Optimism Drives the Economy in Dubai

As nations across the globe contemplate the best actions to compete in tomorrow’s economy, one city is already realizing the benefits of its investments.  I had the opportunity to travel to Dubai earlier this month with 40 other chamber of commerce executives on a trip planned and hosted by the Dubai Chamber and the American Chamber of Commerce Executives (ACCE).  Our week-long visit highlighted trade and economic opportunities between our two nations, and provided an opportunity to learn about San Francisco businesses working in Dubai.

Dubai, one of seven emirates of the United Arab Emirates (UAE), is strategically located on the Arabian Peninsula, south of the Persian Gulf.  Dubai is about 500 square miles in size with a population of 1.5 million.  It’s location, however, makes it easy access from the vastly populated regions of India, Egypt and northern Africa, thus making it a natural center of trade for the region.

Built using investments from the emirate’s oil wealth, Dubai has quickly evolved into a global business hub.  Already home to many international businesses, an increasing number of global firms are choosing Dubai as a base for their regional sales, manufacturing and distribution operations including Bay-Area companies HP, Oracle and Cisco.

Dubai is also known as the tourism and shopping capital of the Middle East. Dubai boasts the largest hotel in the world, the largest shopping mall in the world, the tallest building in the world and the largest waterfront project in the world – the famous Palm Jumeirah Islands.

To help put these projects in perspective:

The Dubai Mall cost $20 billion to build and includes 12 million square feet and 1,200 retail stores.  It opened in 2008 with 37 million visitors in its first year.  San Francisco-based companies including The Gap and Williams-Sonoma have recently joined U.S. retailers like Bloomingdales in opening stores in the world-famous Dubai and surrounding shopping malls.

[The Dubai Mall – the largest in the world – looking down from the Burj Khalifa observation deck on floor 126]

The Burj Khalifa opened earlier this year as the tallest building in the world at 2,625 feet and the highest observation deck in the world.  The Burj Khalifa includes 1144 residences, 37 office floors, a 160 room luxury hotel and parking for 3,000.

[From the base of the Burj Khalifa – the tallest building in the world at 2,625 feet.]

The Palm Jumeirah is the largest man-made island community in the world. This $12 billion project is mostly complete with 5,000 private residences, 30 luxury hotels including The Atlantis and connected by monorail and boat.

[Model of the Palm Jumeirah Islands – largest man-made island community.]

Our visit not only included the landmarks, but meetings with business leaders from the Dubai World Trade Center, Healthcare City, International Financial Center and DP World, one of the largest marine terminal operators in the world.

Dubai is not immune to the global recession. The skyline, which was once filled by 25 percent of the world’s construction cranes, has slowed in comparison.  While there are still a staggering number of 10,000 cranes at work in Dubai, many projects have slowed to only small construction crews.  And like San Francisco, empty storefronts are a visible sight in Dubai’s malls and shopping districts.  While Dubai’s financial problems are obvious to any visitor, the city – and its businesses – remain enthusiastic about the future.

One interesting tour was the Jafza Free Trade Zone, located adjacent to the world’s 6th largest port, Jebel Ali Port. Jafza is among the world’s largest and fastest growing free zones with now over 6,400 companies operating with the benefit of no taxes or fees.  Jafza offers businesses turn key office, warehouse and manufacturing space without red tape and frustrating restrictions.

UAE Vice President and Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum has said that when the time is right, Dubai will continue in its quest to be the biggest and the best in everything.  Sheikh Mohammed reinforced this message personally in an hour-long visit with our delegation, and there is no doubt that his continued optimism is helping to shape the future of Dubai’s economy.  The Sheikh is proud of his deep interest in business success in Dubai and meets regularly with the Dubai Chamber and business leaders for feedback.

From its Free Trade Zones to its trade policies, providing an exemption on all import duties, to its generally “hands off” approach to commerce, Dubai offers huge opportunities for U.S. businesses looking to expand manufacturing and distribution operations in the Middle East.

U.S. architects knowledgeable about energy efficiency will also find great opportunity in Dubai, which just decreed that all new buildings must be energy efficient. As one of the safest city in the world, Dubai offers all foreign-owned retail, hospitality and other businesses unmatched security through its investments in police, cameras and other measures.

While certainly a very different form of government than our democracy, our delegation experienced a vibrant city with a modern infrastructure, a growing business community and a focus on world trade.  Dubai’s economic recovery is still uncertain, but one thing is clear, Dubai will have a global impact for a long time to come.

[View from the Burj Khalifa – almost

everything in the picture has been build since 2005. ]

[A very modern infrastructure

of highways and transit.]

[The Burj Khalifa in the background – a new light rail transit system in the foreground.]
[The Dubai Financial Center]
[The Dubai Chamber of Commerce…..yes, the entire building.]
[The Burj Al Arab – the largest hotel in the world.]
[A residence under construction on the Palm. ]
[A few miles from downtown Dubai……desert.]

One response to “Optimism Drives the Economy in Dubai

  1. The race is on in Dubai to have something that is sustainable when the oil runs out. If you look back at their history, the Sheikdoms were leveraged to revenues from the pearl industry at the turn of 20th Century. When Singapore perfected the synthetic pearl, it devastated the Sheikdom’s (now U.A.E.) economy.

    I expect that the U.A.E., a student a history; will continue to plow revenues back into non-oil related structures if no nother other reason than self-preservation.

    Remember, Abu-Dhabi is the big oil producer, Dubai is simply trying rival it’s neighbor. It will be interesting to see what momentum the region can sustain through a global economic slowdown.

    To their credit, U.A.E. ranks high (positive) among Transparency International’s Corruption index. They actually outrank Israel, an ally to the U.S. in the region. Of concern will be their labor force going forward. Most of the work-force is imported from the Middle-East and India. There are often labor disputes and the country often rings of human right abuses.

    The country hardly invests in higher education for it’s own citizens. It maintains one of the smallest amounts of investment (as a percentage of GDP), on higher education; in the world.

    Dubai is an interesting place and an even more interesting topic to discuss from a business perspective.

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