with upstream developments at home and overseas, as well as dozens of downstream ventures. Outside of hydrocarbons, Dubai has set ambitious targets to boost the share of renewables in its energy ecosystem, while striving to set an example for curbing consumption.

This chapter contains an interview with Saeed Al Tayer, Managing Director and CEO, Dubai Electricity and Water Authority; and Saif Humaid Al Falasi, Group CEO, Emirates National Oil Company.

Health

With new hospitals under construction, existing facilities expanding, and ambitious plans to improve the quality of treatment available not only for residents but also the growing number of medical tourists, Dubai has a competitive health care sector. Included in its expansion is the introduction of the universal health insurance programme in 2017, providing a sustainable safety net for the over 4m people who live or work in the city and their dependants. Looking ahead, Dubai aims to implement 15 strategic programmes encompassing 100 health care initiatives through the Dubai Health Strategy 2016-21, an overarching project of reform involving both the public and private sectors.

This chapter contains an interview with Princess Haya Bint Al Hussein, Chairperson, Dubai Healthcare City Authority.

Education

With a vibrant and growing private school system generating annual revenues of Dh6.8bn ($1.9bn) and a cosmopolitan collection of international universities, Dubai’s education sector continues to flourish and to attract investment. Its schools and universities are striving to provide their students with the skills they will need to thrive and contribute in a rapidly evolving workplace. In recent years Dubai’s students have made great strides in international indices; now, while it continues to focus on academic achievement, the sector is putting a new emphasis on extra-curricular activities and career support.

This chapter contains an interview with Abdulla Al Karam, Chairman and Director-General, Knowledge and Human Development Authority.

ICT

Like the UAE as a whole, Dubai has one of the most advanced telecoms and IT markets in the Middle East, boasting high levels of smartphone and internet penetration, fast mobile internet speeds and a rapidly growing start-up scene. While prices in the sector – and the fixed-line market in particular – are relatively high, both the fixed-line and mobile segments are expected to see increasing competition in the coming years. A 2015 infrastructure-sharing agreement, as well as technological advances, should allow more customers to switch between the two main operators for fixed-line services.

This chapter contains an interview with Aisha bin Bishr, Director-General, Smart Dubai Office.

Industry

A key driver of non-oil GDP growth, Dubai’s industrial sector continues to play an integral role in both its own diversification plans and those of the UAE. With a new sector strategy providing guidance for the government’s long-term goal of making the emirate a centre for global innovation, Dubai has plenty of opportunities to further develop its industrial sector. Its network of free zones, both established and nascent, together with a new focus on key sectors with high potential for growth, should contribute to substantial expansion of Dubai’s manufacturing and industrial footprint in the coming years, facilitating increased trade across the region.

This chapter contains an interview with Mohammed Al Zarooni, Director-General, Dubai Airport Freezone Authority.

Tax

This chapter contains an overview of the tax framework under which local and foreign investors operate, including a look at the GCC-wide value-added tax, which is being rolled out in 2018, a guide to international taxation treaties, and the investment and tax incentives available in the emirate’s free zones.

This chapter contains a VP from Dean Kern, Middle East Tax and Legal Services Leader, PwC.

The Guide

The guide contains listings of some of the leading hotels and resorts in Dubai, and contacts for important government offices and services. It also contains useful tips and information for business and leisure visitors alike

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