Development in the UAE

In North America, we tend to have an underlying mentality that democracy is best governing system and that although other countries are also industrialized; everyone wants to be North American in order to gain what we have. I have to say that this ethnocentric impression needs to be reconsidered. I form this opinion after meeting with a number of business people in the UAE, particularly with Mubadala, a development organization. I am really fascinated with the organization because it is a private organization that is executing public initiatives. It is an interesting solution for bureaucratic issues that we face in many industrialized countries that inhibits quick development - especially considering how fast the UAE's governments' decisions are being realized. The evidence of this development is obvious in the fact that the majority of the organizations we visited are in a new building of less than 2 years and there are thousands of cranes operating every day. I have never seen growth like this before - and I was living in Alberta during the recent oil boom.

Mubadala is private in that it is managed as any other organization that effectively manages its cash flows and does proper financial analysis for each project, diversifying industries and expanding operations. What makes Mubadala an interesting case is that it is mandated by the government to execute their development plans - for the economic and social well-being of the region. The UAE is governed by autocratic rulers who make all the major decisions of the country, so they have a strong influence in the strategic direction of this company. They also act as a venture capitalist, investing in various projects that Mubadala suggests are worth pursuing, that also support the strategy of the UAE. The oil money Mubadala does not appear to fuel an artificial stimulation of the economy (which we did see with other sectors such as in the Media City of Abu Dhabi), but just provides available capital. Additionally, because of this close relationship between Mubadala and the government, the company makes decisions based on social and economic parameters, perhaps encouraging more long term and sustainable decisions. For example, a major strategy of the government is to build the capabilities of Emiratees through the partnership with multi-national organizations. Thus the decisions made by Mubadala in their partnerships will encourage this knowledge transfer to locals, fulfilling a social purpose while stimulating economic activity. This has the potential to lead to sustainable growth with lesser and lesser reliance on foreign knowledge and investments.

This system is not without flaws by any means, but I think that it is interesting to see how effective it seems to be. Especially when comparing development to Abu Dhabi's neighbour, Dubai. Dubai has executed its development in a much more capitalistic fashion. This has facilitated its growth to some extent, but the city and industrial planning seems to less strategically aligned and purposeful as the development we observed in Abu Dhabi. Their development was delegated to various companies with less direction as to what to develop and how - there is not just one development organization like Mubadala. Thus there are several 'city centers' and suburbs developed that have poorly planned connecting streets making transportation a challenging issue. This comparison of development definitely favours Abu Dhabi's approach for long term effectiveness.

I have a number of criticisms of this system, involving many more complex issues than I have covered in this reflection. I will just share a few brief thoughts: Firstly, this rapid, autocratically directed growth is likely effective as a result of its focus on the well being of a city, not addressing the needs of the countryside of the small region. This is a considerably different situation than what is found in Canada or other larger countries. Secondly, the social development I spoke about is directed towards the Emiratee locals who make up about 10-15% of the country's population, who already have access to a number of advantages than the rest of the population. The social conditions of the remaining 85% of the population of the country seem to be largely unaddressed. Lastly, although Abu Dhabi is responsibly using their oil money to diversify their economy for long term success, I have doubts as to the economic viability of some of those investments (such as Masdar or the Media City), as they are attempting to create demand or industry from scratch, with the attitude that "if we build it, they will come." But will "they" actually come? Only time will tell. As for now, no one really knows, it is all speculation.

"C'mon Ride the Train"

Being interested in modern architecture and design for quite some time, Dubai is a place that truly was a feast for my eyes. Having visited many of the most influential contemporary design cities (Paris, various places in Italy, New York, etc.), none really come to par with or anywhere remotely close to Dubai. In fact, it would seem that for any engineer, designer, or architect, coming to the city for employment represents an unparalleled chance at full creative freedom, with limited or without any restraints whatsoever on capital. A true opportunity of a lifetime!

While the examples to cite for this are endless, one thing in particular still sticks in my head. On my last day in Dubai, I decided to venture off on my own to other less "touristy" areas of the city. This being said, I hopped on a taxi from our hotel en route to the nearest metro (Mall of the Emirates). Now, I know that metro systems are not exactly the things that are the most cosmopolitan...but, this time, I urge all of you to reconsider.

