Abu Dhabi's economic vision 2030: brief discription

Computer image of Louvre Abu Dhabi, part of cultural district project,Saadiyat islnads, Abu Dhabi (source: ConstructionWeekOnline.com)                                                          
Abu Dhabi had made great strides in economic development, in the past few decades. Blessed with huge amounts of petroleum resources, the biggest emirate of UAE enjoys high, growth, per capita income and  fiscal surplus. In spite of the fact that Abu Dhabi has huge oil reserves which will last for another 150 years, it aims to diversify its economy to various other sectors and wants to build a more stronger and sustainable Abu Dhabi, both socio-politically as well as economically. The overall plan for this transformation had been named as, Abu Dhabi vision 2030 and the key think tanks involved in planning are, general secretariat of the executive council, department of planning and economy and Abu Dhabi council for economic development. The given blog is an abstract of the roadmap for the overall economic and social development goals, intended to achieve by 2030. # , $

Introduction

Abu Dhabi vision 2030, as the name suggests, is basically a long term strategic plan to transform the emirate of Abu Dhabi into a world class economy by, diversifying into various sectors, integrating with the global economy, optimizing govt. resources and investing in social & physical infrastructure. The govt. of Abu Dhabi had identified nine areas defining the social, economic and political future of the emirate: large, empowered private sector, knowledge based economy, transparent and optimal regulatory environment, premium healthcare, education and infrastructure assets, optimization of resources, complete domestic and international security, continuation of strong and diverse international relations, maintenance of traditions, heritages and cultural assets and strong contribution to the federation of UAE. (gsec.abudhabi.ae, 2008)

Policy priorities, areas of policy focus and associated objectives (gsec.abudhabi.ae, 2008)

There are basically two primary economic priorities, one to achieve economic development and second formulation of policies so that the benefits can be shared by every section of the societies. To achieve these two given priorities, there had been seven areas of policy focus:

Build an open, effective, efficient and globally integrated business environment: this includes, enhancing transparency, streamlining govt. processes, facilitating investment and modernizing business laws etc.

• Adopt a disciplined fiscal policy that is responsive to economic cycles: this includes diversification of govt. revenue sources (rather than depending on just oil revenue), optimize govt. spending etc.

• Establish a resilient monetary and fiscal market environment with manageable levels of inflation: includes enhancing regulations on banking sectors, leveraging monetary tools to contain inflation, developing less speculative financial markets etc.

• Drive significant improvements in the efficiency of labor markets: includes encouraging emirtaization of work force, expanding the base of skilled labor force and reducing unskilled labor, enhancing labor market process.

• Development of a sufficient and resilient infrastructure capable of supporting the anticipated economic growth: includes ensuring high level of energy production to meet future requirements, implementing safe and efficient transportation system, enhancing the availability of ICT (information communication technologies)infrastructure and encouraging its adoption, maintaining ecological sustainability.

• Develop highly skilled and productive work force: enhancing productivity of workforce with the help of high investment in training and education sector, optimizing the allocation of labor etc.

• Enable financial markets in becoming the key financier of economic sector and projects: includes increase in savings and deposits, enhancing performance of financial markets, encourage investments in economic sectors and projects.

Abu Dhabi’s economic policy priorities  (gsec.abudhabi.ae, 2008)

• Building a sustainable economy: In the past few decades Abu Dhabi had made huge economic progress on account of its oil and natural gas reserves, in 2005 its per capita real GDP rose to $ 55, 200 and is considered as one of the richest nations in the world. In spite of such a phenomenal growth, there are structural flaws in Abu Dhabi’s economy; petroleum sector had been contributing half of the GDP with a non oil trade deficit of  21 Billion US Dollars  in 2006. Similarly more than half of the workforce had been working in the construction  and the govt. sector. Thus overdependence on petroleum coupled with concentration of work force make its economy susceptible to fluctuations in oil price. In order to achieve economic sustainability along with a balanced economic growth, it aims to diversify into various other non oil sectors with a focus on export. (An approach for export is necessary since an inward looking approach will not nullify the dependence on fluctuation oil prices, by making these sectors dependent on petroleum revenue for their  investment). Another area where Abu Dhabi is looking forward is diversification of its workforce by developing a vibrant SME (small and medium enterprises) segment. It wants to build national champions in the form of big enterprises and around the national champions, plans to build a cluster of SMEs. A vibrant SME segment will result in innovation and better productivity of work force.

