uae insight report - 2 dec 2015

World Business Times Insight: United Arab Emirates

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Tighter times UAE bolsters its foreign direct investment environment

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Terminal velocity in Abu Dhabi ADAC on course to transform the passenger experience

United Arab Emirates

The Mirage WBT talks with Dr Jamal Sanad Al Suwaidi

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December 2, 2015

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Embracing ingenuity As oil reserves diminish and the public sector faces pressure to down-size, the UAE’s future will depend on innovative entrepreneurs. More than $2 billion has already been dedicated to incubating bright ideas but it will take more than money, as Elizabeth Wentling reports.

It’s no longer about oil While other Gulf markets are scrambling to diversify their economies under recent pressure from low energy revenues, the UAE capital’s foresight means it is already well advanced in cultivating a prosperous investment environment, writes Sarah Livingstone Abu Dhabi is well known for its oil, but that picture is rapidly changing. And not because the black commodity and its price-tag are dwindling. Rather, the United Arab Emirates capital has for some time been reducing its reliance on the oil and gas sector by using the spoils collected so far to diversify into more sustainable industries. Far from fantasy, Abu Dhabi already has leapfrogged many developed cities in areas including green energy, transportation, media, financial services and tourism. Innovation has been at the centre of each, as the emirate powers towards a knowledge-based society. “Challenges are big, in fact,” concedes chairman of Abu Dhabi’s Department of Economic Development, Ali Majed Al Mansoori. “And the economic sector is bound to be affected by these security and political challenges in the region. So the government decided to take a final, irreversible option to diversify and create an investment environment that motivates business.“ Economies accelerate, diversify and create jobs when new ideas are harnessed, so the government wants to motivate those in the innovation, creativity and entrepreneurial industries. “The opportunity for the success of innovative ideas and projects in Abu Dhabi is much bigger than any other place in the world,” Al Mansoori says. “Most innovation reduces the workforce, which is commonly feared in densely populated economies.” Reforming financial regulations is one way to make the capital more attractive to business; the government has been consciously amending its laws to bring them up-to-date. The government launched the Abu Dhabi Innovation Index and Abu Dhabi Innovation Survey to help measure success in adopting and spreading knowledge. The emirate has performed well compared to international standards, Al Mansoori says, probably because of the limited local workforce here and because much of its oil wealth has been invested in mega development projects such as Masdar, the first of several nuclear plants, Khalifa Industrial Zone, Emirates Aluminium Company, Emirates Steel Company, Strata Airplane Parts Manufacturer, the Nibras Aerospace Park and the tourism and residential hub Saadiyat Island. “We’re making Continued on page 2

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he UAE takes innovation very, very seriously. In the span of a decade, big moves have been made: monstrous glittering monuments have emerged from the sand, while cosmopolitan airports have broken exorbitant traffic records and now humans are flying the Dubai skies in jet packs. But that is only the tip of the iceberg. The UAE, which is celebrating its 44th National Day today, is determined to be among the top 20 countries in the world in the Global Innovation Index by 2021. And history shows that when this country sets a goal, it typically achieves it. The past year – officially declared the Year of Innovation – has been particularly ground breaking, with multiple new initiatives and funds announced to support creative ideas and young businesses. The sentiment has been particularly emphasised in Dubai, where Sheikh Mohammed bin Rashid Al Maktoum (pictured), Vice President and Prime Minister and Ruler of Dubai, last month announced another $544 million to support small and medium-sized enterprises (SMEs). During Innovation Week in November, Sheikh Mohammed reiterated the country’s goal: “to celebrate the last oil barrel we export because we will be prepared for that day when it comes”. “Planning a higher policy for the UAE in the fields of science, technology and innovation that includes scientific

The UAE is proving to be a hub of innovation that will revolutionise and shape the cities of tomorrow

initiatives, legislative recommendations and clear financial investment is a strategic decision that aims to change the national economy equation to drive it away from depending on limited oil resources,” Sheikh Mohammed said. The UAE government is “revolutionising” its services by creating new opportunities for the public to interact with authorities electronically and developing smart phone apps, such as ‘Smart Salik Dubai’, which allows drivers to pay traffic fines and charge their Salik toll tag. However, while the UAE’s foot is firmly on the innovation accelerator, there are some glaring sectors that require far more nurturing, including sustainable energy. Exponential population growth

A successful business is all about finding an edge. Timothy Walters investigates how Dubai’s business chamber is doing just that. TO BE relevant in today’s world, you have to have an edge. And let’s face it, there is no cooler word being thrown around now than innovation. Innovation drives economic growth; from startups to established brands, the value of new ideas determines ongoing success. Nowhere is this more evident than Dubai, where a lack of lucrative natural resources has spawned an engaging appetite for entrepreneurship. With 40 per cent of Dubai’s GDP and nearly half the workforce relying on small and mediumsized enterprises (SMEs), the Dubai Chamber of Commerce and Industry has placed innovation at its core in a bid to boost its 177,000 members. President and CEO Hamad Buamim (pictured) said developing profitable ideas not only strengthened SMEs but also helped attract foreign direct investment to the emirate and promote competitiveness in the broader economy. A recent survey commissioned by the Chamber found 69 per cent of Dubai businesses believe innovation will become a competitive necessity within five years and an innovation strategy is essential. Collaboration will be key, the survey respondents said, with 73 per cent indicating they would work with customers to develop new products and services, while 51 per cent would collaborate with external partners and 46 per cent with academic institutions. However, 45 per cent of businesses said identifying the right partners was challenging.

– between 9 to 12 per cent annually – has not been accompanied by speedy implementation of eco-friendly systems such as recycling and widespread renewable energy, leading to the country developing the highest carbon footprint per capita in the world. Only this year, Dubai Electricity and Water Authority (DEWA) launched an online portal accepting applications for residents to request the instillation of solar panels. In a country where the sun is literally almost always shining, solar could have a dramatic effect on reducing greenhouse gas emissions. The ball is rolling, though, with Abu Dhabi’s Shams-1 100 megawatt solar power plant setting the path. Many of the start-ups that spring from innovation also are struggling to

Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai

gain financing from traditional lenders. Their development is largely dependent on the limited investment available from

private investors, crowdfunding and government initiatives. The government has attempted to raise the profile of the importance of innovation through the inaugural Innovation Week, which was held at the end of November. A unique festival to foster entrepreneurship, a wealth of events were held to inspire and celebrate innovative ideas – especially those that push the envelope and enrich the nation. LinkedIn social media strategist Anas Almarie, an authority in the local entrepreneurial space, said he was confident the UAE was ready to embrace the range of start-ups seeking support. “The UAE is becoming a hot bed for incubating startups, SMEs and even corporations,” he said. “I always encourage entrepreneurs to observe innovative countries, such as South Korea. We must get our hands dirty and innovate, or accept stagnation.” Other global social platforms such as Twitter and Google also have established regional hubs in the UAE, taking advantage of the country’s technology free zones. This increasing attention from Silicon Valley heavyweights, and other international innovators, is helping intensify efforts to inspire innovation in the country. The UAE is no stranger to international attention for recordbreaking achievements. The sticking point this time, however, will be maintaining the momentum to ensure an innovative culture reverberates for generations to come.

The coolness factor The Chamber has launched a $136 million programme including an innovation index, an innovation lab and a new Dubai University campus dedicated to nurturing ideas. The Index – the first-of-its-kind in the world focusing on emerging cities – compares the level of innovation in Dubai with other leading cities such as Tokyo, Singapore and San Francisco, to help boost the emirate’s standing. Meanwhile, the Dubai Chamber Innovation Lab is positively affecting the economy by incentivising, identifying and up-skilling entrepreneurs. It features a digital platform and research centre to transform ideas into concepts. The lab also includes a private sector working group in which operators in various sectors work together to enhance ideas to their fullest potential, as well as creating recommendations for stimulating innovation in the work environment. Buamim said start-ups typically showed

Developing profitable ideas not only strengthened SMEs but also helped attract foreign direct investment

Hamad Buamim, President and CEO of Dubai Chamber of Commerce and Industry

more willingness than established companies to experiment with innovative techniques. “They understand that the path to their progression to become established lies through innovation,” he said. “We have particularly seen this phenomenon from our new initiative of Tejar Dubai, whose aim is to find and train creative, commercially-minded Emirati youth to help them turn their business ideas into a reality.” Tejar Dubai has seen the launch of several offbeat commercial projects by Emiratis. Rafia Al Mulla’s Roundup Food Trucks has helped created a mobile food van culture in the city, while Randa Al Hemeiri has launched Brio, a centre for the early detection, prevention and treatment of children’s learning difficulties – an area that had previously been lacking in the UAE. The Chamber’s existing members are also enticed to think outside the box, with awards

including the Mohammed bin Rashid Al Maktoum Business Innovation Award, recently launched in partnership with the UAE Ministry of Economy. Innovation also is “powering” the Chamber’s international expansion and development of new and smart technologies. “Dubai Chamber is utilising innovation to achieve its strategic objectives of creating a favourable business environment, supporting the development of business and promoting Dubai as an international business hub in line with our efforts to stimulate economic growth for the emirate’s private sector,” he said. Earlier this year, it signed an exclusive e-commerce partnership with Alibaba Group, a giant Chinese firm that has revolutionised online trading. Buamim said the country’s prime location provided an edge for e-commerce and would help it create a new way of reaching out to a wider segment of consumers around the world, particularly in regional markets. “This [Alibaba Group] partnership opens doors to opportunities for MENA companies to explore the business potential of different markets,” Buamim said. The Chamber’s expansion includes new offices in Azerbaijan, Ethiopia, Iraqi Kurdistan and Ghana, with more to open soon in Mozambique and Kenya. Brazil and China are also in the pipeline. The 177,000 businesses registered with the Chamber is a staggering increase from the 450 since its launch in 1965. Its services also have grown exponentially, significantly contributing to the growth of Dubai’s private sector.

