Influential factor: The emirate’s resilience is re-building confidence among the global business community

With each passing year, Dubai continues to further solidify its positioning as a regional and global hub for business and finance. As the emirate posted robust economic expansion across all sectors in 2013, its resilience in the years following the global economic downturn has helped to re-build confidence amongst the global business community. Having established itself over four decades ago as one of the Gulf's major trading cities, the emirate has been built upon an unprecedented mix of cultures and influences. Its historic connections to the Arabian Peninsula, North Africa and South Asia via trade and commerce have now been expanded to marketplaces around the globe as the emirate continues to modernise its offerings as a leading investment destination. With local authorities along with the federal government continuing to provide strong leadership and support for enhancing economic competitiveness, the emirate appears poised to enter a new cycle of growth and expansion.

Demographics

As of mid-2013 Dubai had a population of 2.16m, up from 2.12m at the end of 2012, 2m at the end of 2011 and 1.6m at the end of 2008, according to the Dubai Statistics Centre (DSC). Since 2000 the emirate’s population has more than doubled, almost entirely as a result of foreigners settling in the UAE. As of the end of 2012 Emiratis made up around 11% of the population, while expatriates accounted for the remaining 89%. As a result the emirate is very ethnically diverse and hosts dozens of languages and people from around the world, and this multinational workforce has served the emirate well. The majority of foreign workers in Dubai are male, which has skewed the emirate’s gender mix: as of the end of 2012, men accounted for nearly 70% of the population, according to the DSC. Like other countries in the Middle East, albeit to a slightly lesser extent, Dubai’s population is very young. Nearly 45% is 29 years old or younger, while almost 80% is less than 40 and about 95% is under the age of 50.

Language

According to the constitution, Arabic is the official language of the UAE. However, due to the make-up of the population a variety of languages are spoken. English is the lingua franca of business throughout the region and is in use at all levels of government. Given the emirate’s multinational population, a wide variety of other languages are also spoken, including Chinese, Farsi, Hindi, Urdu, French, Spanish, German and Russian.

Religion

While Islam is the official religion of the UAE, Dubai’s diverse population includes adherents of a wide variety of other religions as well. The constitution guarantees freedom of religion in the UAE in accordance with established customs and traditions. That said, daily life throughout the UAE is strongly influenced and informed by Islam. The Sunni tradition – the dominant form of Islam in the country – has had some bearing on the legal system, which was developed as a combination of international practices and sharia law.

Geography

The UAE, which stretches from the south-eastern shore of the Gulf almost to the Strait of Hormuz in the north, occupies 83,600 sq km. The country borders Saudi Arabia to the west and south, and Oman to the east. Dubai is the most populous emirate in the UAE and the second largest, behind Abu Dhabi, by area, covering 4110 sq km in total.

The emirate’s area has grown by around 200 sq km since the early 1990s as a result of a series of major land reclamation projects. Dubai is bordered by the emirates of Sharjah and Abu Dhabi, in the north and south, respectively. The emirate accounts for less than 100 km of the UAE’s 1318 km of naturally occurring coastline, though the land reclamation projects carried out over the past decade have expanded the coastline substantially.

Most of the country is located along the coast of the Gulf, with the exception of Fujairah and some parts of Sharjah, which lie on the Gulf of Oman. The emirate considers Hatta – a small exclave that is located in the Hajjar mountains around 115 km east of the city of Dubai – as its own. Most of Dubai’s land is covered in fine sand and gravel desert.

Climate

Similar to the rest of the Gulf region, Dubai has an extremely hot, desert climate. During the summer months, which run roughly from June to September, the emirate is hot and humid near the coast (where the majority of the population resides) and hot and dry further inland, with average temperatures around 34°C. During the rest of the year temperatures vary from a low of around 19°C in January-February to 25-30°C in the autumn months. As in most desert climates, temperatures generally drop substantially at night.

History

Relatively little is known about the early inhabitants of the land that now includes Dubai and the other emirates, though the area has been a centre of trade between cultures for thousands of years. The earliest recorded archaeological evidence has been traced back to the Umm An Nar civilisation, which was active during the latter half of the third millennium BCE, from around 2000 BCE to 2700 BCE in what is now the UAE and Oman. Ceramics dating to the third and fourth century CE have also been found. The earliest written mention of Dubai can be found in the Book of Geography, which was written in 1095 by Abu Abdullah Al Bakri, an 11th-century Arab-Andalusian geographer. The area was then widely known as a trading and fishing centre during the Sassanid Persian and Byzantine empires, and by the 16th century the local pearling industry had taken off in the Gulf region as well.

By 1833 the area that is now the city of Dubai had been settled by the Bani Yas, a well-known nomadic Arab tribe that took power in the region in the 18th century. The Al Maktoum family, which rules Dubai today, traces its lineage back to a group of Bani Yas that moved into the northern Gulf from the southern Arabian desert (in what is now Saudi Arabia) in the late 1700s. A number of other Emirati leaders, including Sheikh Khalifa bin Zayed Al Nahyan, the current president of the UAE and ruler of Abu Dhabi, are also descended from the Bani Yas.

