Dubai Urged To Back High-Tech Industries

The chief executive of a Dubai manufacturing conglomerate says the government should support high-technology industries to boost the economy’s trade and tourism-led recovery.

Khalid Jassim Kalban, founding chief of Dubai Investments , says the emirate could increase the 15 per cent of gross domestic product that manufacturing presently represents towards the levels approaching 25 per cent seen in countries such as Singapore.

“Dubai can focus on high-tech, but there is no focus, the government needs to give it more direction,” he says.

When Mr Kalban helped establish the company in 1995 with a group of United Arab Emirates merchant families, manufacturing accounted for less than 4 per cent of Dubai’s economy, but developing the sector became a state priority. The government retains about a 10 per cent stake in the publicly traded company, which is listed on the Dubai Financial Market.

Dubai Investments ‘ portfolio of more than 30 companies focuses on building materials, such as glass manufacturing, but also includes a dairy farm and a business park on the outskirts of the city.

Manufacturing in Dubai is a tough proposition, Mr Kalban concedes. Resource-rich neighbours such as Saudi Arabia and Abu Dhabi can provide cheaper energy and lower labour costs to potential industrial investors.

He says start-up costs in the oil-rich kingdom of Saudi Arabia, for example, are 60 per cent lower than in Dubai, where energy, labour, land and the cost of living are more expensive.

Nevertheless, government incentives and a focus on high-tech industry, sophisticated processing and food packaging could help the manufacturing base grow, he believes.

In recent years Dubai has scored some manufacturing successes thanks to its status as a regional trade hub, luring leading confectionery companies Mars and Nestlé to open factories near Jebel Ali port and the freight-oriented Dubai World Central airport.

But for the sector to take on a more significant role in the services-led economy, “we need to see it as strategic, like it is on tourism and finance, and give incentives for investment”, Mr Kalban says.

As Dubai recovers from its financial crisis, he says diversifying effort into manufacturing would provide another economic boost to the emirate, whose past investments in commercial infrastructure, such as office parks and trade zones, are paying big dividends amid strong regional demand.

“We need to develop projects, this is the Dubai way we get ahead of other countries,” he says.

In the meantime, Dubai Investments is seeking to expand beyond its Gulf base. The conglomerate is on the verge of selling one of its companies and stakes in two others and some of that capital will be used for investment outside the Gulf of about $50m over the next two years.

As with an increasing number of Gulf investors, north and sub-Saharan Africa is a target for new business activity at the company.

Dubai Investments has been investigating Libya as a new market and even as a launch pad into sub-Saharan Africa thanks to the close links to the rest of the continent bequeathed by the former Gaddafi regime.

Other prospects include newly independent South Sudan, which despite conflict with Sudan plans to embark on a large basic infrastructure programme.

Zawya