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Aerospace industry takes off in UAE

Continued from page 1

It’s no longer about oil good progress towards our switch from natural resources to a knowledge-based economy.” Each of these projects, to varying degrees, involves the private sector. As part of the government’s Abu Dhabi Economic Vision 2030, they have invested heavily in infrastructure and partnered with major investors, including Cleveland Clinic, General Electric and Airbus. The Abu Dhabi Global Market financial free zone was also launched last month on Al Maryah Island. Many of the private businesses setting up are small and medium enterprises (SMEs), an area the government has been particularly eager to foster. “The role of the government sector is complementary to, rather than competitive with, the role of the private sector,” Al Mansoori said. “It leads the competitive environment for more excellence in such diversity.” Emiratis are showing their business acumen, too. The Khalifa Fund invested $545-million into SMEs in the last few years, and it’s paying off. Many locals are moving away from the guaranteed salaries of the public sector and starting up their own small companies. This is especially true for the younger generation. “We trust the organisational level of our young nationals,” Al Mansoori says. “Rest assured locals will realise the importance of the private sector and help develop it. “God willing, the government sector will depend on the private sector in creating sustainable development.” This movement toward a sustainable economy, however, did not just happen overnight. For some time, the capital has been reducing its reliance on oil and gas and diversifying into green energy, transportation, media, financial services and tourism. And the older generation deserves credit for making choices for the future that cost them in the now. You never know, they might even be able to teach the young whippersnappers something, too. “History tells us that the region has seen many problems in the past, even at the beginning, which were addressed through the wisdom of the leadership,” Al Mansoori says. “You shouldn’t forget the older generations’ accumulated experience in the government sector. These people are well placed to partner with the private sector in the next phase – the contracting phase – to manage business projects and run them efficiently.”

December 2, 2015

An emirati engineer working at Strata

Mubadala’s diversified aerospace companies prove there’s more to aviation than airports and airlines. Their progressive hiring practices prove there’s more to them than the bottom line, writes Elizabeth Wentling IN BARELY a decade, the United Arab Emirates has emerged as a leader in aerospace. Leveraging its booming airline and airport companies, the Gulf state has expanded into manufacturing and servicing airplane components, gaining partnerships with the world’s biggest aviation players.

In 2002 the Government of Abu Dhabi established Mubadala as a principal agent to drive economic

diversification through active investment and asset management across a wide range of industries. Just five years later, Mubadala announced that it would support the development of a sustainable aerospace industry for Abu Dhabi. Ever since, it has formed partnerships and initiated investments with world leading companies. CEO of Aerospace & Engineering Services at Mubadala Homaid Al Shemmari said investing in the aerospace industry was a deliberate plan to facilitate growth and innovation. A central part of Mubadala’s strategic growth plan is focused on two core areas, services and manufacturing. A 25km2 aerospace and technology park – with 5km2 earmarked solely for aerospace projects – will bring the vision to life. “The Nibras Al Ain Aerospace Park is a key catalyst to setting up a world-class aerospace hub. Nibras will be our industrial platform for Homaid Al Shemmari, CEO of Aerospace & Engineering Services at Mudabala

THE oil price plummet has left some with a dim impression of the UAE’s economic sustainability. The country has, after all, been built on revenues from the sector. A more accurate picture shows the country was already advanced in its diversification – the current economic climate may just fire things up a little faster than initially planned. The International Monetary Fund (IMF) expects the UAE to post a fiscal deficit of 2.3 per cent of GDP in 2015, in what would be the country’s first deficit since 2009. But a small deficit is not expected to pose a serious threat to the economy. The UAE fares better than many of its neighbours because of large financial reserves accrued through sensible investments during the peak oil periods. Minister of Economy Sultan Bin Saeed Al Mansouri (pictured) is adamant

Tighter times The UAE’s budget is feeling the pinch, but it is far from drying up as it boosts its foreign investment environment. William Maimer investigates the decline in oil prices from more than $100 per barrel in mid-2014 to about $60 will have “a limited impact” on the UAE’s growth rate. A deliberate diversification strategy has already seen oil revenues as a proportion of the national income decline from more than 90 per cent to less than 70 per cent, he said. “Our government has repeatedly declared its aim to reduce the country’s oil dependency to below 20 per cent of the

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manufacturing and maintenance facilities,” Al Shemmari said. “[Nibras] allows us to focus investment and effort in one geographical location in order to maximise the synergies across the aerospace value chain. The development of a hub for Abu Dhabi supports other local business and delivers on the regional requirements of our global partners.”

For Mubadala, it is about innovating the industry. With over $66 billion in assets and strategic partnerships established with the likes of Rolls-Royce, GE, Boeing and Airbus, Mubadala certainly has the ability to make a large impact on the industry. “We’re contributing to the economy in many different ways. Our education and training initiatives are generating employment opportunities for Emiratis, and investment in research and development projects are pushing the industry to new heights,” he said. Through assets like its composite aerostructures manufacturer, Strata; and its turbine and engine Maintenance Repair and Overhaul (MRO) services provider, Turbine Services & Solution (TS&S); Mubadala has longstanding relationships with global Original Equipment Manufacturers (OEMs) and is providing high-skilled jobs for the local community. “In just five years Strata has grown to nearly 700-employees strong. Fifty

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total GDP in the coming years – a mandate that will protect our economy from the vagaries of international oil prices in the future,” Al Mansouri said. The industrial sector is expected to become a new dominant force, accounting for 20 per cent of national GDP by 2021, while an emphasis on innovation and knowledge is expected to see these sectors contribute 5 per cent of GDP by 2021. New legislation to support small and medium-sized Enterprises (SMEs) is also a key plank of the strategy – as many as 60 per cent of businesses in the UAE are SMEs. The government is targeting 5 per cent of GDP to come from FDI by 2021. The foreign inflows will help make up the shortfall from declining government spending. Federal spending has been scaled back this year for the first time since 2004, to $125bn compared to $130bn last year, according to the Central Bank. The country had increased spending by an average of 12 per cent annually in the decade prior. In a bid to ramp up its appeal to foreign investors, Al Mansouri said the government was writing a new FDI law to “further improve the UAE status as a favourable destination for investments”. Also expected is to allow higher foreign ownership of businesses outside the country’s 34 free zones. “The overall economic development of the country is very attractive for foreign investments, especially in the non-oil sectors such as aerospace, tourism, real estate, construction, financial markets, industry and retail,” Al Mansouri said. “In 44 years of the federation, we have succeeded in creating a highly developed, vibrant and open economy that has emerged as the most attractive investment

Sultan Bin Saeed Al Mansouri, UAE Minister of Economy

environment in the region due to the wide range of opportunities it offers in all business sectors as well as key investment benefits such as: zero income tax, world class infrastructure, free transfer of profits, low customs tariffs between 0 and 5 per cent for almost all goods.” The UAE is an attractive investment location for the Middle East and it witnessed an increase in business activity – particularly in the real estate sector – following the 2011 Arab Spring, as the wealthier sought a refuge for their cash. About $10bn of FDI flowed into the country last year, according to United Nations data. The figure is lower than the $12bn average pre-2008, but is more than Qatar and Saudi Arabia combined ($1bn and $8bn, respectively). Many of the businesses that intend to invest in Iran when it opens up, will also likely base themselves in Dubai. The country ranks high on international scales such as the World Bank’s Ease of Doing Business report (22nd) and the World Economic Forum’s Global Competitiveness Ranking (17th). Its advanced infrastructure, efficient legislative environment, strong labour force and strategic geographical location are often cited in such reports. However, the UAE faces increasing

per cent of its employees are Emirati, 84 per cent of whom are female. Our goal now, and in the future, is about creating a framework where innovation and entrepreneurial spirit can grow,” Al Shemmari said. Looking ahead, Mubadala is expected to create more than 10,000 jobs by 2030 through all of the new facilities its companies will set up at Nibras. Will the aerospace industry witness steady growth in the years to come? Only time will tell, but Al Shemmari believes a well diversified aerospace business across both manufacturing and services will stand the test of time. For now, Emiratis are on track to continue influencing the aerospace sector, both at home and around the world.

