The Hindu Business Line : A new momentum to growing partnership

A string of wooden boats, or dhows in local parlance can be seen anchored along a section of the creek — a 14-km channel that has been at the heart of Dubai's growth from a small trading post to an international metropolis. For years these boats have been sailing towards the Indian subcontinent, bringing with them a wide variety of merchandise, bound for the Arab world.

With Dubai serving as the traditional transshipment hub, cargo is disembarked and re-loaded here. It is then ferried onward to destinations such as Yemen, Iraq, Iran, Somalia and other Gulf States. Nearly, 7,20,000 tonnes of goods still pass through the creek annually.

Many of the dhow owners are from India and shuttle between Dubai, Mumbai or Ahmedabad. Many reside in a string of multi-storied apartments that overlook the creek and across towards Bur Dubai, the city's prime business district.

The bustling creek area, which adjoins the glittering gold market, has a typical Arab flavour to it. By night the orange glow from the well-lit surroundings descends on the placid waters of the creek. A dhow cruise by night along the creek is a truly memorable experience.

OIL EXPORTS

While trade, commerce, services and manufacturing have been the key to Dubai's success, oil exports have played a key role in the UAE's overall development. The country has the fifth largest reserves of oil in the world, which stand at 97.8 billion barrels. The UAE also possesses 213.5 trillion cubic feet of natural gas, reinforcing its prominent position on the global energy map. However, most of the UAE's oil is located in the Abu Dhabi Emirate, with reserves standing at 92.2 billion barrels.

In comparison, Dubai has deposits of only four billion barrels. The Emirate of Sharjah has 1.5 billion barrels, while the northern emirate of Ras Al-Khaimah has 100 million. Like oil, most of the natural gas is also concentrated in Abu Dhabi. The Emirate, according to government estimates, has 198.5 trillion cubic feet of gas.

Despite the huge hydrocarbon reserves, UAE's economic planners are well aware that oil and gas will not last forever. The development of the non-oil economy, especially outside Abu Dhabi has, therefore, become a top priority.

Consequently, the development of non-oil sector in Abu Dhabi is being undertaken in tandem with the growth of the hydrocarbon sector. Dubai leads the diversification process, focusing on the development of tourism, media, shipping, financial services and manufacturing.

Dubai's prominence

In advancing its rapid development, Dubai's planners have kept the city's strategic location uppermost in mind. With destinations in South and South East Asia, Central Asia and Europe not too far away, a conscious decision has been taken to develop Dubai as a key transportation and transshipment centre of the region.

Consequently, Jebel Ali port has been developed as a giant transportation hub. However, more than transshipment, this port services the huge Jebel Ali Free Zone, which has been the magnet for substantial overseas investments.

With 67 berths, the Jebel Ali port is the biggest in West Asia and is part of the largest man-made harbour in the world. When completed in 1979, the Jebel Ali port ranked alongside the Great Wall of China and the Hoover Dam in the US as the only three man-made objects that were visible from space.

Not far from the port, the Dubai World Central International Airport is also being developed on a colossal scale. This airport, when complete, would have six 4,500 m parallel runways. A massive passenger complex would be located in the middle. When complete, the mega-airport would handle 120 million passengers and 12 million tonnes of cargo annually.

Airport expansion

Dubai's plans are based on the assumption that this airport would become the nucleus for transiting passengers from the Asia-Pacific region, South Asia, West Asia, Africa, Europe, and Australia.

Given its massive size, this airport would easily service the giant A380 planes. The development of this air complex could cost $82 billion.

Along with transportation, the UAE has identified the development of tourism and construction as key elements of its strategic plan.

The growth of tourism has been a major success story. UAE is already the market leader in the region in providing modern tourism facilities and attracting visitors. Starting from 2005, Dubai alone plans to add 9,682 hotel rooms by 2008.

The Palm, Jumeirah will have 30 to 40 hotels once the project is completed. Several hotels and resorts are planned along the Jumeirah coast, and the coastline north of the Dubai Creek.