Have a look for yourselves - The first picture is a sample of what every metro station looks like from the outside (this one is of the Burj Khalifa/Dubai Mall Station), while the other two are taken from the inside of Khalid Bin Al-Whaleed station (the station adjacent to the Burjuman shopping center).

Having second thoughts yet? The cleanliness, superb. The staff, respectful and well-informed. The design, futuristic. The lighting, exquisite. A very high-end look, for such a basic staple. Truly Amazing!

I know that I might not be the most frequent user of metro systems or public transport as a whole but, I'm sure if Montreal's metros looked anything close to this, I, as well as others, might be more inclined to make use of it. The Dubai Metro System is fully automated, meaning that there are no drivers but there is a central location which monitors the flow of the carts. The metros ride above ground unlike the ones in Montreal. It is also said that once the entire system is completed, it will have taken over the world record set by the Vancouver Sky train as the longest automated metro system in the world. The only negative comment I can make about the system is that I found it to be quite slow. However, I'm not sure whether this is because many of the stations were still under construction causing the trains to have to slow down. I guess I will have to retest in June 2010 when it will be fully completed. Anybody down for a summer trip? I know I am!

One last random thought for now. For some reason, the only song that keeps on replaying in my head, over and over again, is one that is taking me back to my youth (I know I'm still young, but you understand), and the days in which Chicago Bulls Basketball games and anything Michael Jordan were all the rage. Come on people, sing the Quad City DJs song with me, I know you know it..."C'mon ride the train...woo woo...and ride it!"...I can't hear you...Sing louder!

Abu-Dhabi vs. Dubai

Abu-Dhabi (Father of the Gazelle in Arabic) is by far the richest of the 7 emirates of the UAE, and the one with the largest oil reserves. It is estimated that Abu Dhabi holds 9% of the world’s oil reserves, large enough to secure sufficient investment inflows for at least another 100 years. The capital state’s business culture is definitely more conservative, with strong government involvement focusing on preserving and promoting national Emirati culture. Abu Dhabi government and its main financial institution Mubadala promote joint economical and social development in the region

Dubai, on the other hand, is UAE’s most populous state and the most economically thriving. The city economical freedom and lax regulations allow for greater innovation and growth...too much, too fast at times. Foreigners (Expats) can own properties and businesses in the free-hold areas, providing a strong incentive for foreign investment and entrepreneurial activity. In fact Dubai is far less depended on oil and successfully diversified its economy into the tourism, real estate and services sectors.

Throughout our trip, from our interviews with business people and government officials, the unique identity of these two powerful states and the competition between them became more obvious. Is this inter-state rivalry healthy for UAE’s development? Strategically it could allow the two cities to position themselves and to jointly support regional economic growth: Dubai is a financial center, luxurious and extravagant, while Abu-Dhabi remains more traditional, with a focus on developing culture and fine arts . Another example is Abu-Dhabi’s young airline company Etihad, now competing with Dubai’s Emirates, pushing the industry to further innovate and improve quality standards to compete locally and internationally. However, the long term results of this brotherly rivalry remain to be seen....

Dubai's Burj Kalifa and Abu Dhabi's Yas Island future developments: Guggenheim, Louvre and Opera House

Richness in Culture, Not Currency

The population structure of the United Arab Emirates is highly unique. Eighty-five percent of the population of the country is comprised of expatriates, mostly individuals from South Asia, the Middle East, Europe, and North America. Therefore Emiratis make up a huge minority within their own country. The vast disparity was evident everywhere we went, from the local souks to business headquarters, Emirati people were found far and in between.

With a strong affinity towards Middle Eastern cultures and a firm belief in the true value of cultural preservation, all I could think was that a rich Islamic culture was losing to globalization. Dubai and Abu Dhabi are being positioned as global hubs. Dubai already possesses every department store and hotel chain the world has to offer, and soon Abu Dhabi will be home to the Louvre and the Guggenheim Museums. Globalization on steroids; my greatest concern was how to preserve the region’s culture in such a global landscape.

I felt alone in my thoughts, as everybody was heralding the abnormally quick growth of the region and attributing them to the great prowess of our increasingly global world. After voicing my concern to a number of high-ranking business people we encountered, as well as managers from Mubadala, the central government fund for Abu Dhabi, I was relieved to discover that in fact, the Emiratis shared my anxiety. Cultural maintenance is a growing concern for nationals as they recognize that their country is currently managed and fueled by foreigners.

