At the centre of Abu Dhabi’s development is the creed that it is a modern society shaped by an ancient culture. This has been laid out in the emirate’s Plan Abu Dhabi 2030, the multifaceted initiative that directs its growth to satisfy the needs of a growing population while maintaining the sustainability of the environment and referencing its cultural heritage.
In Estidama green-rated buildings and tourism and retail products that emphasise its history, the influence of tradition and culture are felt everywhere in the city’s new developments. However, Abu Dhabi is unmistakably being positioned as a future leading global centre.
“The noblest objective we work towards is to ensure every citizen’s welfare and stability,” General Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council, said in January, when announcing the latest public spending of Dh330 billion on capital projects. “As such, most of our efforts are geared to allow our sons to enjoy the benefits of development and help them contribute, through their creative potential, to the overall development of the country,” he said.
The emirate’s first competitiveness report, released earlier this month, is a testament to that vision. According to the report, “Abu Dhabi has the highest standard of living relative to global standards and benchmarking.”
The report was issued by the Competitiveness Office of Abu Dhabi, a subsidiary of the Abu Dhabi Department of Economic Development (Added) that aims to improve the business climate in the emirate.
Beyond energy
However, the report stressed the importance of diversifying the economy: “When adjusting the GDP on oil and gas, the other sectors combined account for 40 per cent of the economy, which raises the importance of diversification for the emirate.
“Growth in non-oil sectors in the economy, especially the high-skill goods and services, is quite essential for the long-term sustainability.”
Ratings agency Standard and Poor’s expects Abu Dhabi’s GDP will be around 4.5 per cent in 2013 with a stable outlook, with growth anchored by its strong fiscal and external positions, which give it fiscal policy flexibility. “Abu Dhabi is one of the world’s wealthiest economies; we estimate GDP per capita at $109,000 [Dh400,275] in 2013. We expect real GDP growth in 2012 to be around 4.5 per cent, premised on 6.4 per cent growth in oil output, together with 4 per cent growth in non-oil sectors,” the report said.
The agency said diversification efforts and public spending have helped sustain non-oil economic growth at 4 per cent, boosted by activity in the financial, manufacturing and transport sectors.
Over the next five years, the emirate expects to post GDP at an average annual rate of 5.7 per cent, Added officials said last year. By 2030, the emirate expects non-oil trade to account for 60 per cent of GDP, rising from 40 per cent at present.
Shaikh Hazza Bin Zayed Al Nahyan, National Security Advisor and Vice-Chairman of the Abu Dhabi Executive Council, told the Oxford Business Group the emirate is in the process of an extensive review of its capital projects and that the path to the 2030 plan would be elaborated on in the forthcoming five-year plan for the period 2013-17.
New zone
A few weighty announcements are expected to anchor the diversification. Banking and finance will be given a boost by the announcement of the new Abu Dhabi World Financial Market, expected to be operational before the end of the year on Al Maryah Island. Such zones have already proved successful in other areas, including logistic services and suitable industrial parks and cities such as the Khalifa Industrial Zone Abu Dhabi (Kizad).
The competitiveness report stressed that there are four areas in Abu Dhabi with varying industrial activities: manufacturing, agricultural processing, chemicals, building materials and technological and environmental industries. Chemicals remain the largest contributor. Chemicals and plastics represent almost 40 per cent of value-added products in the manufacturing sector. The industrial sector is expected to contribute 25 per cent to Abu Dhabi’s GDP by 2030.
On the retail front, Abu Dhabi has overtaken Dubai in mall development. This will establish the emirate as a new destination for retail in the Middle East.
The aviation and tourism sectors will be advanced by massive investments in airport facilities, airline connectivity as well as hotel rooms. Abu Dhabi is being projected as a global aerospace hub, with Al Ain-based Strata, an advanced composite aero-structures manufacturing facility, expected to become profitable by 2015. The facility, which designs, develops and manufactures aircraft major units for partners such as EADS/Airbus and the Boeing Company, is likely to generate cumulative revenue of $1 billion by 2020, according to media reports.
Abu Dhabi International Airport is also being expanded. As part of a $6.8-billion expansion project, a new mid-field terminal will more than double passenger handling capacity by 2017. By then, the airport will welcome 30 million passengers, with capacity to handle up to 50 million in total.
The strategy at the national carrier, Etihad Airways, is to focus on growth markets and continue to build “a new Silk Road that connects markets via the Abu Dhabi hub”, President James Hogan said at the World Travel and Tourism Council Summit last month.
The airline’s new three-pillared business model is based on organic growth, codeshare partnerships and minority equity investments in other carriers. Its 42 codeshare agreements and equity investments in four airlines, including airberlin, Air Seychelles, Virgin Australia and Aer Lingus, boosted its first-quarter results by more than 30 per cent.
In April, it announced an investment into a fifth airline, India’s Jet Airways. “Our equity investment proposition ensures commitment and obligation from both airlines and streamlines our entry into new markets, affordably and within foreign investment limits,” Hogan said at the summit.
“This strategy helps us avoid the drawn-out process that applies for mergers and larger investments, and enables our continued expansion via established and respected global brands, while delivering reciprocal benefits to our partners, including access to our growing network and significant savings through activities including resource sharing and joint purchasing.”
Diversification also extends to energy with demand in the UAE growing at an annual rate of 9 per cent — three times the global average. Abu Dhabi hopes to meet 7 per cent of its energy needs with renewables by 2020.
New technologies
Among the recent trade agreements signed were a nuclear cooperation agreement with Japan to facilitate transfer of nuclear technology, expertise and equipment between both nations, and a deal between Masdar and France to cooperate on renewable energy through the development of new technologies in the renewable energy sector, exchange of expertise and conduct of joint researches.
In a major push to generate electricity through non-conventional energy sources in the UAE, the world’s largest solar power plant was inaugurated in Abu Dhabi earlier this year. The $600-million 100 megawatt Shams-1 will enable its parent Masdar to gain a competitive edge in developing and investing in similar projects in the region. The solar project began feeding electricity to the grid earlier this year. Masdar currently owns 12 per cent of the installed global capacity for concentrated solar power technology.
The Emirates Nuclear Energy Corporation is also working to deliver safe, clean, efficient nuclear energy to the country’s grid — it has an initial delivery target of 2017, according to its website. By 2020, it is projected that nuclear energy will produce nearly a quarter of the nation’s electricity needs. The UAE is already a global leader on the renewable energy front, as host to the headquarters of the International Renewable Energy Agency.
