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UAE’s focus on real economy reaps foreign investment rewards
Forthcoming business report to explore Emirates’ role as re-exportation hub.
July 6, 2010 3:28 by Rasha Reslan
Abu Dhabi, 6 July 2010: The United Arab Emirates (UAE) is targeting investment in the real economy in a two-fold bid to improve the standard of living for its people and support the ongoing diversification process, according to Sheikha Lubna bint Khalid bin Sultan Al Qasimi, the Minister for Foreign Trade.
Speaking exclusively to Oxford Business Group (OBG), the global publishing, research and consultancy firm, Sheikha Lubna said that the decision to place the emphasis on goods, resources and services rather than on the paper economy was set to bring about a further increase in the non-oil-related contribution to the GDP of the country. She mentioned that the decision to focus on a variety of sectors with high added value rather than on specific sectors characterized by comparative advantages are the driving forces of the new strategy of economic diversification. This, she said, has resulted to an increased contribution of the non-oil sector to the net domestic product of the state to 71% in 2009 as compared with 63% in 2008.
“The UAE always works to bolster revenue sources via diversification and is attracting most of the foreign investment flows to the region,” she said. “In order to enhance our economic strategy, we are currently focusing on areas such as renewable energy, airplane components and manufacturing, technology, tourism and education, while also boosting the country’s services sector.”
Sheikha Lubna highlighted the UAE’s performance in trade activity, which, she said had remained strong despite the global economic challenges, thanks to the role it had carved out for itself as a hub for re-exportation.
“The UAE has strengthened its regional and international position with regards to foreign trade during 2009. It has been able to do so primarily through its open market approach and the fact that it’s an international trade hub that conducts extensive export and re-export activities with 202 countries,” she said. “Generally speaking, despite the 11.9% decrease in global trade in 2009, the UAE was able to register an 8.1 % growth in its exports.
“Additionally, the balance of trade improved by 31% in the same year, achieving a surplus of AED107 billion. Also in 2009, an improvement was witnessed in the volume of foreign trade with countries such as those of the Arab world, the GCC States, and the United States of America,” she added.
With protectionism on the rise in the wake of the downturn, Sheikha Lubna voiced her concern that any curbing of trade activity between countries would hinder rather than help global economic recovery. She called for measures aimed at targeting its removal, such as the strengthening of multilateral trade rules and controls, to be explored swiftly, saying: “The only way to move forward in the trade system is to expedite serious negotiations and actual trade exchange among World Trade Organization (WTO) member countries.”
The full interview with Sheikha Lubna appears in The Report: Abu Dhabi 2010, OBG’s guide on the Emirate’s economic activity and investment opportunities. OBG’s report includes a detailed, sector-by-sector guide for foreign investors, together with a wide range of interviews with the most prominent political, economic and business leaders, including Khaldoon Al Mubarak, the Chairman of the Executive Affairs Authority, Sheikh Diab bin Zayed Al Nahyan, Member of the Abu Dhabi Executive Affairs Authority and Chairman of the Abu Dhabi Water and Electricity Authority.
The Report: Abu Dhabi 2010 marks OBG’s fifth year of operations in the Emirate and follows more than six months of on-the-ground research by the Group’s team of analysts. It will provide information on opportunities for foreign direct investment into Abu Dhabi’s economy and will be a guide to the many facets of the Emirate, including its macroeconomics, infrastructure, political landscape, banking and sectoral developments. The report will be available in print form or online.