OBG talks to Nasser Alsowaidi, Chairman, Department of Economic Development (DED)

Interview: Nasser Alsowaidi

Is there a risk that high levels of government spending will crowd out the private sector?

NASSER ALSOWAIDI: The net impact of government spending may vary with different conditions: it may increase aggregate demand, stimulating private sector investment in response. Public spending on infrastructure will create opportunities for the private sector. Some may argue that a budget deficit financed by debt will dry up available finance for the private sector, but this is not the case in Abu Dhabi.

According to the “World Investment Report 2011”, foreign direct investment (FDI) into GCC countries dropped by about 15% that year. In my view, government spending is essential to compensate for the decline in private investment. The government is not in competition with the private sector; however, the withdrawal of public investment from the productive sectors should be gradual and should coincide with the emergence of a strong, dynamic private sector.

How can Abu Dhabi best position itself as industrial capacity shifts from traditional centres in the West to more cost-competitive environments?

ALSOWAIDI: Abu Dhabi is developing a powerful and efficient industrial sector that will replace traditional oil and gas activities as one of the major contributors to the emirate’s economy within the next two decades.

The DED has carried out an industrial strategy for the emirate. Besides several heavy industries being identified to stimulate growth in the industrial sector, a number of industrial zones offer various incentives and cater to a variety of businesses, notably the Khalifa Industrial Zone Abu Dhabi (KIZAD).

These industrial zones offer efficient access to local, regional and international markets in a low-cost environment designed to increase ease of business and profitability. Furthermore, industrial zones such as KIZAD can create competitively priced infrastructure solutions that are tailored to address the specific utilities and logistics needs of major manufacturing projects.

What can be done to increase job opportunities in population centres outside Abu Dhabi City?

ALSOWAIDI: Economic Vision 2030 emphasises social and economic progress through developing the national labour force, empowering women, attracting skilled foreign workers and accelerating equitable provision of education, health and infrastructure.

There are a number of government entities playing pivotal roles in this effort. In particular, the Abu Dhabi Tawteen Council (ADTC) is ensuring job creation for nationals, offering incentives for companies to set up in the Eastern and Western regions of the emirate. The ADTC holds some partnerships with the private sector, government institutions, and semi-government entities to establish an integrated information system of the labour force in the different regions of the emirate.

In addition, the Western Region Development Council is working to develop a database of career opportunities in the Western Region, in cooperation with the Abu Dhabi Systems and Information Centre. This database aims to assist job seekers in finding suitable jobs and monitor information about employers and labour market trends in the Western Region, as well as providing advice on employment and required skills.

Aside from increased access to funding, what other areas of small and medium-sized enterprises (SME) development need additional support?

ALSOWAIDI: Further action needs to be taken to enable SMEs to capitalise on market opportunities and to link those enterprises to large projects in order to increase their competitiveness. We cannot overlook the government’s efforts to develop knowledge-based small businesses, in addition to establishing clusters to support networks of SMEs and decrease operational costs.

The development and establishment of SMEs will enable us to achieve the objectives laid out in Economic Vision 2030: targeting the private sector as the main engine of growth in our economy while increasing the participation of Abu Dhabi nationals in the workforce.