Exploring grounds for cooperation

The Dubai-Hamburg Business Forum 2007 takes a close look at six sectors of importance to Dubai and Hamburg.

Dubai and Hamburg can only be described in superlatives. While the former has emerged as the world's business hub, attracting worldwide attention through innovative real estate projects and investment options, the latter is one of the most important economic regions in Europe. In 2006, when the German economy grew on an average by 2.5 per cent, Hamburg's economic growth was to the tune of 2.9 per cent.

According to economists, Hamburg will continue to achieve above-average growth rates in 2007. The large number of company head offices in Hamburg is another indicator of the city's economic reputation.

In macro-economic terms, Dubai provides extremely attractive trade advantages to investors, residents and businessmen, such as easy access to global markets, seaports, telecom and transportation, and world-class infrastructure, apart from social and political stability as well as a competitive and efficient workforce.

The Dubai-Hamburg Business Forum 2007 is focusing on six sectors of importance to Dubai and Hamburg — renewable energy, aviation, banking and finance, maritime, healthcare and life sciences and logistics and foreign trade — and discussing ways to collaborate, communicate and benefit in the years to come.

Renewable energy

The renewable energy sector is growing at twice the national rate in the Hamburg region, which boasts the world's biggest wind energy facility. The city has been providing opportunities for solar energy companies since the 1980s through its support programmes for solar thermal plant and equipment. With sales of over 530 million euros (about Dh2.7 billion) in 2005, CINergy ranks among the world's leading solar energy companies.

Even though the renewable energy sector in Dubai is in its infancy, the UAE has enormous potential. With sunshine throughout the year, the region is ideally suited to harnessing photovoltaic and solar energy. Wind power is also viable. The number of companies engaged in renewable energy in the region has also been growing in the recent years.

There are 21 companies registered as solar energy businesses in the UAE. Dubai's weather conditions make it an obvious environment for thermal energy generation. Currently the Dubai Electricity and Water Authority (DEWA) limits the use of solar power to monitoring water flow or combating rust in pipes.

According to Saeed Mohammad Ahmad Al Tayer, Managing Director and Chief Executive of DEWA, "Solar energy usage is curtailed by its relative high and uncompetitive unit cost of production, its requirement for considerable space and its relatively small scale electricity production compared with the huge requirement of DEWA." The Department of Renewable Energy, however, predicts that up to half of the UAE's required energy will come from renewable sources by 2050.

DEWA is also exploring wind energy options. Wind speeds in the UAE often exceed the minimum seven metres per second required to harness power, reaching up to 12 metres per second. Feasibility studies have been conducted in Fujairah and a proposal for three wind farms with a capacity of 66 mega- watts (MW) have been submitted. In 2004 the first wind plant in the UAE was set up on Sir Bani Yas Island. The UAE aims to become a regional leader in renewable energy.

Aerospace industry

After Seattle and Toulouse, the Greater Hamburg region ranks as the world's third-largest centre for civil aircraft building, outfitting and maintenance, a ranking it owes in large measure to Airbus Deutschland GmbH and Lufthansa Technik AG, two major global players.
The final assembly of the Airbus A318, A319 and A321 and the production, assembly and delivery of major components of the new Airbus 380 are key parts of what makes Hamburg an aircraft industry centre of international standing.

Hamburg's electronics and microelectronics companies and research institutes are heavily involved in the avionics sector. Employment figures in Hamburg's aircraft construction and repair sectors have been rising steadily since the mid-1990s. The city's aircraft industry employs around 25,000 people (as of end 2005).

Also in 2005, the Hamburg aircraft industry generated more than four billion euros (about Dh20.48 billion) in sales. Hamburg's aircraft industry is integrated into its knowledge infrastructure. The city's universities and research institutes offer a range of research and teaching programmes relevant to aircraft construction.

Dubai's air transport industry is the backbone for active trading activities between Dubai and Germany. At the heart of Dubai's air transport industry is the Emirates airline, one of the fastest-growing airlines in the world.

With the establishment of the Dubai Aerospace Enterprise (DAE), several potential fields of cooperation between Dubai and Hamburg have opened up. The DAE is currently building a $15-billion (about Dh55.05 billion) global aerospace corporation, which will include DAE Capital, DAE Manufacturing, DAE Engineering and DAE Services.

There is also scope for bilateral cooperation between Hamburg and Dubai in the area of raw materials. Dubai could potentially be a supplier of the aluminum required to manufacture aircraft components. The UAE is home to maintenance and spare parts centres for Boeing and Airbus, which could potentially be supplied by German contractors.

Banking and finance

Both Dubai and Hamburg enjoy well-developed financial sectors with steady growth. As the gateway to the Middle East, Dubai's financial sector is one of the healthiest sectors of the emirate's economy. In 2006, the financial sector represented 10 per cent of Dubai's total nominal GDP. The banking sector in Dubai is the backbone of the emirate's financial sector.

It plays a major role in enhancing the extraordinary development witnessed in Dubai as it backs key sectors of the economy such as construction, trade and tourism. However, Dubai's banking sector is already saturated and as a result cooperation with Hamburg in terms of attracting German banks to Dubai may not be possible.