In response, the Sheiks have installed an Emiratization program. The thought is to encourage both public and private companies to hire local Emirati people who will be trained by their foreign counterparts. Essentially, the UAE (only approximately a thirty-five year old country) is acquiring expatriate skill-sets through knowledge transfers. This ingenious concept saves both time and resources, and ensures that the local Emirati people are trained by the most competent minds the global world has to offer. The program is aimed to build a sustainable Emirati business world fueled by its own people.

I am personally excited by the project, as it appears that the country has discovered a method of accelerating the typically slow process of climbing the corporate ladder. Emirati people hired normally possess university degrees from local or foreign universities (often through subsidy programs as well) and will be hired for positions currently held by expatriates. The expatriates, who are often living in the region for short transitional periods, will thoroughly train the locals to occupy their positions.

Although I recognize certain downfalls with the program, specifically in terms of finding enough willing Emirati people and the sustainability of essentially buying foreign knowledge, I believe that if expatriates ensure to impart their soft skills as well as their hard skills to the Emirati people (specifically in terms of management, innovation, organization), next time I visit the UAE, I will be pleasantly surprised.

who you are determines what you get

The Emirates primary objective is growth through attraction of foreign investment and skills that are lacking locally. In order to enhance this, they open their economy as much as possible hence sacrificing environmental or social regulations and investments. After visiting Abu Dhabi and Dubai for the last ten days I have noticed an apparent breakdown of the social classes. At the top, with the most power and wealth are the Emiratis followed by an upper class of expatriates from Europe, India and other Middle Eastern countries. They are usually educated and hold respectable jobs with high, tax free salaries. And at the bottom a lower working class also constituted of expats but from Bangladesh, Pakistan, Afghanistan, the Philippines, Africa and India. University educated in their home country or not; they are usually construction workers, taxi drivers, fast food employees or in other service industries. Coming from the management faculty of our university; the objective of our trip was obviously oriented towards discovering the business opportunities, and the corporate life style in the Emirates. Very little focus on the underprivileged portion of the population.

I hence dedicated a portion of my free time to talk with some of these people. While the general census was that life is better here than at home with better working opportunities and conditions, many were disillusioned shortly after their arrival here. They work hard long hours for very little income for jobs often undermining their skill level. Although this is slowly changing, the lower class has difficult access to education and healthcare and are not always treated the best of ways. However, as said previously, they wouldn't be here if they had nothing to gain.

The image that was described to us by the managers of the companies we have visited was that Dubai and Abu Dhabi are going to be amongst the most important economic and cultural hubs in the future. I must admit that they had some very good arguments and I wouldn't be surprised if they are proven right in the future. However I just wanted to note the contrast between the opportunities for the upper class and those for the lower class, although both positive, are greatly disproportionate, significantly advantaging the few privileged. This is necessary to a certain extent in order to attract investment, although quite excessive here in my point of view. Given that the UAE is completely new, hence allowing incredible flexibility in its policies, I believe that it can seize this chance to not make the mistakes of others and get things right from the start.

If the United Arab Emirates is to be a leading figure in the future, I would just hope for it to not also be an example of inequality.

Is the UAE's growth sustainable?

Locals (emirates) represent only 15% of the population and own the majority of the firms in the country. Expats represent 85% of the population and consist of occidentals who have the management jobs and of Asians/Indians/ pakistanians who work as construction workers, at the bottom of the social ladder.
Culturaly, I doupt that locals, which represent only 15% of the population, will be able to preserve the traditions and values of the country in the long run. Economically, I believe that the country will not be able to sustain its economic growth if it continues to rely on expats to provide know-how considering these expats need to leave the country when their work visa expires. Can an economy evolve if there is no corporate memory and no internally developed strength? Can a country really thrive on a comparative advantage that it purchases from abroad? I honestly do not think so. People and firms come here to take advantage of the country’s resources and tax regulations (no taxes). The economy heavily relies on expats whose life here is only temporary, which creates short sighted growth strategy. In order to grow in the long run, I feel like the country will have to be more open concerning the residency status of foreigners.
Furthermore, the government of Abu Dhabi seems to be trying to build a comparative advantage in tourism (etihad), medias (two four 24), environment (Mazdar), manufacturing and high tech (according to the Canadian ambassador). I get the impression that by trying to specialize in so many industries, they will simply spread too thin and not be able to build a consistent brand image of the emirate.