• Ensuring, economic growth be shared among various sections of Emirate: Another area of action, is distribution of wealth generated from economic growth among every sections of society, ensuring strong social development and regional economic growth. It aims to achieve this by, investing in education sector, encouraging participation of females in the workforce, attracting skilled expatriate workforce and stimulating balanced regional growth with investments in various physical and social infrastructure. (especially in the western region which lags behind the Abu Dhabi and Al-Ain region)

Engines of Abu Dhabi’s future economic growth:

Hydrocarbon plays a very important role in over all GDP of Abu Dhabi and  will continue to do so in the nearby future. But along with it the Emirate also aims to diversify into other capital incentive and export oriented sectors in which it can have an advantage. (gsec.abudhabi.ae, 2008)

• Petroleum :- Abu Dhabi has huge oil reserves; it is among the top five crude oil exporter and top twenty five natural gas exporters (it supplies natural gas primarily to the Asian economies). It is active in the entire range of petroleum business such as, exploration, production, transport, refineries etc. The major oil producing company in Abu Dhabi is ADNOC (Abu Dhabi national oil corporation), other entities active in the sector are IPIC (international petroleum investment companies), Abu Dhabi national energy, Mubadala etc. Due to low production cost and economies of scale Abu Dhabi’s petroleum sector makes a profitability of more than 15%, the global average. In its future economic vision also ,petroleum sector continues to be high up on its agendas. In the coming decade, ADNOC aims to upscale the crude oil production by 3.5 Million barrels a day with the help redevelopment of existing fields and development of new, smaller fields. It also aims to increase its output in other related areas with the help of investments in better technologies.

• Petro chemical: - Abu Dhabi is endowed with huge oil and gas reserves and also has a very well developed petrochemical industry, based on which it aims to target a higher pie of the hydrocarbon value chain. It has large current capacities in Ethylene, Polyethylene and fertilizer segments and plans to build further on it. It is also expanding its production facilities in China and other international locations so that it can position itself strongly to the global market, especially  Asian markets.

• Metals: - In this area Abu Dhabi has plans to expand into Iron, Steel, Aluminum production as well as other advanced materials. It does not have sizable metal deposits of its own, but has access to state of the art industrial cities with excellent infrastructure, low cost energy, world class transportation system and comparatively economical skilled work force. Moreover produce of the metal production unit canl be used as raw materials for the fast growing manufacturing sector of Abu Dhabi.

• Aviation, aerospace and defense :- the given sector valued at approximately 500 Billion US dollars is another growing fields where Abu Dhabi intends to become a global player, it has the basic infrastructure upon which it wants to develop further to become a global player.

• Pharmaceuticals, bio technology and life sciences: - Another interesting sector with a annual output of around 700 Billion US dollars, where Abu Dhabi wants to diversify. Presently the industry is at a nascent stage in the Emirate and requires significant investment. In order to be a successful player Abu Dhabi also requires putting considerable efforts in many areas such as, intellectual property rights, international trade agreements, drug testing facilities etc. One another factor that can be beneficial for the given sector could be the huge investment made by the Emirate state in health care infrastructure and education.

• Tourism: - Though still far behind in attracting tourists like its cousin Dubai (which is visited by some 10 Million tourists annually), tourism is another area where Abu Dhabi is making huge investments. It is investing in grandeur projects for building its competencies in various forms of tourism such as sports, business, cultural and lifestyle etc. Abu Dhabi has developed state of the art luxury resorts, shopping malls, golf courses, convention centers, and has invested in many extravagant projects like the Ferrari theme park and Sadiyat islands to attract various types of tourist segments. The govt. has an ambitious plan of attracting 7.9 million tourists by 2030, to accommodate this anticipated increase in tourists the Emirate state is also investing hugely in developing hotels, number of hotel rooms are expected to increase to 21,000 by 2013, 49,000 by 2020 and 74,000 by 2030. (AMEinfo.com, 2008) Not only is it making huge investments, in infrastructure but also in other bran building activities. The tourism board of Abu Dhabi namely ADTA (Abu Dhabi tourism authority) has opened offices all across the globe such as England, Germany, China etc and taking strong marketing initiatives to promote brand Abu Dhabi as a great tourist destination. The Emirate realizes the fact that not only tourism a great revenue earner, but also there are other benefits associated such as , enhancement of SME segment thereby leading to diversification of enterprise base, strong brand building for the Emirate state and earning of foreign capital.

• Health care equipments and services: - valued at $ 300 Billion in 2007, this another lucrative segment where the Emirate wants to expand. It intends to successfully compete in the market by developing world class medical infrastructure. Equipped with state of the art airline and airport facilities, it can be reached comfortably. Along with investments in state of the art hospitals, another area that needs attention is attracting talented medical professionals.

• Transportation, trade and logistics: Abu Dhabi had a long tradition of trade and  wants to carry it further. It has got huge advantage for becoming a trading hub because  of great infrastructure in the form state of the art ports, airports, airlines and road infrastructure and strategic advantage of being placed just on the cross roads of West and East and North and South.