The British swept into the Gulf in the early 1800s, with the goal of protecting one of their primary trade routes to India. In 1820 Dubai, along with a number of other local sheikhdoms, signed a general maritime treaty with Britain, in what was considered to be a major defeat for the Ottoman empire at the time. Under the treaty, Dubai and the other emirates, in addition to parts of modern-day Oman, became the Trucial States, an official protectorate of the British empire. This alliance lasted until the late 1960s, when the UK announced that it planned to leave the Gulf entirely by the early 1970s. In December 1971 the newly formed emirate of Dubai became a founding member of the independent state of the UAE, which was primarily organised by Sheikh Zayed bin Sultan Al Nahyan, the ruler of Abu Dhabi at the time, and Sheikh Rashid bin Saeed Al Maktoum, the ruler of Dubai from 1958 until his death in 1990. When the new country was formed, the city of Dubai consisted primarily of a small town on the banks of Dubai Creek. Since then, under the leadership of Sheikh Rashid and his successors, Dubai has developed into the cosmopolitan economic centre it is today. The current ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, took over in 2006.

Government

Under the constitution of the UAE, which was written jointly by the rulers of Dubai and Abu Dhabi in 1971, each of the seven emirates that make up the country retains a substantial amount of political autonomy. The federal government, based in Abu Dhabi City, manages a number of areas that require national-level oversight, including national security, defence, foreign relations, fiscal policy, monetary policy, labour relations, air traffic control, immigration, communications regulation and education standards. Outside of these areas, each emirate operates on an individual basis.

In some cases, federal and local regulators and other government organisations work together. For example, the Dubai Health Authority, which develops and manages the emirate’s health sector, works with the federal Ministry of Health. Each individual emirate is also allowed to set its own pace in terms of local development and diversification. At the same time, a certain percentage of each emirate’s revenues are put toward the federal budget. In practical terms, Dubai has the freedom to focus almost exclusively on the development of its economy.

Due to their status as the original founding members of the UAE, Dubai and Abu Dhabi hold a number of additional powers at the federal level and are considered to have more influence on national affairs than the other five emirates.

For example, the rulers of Dubai and Abu Dhabi hold veto power on the Supreme Council, the presiding national body in the UAE, which is made up of the rulers of the seven emirates. Additionally, as a result of Sheikh Zayed’s leading role in the formation of the country in the early 1970s, the ruler of the Abu Dhabi traditionally serves as president of the UAE, while the ruler of Dubai traditionally serves as prime minister and vice-president of the country.

Political Organisation

The federal government is organised into three branches: the executive branch, the legislative branch and the judicial branch. The executive branch consists of the Supreme Council and the Cabinet, which is officially known as the Council of Ministers, and is made up of the nation’s 22 government ministers. The Cabinet, which is overseen by the prime minister and two deputy prime ministers, plays an advisory role to the Supreme Council, in addition to overseeing the operation of the UAE’s federal ministries.

The legislative branch comprises the Federal National Council (FNC), a 40-member, partially elected body consisting of representatives from all seven emirates. Since the UAE’s first public elections in 2006, half of the members of the FNC have been elected by an Electoral College, which is composed of prominent citizens appointed by the Supreme Council. The other 20 members of the FNC are appointed directly by the Supreme Council.

The number of representatives each emirate sends to the FNC is based on the emirate’s size and population. Dubai and Abu Dhabi, as the most populous and largest emirates, each send eight representatives (four appointed by the respective rulers and four elected by the Electoral College), while Sharjah and RAK each send six and the remaining three emirates each send four. The FNC, which plays an advisory role to the federal government, has the power to review and amend federal draft laws and amendments before they are put before the Cabinet and the Supreme Council for approval. Other tasks carried out by the FNC include questioning ministers on their job performance and both developing and discussing the federal budget.

Key Body

The council has been a key beneficiary of the Supreme Council’s efforts over the last decade to boost public participation in government. For 35 years following the creation of the FNC in the early 1970s, representatives were appointed by the Supreme Council. In 2006 a 6000-strong Electoral College elected 20 members of the council, in what were the UAE’s first public elections. By the time the second round of elections took place in September 2011, the Electoral College had grown to include 129,000 prominent individuals.

In line with this expanded representation, the Supreme Council has also worked to boost the FNC’s powers in recent years. In 2008 a handful of new constitutional amendments both extended representatives’ terms to four years, which had previously been limited to two years, and expanded the council’s responsibilities to include the UAE’s involvement with international conventions, among other alterations. The Supreme Council has indicated that it plans to continue extending the FNC’s powers in the future. The federal judicial branch of government, meanwhile, comprises the Federal Supreme Court and the Courts of First Instance, both of which operate independently of each other and are separate from the other branches of government, as laid out in the constitution. The Federal Supreme Court deals primarily with federal-level disputes. Meanwhile, the Courts of First Instance, which include a variety of local and regional courts that are spread throughout the country, handle civil, personal status and commercial cases at the local level.

Business Environment

The UAE business environment is regarded as being one of the most open in the GCC, and this is reflected in the country’s rankings in the World Bank’s 2014 “Doing Business” report. Overall, the UAE is ranked in 23rd, ahead of GCC neighbour Saudi Arabia (26th), as well as European countries such as the Netherlands (28th), Switzerland (29th) and Austria (30th). For the 2012/13 year, the World Bank recognised three changes that the UAE had made to improve its business environment: fewer procedures to connect electricity; increased operating hours for the land registry and reduced property transfer fees; and new measures aimed at protecting investors.

Although the UAE ranks in 23rd place overall, it is in the top five for five of the 10 factors that contribute to a country’s rating, including dealing with construction permits (5th), getting electricity (4th), registering property (4th), trading across borders (4th) and paying taxes (1st). Despite these strengths, however, the country’s overall ranking is brought down by poorer rankings on four factors: getting credit (86th), protecting investors (98th), enforcing contracts (100th). Dubai’s success has largely been due to a unified vision and a strategy that depends on the active participation of the private sector. Building on this progress, the government developed the medium-term Dubai Strategic Plan (DSP 2015) in 2007 to support continued economic growth, as well as deliver on specific social goals.