Profile:
Emirates: Ras Al-Khaimah
Emirates: Ras Al-Khaimah
Ras Al Khaimah, the fourth-largest emirate, located in the northernmost part of the United Arab Emirates (UAE), is on the cusp of becoming a lucrative investment destination. With a diverse landscape, as well as a vast supply of natural resources, RAK is aiming to become a regional leader in tourism, real estate and industry by implementing a development programme that has achieved 50% GDP growth over the last four years.
ISBN: 1-902339-90-8
ISSN (Online): 1755-1765
ISSN (Print): 1755-1226
TABLE OF CONTENTS
COUNTRY PROFILE
This section provides a quick look at some facts about the country, its population, economy, natural resources, education system, religion, culture, language, climate and geography.
POLITICS
In recent years, RAK has begun placing itself on a path to join the “big three” of the UAE – Dubai, Abu Dhabi and Sharjah – as an attractive investment destination, albeit on a different course. Higher rents for residential and office space, increasing traffic problems and generally more stressful working environments in the bigger emirates are all factors why living and doing business in RAK is becoming more appealing. Having learned from the experiences of those other emirates that had started earlier, RAK's political leaders are better able to formulate a successful development plan. As a member of the UAE, RAK has access to excellent security forces, backed by the US and increasingly by Russia. Liberalisation of the government continued in 2007 as well, following the election of the country's first legislature. While its powers are still limited, the UAE is garnering recognition worldwide for its efforts, with RAK in particular gaining notoriety through the progress it has achieved in its enfranchisement of women. The emirate appointed nine women to the Federal National Council in February 2007, far surpassing other governments in the region. RAK has achieved equal literacy rates for both sexes in the UAE and currently counts more women enrolled in universities than men.
This chapter includes interviews with Sheikh Saud Bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah; and Robert Kocharian, President of Armenia.
THE ECONOMY
While RAK has limited hydrocarbons reserves, it does boast fertile land for agriculture and an abundance of local minerals that are used for the emirate's local industries, particularly cement and ceramics manufacturing. In addition, RAK has developed a reputation as a business-friendly environment that is open to both local and foreign players, resulting in a strong and relatively diverse economy. While many economic policies come from the federal government, RAK's local offices play a key role in determining how the emirate should develop. Several sectors have recorded excellent growth in recent years, with tourism, construction, manufacturing, real estate and financial services accounting for 57% of GDP in 2005. While oil has never factored heavily in RAK's economy, recent years have seen an increase in exploration activity on- and offshore. Imports and exports are also experiencing positive growth and this trend should continue as expansion to the emirate's airport and port facilities is expected to boost trade figures further. Meanwhile, the CSEM-UAE Innovation Centre, located in RAK, will introduce technical innovations that will not only improve building materials for current development, but will also reduce costs, emissions and waste in the emirate's infrastructure.
This chapter includes interviews with Sheikh Faisal bin Saqr Al Qasimi, Chairman, RAK Finance Department; Khater Massaad, Advisor to the Crown Prince, CEO, RAK Investment Authority; Oussama El Omari, CEO, RAK Free Trade Zone; and Tony Cheetham, Chairman of the Board, RAK Centre for Advanced Materials. This chapter also includes a viewpoint from Peter Watson, US Department of State Advisory Committee on International Economic Policy.
FINANCIAL SERVICES
Due to current high levels of liquidity, strong economic growth and a rapidly growing population, the future looks very bright indeed for financial services in RAK. Following the success of the RAK Free Trade Zone the emirate has become the third-largest recipient of investment in the GCC, relative to GDP, some of which will be used toward a new financial city and economic free zone. RAK's two local banks, RAKBANK and Commercial Bank International, are enjoying the benefits of rapid growth, resulting in increased profit margins and net income interest. This has come as a result of significant growth in credit card portfolios, mortgage finance and commercial loans. However, despite the recent success of RAK's local banks, the industry remains dominated by outsiders. There has been a recent increase in sharia-compliant products, with the government selling Islamic bonds to fund the development of large-scale projects for the tourism and industry sectors. It is the development of the insurance sector, however, that is crucial to further growth in RAK. At the moment, the segment is largely unregulated, and like elsewhere in the region, education is required to help the population better understand the importance of insurance. New regulations from the UAE's Ministry of Economy should help in this respect.