competition from neighbouring Qatar, which has rapidly strengthened its legislative and judicial systems to improve its standing on the world stage after years of trailing behind. Qatar now ranks above the UAE in both international competitiveness and ease of doing business. The UAE’s ability to strengthen its areas of diversification and innovation will be critical to ensuring its economic sustainability. How it manages reform of subsidies and the tax system will also be important. Analysts have warned of the need to slice generous subsidies and implement a value-added tax. The government has been working on both and in August introduced a market-driven fuel price system that determines a set monthly price for diesel. Al Mansouri conceded that liberalising the market and promoting more transparent competition were crucial to organic growth. “We believe deregulating fuel prices and lifting subsidies will contribute to building an open and effective business environment that is integrated seamlessly with the world economy,” he said. “This will allow for the adoption of disciplined fiscal policies that are more responsive to economic cycles.” The country is also placing high importance on the World Expo 2020 in Dubai. Al Mansouri said the international event would create 270,000 jobs and accelerate the emirate’s tourism to a record 25 million visitors. “The UAE has strengthened its global position in the past few years and we expect that strong trend to continue on all levels, especially following Dubai’s bid-winning performance to host Expo 2020,” he said. “This important event will make a qualitative contribution to the national economy.” The UAE will undoubtedly put on a good show but at the end of the day it will be judged on how far the economic impact reverberates. IMF analysis concurs with Al Mansoori. However, the IMF has urged greater scrutiny in opening up the economy to FDI, improving access to financing for start-ups and SMEs, and building on the progress made in transitioning to a knowledge based economy. If this is done then the expectation is that the country can ensure ever increasing growth and prosperity in the short and medium terms.

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Terminal Velocity in Abu Dhabi From its unique design to smart technology and entertainment, Abu Dhabi International Airport is creating an entirely new travel experience in its bid to compete in the increasingly innovative aviation industry, writes

Ali Majed Al Mansoori, Chairman of Abu Dhabi Airport Company (ADAC)

Courtney Lawrence

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rom ergonomic sleeping pods to self-service bag-drops, the airport experience is not what it once was. As operators internationally compete to attract a larger share of the 3 billion passengers travelling annually in a multi-trillion-dollar industry, innovation can be highly rewarding. Abu Dhabi International Airport (AUH) is preparing to lift the bar even higher. Its new Midfield Terminal Building (MTB) promises to set new trends in airport architecture, smart technology and, most importantly, the passenger experience. The project will revolutionise travel, according to Ali Majed Al Mansoori, the chairman of Abu Dhabi Airports Company (ADAC), the government entity responsible for the emirate’s five airports. “The MTB will be an airport terminal like never before seen,” Al Mansoori said. “No other country has built infrastructure like this.” Already two-thirds completed, the terminal is due to open in 2017, taking Abu Dhabi International Airport’s capacity to 45 million. The airport is already expected to record 24 million visitors this year with close to 30 million passengers forecasted to travel through AUH when the MTB opens. Passengers will arrive at an impressive 700,000-square metre terminal building, one of the largest buildings in the world. It’s likely they’ll spot its curved roof that appears to float across 18 steel arches, cutting an iconic wave across the Abu Dhabi landscape, from more than a kilometre away. Spanning 319 metres – almost twice the width of Heathrow’s terminal five – it will be difficult to miss. A significant proportion of Abu Dhabi’s passengers purely transit through the airport – a segment in which it competes against neighbours Dubai and Doha. For them, the quality of the experience inside will be far more important. Al Mansoori said innovative systems not yet seen in other international airports would

The new Midfield Terminal Building (MTB) project at Abu Dhabi International Airport

dramatically improve efficiency for everything from check-in to border control – and any time not spent in a queue can be worth additional revenue for the airport’s commercial operators. “The Midfield Terminal Building is a cutting edge project in terms of the technology and systems that will be implemented for the first time,” Al Mansoori said. “We are bringing in machines that the world has never seen.” The terminal will do away with long airport queues – a traveller’s worst nightmare. The new check-in system automatically verifies all types of boarding passes, including mobile and those printed at home, improving security, passenger processing and waiting times. Passengers will then place their luggage on a sophisticated baggage system able to handle more than 19,000 bags per hour – about five times the current 4,800. The first tote-based system of its kind in the Middle East, each bag will have its own tray and barcode, reducing the likelihood of travellers arriving at the other end only

to find their bag did not follow them. Passport control also will be swift. Regular travellers may have already experienced electronic gates at most international airports, including Abu Dhabi, but Al Mansoori said the MTB version would be even more advanced. “You’ll just swipe your hand and you’re good to go, whether coming in or out of the UAE,” Al Mansoori said. “It’s even more efficient than eye scans. “Passengers hate standing in lines at the airport – this system is brilliant because they won’t have to.” With nothing else left to do, passengers will have more time to wait for their flight – but ADAC is promising a memorable travel experience, with entertaining offerings provided by retailers, food and beverage operators, and leading brands of the world. Innovation is imperative for Abu Dhabi International Airport to contend in a region where three worldclass airports operate within an hour’s flying time. And the competition will intensify as Dubai’s second airport, Al Maktoum International, only 45 minutes drive from Abu Dhabi,

WHAT YOU NEED TO KNOW ABOUT THE MIDFIELD TERMINAL COMPLEX n 65 contact gates n Capacity to handle up to 8,200 passengers per peak hour n 156 check-in counters, 48 self-service kiosks n 700,000 sq.m of internal space n 30,000 sq.m of airport lounges n 28,000 sq.m of retail and food & beverage outlets n more than 100 million construction hours to date expands to its planned capacity of 165 million passengers. Also within driving distance, Sharjah International Airport is gaining traction as a travel hub, while Qatar is fiercely competing with its 18-monthold Hamad International Airport, which recently reported a 23 per cent increase

in passenger traffic during the third quarter of 2015, to 8.4 million. “People have the choice to travel through Sharjah, Dubai or Abu Dhabi – but if they want to see something different and experience smooth transitioning, they will choose the MTB,” Al Mansoori said. “Competition is healthy, it keeps us on our toes, it’s good for us.” But sheer numbers are not Abu Dhabi’s goal. The airport consistently rates high in world rankings based on the quality of passenger experience. It is aiming to join only two other airports in Asia that have a level of service ‘A’ rating as defined by the International Air Transport Association (IATA). Abu Dhabi also performs well in Skytrax’s annual World’s Best Airports list, topping the Middle East for three consecutive years (2012-14). Al Mansoori said ADAC would ensure the airport’s expansion matched passenger growth to maintain its high standing. “We don’t want to fill the building with lots of people; we want to have a high quality airport,” Al Mansoori said.

The Midfield Terminal Building is a cutting edge project in terms of the technology and systems that will be implemented for the first time. – Ali Majed Al Mansoori

“We want to attract people who want to see an interesting cultural city - that is our goal.” The new terminal will open shortly after the launch of the Louvre Abu Dhabi, while a second renowned museum, the Guggenheim Abu Dhabi, will follow a short time later. The number of visitors to the emirate is growing rapidly; Abu Dhabi Tourism and Culture Authority recently revised its 2015 projections from 3.5 million to 3.9 million after recording a 20 per cent increase in guest arrivals during the first four months of the year. Abu Dhabi International Airport also stands to gain from Dubai’s tourism growth. The MTB project is also a critical element in the emirate’s economic diversification. World-class airport infrastructure will help boost trade and tourism opportunities, open up foreign markets to Abu Dhabi – and UAE – exports and increase the appeal for businesses to establish offices in the emirate. The aviation sector could be worth as much as $53bn to the UAE economy by 2020, industry experts told the Future Air Transportation Systems Summit in Dubai in January. However, no amount of infrastructure expansion will be able to stave off the region’s critical airspace congestion issue, which industry leaders have persistently said is their greatest challenge. Oxford Economics estimates that the exponential growth in air traffic across the Gulf could cost the region $16.3bn over the next 10 years if air traffic control systems are not improved. The UAE has said it would start restructuring its crowded air space next year. In the meantime, ADAC is reshaping what happens on the ground with the construction of the Midfield Terminal Building. With the industry forecasting four billion passengers globally by 2020, Abu Dhabi’s visitor numbers will rise effortlessly. As such, ADAC has set high expectations for the MTB to be the most modern, attractive and innovative airport terminal in the world, setting the scene for AUH to maintain its top international ranking.

