Aerospace industry is next on list for Dubai's soaring ambitions

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The Independent Online

Dubai's phenomenal success story is based on a brilliant branding exercise. That crucial image, which was supposed to be polished still further by Dubai Ports World's £3.9bn takeover of the P&O ports business, has now come under fierce attack in the US because of this very deal.

What American politicians are not able to do is to differentiate between liberal, open, economically dynamic Dubai and its conservative, moribund, oil-rich neighbours.

Dubai has little oil. That is why it had to find another money-spinner. Taking city-states such as Singapore and Hong Kong as a model, the emirate has created a business and tourist centre, from a very unpromising creak and strip of desert, over the last two or three decades.

Simon Williams, of the Economist Intelligence Unit, says: "Dubai is a small country with a small labour force, but it has big ideas of where it wants to go."

Dubai's indigenous population is just 150,000, on a land mass about the size of Luxembourg.

The emirate has the world's most luxurious hotel, the biggest artificial island, the largest man-made harbour. The construction of what will be the world's tallest building - Burj Dubai, 800m high, at a cost of $800m (£460m) - and the largest shopping mall has started. The emirate will also boast Dubailand, a $19bn theme park twice the size of Disneyworld in Florida. There will be an underwater hotel and an indoor ski resort, with real snow.

The national airline, Emirates, has seen phenomenal growth, bringing huge traffic to Dubai. It has placed the biggest order for new aircraft in aviation history, including the largest number of the giant A380 planes from Airbus.

The latest megaproject was announced over the weekend: a $15bn scheme to create an aviation services company for the booming economies of Asia and the Middle East. It will develop airports in places such as India and China, lease plans and make aircraft parts.

Analysts say that what may individually look like white elephant projects collectively add up to a clever scheme to create landmarks that put Dubai on the map and in the imagination.

That Dubai brand is so good that one of the first buyers of property on the first artificial island built off the coast was that supreme purveyor of brands, David Beckham. The national image is also why the sporting events that it hosts, such as the Desert Classic golf tournament, are important.

The total population today is about 1.4 million. Around half of those people come from India, Pakistan or other parts of Asia. But astonishingly, there are 110,000 Britons living there. Dubai attracts 7 million visitors a year and that is predicted to grow to 15 million within a decade. This is a country where the hotels enjoy 80 per cent occupancy rates in the sweltering height of summer.

The emirate, one of seven that make up the United Arab Emirates, is run like a private enterprise by Sheikh Mohammed bin Rashid Al Maktoum and his father Sheikh Rashid before him. The Maktoums own everything and there is virtually no political or press freedom (the papers are reckoned to be less free than those in Yemen or Sudan). But rather than the traditional autocrat, Sheikh Mohammed sees himself as a CEO.

The development of Dubai started with a realisation by Sheikh Rashid that the key lay with its geographical location - half-way between east and west - and so trade was the basis for growth. That started with the creation of two giant ports. The acquisition of P&O would, then, play to the very foundations of the Dubai economic success story.

Between 1990 and 2004, Dubai's gross domestic product quadrupled to $27bn and it expanded a further 16 per cent last year, according to official statistics. It handles more than $60bn of trade every year.

Dubai allows overseas companies to operate there on a 100 per cent foreign ownership basis. There is no corporation tax.

That the formula works is shown in Dubai's run-away property market and a booming stock market. It has also benefited from the post-9/11 situation, as Arabs throughout the Middle East want to put their money closer to home and the liberalised economy of Dubai is much more attractive than, say, Saudi Arabia.

Dubai has shown that, if you create enough excitement about a place, the money and the crowds will follow.

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