Is Dubai Authentic??

Authenticity is a key element in attracting members of the creative class to a city. In a discussion prior to our trip, we had a conversation about whether or not Dubai is authentic - does the place match its branding, does it have something unique to the city? I would argue that although Dubai does have a unique environment that will attract creative people but will not retain them. In fact, the very features that draw people to Dubai are based on the transient attitude that facilitates their departure. Because about 92% of the population is made up by expatriates (non-citizens/locals), the dynamics of the foreign portion of the population within the unique legal framework of the city defines Dubai's culture, not by the Emiratees themselves.

I would define the authentic and attractive draw of Dubai is that it is a port city and a land of opportunity. By nature a port city is a place where people will stop in for business, experience the local entertainment and then leave. Dubai is in a key location in the Middle East, and has the most liberal and capitalistic regulatory system in the whole region. It draws young people (skilled and not) to its parties and entertainment of the quality one could find in Miami or Paris. Thus it compares to other port cities that facilitate trade and entertain, encouraging repeat visits. Dubai also provides a diverse amount of opportunity, despite the recent economic downturn. Whether you are from Bangledesh looking for a better wage or are a highly sought American businessperson, there is opportunity in Dubai for you. They are drawn to the opportunity to make tax free cash in a position or field that perhaps they would be able to have in their home country. However, a large portion of the businesspeople and politicians we spoke to (who are Expatriates, members of the creative class) will only stay in Dubai for a few years. They come, get the experience they were seeking (professionally and personally) and then they are off to the next adventure.

The implications of this authentic culture on Dubai's economic development are substantial. How will Dubai retain creative people in the long run? Although there are policies in place to have Emiratees absorb this expertise, will Dubai actually become an innovation center of the world? Until Dubai solves this challenge, it will continue to be a consumer of innovation in the future despite its high population of the creative class.

Environment: Not a Priority

Prior to coming to the United Arab Emirates, I ran into my “Strategies for Sustainability” professor from last semester. Professor Graham basically said to me “Celine, you better ask them about their reckless behavior towards the environment”. I most definitely made it my mission to understand the importance of the environment within the UAE’s agenda. After having spoken to many CEOs, executives, and government officials, I have come to the conclusion that the environment is definitely not at the forefront of the majority of the business being done in this country. Abu Dhabi and Dubai want to grow. They want to grow fast. The urgency of development and the pressure of immense GDP growth, in the double digits, mean that the country does not regard the environment as a priority or even a consideration. This being said, the country does value not only economic growth but social growth as well. In a country where there are thousands of low wage workers, the UAE is striving to improve the living conditions and the quality of life of not only their Emiratis but of the variety of its expats as well. The UAE is prioritizing in this sense – the country seems to have a “double bottom line”. In a country with only a 37-year history, there is hope with respect to social issues, and once the UAE realizes the complexity of social-environmental issues, I want to be idealistic and believe that there is hope with respect to the environment as well.

The Affect of Culture on the Business Climate

There was much to see and much to do in Abu Dhabi and Dubai, but even more to learn. It's been interesting to learn about the culture and how that culture has impacted the business climate of the U.A.E.

The laws and customs have greatly affected how people do business. After a visit to the New Medical Centre that has ten hospitals in the U.A.E, we visually saw this influence. One of the hospital rooms included a large area for the family to gather and discuss the medical condition of the patient and to decide what to do. In Canada, there are patient confidentiality laws that do not allow doctors to discuss the medical condition of the patient without the proper consent, even with the family. In Canada, family members are often discourages to visit because time in the hospital is a time to rest and get better. Here, if family members don't visit it can be taken as an insult.

Over the last week, I found my opinions constantly changing as I struggled to understand the true essence of the country. I am still mulling over the issues and gathering my thoughts as I decide whether I would be willing and able to live in the U.A.E in the future.

the Grand Mosque Masdar City model

The following was originally written Tuesday the 23rd of February!