AUH passenger numbers soar THE number of passengers at Abu Dhabi International Airport (AUH) already is growing at more than 10 per cent annually, but the figures are only projected to increase even further. AUH’s rate of growth eclipses its neighbour, Dubai International Airport, and its outlook is as good as any in the world, according to aviation analysts CAPA. More than 24 million people are forecast to pass through the airport this year, up from about 20 million in 2014. The most recent figures show 18 per cent growth in the first ten months of this year, with 19.4 million passengers between January and October. CAPA expects AUH traffic to continue to grow even more quickly than that of Dubai, expanding 50 per cent over the next three years to reach 48 million by 2025. The UAE capital’s ability to enshrine its place as a long-haul transport hub has been aided by the rapidly expanding national carrier, Etihad, as well as aviation-friendly policies under the Abu Dhabi government, which is keen to increase the flow of passengers to impact the entire economy.

Despite its fast growth, multi-billion dollar investment in ongoing expansions mean the airport does not suffer the infrastructure capacity constraints of many of the world’s major airports, such as Heathrow in London and JFK in New York City. However, the picture is different in the air, where the issue of space has been on the agenda for some years. Similar growth at airports in Dubai, Sharjah and Qatar have seen passenger numbers across the Gulf peninsula surpass 100 million. CAPA predicts the UAE’s key airports, including AUH, could be handling a combined 160 to 170 million passengers annually by 2020, making it one the world’s busiest airport system. The local airlines are attempting to cater for the growing demand by using the biggest planes available, Airbus’ A380 and Boeing’s 777s, which can each carry 450-550 passengers. As the passengers flow in to Abu Dhabi, so too is the money, with aviation’s proportion of gross domestic product (GDP) expected to double as the emirate continues to diversify from oil and gas and hone its attention on more sustainable industries.

More than 24 million people are forecast to pass through the Abu Dhabi International Airport this year

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December 2, 2015

Dr Jamal Sanad Al Suwaidi, Director General of the Emirates Center for Strategic Studies and Research (ECSSR), talks to World Business Times about the controversial issues raised in his new book, ‘The Mirage’, from how to counter religious extremism to historical Islam’s influence on contemporary Europe.

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eligion and politics have long inhibited the Arab world from progressing, according to Emirati intellectual and strategic expert Dr Jamal Sanad Al Suwaidi (pictured). While leading Arab scientists and thinkers solved global problems as complex as algorithms and medical breakthroughs (think Abdullah Muhammad bin Musa Al Khwarizmi and Avicenna), their genius only served to benefit Europe, which was much more willing to adopt freedom of thought and creativity, he says. In fact, Europe’s contemporary higher scientific and intellectual standing is a product of historic Islamic civilisation. Therefore, Dr Al Suwaidi says, separating Islam from state is well over due. “Palpably, the relationship between religion and politics is a pertinent issue having a notable impact on the current regional environment in the Arab and Islamic worlds—which incidentally prevents many Arab and Islamic societies from keeping up with the march of modernity, progress and development,” Dr Al Suwaidi tells World Business Times. “Therefore, as I see it, separating religion from politics is a prerequisite for the achievement of real progress in our Arab and Muslim worlds. The time has come to courageously address this issue.” Dr Al Suwaidi argues in his new book ‘The Mirage’ that the current dilemmas facing the Arab world can be traced back to its dependence on “extreme, intolerant ideologies” promoted by certain political religious groups. “Contemporary independent and creative thinkers situated in the Arab and Islamic world must contend with similar dangers to their intellectual integrity and personal safety as that which loomed over their intellectual predecessors in Europe during the Middle Ages – the threat of being charged with apostasy or blasphemy, or worse, the daunting prospect of being subjected to violence or even assassination by radical groups that reject modernity and scientific development,” he says. His comments are brave given he lives in this Arab world he is describing, but Dr Al Suwaidi says there has been much progress in recognising the need to separate religion and state in the Gulf Cooperation Council (GCC) member states, the UAE, Qatar, Saudi Arabia, Kuwait, Bahrain and Oman. “There is in fact a shared belief among the GCC states that reform is necessary and closely connected to domestic and regional security and stability,” he says. These countries, as well as Jordan, have tactically moved to increase social interaction by listening to and acknowledging citizens’ concerns, often via social media, and subsequently addressing them. “Undoubtedly, this particular form of governance has served to ensure their stability, by contrast to other countries in the region, which have notably failed in their efforts to achieve anything closely comparable – as illustrated by the level of unrest and disorder that numerous countries across the region have witnessed in the last few years,” Dr Al Suwaidi says. In response to criticism that the GCC states’ political reform has been too little and too slow, Dr Al Suwaidi argues it has been incremental in a bid to avoid incomplete implementation of one stage before the next, potentially leaving room for unrest to brew. “I perceive the vision adopted by the GCC states concerning political reform and democratic transformation to have struck the right balance in the sense of not compromising the national identity, culture and society of the state,” he says. In highlighting the UAE’s “exemplary model of political reform and societal development”, Dr Al Suwaidi praised the country’s Federal National Council elections and their improved voting mechanisms since they were first held in 2006. “These reforms reveal the aspiration of the UAE leadership for the success of the UAE’s parliamentary experience and the development of political and democratic reform in general,” he says. However, Dr Al Suwaidi emphasises that separating religion and politics does not mean excluding religion from daily life – far from it.

The Mirage

Dr. Jamal Sanad Al Suwaidi, Director General of the ECSSR, & author of ‘The Mirage’ (pictured below)

of religion & state Doing so could, in fact, cause instability among society and within individuals. But just as Europe had to adapt to modern global perspectives in order to progress from the Dark Ages to the Renaissance period, so too do Arab countries need to “reject inherited religious, cultural, moral and ethical traditions that fail to appreciate the fact that the building of a stable nation-state includes a willingness to learn from other civilizations”. Organisations such as the Muslim Brotherhood, and even Hezbollah and Hamas, have proven the inability of political religious groups to govern effectively, Dr Al Suwaidi says, adding that their slogans and theories are “in reality, wholly inapplicable on the ground”.

Separating religion from politics is a prerequisite for the achievement of real progress in our Arab and Muslim worlds. The time has come to courageously address this issue. – Dr Al Suwaidi The Muslim Brotherhood lasted barely a year in power from June 2012 until a military coup on July 3, 2013. An affiliated political group in Tunisia, Ennahda Movement, also was forced to step down in 2014 after it was voted into power in March 2011 following the revolution that toppled authoritarian ruler Zine El Abidine Ben Ali. “The Muslim Brotherhood’s inability to govern [Egypt] upon winning a majority of seats was exposed by the group’s notable lack

of understanding of the enormity of the task of governance and what it actually entails,” Dr Al Suwaidi says. “Instead of working on legislation that would have alleviated Egypt’s economic and social problems, the group sought to establish a stronger foothold at home through a policy of Ikhwanization [brotherisation] of the state and the fuelling of crises abroad that eventually led to the deterioration of Egypt’s international relations. “Hezbollah and Hamas are similar to the Muslim Brotherhood and other political religious groups in the sense that their goal is not to work for the provision of basic needs for the people, but to achieve objectives associated with either regional nation-states or foreign organizations, by virtue of the fact that they owe allegiance to those entities.” Dr Al Suwaidi says countering the “intolerant and regressive ideas” of religious political groups requires a multidimensional approach, with cultural and intellectual arguments as equally important as military intervention. “A cultural and intellectual approach will help with the uprooting of these destructive ideas, thereby limiting he ability of those that seek to manipulate the minds of the youth, or exploit the difficult economic and social circumstances in certain communities that otherwise can be targeted as a breeding ground for the amplification of such ideas,” he says. “Second, we must promote a culture of moderation in all Gulf, Arab and Islamic communities, and bolster efforts to confront those destructive ideologies that contradict both humanity and the tolerant principles of Islam. “Third, we need to strengthen cooperation between the religious institutions in the GCC countries and the religious institutions in the Arab and Islamic worlds, especially those institutions whose influence extends across the region and more broadly across the international community, such as Al Azhar. “The objective here would be not only to confront these destructive ideologies, but to unmask the real objectives of those propagating such ideologies, their inherent corruption, thereby revealing their true nature, namely the practice or justification of violence concealed and camouflaged under the veil of religion.” Dr Al Suwaidi also points the finger at nonArab states, insisting they must do more to slow down the financing of extremist religious groups and improve surveillance of recruiters operating in foreign countries including in Europe. He says it is “surprising” that ISIL, which has

