Desert bloom
Desert bloom
Arab economies - rich with cash from rocketing oil prices - are in the midst of a building and economic boom
By Shefali Rekhi, Assistant Foreign Editor
DUBAI THEME PARK: Construction workers at the Dubailand site last month. The project is being touted as the Middle East's answer to Disneyland. -- PHOTO: AFP
View more photos
THE Arab world's desert economies are experiencing an enduring boom, driven by an increase in oil prices that is swelling government coffers.
New iconic landmarks are coming up, immigrants from Asia and the West are being sought and more companies from around the world are setting up shop as the region moves away from relying on oil.
Among them, the six economies of the United Arab Emirates, Saudi Arabia, Bahrain, Kuwait, Oman and Qatar, in particular, are making waves in the desert.
As members of one of the Arab world's representative bodies, the Gulf Cooperation Council, this group of six notched a robust 6.5 per cent GDP growth last year.
This figure was way above the average 3.5 per cent annual growth between 1990 and 2002.
And the National Bank of Kuwait maintains that the US$300 billion (S$456 billion) added to the net foreign assets of this group of six over the past three years will fuel future spending.
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Boom time in the Middle East
As the Times of London said in a special report in May on the region: 'A new power is taking its place in the world economy.
'After the disruptive emergence of China and India as key players with a decisive role in shaping global events, now the Middle East, too, is finally joining the race to challenge the dominance of the West's developed, industrial zones.'
In particular, Dubai, in the United Arab Emirates, is leading the charge to diversify, and encouraging others to follow.
After reaching the targets of its first Strategic Plan to achieve much higher levels of growth ahead of time, the emirate has embarked on a second Strategic Plan.
As part of this, it aims to raise per capita incomes from US$31,000 to US$44,000 by 2015 and take GDP growth rates to 11 per cent per annum by then.
For this, the emirate is placing its hopes on Dubailand, described as the Middle East's answer to Disneyland, which will have projects such as Aviation World, Dinosaur World and Desert Dunes - featuring an artificial rainforest under a glass dome.
Such is the pace of change in Dubai that Hooters, the American restaurant chain famous for its scantily clad waitresses, is considering opening an outlet there.
Meanwhile Abu Dhabi, another emirate of the UAE, is building the Abu Dhabi National Exhibition Centre which, when completed next year, will provide 55,000 sq m of exhibition floor space, making it one of the region's largest trade show venues.
And Saudi Arabia, the region's biggest economy, has unveiled a bold new initiative to build six 'Economic Cities' that will focus on specific sectors to attract new businesses.
The trend is catching on in some economies near the Middle East as well.
In Egypt, for instance, Trade and Industry Minister Rachid Mohamed Rachid, who quit a high-powered job at Unilever to join the government, has been aggressively pursuing reforms - among them slashing red tape and changing Customs procedures to make trade easier.
Even Yemen, a country long considered to be one of the world's poorest, held its first investment opportunities conference two months ago.
Analysts and observers say the process of change probably started after the Sept 11, 2001, attacks, following which Arab money that was invested or parked in the United States had to be moved to new locations.
At the same time, oil prices continued to surge, moving from US$24 a barrel in 2002 to US$70, adding to the liquidity in the Arab economies.
According to an estimate by the Institute of International Finance, current account surpluses for the GCC economies surged to some US$227 billion last year, becoming a strong catalyst for change.
Government spending unleashed pent up consumer demand, resulting in a real estate and stock market boom as well.
Given the momentum, global finance firm Lehman Brothers predicted that the boom will 'continue through this decade, setting the stage for potentially sustainable growth even after the current oil boom ends'.
According to Mr Fadi Ghandour, president and CEO of Jordan-based transportation and logistics company Aramex International, the process of change is deep.
Twin pressures are at work, he explained.
'As we open up, there are companies coming from all over the world, and they want to compete in our markets because there are no more restrictions,' said Mr Fadi.
'Also, for the first time, the economic boom is forcing companies to go global, and that has not happened before.
'The Arab world, and corporations in the region, realise that if they do not change, they will be left behind.'
There is much to be done.
The region remains fettered by weak government institutions and large public sector organisations that crowd out private sector dynamism.
Unemployment rates are high - according to the World Bank, it was 12.5 per cent in 2005 - and some 100 million new jobs are needed across the Middle East by 2020 to absorb its strong population growth.
And the rates of illiteracy are worrisome. It is estimated that illiteracy in the region is 18 per cent in the under-15 category and as high as 43 per cent among women.
There is also concern about the continuing turmoil in the Middle East and its possible repercussions on these economies, given increasing migration taking place in the region.
Some observers have even described the situation in the Middle East as 'schizophrenic', and are concerned about where the disparity will lead.
'The Arab world is at a critical juncture,' said Mr Klaus Schwab, founder and executive chairman of the World Economic Forum.
'Although the region's economies are currently very dynamic and offer tremendous business opportunities, there is no doubt that improvements to national competitiveness and closer integration with the global economy and within the region are necessary if this growth momentum is to be sustained,' he said in an address at the World Economic Forum meeting on the Middle East in Jordan in May.
But the burgeoning growth in the region is attracting a wealth of new attention from investors and immigrants, and holding promise of possible change in the face of the Middle East as well.
The bevy of blonde and brunette stewardesses, speaking in distinct Western accents as they welcome visitors aboard a Middle Eastern airline bound for Dubai, hint that vast change, in a land once known for its bedouins and desert safaris, may not be far away.
