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Focus on Stability
His Excellency Sultan Bin Saeed Al Mansoori, Minister of Economy for the United Arab Emirates, talks about finding stability in the region and eyeing conservative growth
April 11, 2012 1:40 by kippreport
How do you assess the health of the UAE economy in these troubled times?
I think, so far, based on the action taken by the government since 2008, we feel it is more stabilized right now in terms of the financial situation in the country as a whole. We also see more decisions being made about Saudi issues considering the real estate in Dubai doesn’t mean everything is solved, but it is in a much better position than many other countries. Our concern at the present is the events in Europe concerning the financial crisis, the lack of transparency in many countries, clarifying the real financial situation and debt in these countries, also providing for a collective solution for these countries. Of course, the UAE is the most integrated economy in the world, but at the end of the day we need Mobilon; you need the rest of the world to function.
This has put us in a position by which we had to be selective about partners of the UAE for the next three to five years who can grow. With the passive growth that we have in the UAE and the expectation of growth should be hovering between 3.5 to 4 percent. To achieve that we will need and require stability in the region, we will be stabilied in countries, such as the Gulf countries, including Iraq, Iran, and countries around us. But internally I am very optimistic that the UAE’s soild, stable government has been able to succeed in creating a much more stable situation in the economy, and meanwhile look at areas of growth that we need to consider in the next three to five years.
You talked about the euro crisis, as you know most of the European banks were involved in arranging syndicated loans for companies in the GCC. Do you think local banks or regional banks are ready to fill the gap if they leave?
Definitely, the local banks are well positioned, whether in terms of liquidity or in terms of the ability to fill this gap. Ourbanks are also going international, they are also being able to finance a lot of projects, also with the UAE. The UAE, as a country based on what has been achieved over a large number of years, I’ve been able to create a reserve and based on this reserve, whether in the banks or the government sector, is something that we are utilizing at present to bridge the gap in the financial inadequacy happening either in the banking sector worldwide or within our country. I’m very much confident of the ability of our banks to bridge that gap, and also not only within the UAE, but also the possibility of financing other sectors across the Gulf countries also.
As you know some countries in the Arab world have undergone transformation and they have new governments, like Tunisia and Egypt. What steps would you take as a minister or in partnership with the private sector in the UAE to facilitate investment in those countries because stability is good for everybody?
There are two steps we have taken. First, there is existing investment in these countries that we wanted to make sure these investments continue to grow because they have to grow with the growth of the economies of these countries, and it is in our interest to make sure there is stability in the financial sector in these countries.
The other side is to help the government draft an economic agenda which is the main objective and main reason why these changes have happened in these countries and how the UAE private sector can benefit from it. There has been a number of visits from the delegation, some of them were to Egypt; there were delegations to Libya, business delegations from the UAE, to Tunisia. So, all of these visits show the commitment of the UAE as a government and a private sector, to the continuous strategy of investment in the region; it has been like this before the Arab Spring and committed that a change in the region can be done through a change in the economic agenda, providing for a better living standards in these countries, which can only come if these countries are functioning properly, by which also the public in general benefit.
What are the challenges and risks?
Challenges that we have in the region are how to transform the region from one that has turmoil to one that is stable, with all that is happening around us between Iraq and Syria, Iran and Yemen, does not really attract investment in the region from other countries, because when you look at the picture, whether it is Iraq or Saudi Arabia, or whether it is the UAE, they see it as one; as the Middle East, which sometimes scares them off investing in this region, so the challenge is creating stability in the region and that has to be done quickly before this kind of investment goes somewhere else.
Recently, the Abu Dhabi World Future Energy Summit was inaugurated by H.H Sheikh Mohammed Bin Zayed, who closely supports it. What steps do you think the UAE should take and how long will it take to turn it into a green economy?
The UAE is one of the countries with high carbon emissions, with that in mind it was a courageous decision by the government to move into renewable energy, whether it is through investment in Masdar or investment in other technology that will be able to provide for this kind of renewable energy. Part of it is investment in nuclear, solar, and in new technology that will enhance the participation of the renewable energy in the UAE’s general consumption of energy.
There was a target, which was about six percent, that the UAE should reach by the 2025 to 2030 that UAE source of renewable energy will participate in the overall meeting of demand of the UAE energy by 2025 to 2030, which is an indication of the commitment of the UAE’s government. This project is not only for the UAE, but for the best of the brandsin the world, and can bring in innovation and new energy that can be utilized for the world.
How real are theses geopolitical risks and how are they affecting investment in the region?
One of the factors that you will look at before investing in a country is the stability in the country, then the system of the government, then the laws & regulation that govern and protect the investors’ rights.
I do believe that these issues are very critical and very important when it comes to our region. Currently, this is a challenge for us as a region, in terms of attracting investments into certain countries [not the UAE, as I believe the UAE is a highly developed country].
The UAE has a stable government, laws and regulations; it is well advanced, updated and ever-changing; the liquidity and the cash is there. As far as the geopolitical risks are concerned, when it comes to the UAE, I’m not worried about it. The government of other countries in the region should think about it. The people have moved on with regards to the Arab Spring, it is mainly for economic reasons. There should be priority in their agenda, the economic side has to be addressed as a priority.
In the UAE, what is the focus on GDP growth in 2012?
I think we will manage a growth of three and a half to four percent. It depends on the prices of oil as it contributes to almost 29 percent of GDP; it depends on the political situation and what will happen around us, whether it is the situation in Iran or our country. To be more conservative, GDP would go up to three and a half to four percent.
First published TRENDS