The Dubai Department of Tourism and Commerce Marketing (DTCM) steers overall development of tourism in the Emirate, supervising the licensing of hotels, hotel apartments, tour operators and tour guides. Its network of 15 overseas offices promote and market Dubai as an attractive tourism destination. Its efforts have borne fruit, as Dubai has become one of the most sought after tourist destinations in the world.

The Hotel Benchmark Global Ranking Index, which compared the performance of 165 cities in 2006, has given high marks to Dubai. Dubai was in third place on the revenue per available room and occupancy scale.

The DTCM Director-General, Mr Khalid A bin Sulayem, said: "The excellent performance by the hospitality industry in the Emirate is a reflection of our marketing and promotional initiatives, especially in the overseas markets, to position Dubai as the world's leading tourism hub."

INDIA'S ROLE

India has played a significant part in the UAE's growth story, including the development of its tourism sector. "India has always been one of the top five source markets for leisure and business visitors accounting for close to 3,90,000 guests during 2006, an increase of over 8.8 per cent over 2005. We hope to increase the growth rates in 2007 and 2008 significantly due to enhanced flight connectivity from various cities in India and on account of infrastructure developments," says Mr Carl Vaz, Director, and DTCM India Representative Office.

Nearly 1.4 million Indians are employed in almost every sector of the UAE's economy. Trade is booming and non-oil trade between the two countries already stands in excess of $13 billion.

Nearly 80 per cent of trade has been routed through Dubai. The exponential growth in trade is evident from the figures provided by Dubai Customs and Statistics. Trade has grown in the last four years by a staggering 336 per cent, from $2.5 billion in 2002 to $10.9 billion in 2006.

Indian investors

The rise in Indian investments in the UAE has also been impressive. The largest number of foreign investors to the UAE, in the first half of 2006, came from India.

Of the 5,500 companies operating in the Jebel Ali Free Zone, more than 600 are from India. Nearly 60 per cent of the companies operating out of the Al Hamriya Free Trade Zone in Sharjah are of Indian origin. In the Ras Al Khaimah Free Trade Zone, nearly 30 per cent of the companies registered are Indian.

Several Indian public sector undertakings are operating from the UAE. These include Air India, Indian, Indian Oil Corporation and National Small Scale Industries Corporation.

While the Bank of Baroda is the only full services Indian bank operating in the UAE, many others such as Canara Bank, Punjab National Bank, State Bank of India, Export Import Bank, Andhra Bank and State bank of Travancore have representative offices and tie-ups with local companies.

The Tea Board has been marketing Indian tea in the UAE and the region. Among the Indian insurance companies, the Life Insurance Corporation International and LIC Housing Finance Ltd have representative offices in the UAE.

Recently, the General Insurance Company opened a full-fledged branch in Dubai to tap the re-insurance business market.

Commenting on the surging economic interaction between India and the UAE, the Consul-General of India in Dubai, Mr Venu Rajamony, said, "the rapid growth of the Indian economy has made it (India) an attractive destination for investments from UAE." He added that Indian companies had now become "more robust and confident" and were entering Dubai in large numbers.

UAE investments

Recognising its emergence as one of the fastest growing economies in the world, the UAE has accelerated its investments in India.

Recent media reports suggest that Nakheel, a leading real estate developer in West Asia, is forging a 50:50 joint venture partnership with DLF Ltd of India. Total investments are in the range of $10 billion.

The mega project envisages the development of two integrated townships in India — one near Gurgaon and the other between Mumbai and Pune in Maharashtra. Construction work on the projects is expected to begin this year, with the first phase scheduled to be completed in three years.

The Dubai-based Emaar Properties has already entered the Indian market following a tie up with MGF Development Ltd of India. The joint venture plans to invest $4 billion in India.

Boost to tie-up

India's vibrant relationship with the UAE is part of its larger engagement with the six Gulf Cooperation Council (GCC) countries comprising Saudi Arabia, Bahrain, Qatar, UAE, and Oman. As India gets closer to the region, discussions have begun on having a Free Trade Area (FTA) agreement with the GCC.

It is hoped that the visit to India by Sheikh Mohammed bin Rashid Al Maktoum, the UAE Prime Minister, Vice-President and Ruler of Dubai, will not only bring the two countries together on a bilateral platform, but also impart a new momentum to the growing partnership between India and GCC.

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