Arab economies - rich with cash from rocketing oil prices - are in the midst of a building and economic boom
By Shefali Rekhi, Assistant Foreign Editor
DUBAI THEME PARK: Construction workers at the Dubailand site last month. The project is being touted as the Middle East's answer to Disneyland. -- PHOTO: AFP
View more photos
THE Arab world's desert economies are experiencing an enduring boom, driven by an increase in oil prices that is swelling government coffers.
New iconic landmarks are coming up, immigrants from Asia and the West are being sought and more companies from around the world are setting up shop as the region moves away from relying on oil.
Among them, the six economies of the United Arab Emirates, Saudi Arabia, Bahrain, Kuwait, Oman and Qatar, in particular, are making waves in the desert.
As members of one of the Arab world's representative bodies, the Gulf Cooperation Council, this group of six notched a robust 6.5 per cent GDP growth last year.
This figure was way above the average 3.5 per cent annual growth between 1990 and 2002.
And the National Bank of Kuwait maintains that the US$300 billion (S$456 billion) added to the net foreign assets of this group of six over the past three years will fuel future spending.
RELATED LINKS
Boom time in the Middle East
As the Times of London said in a special report in May on the region: 'A new power is taking its place in the world economy.
'After the disruptive emergence of China and India as key players with a decisive role in shaping global events, now the Middle East, too, is finally joining the race to challenge the dominance of the West's developed, industrial zones.'
In particular, Dubai, in the United Arab Emirates, is leading the charge to diversify, and encouraging others to follow.
After reaching the targets of its first Strategic Plan to achieve much higher levels of growth ahead of time, the emirate has embarked on a second Strategic Plan.
As part of this, it aims to raise per capita incomes from US$31,000 to US$44,000 by 2015 and take GDP growth rates to 11 per cent per annum by then.
For this, the emirate is placing its hopes on Dubailand, described as the Middle East's answer to Disneyland, which will have projects such as Aviation World, Dinosaur World and Desert Dunes - featuring an artificial rainforest under a glass dome.
Such is the pace of change in Dubai that Hooters, the American restaurant chain famous for its scantily clad waitresses, is considering opening an outlet there.
Meanwhile Abu Dhabi, another emirate of the UAE, is building the Abu Dhabi National Exhibition Centre which, when completed next year, will provide 55,000 sq m of exhibition floor space, making it one of the region's largest trade show venues.
And Saudi Arabia, the region's biggest economy, has unveiled a bold new initiative to build six 'Economic Cities' that will focus on specific sectors to attract new businesses.
The trend is catching on in some economies near the Middle East as well.
In Egypt, for instance, Trade and Industry Minister Rachid Mohamed Rachid, who quit a high-powered job at Unilever to join the government, has been aggressively pursuing reforms - among them slashing red tape and changing Customs procedures to make trade easier.
Even Yemen, a country long considered to be one of the world's poorest, held its first investment opportunities conference two months ago.
Analysts and observers say the process of change probably started after the Sept 11, 2001, attacks, following which Arab money that was invested or parked in the United States had to be moved to new locations.
At the same time, oil prices continued to surge, moving from US$24 a barrel in 2002 to US$70, adding to the liquidity in the Arab economies.
According to an estimate by the Institute of International Finance, current account surpluses for the GCC economies surged to some US$227 billion last year, becoming a strong catalyst for change.
Government spending unleashed pent up consumer demand, resulting in a real estate and stock market boom as well.
Given the momentum, global finance firm Lehman Brothers predicted that the boom will 'continue through this decade, setting the stage for potentially sustainable growth even after the current oil boom ends'.
According to Mr Fadi Ghandour, president and CEO of Jordan-based transportation and logistics company Aramex International, the process of change is deep.
Twin pressures are at work, he explained.
'As we open up, there are companies coming from all over the world, and they want to compete in our markets because there are no more restrictions,' said Mr Fadi.
'Also, for the first time, the economic boom is forcing companies to go global, and that has not happened before.
'The Arab world, and corporations in the region, realise that if they do not change, they will be left behind.'
There is much to be done.
The region remains fettered by weak government institutions and large public sector organisations that crowd out private sector dynamism.
Unemployment rates are high - according to the World Bank, it was 12.5 per cent in 2005 - and some 100 million new jobs are needed across the Middle East by 2020 to absorb its strong population growth.
And the rates of illiteracy are worrisome. It is estimated that illiteracy in the region is 18 per cent in the under-15 category and as high as 43 per cent among women.
There is also concern about the continuing turmoil in the Middle East and its possible repercussions on these economies, given increasing migration taking place in the region.
Some observers have even described the situation in the Middle East as 'schizophrenic', and are concerned about where the disparity will lead.
'The Arab world is at a critical juncture,' said Mr Klaus Schwab, founder and executive chairman of the World Economic Forum.
'Although the region's economies are currently very dynamic and offer tremendous business opportunities, there is no doubt that improvements to national competitiveness and closer integration with the global economy and within the region are necessary if this growth momentum is to be sustained,' he said in an address at the World Economic Forum meeting on the Middle East in Jordan in May.
But the burgeoning growth in the region is attracting a wealth of new attention from investors and immigrants, and holding promise of possible change in the face of the Middle East as well.
The bevy of blonde and brunette stewardesses, speaking in distinct Western accents as they welcome visitors aboard a Middle Eastern airline bound for Dubai, hint that vast change, in a land once known for its bedouins and desert safaris, may not be far away.
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