This chapter includes interviews with Abdulla Rashed Abdulla Omran, Board Member and Managing Director, Commercial Bank International; and Antoine M Stephan, General Manager, RAK National Insurance. A viewpoint from Bobby Batmanghelidj, President and CEO, Argentum Development Company, is also included.
TRANSPORT
With its long history in maritime trade, RAK is on the verge of becoming one of the most important transportation centres in the Middle East. In this respect, the government is investing billions of dollars to upgrade and develop road, port and airport infrastructure. Until recently, RAK was virtually isolated from its neighbours, but with the opening of the Emirates Road, it is now just a 45-minute drive from Dubai, making its international airport a viable option for passengers seeking to avoid the over-congested one in Dubai. Expansions to RAK International Airport resulted in a 41% increase in passenger traffic in the first quarter of 2007. The government is also doubling port capacity with a programme that has not only increased ship and container traffic, but has also improved waiting times – now less than one day. In addition, an inland container port and state-of-the-art logistics park have recently been opened, which will assist in the further growth of the sector. It is hoped that with these improvements and many others, RAK will become a more attractive destination for investors, heavy industry and tourists.
This chapter includes interviews with Sheikh Salem bin Sultan Al Qasimi, Chairman, Department of Civil Aviation; and Abdulla M Alawadi, Director-General, RAK Transport Authority (RAKTA).
ENERGY
RAK's construction and industrial sectors are growing rapidly as they try to keep up with demand from an economy and a population that are both growing at an unprecedented pace. In order to do so, however, the new developments dotting the emirate's landscape will require vast amounts of gas and electricity. The Federal Electric and Water Authority has been called on to meet this demand and is in the process of developing its master plan, which will see some $15bn spent on increasing power and water supplies to RAK and its neighbouring Northern Emirates over the next decade. Despite RAK's minimal hydrocarbons reserves – contributing less than 4% to the UAE's GDP – the emirate remains hopeful that recent exploration activity will yield positive results. Until such time, however, it will remain dependent on imports. The emirate has recently renewed an agreement to receive gas from Qatari company Dolphin, while negotiations continue with Iran for a deal that would go a long way in helping RAK overcome its energy shortages.
This chapter includes an interview with Peter Sadler, CEO, RAK PetroleumTOURISM
With the most diverse landscape of all the emirates, RAK is marketing itself as one of the premiere tourism draws for potential visitors to the UAE. Several promotional programmes are currently underway to brand the UAE as a top global destination and have so far yielded positive results, with increases in the number of visitors, occupancy rates and average stay length. To date, RAK draws the majority of its guests from Europe, with Britain and Russia showing the most growth. Additional campaigns are underway to target tourists from these countries, as well as big players such as Germany and Japan. Some 25 top-end hotels and resorts are due to open in the next few years. However, attracting and keeping hospitality staff is a challenge, and the rise in the cost of building materials could hinder further development plans.
This chapter includes an interview with Jean-Paul Herzog, President, Middle East and Africa, Hilton Hotels.
CONSTRUCTION AND REAL ESTATE
RAK's construction sector is seeing a massive influx of mega-projects that will transform its diverse landscape forever. In addition, small and medium-sized projects are on the rise and can be found in virtually every nook of the emirate. Despite the positive signs of growth, however, RAK is facing several challenges. Increasing labour and materials costs, combined with energy, labour and skills shortages are becoming ever-present. Development shows no signs of tailing off in the next few years, however. What separates RAK from the rest of the emirates is its greater availability of land, lower startup costs and the accessibility of important building materials such as cement and ceramics. Although the companies that supply these materials, particularly cement manufacturers, have been forecast to reach overcapacity by 2009, they are still showing signs of positive growth.
Key reasons for the real estate sector's strong growth are RAK's young population and the emirate's growing wealth, in addition to lower prices than found elsewhere in the UAE. As RAK has become much more accessible due to recent improvements in road infrastructure, many people from neighbouring emirates are choosing RAK for its diverse landscape and more relaxed attitude. But this growth is not without its problems. Rent prices have surged far faster than wages in recent years, leaving many struggling to afford their homes. To combat this, the government is looking to introduce a 7% cap on annual rent rises. Office, industrial and commercial properties also continue to be popular in RAK, due to its availability of land and the introduction the RAK Free Trade Zone. This excellent growth should continue as RAK's open legal framework appeals to local and foreign investment.
