Spreading the wealth: The government is working to boost economic activity in Al Ain and Al Gharbia

While the Abu Dhabi Economic Vision 2030 strategy provides a clear path to growth and diversification, reaching its goals – which include an average annual growth rate of 7% until 2015 and 6% annually thereafter; significant expansion of the non-oil sector, with the aim of it accounting for 64% of GDP by 2030; and a 50% or greater increase in GDP per capita – is a challenging undertaking. It is made more so by the emirate’s geographic location, which finds Abu Dhabi in close proximity to regional competitors such as the giant Saudi Arabian economy, as well as ambitious newcomers like gas-rich Qatar.

All of the GCC nations share a similar vision: conscious of the finite nature of the resources that have underpinned their remarkable economic growth over recent decades, they have begun to utilise their sizeable revenues in a bid to diversify their economies and provide a stable platform for future growth. Governments around the region, therefore, are expending considerable time and resources on the question of how to make their respective jurisdictions more amenable to domestic start-ups and investment in new economic areas, as well as more attractive destinations for foreign capital.

Competition

Enhancing the competitiveness of Abu Dhabi is therefore a priority for the emirate’s government, to such an extent that a Competitiveness Office of Abu Dhabi exists as a subsidiary of the Abu Dhabi Department of Economic Development. In 2013, the work of this entity was raised to prominence by the publication of the inaugural “Abu Dhabi Competitiveness Report”, launched in May 2013.

The report assesses the competitiveness of the emirate and its three main regions, Abu Dhabi, Al Ain and Al Gharbia, using a range of international benchmarking criteria and standards. It also offers a number of recommendations. For example, in the area of human capital the report calls for targeted skill training programmes to meet the needs of the emirate and its sub-regions; the development of a robust knowledge base covering the local labour market and the creation of detailed labour profiles; as well as the goal of creating a greater number of internship programmes. Moreover, the report raises the possibility of creating a petroleum institute in Al Gharbia, which, although it is home to the bulk of the UAE’s oil and gas reserves, does not currently have a university campus focused on hydrocarbons.

Looking at the business sector, the report makes a number of recommendations which, if implemented, would represent a fine-tuning of the already-efficient government policies. These changes range from the elimination of unnecessary fees and the streamlining of payment processes, to the reduction of fees and procedures that have been identified as particularly onerous for new businesses.

Significant Progress

The report’s findings with regard to the structure of the economy are of principal interest to Abu Dhabi’s economic planners, as they reveal the results that the government’s diversification strategy has achieved so far. The report acknowledges the success with which the government has deployed the wealth generated by its hydrocarbons sector to make large-scale improvements to the emirate’s competitiveness over the past decade, most visibly in the form of an efficient seaport, airport and communications network, as well as a range of major industrial, commercial and residential real-estate developments.

The success of emerging sectors, such as health care and tourism, is also highlighted, with the caveat that the emirate should consider providing more support services to investors. A number of improvement areas are also proposed by the report, with a view to achieving targeted investment in key areas of the economy. These recommendations include establishing new investment incentives, services, programmes and councils; increasing information availability; and branding Al Ain and Al Gharbia as desirable investment destinations in their own right.

Geographical Diversity 

Boosting economic activity throughout Abu Dhabi as a whole is an important issue for the emirate, as it is often perceived from the outside as something akin to a city-state. Despite this perception, however, the western region of Al Gharbia, the location of most of Abu Dhabi’s oil wealth, had an estimated population of 285,400 in 2012, according to the Statistics Centre - Abu Dhabi (SCAD). The region of Al Ain, situated in the east of the emirate, has a higher population still, with a total of 631,000 inhabitants. Abu Dhabi’s economic development, then, must be one of geographical diversification as much as of sectoral variety.

Considerable success has already been achieved in this regard. Al Ain is rising to prominence on the regional map as a global aerospace hub, largely as a result of the efforts of Mubadala Aerospace (see Al Ain chapter). The company has worked with a number of partners to develop a cutting-edge technology and manufacturing base in this hitherto quiet corner of the country: it has entered into a supply agreement with Airbus Group, by which it has developed an aircraft composites manufacturing facility, and a collaboration agreement with General Electric (GE) has resulted in a variety of new aircraft-related activity, centred on maintenance and repair services for GE aircraft engines operating in the Middle East. Mubadala Aerospace has also signed a production agreement with FACC of Austria, a global company involved in the design, development and production of advanced aircraft components and systems and a supplier to major manufacturers such as Airbus, Boeing, Bombardier and Embraer. The developments taking place in Al Ain are resulting in the transfer of knowledge and skills to local inhabitants, which Mubadala has expanded into more diverse areas, such as pilot training (see Security, Aerospace & Defence chapter).

WRDC

In the west of the country, too, the government is driving economic expansion efforts. The Western Region Development Council (WRDC) was established in 2006, and works with a range of government bodies to improve social development, education, health care and infrastructure in the area (see Al Gharbia chapter). This includes the creation of annual, five-year and 10-year development plans and budgets, as well as efforts to measure growth against a matrix of key performance indicators. Another important part of the council’s mandate is its role as an agency for investment promotion and public relations for the region, by which it endeavours to increase awareness of Al Gharbia as a destination for investment and tourism.

The fruits of the council’s labours can already be seen, such as in the success of the Al Gharbia Scholarship Programme, which has opened up higher education opportunities to the area’s best-performing students. The WRDC has also established the Estishara Programme, which assists new companies and entrepreneurs with developing project designs, obtaining approval from government agencies, sourcing demand, helping to produce feasibility studies and exploring funding options.

Examples of businesses that have benefitted from this programme include a desert hospitality attraction, a poultry farm and a building components manufacturing facility. Further support for Al Gharbia’s entrepreneurs and SME segment was made available in 2011, when the National Bank of Abu Dhabi collaborated with the WRDC to provide financial skills training for aspiring business owners.

The government, meanwhile, is endeavouring to upgrade the region’s educational infrastructure in order to better serve its economic development. New schools have been built and old ones refurbished, all according to Abu Dhabi’s New School Model, introduced in 2010 to place increased emphasis on critical thinking, IT skills and English language (see Education chapter).

Opportunities for private sector education companies abound, and recent years have seen the establishment in Al Gharbia of numerous branches of the Glenelg School, first brought to the emirate by the Abu Dhabi National Oil Company in 2008 in collaboration with Glenelg Country School in the US. The government is also endeavouring to increase both the quantity and quality of tertiary education options in the region, which at present are limited to the Higher Colleges of Technology at Madinat Zayed and Ruwais, as well as the Baynounah Institute of Science and Technology in Madinat Zayed.

The rapid economic and cultural expansion of the capital sometimes makes it easy to overlook gains made in the rest of the emirate, but the government’s plans for the development of the other regions – and a track record of turning goals to reality – suggest that a geographically diverse expansion of the economy is well within reach. Achieving this goal will not only help unleash the economic potential of the emirate, but it will also ensure that all areas are able to partake in Abu Dhabi’s success.