Magazine article Washington Report on Middle East Affairs

The United Arab Emirates Today: UAE Ports of Dubai and Jebel Ali Help Make It World Trade Center

Magazine article Washington Report on Middle East Affairs

The United Arab Emirates Today: UAE Ports of Dubai and Jebel Ali Help Make It World Trade Center

Article excerpt

THE UNITED ARAB EMIRATES TODAY: UAE Ports of Dubai and Jebel Ali Help Make It World Trade Center

By Habeeb Salloum

The Arabian Gulf's main trading center, Dubai, handles around a third of that region's $50 billion in non-petroleum trade. Called the Hong Kong of the Gulf, it is the Arabian Peninsula's leading entrepot--the last stronghold of "anything goes" capitalism. With annual per capita imports of more than $25,000, Dubai serves a large, rapidly developing and oil-rich region.

Although Dubai also is the second largest oil producer, after Abu Dhabi, of the seven emirates comprising the United Arab Emirates, much of Dubai's wealth is founded on its ever-increasing commerce. Between 1986 and 1993, its non-petroleum trade grew at an annual rate of more than 17 percent to reach $17.5 billion.

Ships from more than a hundred shipping lines sail into its huge ultra-modern harbor and more than 60 airlines stop in its international airport--second only to Tokyo in the number of daily transit passengers.

Situated between East and West, the city has for centuries been a convenient stopping-off point for global traders. From earliest times its 16-kilometer (10 mile) long harbor, called "The Creek," has been a mooring place for ships ranging from the traditional wooden dhows still in use to today's huge merchant ships. In the past, goods were unloaded from the ships and carried by camel caravans to the desert hinterland beyond.

Today, the pattern of trade has greatly increased and profoundly changed. Besides being an importer, Dubai has become one of the major re-export centers of the world, serving a market of one billion people. It includes the Middle East, East and South Africa, and the countries of the Indian subcontinent. Most remarkable is the manner in which the end of the Cold War has increased Dubai's contacts with the countries of the former Soviet Union, creating an influx of visitors who spend $1 billion annually in the UAE.

What has set Dubai on the road to such progress and affluence is a buoyant and prosperous domestic market and the entrepreneurial heritage of its people. According to Sultan Bin Sulayem, chairman of the Dubai Port Authority, Dubai traders are shrewd businessmen who always have been able to trade well beyond the confines of the Gulf area.

This legacy of commerce is complemented by the far-sightedness of Dubai's rulers who, when the first modest oil revenues began to flow, used the wealth to build an excellent infrastructure for their emirate.

To lure foreign investment, the Dubai government also slashed the red tape which plagues businesses in many parts of the world. Profits and incomes are free from taxation, there are no foreign exchange controls, and the currency is fully convertible.

Entrepreneurs wishing to trade or invest and industrialists wishing to establish factories have found that Dubai has excellent telecommunications systems, with direct dialing to 203 countries. Major international couriers are well represented and offer competitive rates.

Sophisticated facilities of all kinds abound. There is a wide range of skilled laborers and a tolerant social environment in which to work. English ranks on a par with Arabic and superb leisure conveniences, like the three golf courses, fine white-sand beaches, first-class hotels, excellent eating places, a lively cultural life, and spirited nightlife ensure that investors have no difficulty in attracting suitable staffs from all over the world.

Topping all these drawing cards for investors is Jebel Ali, one of the largest free ports in the world. Joined with Port Rashid under the Dubai Port Authority, Jebel Ali's 67 berths, along with Port Rashid's 35 berths, have earned a reputation as the most efficient ports between the Far East and Europe. Built in the 1970s, they handle some 25 million tons of cargo annually, which in 1994 were carried in 8,633 vessels. The twin ports are the 14th largest in the world in terms of container activity, handling 1,880,000 containers annually.

Jebel Ali, the largest man-made harbor in the Middle East, also has been made very inviting by laws providing that any newly established firm in the free zone has 15 years of freedom from taxation, and that this can be renewed for a further 15 years. In addition, companies inside the free zone can be 100 percent foreignowned (outside the zone, 51 percent local participation is required) and they are exempt from foreign duties. There are no taxes, either corporate or personal, and 100 percent repatriation of both profits and capital is permitted.

Energy is abundant and inexpensive and there is a high level of administrative support from the free zone authority. Also, to facilitate the flow of goods, there is a fast international road network connecting the Jebel Ali free zone to the free zones of Oman, Saudi Arabia, Qatar, Bahrain and Kuwait.

These investment temptations already have attracted more than 750 large companies--such as Black & Decker and Sony--from over 60 countries. The UAE government expects the number to rise to 1,000 by 1996 and to more than 6,000 after the year 2000.

A giant aluminum smelter, producing 250,000 tons--soon to be increased to 375,000--a natural gas processing plant, a copper and aluminum factory, a steel fabrication facility, crystal and garment factories, a computer establishment and a huge sugar refinery, not yet completed, are among the firms bringing a sense of buoyancy and optimism to Jebel Ali and Dubai.

As it rushes into the 21st century, Dubai has come a long way from the days when its economy was based on pearl fishing and trading in the Gulf. In the 1930s, after the Japanese introduced cultured pearls, thereby destroying the pearl industry throughout the Gulf, Dubai became a world center for the trading of gold and other precious metals. It has continued venturing into new fields ever since.

Unlike Abu Dhabi's vast oil potential, Dubai's oil revenues are expected to last for only 20 years. The wise way in which they have been invested in diversified industry, however, ensures that Dubai's prosperity will continue. In 1993, petroleum provided less than 40 percent of Dubai's GDP. In 1996, an economic plan, dubbed "Dubai Without Oil," will be launched to see the emirate through the next century.

Contributing to this plan is tourism. A genuine partnership between the government and the private sector, which has invested heavily in hotels, restaurants, extensive sports facilities and tour companies, has laid a firm basis for a steady flow of winter visitors.

The city's hotels, many like the 600-room first-class Holiday Inn, in 1993 welcomed over 1 million visitors--more than twice the population of the country. Some 33 percent of these visitors were tourists and businessmen from Europe and North America.

Dubai has come a long way from the time when traditional dhows, overflowing with goods, made its harbor one of the most picturesque in the Gulf and brought a degree of wealth to its entrepreneurs. Today, dhows still ply their trade but, in addition, banks, factories, trading firms and a steady flow of foreign investment are turning the city into a flourishing and striking metropolis, whose hotels and office tower clusters are grouped around and reflected in the waters of "The Creek."

The benefit from this prosperity has seeped down to all of the citizens. There is hardly any unemployment, crime is virtually unknown, health and educational facilities are excellent and no one pays income taxes. Dubai has joined the league of the affluent but has not forgotten its people. There is every reason to believe that it will continue to serve as the second of the seven pillars firmly supporting the moderate and prosperous United Arab Emirates as Dubai builds an international trading hub well into the 21st century.

Articles may be reprinted with proper attribution, except for photos and cartoons. Article copyright American Educational Trust.

Photo (Emirates University)

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