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King of the Emirates

Often overshadowed by its better-known neighbours, Abu Dhabi has been purpose-built for business success. Catherine Smyth finds that it holds some pleasant surprises for the discerning entrepreneur


It’s 6am, the family have been left asleep in a Dubai hotel and I am sitting in the comfortable leather interior of a BMW, leafing through conference papers on the two-hour drive to Abu Dhabi. Road transport costs in the Emirates are rock bottom thanks to low fuel prices so luxury, long-distance travel is an affordable and convenient option.

We have almost departed from Dubai when something stirs in my semi-awake mind: “Do I need a passport to enter Abu Dhabi? Do I have my passport? No, I don’t.” I lean forward and ask the driver, who replies in the affirmative.

A swift 180 turn, and we are following the road signs back to Jebel Ali, Dubai, then it’s into the hotel with the family still sleeping, safe opened, passport grabbed and back on the road – only to find a notable lack of border checks. The driver pleads ignorance. “I thought you mean credit card,” he replies defensively. Agitated and irritable by arrival time, the stressful start forecasts a gloomy outlook for a day of work, but the dark clouds never materialise.

The smoothness and comfort of the day is marked – defined by proficiency, professionalism and ease from all sides. As far as work being a pleasure goes, Abu Dhabi is built for it. It is a city of business – built for business. Created with the working professional in mind but never neglecting clients, customers and consumers, it is a city that welcomes corporate activity with the fully open arms of Arab hospitality. It’s a city that anticipates your needs as a businessperson and a city that asks: “How can we assist you?”

Built for business
Unlike its neighbour, it is less of a playground. While ample opportunities exist for leisure and relaxation, people mostly arrive in Abu Dhabi to work hard, then exodus to Dubai to play hard. Abu Dhabi and Dubai have separate governing bodies, but are bound in an affectionate kinship within the UAE.

Abu Dhabi can be characterised as the big brother of the two countries. Sleek, smart and sophisticated, always looking out for the interests of little brother, Dubai – better defined by its spirited extravagance, opulence and glamour, its ambitious architecture and development projects, and on a mission to be recognised globally as the best, the biggest, the brightest. After infamously having to take responsibility for the bailing out of Dubai’s government-owned investment company Dubai World with an Islamic bond valued at approximately $10bn in 2009, the characterisation of this big brother-little brother relationship became more appropriate than ever.

It is a city that welcomes corporate activity with the fully open arms of Arab hospitality

Combining business and pleasure is wonderfully well accommodated in the UAE; a family holiday and business trip are easily intertwined. While the rest of the brood were more satisfied left running around the sprawling water parks, aquariums and malls of Dubai than making the day trip to Abu Dhabi, splitting your time between the two countries is possible. If holidaymakers, tourists and leisure travellers were to be given a choice between

Abu Dhabi and Dubai, they would probably choose the latter. But for those arriving in the UAE on business, the former makes a more appropriate destination.

Despite plans and developments of touristic diversification, the grandeur of Dubai – the concentration of spectacle, amusements and activity – remains incomparable to that of its less extravagant big brother. At times however, one might wonder how serious intentions of competition are. Plans for developments of structures such as the ‘Diamond Ring’ – a cross between a luxury hotel and an enormous Ferris wheel – are so extravagant that they could become a serious contender to rival some of Dubai’s more dramatic structures.

However, in terms of architecture Abu Dhabi appears as more of an authentic Arabic city than Dubai. With one of the main attractions being the majestic Sheikh Zayed Grand Mosque, with its eighty domes, thousand pillars, 24-carat gold-plated chandeliers and the world’s largest hand-woven knotted carpet, it stands as perhaps one of the most stunning examples of fanciful Arabic architecture and Islamic art in the world. Even the hotels can provide more of an Arabian nights experience, particularly the likes of the Emirates Palace Hotel, which has become as much an iconic landmark as the Burj al-Arab is in Dubai.

While Dubai may neglect its Arabic heritage to an extent, it remains fully intact and strong in Abu Dhabi. Abu Dhabi also differentiates itself from Dubai in making efforts to build and maintain a reputation in culture and arts. With the Saadiyat Cultural District boasting a world-class performing arts centre, the Zayed National Museum, Guggenheim Abu Dhabi and the Louvre Abu Dhabi, the city is fast becoming a Middle Eastern centre of contemporary arts.

Sustainable growth
The Kingdom of Abu Dhabi possesses massive hydrocarbon wealth. The state has ownership of the majority of these resources, 95 percent of oil and six percent of gas. It accounts for approximately nine percent of the world’s proven oil reserves and much of the state’s wealth is tied up in these resources.

However, the National Department of Economic Development is geared towards ensuring the existence of sustainable growth in non-oil activities and industry. Diversification projects are predicted to generate 64 percent of the Emirate’s income by 2030 and include developments in tourism, financial services, base metals, petrochemicals, gas and increased private sector participation. It is anticipated that economic expansion will continue to be driven by an increased non-oil sector performance.

The amount of non-oil exports from Abu Dhabi is becoming steadily more significant. In 2010, non-oil exports were valued at 11.6bn UAE dirham (AED). Brazil was the top destination for Abu Dhabi’s non-oil exports, receiving goods worth 2.8bn AED. More of a focus is also being placed on the harvesting of natural gases. Large and complex sour gas development projects have emerged in the Shah oil fields, a contract won by the US company Occidental Petroleum in 2011, who are incidentally expected to take 40 percent of profits.