• Education: - The Emirate has one of the most advanced educational systems in the region but with respect to international standards the sector is still in its initial stage. Given the fact that it wants to transform into a knowledge based economy, education sector is high up on its agenda. It is making huge investments in building new teaching facilities and state of the art research centers along with attracting some of the best talent in the education sector. Along with being a lucrative sector in itself, education sector will play a very important role in developing other core sectors by supplying highly skilled workforce.

• Media: - Media is growing at the rate of 25% in the Middle East region. Abu Dhabi intends to be a media hub in the gulf region by investing in advanced technologies in the nearby future and attracting the best talents with high pay package and high standard of living.

• Financial services- The financial sector in Abu Dhabi is expected to make huge strides in the nearby future. With further economic development there will be huge demand for a wide range financial services like commercial banking, investment banking, insurance, corporate and project finance services. Financial sector at the Emirate is open for foreign player enabling the infusion of more capital, talent and competition.

• Telecommunication: - Abu Dhabi intends to be a regional service center for telecom services. Telecomm is primarily a high tech and capital intensive sector that requires constant investment in keeping the infrastructure up to date. Abu Dhabi has advantage on accounts of its sound financial conditions, existing infrastructure and strategic geo graphical locations. Telecom sector will also help in its long term aim of diversifying its work force by contributing as well as requiring skilled work force and attracting highly skilled expatriate population.

• Enabling sectors: - In order to fulfill its ambitious plans of developing various core sectors, it will be investing in developing various enabling sectors like construction, food and beverages, machineries, electrical equipments etc.

Out of the 12 sectors. Energy- Oil and Gas, Chemicals, Aviation, Health care, Pharmaceuticals,
Metals and Hotels are global focus sectors where as Education, Media, Transportation, Financial services and Telecommunication are regional focus centers.

Measures of success  (gsec.abudhabi.ae, 2008)

Abu Dhabi has ambitious targets for its economic growth and social development, which needs to be properly benchmarked and monitored. The overall plans will be benchmarked against some of the other transformational economies like Norway, Singapore and New Zealand etc. The entire future plan will be implemented in blocks of five years with every block having specific agendas for every sector. The salient features of its target are as follows:

• By 2030 it aims to increase its GDP fivefold.

• By 2030 targets, 64% of GDP coming from non oil sectors

• By 2030 targets an unemployment rate of 5%, thereby effectively achieving almost 100% employment.

• With increased productivity, Emiratization of workforce, achievement of full employment and diversification of economy, aims to increase the per capita income by more than 50% by the stipulated time period.

• National asset formation,  including investments and exports should increase by five folds and domestic investments should be doubled during the stipulated time periods.

• Abu Dhabi will protect itself from unfair trade practices and dumping by actively participating in international trade organizations like WTO (world trade organization).

• Today Abu Dhabi has a dependency rate (number of dependent members on an earning member) of 1:4, but  aims to make it 1:2 by 2030 with the help of huge investments in world class education centers and encouraging females to join the workforce.

# the plan was incepted in 2006 and finally the detailed roadmap was prepared by 2008, hence most of the data are with respect to the year 2005 and 2006.

$ It is just an abstract of the overall plan, there had not been any analysis done by the author

References:-

1> Gsec.abudhabi.ae, 2008, executive summary , The Abu Dhabi economic vision 2030, p-5, available at < http://dpeols.adeconomy.ae/dpe/ADVision/english/economic-vision-2030-executive-summary-mandate2.pdf >

2> gsec.abudhabi.ae, 2008, Required policy priorities: areas of policy focus and associated objectives, The Abu Dhabi economic vision 2030, available at < http://dpeols.adeconomy.ae/dpe/ADVision/english/economic-vision-2030-the-vision.pdf >

3> AMEinfo.com, 2008, Abu Dhabi plans tourism makeover, available at < http://www.ameinfo.com/186749.html >

4> gsec.abudhabi.ae, 2008, economic priorities of Abu Dhabi, p- 23 to 41, available at < http://dpeols.adeconomy.ae/dpe/ADVision/english/economic-vision-2030-section-1.pdf >

5> Gsec.abudhabi.ae, 2008, Engines of Abu Dhabi’s future economic growth, p- 113 to 119, available at < http://dpeols.adeconomy.ae/dpe/ADVision/english/economic-vision-2030-section-3.pdf >

6> gsec.abudhabi.ae, 2008, Measures of success, available at < http://dpeols.adeconomy.ae/dpe/ADVision/english/economic-vision-2030-section-4.pdf >