managed to take control of large areas of Syria and northern Iraq, has been successful in recruiting Muslims living in Europe. “It is inexplicable that these groups should be able to find in many European countries a fertile environment that enables them to disseminate their ideas,” Dr Al Suwaidi says. “Therefore, these areas must be targeted and countered, and as such, it is essential for European and American governments to cooperate with the efforts made by the GCC countries in this regard.” As in Arab states, Dr Al Suwaidi says Europe must counter extremist ideology with intellectual dialogue and debate, particularly targeted at young Muslims deceived by ISIL’s propaganda and slogans. “These young Muslims should be informed and educated about the danger posed by the group and their destructive views, which in fact contradict the principles of Islam and true Islamic values,” he says. “In this regard, we should seek the assistance of moderate Muslim clerics who are known for their tolerance. The UAE can contribute to this effort, as it hosts fora with the aim of enhancing peace in Muslim societies. Through these events the UAE seeks to spread the culture of genuine Islam, augmenting efforts to counter extreme ideologies which undermine human values and the tolerant principles of Islam, with the purpose of finding solutions for the issues facing Muslims all over the world.” More also needs to be done to better integrate Muslims, particularly the young, into European society. “We also need to avoid excluding or isolating these young people by curing any feeling of alienation they may hold,” Dr Al Suwaidi says. He disagrees with calls to implement the death penalty for those caught joining a terrorist cause, insisting the answer has to be rehabilitation. “Nor should we consider them terrorists,” he says. “We should educate all other segments of society about the merciful principles of Islam and explain to them that Islam prohibits violence and emphasises the need to spread the values of peace, tolerance and acceptance. All these measures are required to ensure and maintain cultural coexistence in society.” Education, or lack thereof, is a major contributing factor in extremist groups’ ability to attract supporters, Dr Al Suwaidi says. In lower socio-economic countries such as Afghanistan, Pakistan, Somalia and Sudan, extremism has

flourished among the poorly educated who are unaware of the consequences of their beliefs. “One of the problems faced by these countries lies mainly in the declining levels of education, which leaves various segments of society in these countries vulnerable to destructive ideologies propagated by political and religious groups,” Dr Al Suwaidi says. “Pakistan, Afghanistan and Somalia should encourage institutions to establish branches of prestigious Islamic universities or religious institutions and task them with confronting extremist ideologies, as well as encouraging them to disseminate more moderate and more tolerant values. “Additional development assistance is [also] required. There is no doubt that the inferior economic conditions in these countries are fuelling the rise in extremism and terrorism; it is well known that these jihadist groups look to exploit these conditions in their recruitment of vulnerable young people. Therefore, one of the main objectives of the development assistance provided by the GCC to these countries is to assist them in overcoming these fraught economic conditions that facilitate the spread of extremism. This includes improving their education systems and creating job opportunities for vulnerable young people by encouraging them to contribute to developmental projects in their own countries.” The issues discussed in Dr Al Suwaidi’s book have been developed through his work as the director general of the Emirates Centre for Strategic Studies and Research (ECSSR), the UAE’s research institution responsible for assisting the government formulate responses and strategies to political, economic and social issues in the country.

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ehind every great leader is a team. It is not quite the famous saying, but it is true. The UAE’s phenomenal success, astronomical for any country let alone one only 44 years, is widely known. But while several members of the ruling family are leading that development, they are not doing it alone. One of the most influential resources to the UAE government is the Emirates Center for Strategic Studies and Research (ECSSR), headed by director general Dr Jamal Sanad Al Suwaidi. Since its establishment in 1994, the ECSSR has been crucial in helping to formulate the country’s policies, visions and progress, from strategies towards terrorism and cyber security to responding to domestic issues such as Emiritisation and handling the fall out of the 2009/10 debt crisis. The centre was among the first think tanks in the world to identify the threats posed by political religious groups – pivotal research that included recommendations and proposals for decision makers. “We revealed the evils of politicising religion and deceiving simple ordinary people under the cover of religious doctrine,” Al Suwaidi says. “We also highlighted successful global models for human development, social welfare and quality standards in all sectors. The aim and purpose of our efforts were precisely to enhance the chances for peace, security, stability and prosperity for the nations of this region.” That leading research has continued and in May the ECSSR initiated an alliance with other Arab think tanks in a project called ‘Intellectual Storm’, in reference to the Saudi Arabia-led intervention in Yemen, Operation Desert Storm, in which the UAE also has played a significant role to help restore stability. Al Suwaidi says he hopes the alliance will create a common Arab think tank structure devoted to safeguarding the region. “I hope that it will usher in a new era for Arab think tanks in terms of their support for decision makers across the Arab countries, educating their people, and serving their national security,” he says. “This initiative emerged from a sense of responsibility on the part of the ECSSR to serve the decision making process at the local, Gulf, Arab and international levels, in the wake of the difficult circumstances plaguing the Arab world and the dangers that loom around us. This initiative requires combining efforts, uniting

The ECSSR is an influential resource for the UAE government

The Arab intellectual storm Georgia Hunter reports on how the Emirates Center for Strategic Studies and Research (ECSSR) is playing a critical role in following and analysing not only the UAE’s domestic concerns, but issues that impact the entire world. Arabs, mobilising their capabilities, ensuring that decision making depends on scientific analysis and procedures, and finally building united Arab strategies which stem from conscious and insightful forward thinking.” It is this current lack of cohesion in the region that Al Suwaidi says opens it up to criticism from outside and weakens its ability to fight negative forces, such as extremist organisations. “Certainly, the GCC has recorded many significant successes – which I hope will continue to multiply – but these successes do not protect the GCC from criticism and the emergence of negative practices in society,” he says. “The most serious of these negative phenomena is the lack of a consistent media discourse presenting a unified GCC stance towards the issues facing our region. The absence of a coherent, united media approach allows observers and critics to dwell on differences in visions and policies, and impedes building real integration amongst GCC member states.

The aim and purpose of our efforts were precisely to enhance the chances for peace, security, stability and prosperity for the nations of this region. – Dr Al Suwaidi

“However, in my view, the GCC should be admired because it has managed to overcome the various challenges and crises that have faced it over the years. The GCC has not only protected its members from the tension and turmoil which has rocked the region and the world beyond, but it has moved to contain other potential risks and threats that face its members. “In 2011, the GCC sent military forces to the Kingdom of Bahrain to quell the protests raging there and to restore security and stability for Bahrainis. The GCC also showed full solidarity with Kuwait through the Peninsula Shield forces that took part in the international coalitions in 1991 and 2003. This demonstrated the GCC’s commitment to the principle of the common destiny and security of member states. Recently, Operation Decisive Storm represented a pre-emptive move to safeguard the sovereignty of Yemen and restore security and stability for its people. “I hereby call on all GCC states

to work toward further integration and unity on the media and political fronts in order to overcome the looming dangers threatening our region together.” The ECSSR has now published 1100 reports and research papers analysing and, often, providing an alternative view on major political, economical, social and cultural issues of concern for the UAE. These publications are held in high esteem amongst local, regional and international academic and intellectual communities, and a number of them are currently being taught in UAE universities. ECSSR also now has close working relationships with reputable regional and international think tanks, fostering the exchange of scientific and cultural ideas to encourage greater creativity and innovation. Many of its seminars and conferences have been held jointly with these institutions, promoting intellectual exchanges that address the major economic, energy and security issues affecting the region, and the world. “The ECSSR has become an inspiring

model of an intellectual institution with a distinguished style and numerous scholarly and research products, which in turn have served as a valuable source of reference for both regional and international writers and academics,” Al Suwaidi says. “In fact, we perceive scholarly research and thought as tools through which to serve our society and our people.” The research also is valuable in helping to achieve the country’s basic human needs, including security and living standards. ECSSR research is often focused on issues related to national security and sustainable development and produces studies dealing with the ongoing social and economic progress of the UAE, including environmental, political and scientific challenges. As the Gulf’s international strategic importance grows, so too will the significance of the role and work of the ECSSR, as it produces thought-provoking reports on multiple issues and events that are increasingly having a broader impact around the world. Embedded in the Arab world itself, it has a strategic advantage in understanding not only what is happening in the region, but predicting what is to come. “We aim to understand the objectives of these events and developments and, based on the conclusions of our research, to define alternatives and options which serve UAE decision makers,” Al Suwaidi says. “The centre [also] seeks to address emerging developments while they are still taking shape, including those posed by the outcomes of changes and developments occurring in this region and beyond. Such issues require thorough intellectual analysis to protect against improper or superficial interpretation, particularly when addressing complex non-traditional issues such as crossborder terrorism, organised crime, cybercrime, climate and environmental issues, renewable energy technologies and possible future conflicts.” Al Suwaidi’s ambitious vision for the ECSSR, in line with the UAE Vision 2021, aims to further strengthen its global status. He says its success comes down to not only the support of the country’s leaders but the united front among employees. “There is a dynamic, intellectual collaboration between ECSSR researchers and experts alike with regard to addressing various local, regional and international issues of concern. These practices strengthen the centre’s academic output and help to ensure the credibility of ECSSR publications,” he says.