Developments are ongoing and on track for completion in late 2014 according to the CEO of the Abu Dhabi Gas Development Company, Saif al Ghafli. He also announced: “This landmark project, using cutting-edge technology will not only fuel growth, industrial development and employment opportunities, but will create sustainable wealth for our citizens far into the future.” He added that facilities were 60 percent complete and the drilling 20 percent complete. The $10bn project is expected to deliver 500 million cubic feet of clean gas per day as well as condensates, natural gas, liquids and sulphur.

In anticipation of the further diversified economy, national and infrastructural links are undergoing a large upgrade. There are hopes to create one of the world’s largest and most efficient cargo-handling centres. Abu Dhabi is proving itself to be an insightful and responsible sustainable developer, rejecting myopia, thinking strategically and long-term.

A centre of stability
Despite the rich business and development potential of the Middle East, political unrest and economic uncertainty have rendered large parts of the region unsuitable and at times dangerous for business relations, start-ups and development. States such as Iran, Iraq and Yemen have become unstable to the point of there being virtually no opportunity for the forging of corporate relationships and foreign direct investment.

On the other end of the spectrum, seemingly more stable countries and neighbours of the UAE, namely the likes of Bahrain and Saudi Arabia, were rocked by street protests and direct challenges to their ruling families in recent years. Instances of violence and unrest spooked Middle Eastern markets but the UAE managed to emerge virtually unscathed.

Other than a crackdown on internet activism, and the admonition of a small group of anti-government protestors (who were believed to be arrested, but later pardoned) Abu Dhabi has suffered virtually no domestic impact from the shockwaves of the Arab Spring.

The UAE, and more specifically Abu Dhabi, offer the most stable political and economic environment in the Middle East at the moment. The ruling monarchy guarantees an economic agenda with a focus on protection from unstable political factors. Indeed, Abu Dhabi and the rest of the UAE remain domestically unaffected by backlash from the Arab Spring.

Economically too, Abu Dhabi is robust. With real GDP per-capita exceeding $85,912 in the fourth quarter of 2011, and generating 56.7 percent of the GDP of the UAE as a whole, Abu Dhabi is one of the wealthiest countries in the world, ranked alongside Switzerland and Luxembourg. The same economic pressures that fuelled discontent in Syria, Tunisia and Egypt do not exist in Abu Dhabi.

As a land built for business, the government framework in place is highly accommodating for corporate growth

The nation’s political stability is partly credited to its wealth; with little discontent among the population who have access to free education, housing, healthcare and minimal energy and fuel costs, there is a generally strong pro-government sentiment. The fact that Emeriti citizenship is only bestowed upon a very small percentage of the population (about 16 percent), and the fact that citizenship is seen as a privilege, not a right, means that a small and close-knit citizenry – many of whom have personal close connections with the ruling family – form a strong government support unit.

Abu Dhabi is ideally positioned. A safe, stable and secure centre in the Middle East, boasting some of the lowest crime rates in the world. It is situated within easy reach by road or air of other Arabic business capitals – in particular Bahrain, Qatar, Kuwait, Saudi Arabia, Dubai and the rest of the UAE. Abu Dhabi also benefits from its proximity to the world’s largest growing economies, namely Asia and Africa. There exists easy access to markets as well as economic and trading development with the likes of China and India.

Tax-free business
Other than the ‘passing through’ business trip being an exceptionally comfortable experience, the number of small start-up companies or branches of existing corporations appearing in Abu Dhabi is marked and significant – and with good reason. The benefits of moving business to Abu Dhabi, or starting up there are lucrative and plentiful. Certainly one of the most notable allures to bringing business to Abu Dhabi is the fact that corporate taxes are only applicable to branches of foreign banks and oil-producing companies. Imports from non-GCC states are taxed at only five percent.

There also exists opportunities for complete repatriation of profit and capital, and 100 percent business ownership. Even without the zero-tax benefits, the cost of doing business is exceedingly low. The limited liability corporation is the most common type of corporation currently operating in Abu Dhabi and offers some fixed initial capital incentives.

As a land built for business, the governmental framework in place is highly accommodating for corporate growth. Free zones and streamlined incorporation procedures provide advantages and incentives to foreign companies. Support from government services is strong too, with the Abu Dhabi Chamber of Commerce assisting smaller start-ups and independent companies, providing easily accessible advice and information.

Labour costs too are low. The Abu Dhabi workforce is supplemented by the skilled migrant workers from neighbouring India and China, many of whom are experienced engineering, science and IT graduates. The result of extensive migration of HR professionals from all over the world has resulted in an available, qualified and multi-national source of HR skills. There is also an increasing number of UAE nationals entering the private sector workforce, providing valuable local and linguistic expertise. In 2010 the workforce of UAE nationals was estimated at 1.2 million. The workforce, made up of nationals and non-nationals, has expanded along with the economic growth of the Emirates, almost tripling between 1985 and 2005 according to censuses.

It is within national and governmental interests to maintain the flow of business through Abu Dhabi. The economy is fairly heavily reliant on foreign trade, which makes up a majority proportion of the Emirate’s GDP. In 2008 foreign trade accounted for 73 percent of GDP, and in 2010 net trade in goods accounted for 34.5 percent of GDP. This reflects the state’s robust and developed level of commercial activity and the significance of foreign trade to the economy. The total value of commodity imports to Abu Dhabi in 2010 totalled 86.6bn AED, with the main imports being machinery and transport equipment, accounting for 52.3 percent of imports, and the USA taking the place as the top supplier, providing the Emirates with 11.8bn AED of exports.

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