POSITIVE GROWTH

Dubai 2016 | ECONOMY | INTERVIEW

TBY talks to HE Sultan Bin Saeed Al Mansoori, UAE Minister of Economy, on the economics of happiness, supporting SMEs, and Dubai's resilient fiscal position.

HE Sultan Bin Saeed Al Mansoori
BIOGRAPHY
HE Sultan Bin Saeed Al Mansoori was appointed as Minister of Economy of the UAE in February 2008. He holds a bachelor's degree in industrial engineering and management systems from Arizona State University. He also has a diploma in computer system analysis from the Institute of Computer Technology, Los Angeles. In addition to his ministerial portfolio, he serves as Chairman of the Supreme Committee for Consumer Protection, the Coordinating and Economic Cooperation Committee, the National Committee for the Follow-up Program of Investment Climate, the Board of Directors of the Securities and Commodities Authority, the insurance Authority, and the Federal Civil Aviation Authority.

How will the new cabinet, announced last February, complement the pressing needs of the broader economy?

The UAE leadership considers Emirati citizens and residents as a priority and seeks to provide them with the necessary requirements for a happy and secure lifestyle. It also works diligently to enhance the country's position regionally and globally on all levels. In order to achieve its goals, our wise leadership attempts to foresee the future with a long-term solid vision. The latest cabinet restructuring reflects the UAE leadership's emphasis on boosting sustainable development in the country, raising the happiness curve, and building an advanced scientific environment. While this restructuring of the ministries may not reflect directly on the economy at present, the positive impact of these ministries following several economic enhancements will become clear in the near future. The state of the economy is an integral component of happiness

SME development has been unprecedented in the UAE. How has this development been achieved?

The interest in the SME sector is part of the UAE's economic diversity policy and its sustained efforts to reduce the reliance on oil as much as possible. The SME sector's role has increased YoY as a result of this policy's success. The SME sector has always been one of the country's priorities given its vital role in boosting development, strengthening economic diversity, and supporting the steps taken to achieve a knowledge economy that is based on innovation. The UAE leadership has taken consecutive measures throughout the 44 years following the country's establishment in supporting this sector. The efforts commenced with granting citizens pieces of lands to start their commercial and industrial projects. The government also offered financial guarantees to citizens so they could leverage banking services. This process has developed over the years with the establishment of official government entities that oversee the support citizens are provided in the SME sector, such as the Khalifa Fund for Enterprise Development, Dubai SME, Ruwad Establishment, Saud bin Saqr Programme for Young Business Leaders, and the Saud bin Rashid Al Mualla Program for Youth Projects Support. The Federal Law No. 2 of 2014, pertaining to the SME sector, was a remarkable achievement in the development, organization, and definition of this sector. It also provided a number of benefits to national SME projects. This law is a reflection of the leadership's keenness in growing the SME sector. The UAE cabinet, headed by HH Sheikh Mohammed bin Rashid Al Maktoum, approved the decision to create a council for SME projects and establishments, and to launch the National Programme for Small and Medium-Sized Enterprises and Projects to support their owners with benefits and incentives that boost the spirit of entrepreneurship. As a result of the above-mentioned legislations and support, around 350,000 SMEs and projects have been established in the country—creating job opportunities for over 86% of the total workforce in the private sector. Small- and medium-sized projects today account for over 94% of the total number of companies working in the UAE. Of these, 73% is in the wholesale and retail trade sector and 16% is in services, while the industrial sector accounts for the remaining 11%.

To what do you attribute the resilience of Dubai's economy in the face of external economic pressure?

The UAE's economic resilience is a result of many factors, such as its non-reliance on one resource of income, with non-oil sectors currently contributing about 70% to the economy. The contribution of non-oil sectors to the GDP is increasing annually, thus helping to reduce the reliance on oil. We expect that non-oil sectors will contribute up to 80% of the GDP by 2021, which will enhance the country's resilience toward any negative impacts of market fluctuations or global oil prices. Assuming that oil prices remain low, thus leading to a reduction in the oil sector's contribution to the GDP, this in turn will lead to an income increase in other sectors that have been positively impacted by the decline in oil prices. The IMF expects that the UAE will register good growth levels regardless of other global economic challenges. This is another indicator that we are heading in the right direction despite all the challenges facing the global economy in general and our national economy in particular. Furthermore, the UAE has proved to be an attractive investment haven thanks to a legal environment that protects investors and guarantees their rights. We are also monitoring the markets to control inflation rates, which will in turn boost the appeal of our cities to some of the largest global companies and their employees. The UAE economy has proved to be strong and promising—regionally and globally. It has maintained a significant growth level throughout the past years. In addition, the UAE's cash reserves in offshore accounts have largely limited the negative impacts of fluctuating emerging market economies in the last two years.

The revised federal budget was announced at AED48.56 billion. How will this impact the real estate and construction sector, which looks at strong public investment to generate positive sentiment?

Firstly, I would like to note that the federal budget is in good shape and has been able to keep up with the requirements of the government and its development plans for the current year. The truth is that our non-oil national economy enjoyed a strong performance in 2015—mainly driven by construction and industrial projects. The national economy includes several elements that are closely linked, such as the real estate market, which in many developed economies is a reflection of the country's economic growth. In 2016, we expect to see a year of sustained growth in foreign investment entering our country. To leverage this investment effectively, we are creating more projects in different economic sectors. This will be reflected in the supply and demand system in the real estate sector, which will gradually increase the value of real estate in the coming years and lead to the launch of more important real estate projects. With regard to infrastructure, our expectations are to continue the implementation of various projects that will directly contribute to raising the attractiveness of the business environment in the UAE and enhance competition. For example, the work with a large number of infrastructure projects continues such as the expansion of national airports in the country, which amounts to AED100 billion, and the Etihad Rail network project that amounts up to AED40 billion, as well as roads, transport and tourist facilities and the work on the electronic financial services infrastructure.