Dubai made the world’s front pages in November 2013 as it won its bid to host the World Expo 2020 against competition from Russia, Turkey and Brazil. It would be premature at this stage to understand what this really means in terms of long-term opportunity within the wider region of which Dubai and the UAE are the hub, but indicators nearly one year on suggest the resulting potential for regional growth in the run up to and beyond Expo 2020.
According to a recent statement made by the Dubai World Trade Centre, the economic impact of the Expo 2020 in the Middle East and North Africa (MENA) region is valued at some AED 90 billion. This impact will see a ripple effect throughout the GCC and the rest of the MENA region over the coming years. MENA is only a part of the story because Dubai’s region extends to the rest of Africa and Central and South Asia and its purchasing power is global. Dubai is in the right place at the right time to host the Expo 2020 for the benefit of the UAE and a much wider geography.
As Dubai continues successfully to manage its financial recovery, the emirate remains steadfast in developing its core selling points: infrastructure, logistics, tourism and trade. By 2013, Dubai’s new Al Maktoum International Airport had become the largest airport in the world in terms of freight handled, with close to 12 million tonnes per year. In October 2013, the airport opened to passenger flights – with over 102,000 passengers travelling through the airport by the first quarter of 2014. Coupled with the latter, Dubai and Abu Dhabi have spent significant time and effort in creating fully integrated, business-friendly free zones, the key contenders being JAFZA, DWC, DMCC, TECOM and the DIFC. The focus of the Expo 2020 will be angled towards the likes of JAFZA, DWC and the DMCC along with the corridor connecting Dubai and Abu Dhabi with its Khalifa Port and Industrial Zone. The introduction (and eventual refinement) of these and newer free zones have proved to be a game changer for Dubai (and now Abu Dhabi), enhancing the attractions of the UAE as the primary destination of choice within the wider region for inward investors.
While the Expo 2020 will inevitably attract inward investment and growth in the UAE (approximately 275,000 jobs are expected to be created to service the Expo 2020, 50,000+ rooms earmarked within the tourism industry and an estimated boost of $23 billion between now and 2020), the perception of Dubai as a safe and tolerant haven with a legal infrastructure appropriate for a “base of operations” for corporations and businesses in Africa and Central Asia has soared even since the start of this decade, placing the UAE as the hub destination for such businesses independently of, and subsequent to, the Expo 2020. The overall package of advantages over other destinations, and its position at the hinges of the world, both north-south and east-west, continues to draw long-term investment and interest in the UAE. Such types of investors typically explore the idea of extending their presence globally, using Dubai as their “international headquarters”.
As a result, the number of investor applications both within and outside the UAE’s free zones JAFZA, DWC and DMCC continue to increase. The free zones have responded by:
- Simplifying their incorporation procedures
- Creating online based portals for easy access to corporate documentation and procedures
- Providing more options for office and storage facilities, and importantly
- Creating a familiar “business community” via conferences, seminars and conventions – thereby allowing businesses to spawn new opportunities by integrating with their neighbours, engage in healthy competition amongst themselves and gain access to a range of vendors and suppliers in order to maximise cost efficiency for their businesses
Bearing in mind the above advantages, the idea of Dubai as a sophisticated entrepôt not only serves as a force multiplier to the UAE’s growth in line with the Expo 2020, but also has the potential to catalyse opportunities for its regional GCC partners beyond April 10th 2021 when the Expo 2020 will end. Using the Expo 2020 as a springboard, various businesses in the GCC have the opportunity to connect among themselves, building private trade alliances, allowing a two-way stream of capital sharing new technologies being developed among their counterparts which will also generate a “connected-culture” amongst themselves. This ties in well with the Expo 2020 theme of “Connecting Minds, Creating the Future”.
Finally, if you are reading this as a resident in the UAE, you will know much of this already. For others, the attractions of the UAE to all sectors and sizes of business interests, as a market destination in its own right, as a point of access to the wider regional opportunities, and as a stepping stone between the four points of the compass, may not previously have been apparent. Reed Smith’s longevity in the region, our legal and commercial experience and global presence makes us your ideal contact point for a discussion of the opportunities, both in the context of the Expo 2020 and more generally.
Client Alert 2014-268