Finding the compassion in cancer care Millions of dollars are being spent on cancer care in the UAE but until now none of that funding had been directed to supporting the emotional wellbeing of patients. The recently launched Cancer Patient Care Society aims to be their shoulder of support.

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eceiving a diagnosis of cancer is heart wrenching. Living with the disease in a society that still perceives it as an automatic death sentence is extra worrying. A new centre in the UAE aims to relieve some of that emotional pain, offering cancer patients support and guidance to complement their medical treatment. “No cancer patient should be left behind, they shouldn’t just be told ‘here are your chemo sessions, this is what you need to do’; they need to have more compassionate support,” says Nora Al Suwaidi, who will run the new Cancer Patient Care Society, also known as Rahma, Arabic for ‘mercy’. Launched in September, the free service includes psychological counselling, which can be received 24/7 and confidentially over the phone, guidance on treatment options, financial support to pay for treatment and a community support network. It will reach patients even in the most remote areas of the desert state, including through local volunteers. It also will eventually establish a database of UAE cancer patient information to help health authorities understand the disease in its demographic context and provide more appropriate services, as well as a comprehensive collection of the best cancer treatment hospitals and medical centres worldwide. But its ultimate aim is to break down the stigma attached to the disease and improve the psychological wellbeing of patients. “Let’s say a cancer patient is up at 3am and they just want to talk to someone, they could go ahead and call the hotline,” Al Suwaidi says. “There’s always going to be someone there to support them. We’ll tell them where to go to get treatment and help them lobby the government to pay for their treatment if they’re Emirati… but to start off with, we’ll

make sure the cancer patient is not alone. “Even research shows, if you’re strong on the inside you can beat the disease better and more efficiently.” Part of improving the patients’ mental capacity to cope with the diagnosis is to give them hope. “We want to do a campaign to inform [Emiratis] that cancer is not death, because people believe that when you’re diagnosed with cancer, that’s it, that’s your death sentence,” Al Suwaidi says. “We need to remove that scare from the community and tell them it’s not a death sentence, medicine is advanced; if we can’t treat you in the UAE, we can send you abroad, there’s always hope. “We [also] want to educate patients that it’s okay… to tell your family members, it’s not a shame for the community to know.” The idea was inspired by Al Suwaidi’s father and chairman of the centre, Dr Jamal Sanad Al Suwaidi, who was diagnosed with lymphoma of the B cell more than five years ago. “The minute he got diagnosed with cancer, he looked

in the mirror and said ‘what am I going to do?’. He has a PhD, but what’s that fisherman in Fujeirah going to do when he gets diagnosed with cancer and he has no resources?” Al Suwaidi says. Cancer is the third leading cause of death in the UAE, behind cardiovascular disease and accidents, with Emiratis accounting for more than two-thirds of cancer patients, according to the UAE Ministry of Health. The World Health Organization (WHO) says there were 1200 cancer-related deaths in the UAE in 2013, with trachea, bronchitis and lung cancers recording the highest mortality rate for men (16.4 per cent of cancer-related deaths), and breast cancer for women (25 per cent). Healthcare, both public and private, is one of the fastest growing sectors in the UAE. The government alone is forecast to spend AED40bn (£7.2bn) this year and in 2013, the sector accounted for 3.5 per cent of gross domestic product. But most, if not all, of the funding has been directed towards medical treatments and facilities, as well as prevention measures. “When the [UAE health authorities] established the cancer prevention unit they did the ribbon days and went into malls... yes, that’s okay but we already have a 20 per cent cancer rate amongst nationals, so what about the people that are diagnosed with cancer, what are we going to do with them?” Al Suwaidi says. “And that, I feel, is what society is going to [judge].” The centre will rely on government funding and donations. Its first fundraising event will be a fun walking and bicycle race held at Yas Formula 1 Circuit in Abu Dhabi on November 7, with tickets for AED50.

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You said what? While cancer rates are declining in the West, the GCC remains reluctant to discuss the disease. Kathryn Freeman finds out what is being done to buck this trend. CANCER is one of those words that is often whispered. Especially in the Gulf. The lethal disease has gained the attention of scientists, doctors and governments in many of the world’s developed countries, but it remains a relatively taboo subject in the Gulf states. The cancer incidence rate has been falling in developed countries – from about 450 cases per 100,000 at 2000 to 220 today. But the trend has been the opposite in the Gulf, where rates have climbed from 92 per 100,000 15 years ago to 140 to 150 today. Qatar Cancer Society (QCS) is working to turn the negative connotations on their head, launching a number of programs to improve awareness and perception. Chairman Dr Khalid Al Thani said while medical facilities had advanced in the region, the problem was in the use of them. “Qatar has spent a lot of money on developing and creating a cancer centre, which is extremely great because people can have access to treatment quickly. But what’s missing is early detection – not because of facilities, they’re there, but the link between the public and those facilities is very loose and people are reluctant to go and get an examination,” he said. QCS is also in the final stage of a cancer training centre that will provide dedicated cancer training for medical personnel, education programs for school and university students and public awareness campaigns. “This will make a big difference in the reduction of cancer,” Dr Khalid said. QCS’s non-government status will give it greater flexibility in delivering its message – and eliminating the stigma attached to cancer. The diagnosis is clear: only when the population accepts discussion of the disease will the concerning statistics reverse their dangerous direction.

December 2, 2015

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Propelling a global expansion The largest helicopter company in the Middle East is taking off in all areas of aviation. THE oil industry is never a stable ride for business. To help balance the turbulence, Abu Dhabi Aviation (ADA) has been diversifying its helicopter company into all areas of the aircraft industry. Its success branching into consulting, maintenance, cargo, luxury charter, training and search and rescue has led the way for other private companies similarly forced to draw away from their core business to stay relevant in an ever-evolving market. ADA had exclusively serviced the active Gulf oil industry for more than 30 years until it was hit by the global financial crisis and downturn in the oil industry. While other smaller aviation companies, such as RAK Airways, collapsed, ADA Chairman Nadir Al Hammadi (pictured) said his company – and its fleet of 61 helicopters – had barely touched ground since launching their diversification strategy in 2008.

d Royall Jet is an award-winning interna!onal luxury flight services provider headquartered in Abu Dhabi, the capital of the United Arab Emirates (UAE). It is jointly owned by Abu Dhabi Avia!on and the Presiden!al Flight Authority or PFA, the royal flight service.

Opera!ng out of Abu Dubai Airport, Maximus Air specialises in end-to-end cargo solu!ons, especially moving outsized air cargo, using a fleet that includes an Antonov AN-124-100 and two Ilyushin IL-76TDs.

ADA Millennium is a UAE based management consultancy with a f par!cular focus on advisory and implementa!on services to the hospitality oil avia!on, manufacturing, hospitality, & gas and private equity industries.

Far left: ADA Chairman Nadir Al Hammadi Left: One of Maximus Air’s IL-76TD Larnaca

“We’ve been all the way to Brazil, India, Papua New Guinea – we’ve spread our wings across the globe. It’s been a growth time because we have aircraft everybody wants and nobody has,” Al Hammadi said. “There was a financial crisis when we began to diversify, but things went well for us.” ADA has entered the new sectors via several joint ventures. It owns 100 per cent of cargo transport provider Maximus Air and 50 per cent of VVIP charter operator Royal Jet. Its maintenance services are offered in coordination with AgustaWestland Aviation Services, while it operates its newly established

consultancy firm ADA Millennium with its British partner jbca. Al Hammadi said ADA Millennium has been particularly successful due in large part to its ability to pull hundreds of experts in various fields, especially aviation and hospitality. “We have access to unlimited resources and experienced people that we can really plug into,” he notes. “When you want to deliver something, you have to deliver what you’re really good at, something that you have not only done, but excelled at, for a long time. For ADA, we’ve mastered helicopters over our years of experience, including 1 million hours of flying. This is why a lot of people find it very difficult to enter the field, because it’s expensive and you need a track record and the know-how.” ADA also plans to further differentiate itself by opening a training centre in Abu Dhabi in the second half of 2016, with some of the most state-of-the-art, innovative simulators available.

“These simulators are very expensive, they’re worth as much as the aircraft itself,” Al Hammadi said. “It will give you a virtual reality: we’re flying a real aircraft that can simulate wind, rain and thunderstorms; it could put you in any location in the world, it’s very sophisticated.” The diversification has become even more imperative with the decline in oil prices, which has stemmed the flow of activity in the sector and the requirement for ADA helicopters. Despite the downturn in the industry, ADA reported a net profit of $66.4m in 2014. Al Hammadi said the company would continue to broaden and seek more investment partners, both in Abu Dhabi and abroad. “We are working with international investors in different parts of the world – we always try to find a partner who is interested to get into the same line of business we’re in and we find a way to work together so both parties realise the growth potential and take advantage of the opportunity,” he said.

