Marketplace Middle East - Blog
4/17/08
From Dubai to Doha

We took our programme on the road again this week to explore Dubai’s next wave business strategy.

There is a rich history of trading in Dubai which stretches back to the 1850s. It is a mindset which is at the heart of the Emirate’s business plan for the next quarter century. Take DP World, the trading division of Dubai World. It has forged 23 different deals stretching from China to Djibouti. This allows Dubai Inc. to place a corporate flag in each country, planting the seeds for future relationships and growth. This sounds simple, but it may be the key differentiating factor for the United Arab Emirates vis-à-vis its competitors in the Gulf.

This week I had a chance to take an in-depth look at some of the building blocks for the future and to take in some high-level analysis from some of the top political and business leaders in the region at two forums -- the Doha Forum on Democracy, Development and Free Trade and Business Week’s Middle East-China Leadership Forum in Dubai.

Pieces of the Puzzle

Over the weekend, I sat in a few business plan briefings at three divisions of Tatweer, itself a division of Dubai Holdings, the key development vehicle of the government. Dubai Land, Dubai Healthcare City and Dubai Industrial City fit into the next stage of growth. To be candid, it was hard to appreciate the scale of these projects. You might have seen the brands on the many flags, which flutter in the Arabian winds, but to see where they fit into the puzzle of this economy is quite a different perspective. I could write a column on each of the projects, but simply put, one represents sizable theme parks and residential real estate; another is a new approach to integrated healthcare which is sorely needed and the final piece an industrial hub to support the growth which is underway. The hotel, residential and retail hub Bawadi according to its Executive Chairman Saeed Al Muntafiq is worth $53 billion alone.

The industrial city is under construction; 55 square kilometres of real estate which has logistics facilities, land available for global and regional manufacturers to lease space and even low income housing for laborers. This is to address one of the thorniest issues facing the governments in the region; that is to take care of the thousands of workers, primarily from South Asia who have been imported into the U.A.E.

If you take a step back, one can see the industrial logic of all the blueprints and buildings to come. Hotels, golf courses and villas are built to attract visitors and residents. The largest airport in the world is being constructed to bring tourists in and the industrial city will be there to support light industry which has expanded to accommodate the growth. The division managers of these projects smile when asked about the original feasibility studies presented by consultants for all these projects. They were rejected, I am told, by the Ruler of Dubai and now Prime Minister of the United Arab Emirates. It is obvious after this week in the region that the bar is set very high.

Dubai seems to be sprinting to stay ahead of its Gulf neighbors who are now constructing their own visions of the future. On the final approach after a 40 minute flight to Doha from Dubai, one can witness how Qataris plan to expand to more than a million people. The Pearl is the giant project on the cards. Like Dubai, Qatar realizes that trained workers and graduates will be needed to fill the buildings and map out the strategies for the future. The first graduates from the Qatar Foundation campus of four university programs with links to the West will commence May 6th. This is encouraging.

New Culture of Globalization

While the small but wealthy Gulf emirates expand, the sizable players of the Middle East are benefiting from what Turkish Prime Minister, Recep Erdogan called “the new culture of globalization.” Since coming to power in 2003, foreign direct investment has surged from $1 billion to $22 billion. Turkey has not only a large population, but is able to look East and West as an export hub for Europe and the Middle East. Egypt is enjoying similar growth in FDI. This is the benefit of greater integration.

U.A.E. officials say they mapped out their blueprints not on the 40 million people of the Gulf, but the 310 million people of the Greater Middle East Free Trade Area or GAFTA. They have tapped into years of pent up demand, especially after many residents repatriated their savings and assets after 9/11. While consultants may want to be conservative with their project studies presented to their clients in the Gulf, the leaders in the region have no plans to heed that advice.

With oil at $110 or more per barrel, it is full steam ahead.
Dubai is most definitely benefiting from globalization, the increase of oil production, and many other ancilliary industrial, politcal, economic, and other related measures that have coincidentally helped this tiny nation and its resident elite to evolve into global power players.

But, as human rights NGO's in many poor third world nations have reported, much of the manual labor, cleaning, and services deemed unseemily by the "nouveau riche" citizenry and elite are being given to destitute, illiterate, and unrepresented citizens of Pakistan, Sri Lanka, Bangladesh, Thailand, and other such nations, and those individuals are brought to Dubai, and other such Arab nations and used and treated as borderline "slave labor". Anyone who has visited these nations can tell you that much like South Africa during Apartheid, the aforementioned "slave labor" is kept out of sight through the use of force, geographic location, and other state measures, but nonetheless like the homeless in America, the reality cannot be completely masked no matter how much money or force is invested in the PR offensive.

The truly ironic or hypocritical issue regarding this human rights and civil righs atrocity, is not that it is establishing a caste system in the Arab world, that already exists, simply check the pay scales for a Caucasian professional from an Ivy league school against an African American or South Asian American profesional from an Ivy league school employed in any prosperous Arab nation, but rather, it is that the "slave labor" is largely MUSLIM.

So, much for the Arab rhetoric of Islamic brotherhood.
ABOUT THIS BLOG
John Defterios’ blog accompanies the weekly business program, Marketplace Middle East (MME) that is dedicated to the latest financial news from the Middle East. As MME anchor, John Defterios talks to the people in the know, finding out their opinions on the big business moves in the region, he provides his views via this weekly blog. We hope you will join the discussion around the issues raised.
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