So a recap of the last few days:

After arriving Friday evening and having a quick bite to eat at our beautiful hotel, we got to bed relatively early, being exhausted from a good amount of traveling coupled with the time difference. Saturday we visited the Sheikh Zayed Grand Mosque.

(Sheikh Zayed is the late ruler of the Emirates, he established the country in 1971 and led the vision for the growth and diversification of the economy...he was uneducated, as, for example, Abu Dhabi used to be just a village of pearl divers, who stopped diving for pearls when the Japanese invented synthetic pearls...Abu Dhabi was basically settled in the 50s when fresh water was found on the island...desalination is now the second largest industry after oil). The Mosque was quite an engineering feat, with the largest carpet in the world, and it is a structure that was built in about 10 years and is enormous, though not very detailed, and used largely as a tourist attraction; it has only been open for 2 years. After that we went to the Marina Mall, and finally back to the pool for a relaxing afternoon.

Sunday was our first full day. It is also the first day of the week, as Friday is the holy day so their weekend here is Friday/Saturday. We went to SNC Lavalin, a construction company, and to the Canadian embassy, where we met the Canadian ambassador and received some very interesting insight on expats working in Abu Dhabi, along with interesting details such as the 26,000 Canadians working in the city and the fact that Australians have quite a large presence in the city. In the afternoon, we visited Masdar City, which is the first carbon-neutral, zero-waste city in the world. Largely an experiment for renewable technologies and what a fully sustainable city could look like. They are testing 41 different solar technologies, they have an institute for research which involves 88 students from 42 countries, and also a 10 megawatt solar firm, of which 3 mega watts is currently being used for the construction of the city, and the rest is currently going back to the Abu Dhabi grid. The city, when it is completed, will require 280 mega watts of power, so there are other technologies that are being developed as well for extra power; unfortunately they can't use wind as it's right next to the Abu Dhabi International Airport, and there are many other elements of the city to critique as well. For dinner, we ate at a Lebanese restaurant and met with some people working in Abu Dhabi, so were able to hear about things such as why Dubai is not by any means in serious trouble, why there has been a large shift in focus in growth to Abu Dhabi, and why fundamentalists haven't yet attacked the city, which stems from many reasons from laundering of money to a hidden drug trade.

Monday started at Etihad Airways, currently one of the largest airlines in the world which connects North America, Europe, the Middle East, Southeast Asia, and Australia like never before, creating Abu Dhabi as a hub of the world. We met with the CEO, CFO, and other executives, and had a fascinating tour of their 12-month-old facility. We also met with the Director of the National, Abu Dhabi's English language newspaper, which is only 2 years old. The rules of the media are quite different in a place controlled by a monarchy, and news is more about in-depth analysis than breaking news, as everything has to be passed through the government. Yesterday, Monday, we did several things, including a meeting with the COO of the largest public hospital in Abu Dhabi, the Sheikh Khalifa Medical Center, managed by Cleveland Clinic. Sheikh Khalifa is the current ruler of the Emirates and the eldest son of the late Sheikh Zayed. If you've kept in touch with the area, you'll know that the tallest building in the world was named the Burj Khalifa after this man. We also went to the New Medical Center, a hospital started by a Dr. Shetty, an entrepreneur who owns 26 horizontally integrated businesses and is one of 3 people in the Emirates to have been offered citizenship. Emiratis make up just 15% of the population here, and it is impossible to achieve citizenship (except for these exceptional 3). In fact, businesses cannot be majority-owned by foreigners. The Abu Dhabi government must own over 50% of any business started in the UAE. We had a chance to go to the Emirates Palace, which is quite astounding, and I finally got my first taste of beach sand.

Today we visited Studio Twofour 54 (which doesn't represent beer for you Canadians, it represents the coordinates of Abu Dhabi). We also went to Mubadala, the firm whose mandate it is to invest the government's money to deliver a financial and social return. Driving into Dubai today was quite fascinating. The development that has gone on here is capitalism on crack to say the least.Anyway, the food, the people, and the experiences have been great so far. Many details I have left out, but Im sure you get the idea of what a fabulous opportunity for our whole group.

Wild Weather

Yesterday was a day of contrasts. In the morning a couple of us went with a friend of mine to ride four wheelers in the desert. There was a bit of a sand storm. To be able to ride the four wheelers among the dunes we had to buy sunglasses because of the blowing, stinging sand.

