The UAE has created an industrial powerhouse with assets of $135 billion for the global energy markets and easily outstripping other contenders in the same space.

As per a resolution issued by His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, a committee has been set up under the chairmanship of Shaikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, to oversee the merger of International Petroleum Investment Company (Ipic) and Mubadala Development Company.

The move represents a paradigm shift within Abu Dhabi’s energy and development vision and comes as a response to the challenging — and rapid — developments witnessed in the global energy sector. It will need size and scale to address these developments and smaller enterprises lacking vital capabilities cannot compete with large counterparts in the open and highly competitive markets.

The decision also gives Abu Dhabi — and the UAE — certain investment advantages that would reflect positively on the diversity of the economy that the country seeks to achieve through several practical decisions taken in reduce years to reduce reliance on oil and develop local and foreign investments to meet the development visions 2020 and 2030.

Although the planned merger is restricted to specific domains due to their extremely well-defined specialisations and financial capabilities, the new entity formed from it will be able to create global investment arms capable of competing against other huge companies.

Moreover, its area of interests will move beyond the energy sector to include technology, astronomy, health, industrial, and real estate as well as the investments to boost the UAE’s longer term prospects.

Most interestingly, the merger will significantly decrease the general operational costs of both and boost their efficiency and performance by employing the most advanced processes.

And by virtue of this merger combined with a similar one that brings together National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), the UAE will be the first country in the Middle East to take such bold initiatives.

Such mergers also build on the UAE’s vision to be a leading player in mergers and acquisitions, as it has become a required feature given the conditions in the international corporate market.

And that explains some of the global mergers, especially those in industrial countries where significant economic roles are discharged by giant companies that can quickly adapt to changes to reinforce their competitive strategies. This could be either through fast-track administrative decisions or using the most advanced technological prowess.

Therefore, it can be said the UAE has thrown the doors wide open for other countries in the region to follow in the same footsteps.

Having led the region’s growth in various sectors such as trade, real estate, finance and services, the UAE will now lead the region in effecting mergers and establishing business behemoths able to cast a deep imprint in the global market. This will result in economic realisations that would serve the GCC’s development vision.

Evidently, these significant approaches herald a prosperous economic future that would not depend on oil as a main source of income and also boost confidence in the GCC’s developmental visions as there are some regional and international powers attempt to cast doubt on Gulf states’ abilities to find alternatives.

However, the GCC’s strict and sincere decisions refute such discrediting tactics. These help them take practical steps to press ahead with the broader vision to achieve objectives and create resilient economic entities.

Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.