The innovation wave Criticism that the UAE’s success has been built on oil wealth are ignorant, Wassim Mourtada argues

COMPARED to Silicon Valley, Boston and Cambridge, the UAE may not register as a fount of innovation. After all, it has not developed cancer drugs or worldchanging technological systems. But the definition of “innovation” is all too often tied to invention. Instead, innovation is the actual propagation and widespread usage of an inventive method or device that has the greatest impact. Many good inventions lie unexploited on the shelves of universities and government labs or in the sheds of inventors. Innovation needs to be measured by the size of the impact across the number of people it affects. In this sense, the UAE is both an innovation itself and a source of inspiration. Necessity is the mother of invention. The UAE itself is an example. It was founded because the individual sheikhdoms were too small to be nations unto themselves. They united, and they did so in a fashion that has proven enduring and highly cohesive; there is a large and long-lasting political consensus among the citizenry. The UAE needed all manner of expertise and labour to assist in the development of the nation; engineers, doctors, teachers, builders, janitors and bankers were all welcomed. Out of necessity, the UAE pioneered a workable, durable model for long-term guest residents. Because of its political stability and guest-resident policy the country has continued to evolve into an economically vibrant, socially cohesive nation. Compared to the region’s struggle for stability and the West’s longing for a productive migrant and immigrant policy, the UAE stands out as a success. Beyond oil, the UAE has established itself as a transportation and logistics hub, with national champions such as DP World, the ports company which is among the five largest in the world, as well as Emirates, one of the largest, most profitable airlines in the world. These companies have been able to attract international expertise because of the UAE’s geographic centrality and political stability.

The UAE captured the global imagination in the early to mid1990s with Dubai’s real estate driven expansion, which turned into a binge and came crashing down during the global financial crisis in 2008/09. However, a good winter has an evolutionary function. It clears the weak trees, removes the frail branches, and allows for only the strong-rooted trees to grow in the spring. After the financial crash, the cleansing that took place was critical in solidifying the UAE’s foundations. Gone were the dreamers, schemers and fly-bynighters. Those that remained did so because they were in it for the longrun, whether by choice or a complete lack of it. The fantastic was replaced by the practical, and the successful models were repeated and scaled. Contrary to the popular image of expats abandoning their unaffordable cars in the airport parking lot as they hurried back “home”, the reality is the opposite. Since the global financial crisis, the population of the UAE rose from 6.8 million in 2007 to 9.5 million in 2014, the vast majority of that from economic migration. In this time period, and in this sober, practical environment, there were a number of important developments that have brought forth a UAE that is not yet fully understood or recognised internationally. A decade ago, there was perhaps only one venture capital firm in the UAE. Today, there are at least a dozen focused on technology and a halfdozen accelerators that are able to bring know-how and financial resources. The biggest hurdle was never the money, but rather the belief that technology companies could indeed be birthed here and thrive: a large psychological step forward. This sector now enjoys the participation of Silicon Valley and European venture capital firms, and has featured significant mergers and acquisitions: the ultimate validation of a viable technologystartup environment. A modern commercial legal system also has been developed as part of the Dubai International Financial Centre.

Local and regional companies can opt to have their commercial contracts under the jurisdiction of the DIFC Courts. This allows for legal procedural transparency and predictability that none of the regional legal systems have yet afforded companies. The UAE also produces critical structural parts for Boeing and Airbus and is home to one of the largest utility scale deployments of concentrated solar power. Abu Dhabi continues to fund the development of clean energy technologies globally, as well their large scale local deployment, while Dubai works diligently on moving towards its target of 15% of energy to be derived from solar. This steadfastness has brought forward one result that few expected: one of the lowest cost utility scale deployments of solar panels in the world. The country is also developing a Mars satellite to circle the red planet by 2021 and provide critical scientific data for the international community. It is easy to credit the UAE’s success to its immense oil wealth. But many a state has failed despite abundant natural resources. From the oil states of Libya, Iraq and Iran, to the minerals of many African nations, to the phosphate resources from bird droppings of Nauru, the “resource curse” does indeed exist. It is also easy to argue that if the UAE had not had oil, then it would not have developed the way it had. But that ignores Dubai, which was built not on oil but on commerce and transportation. The UAE’s success has not been reached alone, and it relies heavily on the participation of international companies and foreign professionals. For that, it is often criticised. However, in a global and networked economy, this is not a sign of weakness but a sign of strength; the country is able to marshal and coordinate an international workforce, integrate it with the global innovation economy and have it contribute to the international system. Much has happened behind the scenes in the UAE since the global financial crisis. Now a more developed, innovative and innovating UAE is emerging.

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Masdar Institute of Science and Technology

A new environmental frontier Sharjah-based environmental firm Bee’ah has set new records in waste management in the Middle East; now it is building an international hub for everything green, from solar power to improving air and water quality, writes Charlotte Callear

Unearthing a

green metropolis Masdar has carved a name for itself on the global renewable energy map, as it progresses with the world’s first carbon-free city and investments in green projects across the globe, reports Shayan Shakeel IN THE centre of the UAE capital, the world’s first dedicated residential and commercial carbon-free city is evolving. The project is barely one-quarter through its initial plans and the UAE remains one of the highest carbon polluters per capita in the world, but progress is zooming and the country now has the fastest growth in renewable energy in the region. Masdar City is home to the International Renewable Energy Agency (IRENA), the first office of a major environmental organisation outside the developed world, as well as the UAE’s own Masdar Institute of Science and Technology (pictured), which has produced PhD graduates and encouraged economically viable patents. “The one message the international community needs to understand is that renewable energy is part of our overall economic diversification vision,” Masdar CEO Dr Ahmad Al Belhoul said. “To create a truly smart economy, as the Abu Dhabi Vision 2030 outlines, we need to work in different sectors, and renewables is one of them.” Abu Dhabi holds 9 per cent of the world’s known oil and 5 per cent of global gas reserves, but diversifying into renewables is a strategy to help maintain the emirate’s leadership as an energy capital. “The more we rely on renewables, the more hydrocarbons we will be able to export, prolonging

the life of our reserves,” Dr Al Belhoul said. Masdar was established in 2007 with a $15bn commitment to invest in green energy. Its success locally is helping advance environmental projects worldwide. Through its private equity arm, Masdar has invested more than $500m and now has a portfolio of about 4.5 gigawatts of renewable energy, equivalent to four nuclear reactors. Its projects include a planned offshore wind farm in Dudgeon in the UK that would be the world’s largest. In only seven years of operation Masdar has become an example for the GCC in pursuing green economy ambitions. “We tend to have a catalyst effect, which causes other investors to also invest in projects,” Dr Al Belhoul said. “For instance, Dubai began its own solar project once we invested in Al Shams in Abu Dhabi. Now we are trying to catapult renewables by being the first investors in a country, such as in Jordan and Oman, where we are building their first wind-related projects. “We believe in small investments that can have a big social impact. Renewable energy is becoming economically viable as the sector evolves. But financing remains a challenge. Not all lending institutions are confident of the sector’s feasibility, though this is beginning to change, Dr Al Belhoul said.

RUBBISH has taken on a whole new meaning in Sharjah, an emirate to the north of Dubai. Paper, food scraps, plastic, industrial waste – they all have their place in what has become the Middle East’s most advanced recycling system. The emirate has achieved a 70 per cent recycling rate in less than a decade and it is on track to become the first place in the region to record zero waste sent to landfill. Much of this effort has been undertaken by Sharjah’s awardwinning environmental company, Bee’ah. “Only few cities in the world have reached that,” Bee’ah Group CEO Khaled Al Huraimel said. The firm first focused on waste management “because that is an immediate problem we have to fix”. It now has the third largest material recovery facility in the world, the largest gasification waste-to-energy facility and the first building in the UAE powered by green renewable energy. To reach its goal of zero waste, the company plans to start construction this year on a waste energy facility that will convert the rubbish to electricity to be used by the Sharjah power grid. Using the cleanest technology available internationally, it will be built over phases to a maximum capacity of 80 megawatts (MW), Al Huraimel said. Bee’ah’s work has triggered momentum in the environmental industry across the entire region; Dubai also now has improved its residential recycling levels from 40 per cent to over 52 per cent in 2012, with Bee’ah running most of the programs. It also is working on a project to organise waste management and recycling for the Burj Khalifa, the world’s tallest building. Bee’ah, whose name means ‘environment’ in Arabic, now aims to earn wider international recognition by branching out to renewable energy, water programs and air quality. “We want Sharjah to be the environmental capital and leader when it comes to environmental change in the Emirates,” Al Huraimel said. Bee’ah’s solar power project, to be built on a landfill site, is planned to generate more than 20MW to power facilities at its Waste Management Centre. The company has invested millions of