This chapter includes interviews with Saif Rashid Saeed Hamarain, Chairman, Emirates Roads Contracting Company; Imad Haffar, Chief Operating Officer, Rakeen; and Mohammed Sultan Al Qadi, CEO, RAK Investment Development Office, Managing Director and CEO, RAK Properties.
INDUSTRY
Due to a lack of hydrocarbons, RAK has had to diversify its economy by opening up to foreign investors and industries. Its cheaper prices, availability of land, location and abundance of minerals for construction materials have made it an attractive destination. The industrial sector now accounts for 8% of GDP and looks set to contribute further in the coming years following the recent establishment of free trade zones. Cement and ceramics remain the dominant industries in RAK and officials aim to make these sections regional and global leaders in terms of production. The government recently announced its plans to establish RAK Minerals and Metals Investments, which would cater to increasing demand from countries such as India and China. Other industries looking to take advantage of this appealing business environment include pharmaceuticals, with RAK’s largest producer, Julphar, looking to build seven more plants throughout the country in the coming years. Saudi Arabia’s Zamil Steel, one of the largest industrial groups in the Middle East, is also looking to establish an important presence in the emirate. One constraint to growth, however, is RAK’s lack of energy supply. Some in the industry sector have been forced to switch their plants to coal or diesel oil. Negotiations with gas suppliers and exploration activity are ongoing, however, and it is hoped that RAK’s energy supply challenge will be dealt with in the short term.
This chapter includes interviews with Liu Yajun, Director-General, Investment Promotion Agency of the Ministry of Commerce of the People’s Republic of China; Abdul Razzaq Yousef, CEO, Gulf Pharmaceuticals Industries (Julphar); and Thomas Hinderling, CEO, Swiss Centre for Electronics and Microtechnology (CSEM).
HEATH & EDUCATION
Improvements to health care infrastructure, the addition of hospital beds and the development of specialist units are just some of the areas in the sector that are benefiting from RAK's increased wealth. The federal government is doing its part by restructuring the health care system to raise the level to an even higher standard. These changes have all become necessary, due to RAK's growing population, as well as the increase in number of non-infectious diseases, such as cardiovascular disease, cancer and diabetes. The government is in the midst of establishing partnerships with health care providers in the US and Europe to benefit from their knowledge and experience in combating the health problems associated with wealthy nations. To further strengthen the sector, the government has announced that some $2bn will be invested in the coming years. The private sector will be given the opportunity to play a greater role, and mandatory medical insurance is set to be introduced by the end of 2008.
The education sector is also profiting from federal and local government spending, foreign investment and the establishment of public-private partnerships. Although on a much smaller scale, RAK has been implementing reforms to its education system to improve the standard of living, and has been successful in its attempts to attract foreign universities to open their doors in the emirate. New schools, campuses and universities are sprouting up all across RAK and the UAE and cover the entire spectrum of education. RAK is looking to become a regional leader in aviation training in particular. The government has implemented several five-year plans that will introduce the latest in information technology, provide training for its teachers and raise the standard of education so that it can not only compete regionally, but on a global level as well.
This chapter includes interviews with Peter Kappert, Chairman, Sonnenhof Swiss Health; and Talal Abu-Ghazaleh, Chairman and CEO, Talal Abu-Ghazaleh Organisation, and Deputy Chairman, UN Global Impact.
THE BUSINESS GUIDE
In cooperation with Morrison Menon, this chapter delves into taxation in the emirate and explains the new laws that are making RAK a more favourable business environment and further encouraging local and foreign investment. This chapter also looks at RAK's independent judicial system, which is doing its part to establish a more regulated business atmosphere, not hampered by the over-regulation generally found in the federal system.
This chapter includes an interview with Rashid Ahmed bin Shabib, Founding Partner, Bin Shabib & Associates; as well as a viewpoint from Saju Augustine, Partner, Morison Menon Chartered Accountants.
THE GUIDE
The guide includes a comprehensive directory of RAK's top hotels and provides contact information for government offices, public institutions, foreign missions, law offices, accountancy firms, airlines, car rentals, hospitals and media outlets. A facts for visitors section offers useful tips for business travellers on topics such as etiquette, currency, visas, language, communications, dress, business hours and electricity.