That evening, as we gathered by the fountains by the tallest building in the world, we were astonished to see a display of lightening, followed a torrential downpour rain - something unusual in a desert!

As we walked thru the mall we witnessed an unusual sight indeed, water flooding out of some high end clothing boutiques. Clearly the Mall of the Emirates was not designed with this kind of rain in mind.

On the way back to our hotel, the driver had to navigate around large puddles, make that, small lakes of water on the highway, a new experience for him.

Abu Dhabi: le début

Après un trajet de 20 heures, nous sommes arrivés à Abu Dhabi vendredi le 19 au soir. Notre hôtel est sur la Yas Island, une île artificielle qui fait partie d’un projet de 36 milliards de dollars. 36 milliards! À côté de l’hôtel se trouve le Yas Marina Circuit, celui qui a remplacé le circuit Gilles Villeneuve de Montréal pour l’édition 2009 du Grand Prix. Pour un instant, je me suis senti indigné, et un peu jaloux qu'on ait été détrônés ainsi. Mais bien entendu, ici ils ont l’argent pour faire un circuit qui a de l’allure!

Le lendemain fut une journée touristique. On est allé visité la Mosquée du Sheikh Zayed, dont la construction commencée il y a 10 ans venait d’être achevée. Elle est énorme – pas aussi grande que celle de La Mecque parce que c’est défendu par la religion musulmane, mais gigantesque tout de même (voir photos). En rentrant, les femmes doivent se couvrir d’une abaya et tout le monde doit enlever ses chaussures. À l’intérieur se trouve le plus grand tapis persan tissé et les plus grands chandeliers au monde: impressionnant certes, mais de valeur culturelle, pas vraiment (on dirait que tout était fabriqué en Chine). C'est un peu représentatif du bâtiment : un manque de détail fragrant et une qualité inauthentique…un projet un peu hâté selon moi.

Le reste de la journée, on a fait un peu le tour d’une partie de la ville. Résumé : les immeubles (dont la moitié sont en construction) sont plus grands et nombreux que les nôtres, et les centres d’achats plus extravagants. D’accord, il y a un peu plus que ça à dire si on regarde un peu plus attentivement…on en reparlera!

Abu Dhabi - The Richest City in the World

As many of you may know, Abu Dhabi was recently listed as the world's richest city by Forbes. While luxury has become somewhat synonymous with the cities of Abu Dhabi and Dubai, "opulence" and "hospital" are not words that we would commonly see used side by side...clearly this is not the case in Abu Dhabi where locals no longer yearn to be on glitzy VIP lists but rather crave lifestyles of the new local term they coined, "VVIP" - very very important person.

The following are pictures from the VVIP suite at Dr. Shetty's New Medical Center that we visited in downtown Abu Dhabi. The first picture is a welcome sign to the room and the second picture is a separate "waiting room for guests" within the area suite. This doesn't include the actual room of the patient, which also includes an extended sofa like the one seen in picture two!

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My first experience at a mosque

These past few days on our trip, we have constantly been debating the issue of oppression of women here in the UAE. Many of the speakers we have discussed this with have mixed views. When we visited the famous mosque on the 21st, we were forced to cover ourselves from head to toe in the Abaya. This immediately brought up the issue of oppression. Did I feel oppressed by having to wear it? To be honest, I did not. For me it was more about respect than anything else. We were outsiders trying to get a better understanding and appreciation of the Muslim culture, and we were asked to be respectful by dressing modestly. I would expect the same if a group of tourists were entering my place of worship. I did not hesitate to comply, as I understand that the religion has rules and traditions that must be respected, as do most other religions. This one may happen to be more extreme than others, in that we had to completely cover ourselves. However, it was a new, enlightening experience, and I certainly welcome any more that I may have on this journey.

Our first day in Abu Dhabi

Our first taste of the Muslim culture after a restful evening - Sheikh Zayed Grand Mosque - the largest in UAE and the world's eigth . The mosque was opened in 2007 and named after Sheikh Zayed, the founder and the first President of UAE.

Ladies are required to cover themselves at all times in the mosque.

A short stroll in the Heritage Village...

Enjoying our evening on the rooftop of the 5-star Yas Hotel by the Abu Dhabi race track.