Unlike banking and insurance, the financial and commodity markets offer opportunities for cooperation between Dubai and Hamburg. Both cities have several financial and commodities markets. Cooperation can also be extended between the Dubai Multi Commodities Centre (DMCC) and the Hamburg Grain Exchange (HE). The DMCC can offer Hamburg companies the access to the Middle East, whereas the HE can offer Dubai companies access to Europe.

Hamburg is one of Germany's oldest and foremost financial centres. It is unrivalled in the diversity and quality of its specialised financial services in the areas of asset management, trade, shipping and real estate financing and transit and commercial insurance. Hamburg's government and its financial sectors are keen on attracting new companies to Hamburg and expanding the local companies' trade links with Dubai.

Maritime industry

The strategic location of Dubai and the current boom in global shipbuilding ensures Dubai's role as an international maritime hub. At the end of 2006, Dubai's maritime industry comprised 100 companies, employing about 10,000 workers. Leading the industry is Dubai Drydock, one of the world's largest ship repairing facilities and the premier yard between Europe and the Far East.

Maintained by the Dubai government, JADAF Dubai offers dry-docking and ship repairing and maintenance facility and is home to hundreds of offices and showrooms providing marine services.

The Dubai Maritime City is under construction and, when finished, will offer 2.16 million square metres of reclaimed land offering infrastructure for maritime industry activities and living amenities of people involved.

With Dubai's strong metal industry and existing economic ties with Germany, the emirate offers investment opportunities in ship parts production. There is also scope for bilateral cooperation between Hamburg and Dubai in the areas of raw materials and components production. The UAE is home to several steel processing plants, which could supply parts for the shipbuilding industry.

The maritime industry is one of the most enduring sectors of the Hamburg economy. JJ Sietas KG Schiffswerft, arguably Germany's oldest shipyard, has been operating since 1635. In 2005, the local maritime industry generated sales of about 1.14 billion euros (about Dh5.9 billion).

Hamburg has an array of research institutes and organisations, working closely with local companies to develop maritime industrial products. Going by the global upswing in the shipbuilding industry, Hamburg's shipyards have enough orders to operate at full capacity in 2007 and beyond.

The maritime industry predicts annual sales will grow to about 1.7 billion euros (about Dh8.7 billion) by the end of 2007. Hamburg's international shipbuilding competitors are currently investing large sums of money in new shipbuilding capacity, which will start coming on stream from 2010 onwards.

Healthcare and life sciences

Dubai's healthcare sector has grown rapidly over the last decade and currently accounts for about six per cent of Dubai's non-oil gross domestic product. The sector is predicted to grow by 14 per cent in the next five years. The UAE healthcare market is predicted to grow from $3.2 billion (about Dh11.74 billion) in 2005 to $11.9 (about Dh43.6 billion) in 2015. It is projected that as domestic per capita GDP increases, healthcare spending will increase by $1.7 billion (about Dh6.2 billion), but then by a further $7 billion (about Dh25.7 billion) as the increased wealth of the country pushes up demand for healthcare.

Germany's healthcare and life sciences sector is predicted to grow by 75 per cent in the next 15 years. The main drivers of growth are Germany's ageing population, growing awareness of health issues and increasing private-sector involvement due to regulatory changes. Hamburg's healthcare and life sciences sector has more than 3,500 companies, with a workforce of about 70,000.

For the 2006-2009 period, Germany's federal government allocated about 800 million euros (about Dh4,096 million) for health research and medical technology as part of its hi-tech development strategy for the healthcare and life sciences sector. Hamburg and Dubai have close links in the area of training and professional development for medical practitioners and other medical professionals.

Logistics and foreign trade

Logistics experts view Hamburg as Germany's most dynamic logistics location with a dense network of logistics companies, a range of IT and technology specialists and the spectrum of intelligent additional services that include handling of hazardous goods, customs clearance, technical services, waste disposal and quality control.

With more than 156,000 people directly and indirectly dependent on it for employment, the Port of Hamburg is the economic powerhouse of northern Germany. Also servicing about 12 million passengers annually and with a spare capacity to service about three million additional passengers, the Hamburg Airport is prepared for further growth. Once completed in 2008, the urban rail link will integrate the airport with the central city.

The Port of Dubai and the Port of Hamburg can cooperate on several grounds. Both ports are closely integrated into cities. In Hamburg, the suburb of Finkenwerder is separated by a narrow canal from the Eurogate container terminal and on the Elbe River's Veddel Island, the industrial land lies adjacent to the residential land.

In Dubai, Port Rashid is located immediately adjacent to the old part of the city at the mouth of the Dubai Creek. It may, therefore, be possible for the two ports to jointly discuss and compare their challenges and opportunities. The Hamburg Cruise Terminal and the new Cruise Terminal in Dubai might enter into some form of cooperation in the area of passenger shipping. The two airports have existing ties in the form of Emirates Airlines' Hamburg-Dubai direct service.

In 2005 the volume of international trade between Hamburg and the UAE totalled about 70 million euros (about Dh358.4 million). As the UAE and other Middle East countries continue their industrial development, Hamburg-based companies will increase their trade in commodities and semi-furnished products and increase their sales of industrial finished products and medical products in this region.