Khaled Al Huraimel, Group CEO of Bee’ah

dollars over five years towards the Gulf Ecosystem Research Centre, a joint initiative with the American University of Sharjah, to conduct research into Gulf ecosystems, particularly in the areas of air, water and land pollution and biodiversity. Bee’ah also is opening up to international investment, offering environmental companies across the world opportunities to set-up their projects in Sharjah, either independently or as part of a joint venture. Al Huraimel said international environmental firms in Sharjah had access to land, facilities and raw materials and would benefit from the emirate’s cheaper labour and healthcare and taxfree schemes. “We are always open to new ideas, new partnerships,” Al Huraimel said. “If it’s a hub you want to set up, we’ll provide all the tools to make it very feasible and interactive.” “Today, [investing in green technology] has become attractive. Why has the price for solar gone so low? [Because] there is money to be made, now, so green technology has reached a level today where it is profitable for companies. There is a return to be made; before it was more of a strategic initiative. “There is a lot of opportunity from an investor point of view in solar and waste ... everyone is looking at this area now.” Despite the significant progress, obstacles remain. The UAE Ministry of Environment was established only in 2006. By this point, Europe

was seven years into the 1999 Landfill Directive, which played a significant role in normalising recycling globally. “We’re trying to catch up very quickly but that needs government support,” Al Huraimel said. Issues include standardising policies across all of the seven UAE emirates. For example, Sharjah and Dubai have different coloured bins for their recycling programs, which can confuse residents who cross borders. “They’ve been working on it but seeing the implementation happening would be very helpful for all of us,” Al Huraimel said. Awareness is another key issue that needs more attention. “No matter how much you spend on the infrastructure, if the people are not aware of what needs to be done, it’s another challenge,” Al Huraimel said. Bee’ah has embarked on several awareness initiatives, as far down as school level. The Bee’ah School of Environment has given 200,000 students across Sharjah access to online programs and awards that highlight the importance of recycling. “First we cover teachers and students, then we cover everyone,” Al Huraimel said, explaining the domino effect. Education teams also have been dispatched to every home in Sharjah, armed with awareness kits, explaining how they should segregate their rubbish and why it is important. Due to the past few years of progress, the UAE ranked in the top 30 in the Yale University and Columbia University Environmental Performance Index in 2014, for the first time. It is an impressive effort, given that in 2006 a World Wildlife Fund (WWF) Living Planet Report said the UAE’s rapidly expanding population and urbanisation had seen its environment dramatically decline to the point that it had the largest per capita ecological footprint in the world. The UAE may have been slower to join the environmental revolution, but it is fast making up the time. And Bee’ah is leading the pack, not only regionally, but as an international model for sustainable energy and waste management.

8 UAE

World Business Times is a leading global provider of business intelligence and insight

December 2, 2015

A Pearl of an idea

Corporate governance has been somewhat of a misunderstood myth for many Gulf family-owned businesses, but the tide is turning as a new generation prepares to take control of over $1 trillion in assets, reports Sarah Livingstone

G

ulf businesses are experiencing perhaps their most dramatic shift in psyche ever. As thousands of family firms, accounting for as much as 90 per cent of some states’ economies, prepare to hand over the reigns to the new generation in the coming decade, they are upping the ante on transparency and accountability. The Pearl Initiative, a private sectorled, not for profit program, has been at the forefront of helping guide companies to improve their business practices and convince them that good corporate governance is profitable. “[For decades], private companies, probably because they were not expected to pay taxes, didn’t really see the point in publishing reports or accounts, so there was virtually no

transparency or resulting accountability,” founder of the Pearl Initiative and UAEbased businessman Badr Jafar said. “The regulations haven’t changed that much, except possibly for publicly listed firms, but what has changed is the increased sense that there is a strong business case in good governance, and that’s really what the Pearl Initiative has been driving.” Part of the impetus for the initiative has been addressing one of the region’s greatest challenges: creating an estimated 200 million jobs in the next two decades – just to keep the current youth unemployment level stable, at an already high 30 per cent. While there is much emphasis on startups, Jafar, who also is CEO of Crescent Enterprises, a UAE-based international

conglomerate with 20 subsidiaries, argued existing firms also were crucial to meeting the jobs challenge. “Where I don’t think there’s enough work being done is protecting, nurturing existing businesses, including family businesses – allowing them to thrive in order to create more opportunities for our youth,” he said. “We have over a trillion dollars of assets that are going to be passed from second to third generation … over the next 10 years alone. The transition from the siblings’ partnership to the cousins consortium is traditionally where the most problems occur, and we simply don’t have the governance protections in place to protect that huge transfer of wealth.” “So it’s great to create new businesses through startups and encouraging

Emirati impact entrepreneur and businessman, Badr Jafar

entrepreneurship, but if we don’t protect our existing businesses and allow them to thrive, then we really have no hope in creating stable economies and the healthy societies that rely on them.” Scores of family businesses have participated in the organisation’s programmes and forums, and the Pearl Initiative has partnered with the UN since its inception in 2010. While it currently only runs programs across the Gulf, many multinationals operating within the region also are joining hands with local companies, and that, Jafar said, was important. “It’s extremely important [that multinationals] don’t have a double standards approach to corporate governance, whereby the sort of rules that they apply for themselves in their own jurisdictions are different to the ones they adhere to here,” he said. While the Gulf business environment is becoming more transparent, progress has not been fast enough, according to Jafar. “[The aim is to] move away from seeing it as a burden to a huge opportunity. And that shift in mindset is one that I’m seeing, but just not fast enough,” he said. “We don’t have the luxury of time … if we wait 10 years for this to happen gently and slowly, then we’ll witness a huge destruction of value.” Damage already is occurring is some places. In Saudi Arabia, for example, courts are clogged with family-related disputes, Jafar said. “You’ll find the family business courts completely overwhelmed and businesses falling apart. When you have to go to court to resolve a dispute, the family is already fractured; it’s going to be difficult to build that trust back up again,” he said. “[And] imagine the result on the economy if you have 90 per cent of the GDP potentially fractured. “It’s crucial for these family businesses to adopt [good corporate governance] because they are the lifeblood of the region’s economies.” As is the case globally, Gulf firms also are increasingly embracing corporate social responsibility (CSR), but Jafar warned community programs did not make up for corporate accountability. “Corporate accountability transcends just social responsibility, it goes much more to how companies interact more broadly with all of their stakeholders and embedding those values into their ethos; and it’s about generating trust – not buying loyalty, but generating trust – which is a much more authentic way of connecting with stakeholders.”

We don’t have the luxury of time … if we wait 10 years for this to happen gently and slowly, then we’ll see a lot of damage. – Badr Jafar More companies also are recognising the potential profitability in addressing socioeconomic challenges. “It’s about using your entrepreneurial intrigue, excited-ness, as well as passion and skills, to generate business models that address socio-economic challenges that are relevant to your region or country,” Jafar said. “And that doesn’t have to be a tradeoff; it’s not about deciding how much money goes to profit [and] how much goes to social impact – your business will have so much more potential to generate profit more sustainably over a longer period of time if you’re addressing social economic challenges.” It is not only start-ups solving these challenges – some of the world’s greatest brands are finding themselves forced to adapt to changing markets. “You’re seeing this almost existential threat to some of the biggest brands today, like the Cola Colas of this world; [They’re asking], ‘are we really producing something that society needs today?’,” Jafar said, referring to consumers’ increasing preference for sugar-free drinks. “They’re having an identity crisis right now, even the fast food chains. Pepsi, [for example], are buying up drink brands that are more appealing to the habits of generation Y because they see this threat. “This is what I think true social entrepreneurship is, it doesn’t have to be practised only by individuals; it can be practised by big business. The bravest thing, and the most difficult thing for a large established company that’s had a product for many years to do, is say, ‘hey, you know what, maybe the product’s not relevant [any more]; habits change, let’s actually provide something society needs.” Jafar and his colleagues applied this theory in his family business Crescent Petroleum, the only firm of more than 20 in Kurdistan, Iraq, that is exploring for natural gas, rather than oil. “The amount of carbon emissions reductions as a result of our investment in displacing liquid fuel in power generation by natural gas is huge,” he said. “Unlike with oil, the multiplier effect of natural gas production and use within a country is huge, from generating much-needed electricity to spurring local industry and jobs. “Would it have been easier for us to just go after the oil? Totally. All the companies that did, made their money back long ago; we believed in what we were doing, not just economically, but also the social imperative behind that business decision.” As the employment market becomes increasingly competitive, identifying and meeting socio-economic challenges may well be the most fitting key to unlocking hundreds of millions of desperately needed jobs. And without the progressive corporate governance ethos now considered fundamental to protecting and enhancing economic growth, the Middle East will find it increasingly difficult to create these opportunities for its bulging youth population.