What is the core of the UAE's foreign trade policy, and to what extent is local economic openness paving the way for wider regional growth?
The UAE's foreign trade policy is geared toward economic openness to the world and productive interaction with its global trade partners. It is founded on the principles of parity and mutual interests. The decision to nurture an open economy was wisely made by our Founding Fathers led by our late President Sheikh Zayed Bin Sultan Al Nahyan from our country's inception. Even then they knew that an open economy was vital to the UAE's commercial ties at a regional and international level. An open economy has helped the UAE gain the confidence of global investors and businesses and has accelerated the nation's economic diversification efforts. It has also boosted local competition, job creation, and the options of goods and services that UAE citizens can choose from. An open economy has been vital to our resilience against the global downturn and the social movements that have posed numerous economic challenges to the region and the world.
Following the successful diversification of the UAE economy, which sectors hold the largest growth potential for trade and investment?
The industrial sector shows very promising potential. In 2011, the UAE's industrial activities expanded by almost 11% to remain the second largest component of our GDP after hydrocarbons. The manufacturing sector accounted for a record $38.8 billion in 2011. The transport sector is another rewarding area for trade and investment, as it expanded by 6% in 2011. Renewable energy is also growing, especially as we are now the official headquarters of the International Renewable Energy Agency (IRENA). The UAE has already adopted a plan to raise the contribution of the renewable energy sector by up to 7% of national energy requirements by 2020. SMEs represent yet another solid sector, accounting for over 70% of the UAE's GDP (excluding oil), and are thus considered the backbone of the national economy. Other recommended sectors include tourism, finance and banking, education, health, logistic services, and ports and airports.
Which countries currently present particularly interesting opportunities for bilateral trade growth with the UAE?
We are eyeing countries with high growth rates, large and expanding populations, stable economic and political environments, forward-looking policies, and a clear vision of FDI in regions such as Latin America, Africa, and Central Asia. These growth partners uphold laws for protecting investors, widening investments, and expanding trade. We also intend to broaden our bilateral trade with strategic partners such as India, China, and Korea.
How important a role do SMEs play in utilizing opportunities and strengthening bilateral trade between countries? What can be done to empower and enable SMEs to enter international markets and benefit from exports in expanding their operations?
SMEs represent around 70% of our GDP, so any country tapping into our SME sector would be engaging with the backbone of our economy. SMEs are major users of imported goods and also account for a large exporting group; they are vital to strengthening bilateral trade. Companies falling under the SME category face many financial and policy challenges, which the UAE is keen to address. Governments should introduce supportive policies that make it easier for SMEs to expand and enhance their operations and enter international markets. For its part, the UAE aims to create a supportive environment where SMEs can easily benefit from the right financial, training, and knowledge resources. We recognize the positive value of SMEs in our national economy.
What will be the focus of the 2012 Annual Investment Meeting? What makes the UAE such an ideal location for international economic forums and events?
The UAE is an excellent host for international dialogues and events due to its strategic geographic location between East and West. As the region's recognized commercial hub, it also provides an ideal setting for businesses to interact and deal with each other. It offers many world-class venues such as the Abu Dhabi National Exhibition Centre and the Dubai World Trade Center as well. The country's thriving meetings, incentives, convention, and exhibitions (MICE) industry is considered an important medium for showing the UAE's push away from oil toward a more diversified economy.
The UAE joined the World Trade Organization in 1996, and a number of WTO reports have since been issued evidencing the country's commitment to creating an open international trade environment. What measures continue to be implemented in this regard?
During our second Trade Policy Review (TPR) under the WTO we were commended for upholding free-market principles and for aggressively pursuing economic diversification. We are committed to continue implementing measures that sustain the positive world view of our open trade environment. For one, we continue to update and improve our economic and legislative laws to fortify our open market. Building on the strong approval of the WTO over our latest TPR, we also intend to provide more information on our trade policy and deliver on our obligations to the WTO. We will continue to work with the WTO Secretariat and benefit from the expertise and technical assistance it extends. Since 2011 we have not raised our tariffs beyond 4.9% to float us above the global crisis without compromising our trade liberalization. This strategy has worked well alongside our simple tariff structure and minimal non-tariff barriers, and will continue to be in force. Of course, we will also maintain our business-friendly environment and free trade zones, which have carved for us a successful model for investment promotion.
What lessons were learned from the recent global liquidity crisis? What measures is the UAE implementing to develop appropriate policies for recovery that balance economic growth with sustainability?
In the UAE, we have adopted several measures to balance between economic growth and sustainability. For one, we have restructured our economy to focus on sectors such as tourism, logistics, and trade. In addition, most of the assets of national and foreign banks are located within the country, with their parties well-known and sound. We have also kept the percentage of our bank reserves and capital over our total bank assets far above international Basel II standards. Moving forward, we are continuing with several mega-projects, implementing strategic wage increases, and enhancing our investment offerings to draw in more FDI. We are planning several initiatives to further strengthen trust in our economy and cement our status as a preferred regional and global business and investment partner.
As the first female UAE minister and an inspirational role model for young Emirati women, what advice would you impart to budding young female entrepreneurs?
I would advise them to aim high and not set limits to what they can achieve; the region has made great strides in opening up opportunities to our sisters. I would like to remind them that women possess many unique traits such as exceptional interpersonal skills, persuasiveness, adaptability, team spirit, and confident decision-making, which make us excellent entrepreneurs. I would also warn them not to fall into the trap of competing against men. Their greatest competition is themselves. They should work with men for the betterment of society.
What is your outlook for the rest of 2012?
Many indicators point to a breakthrough year for business in the UAE. After a three-year asset slump, the country's banks are looking at a strong profit rally in 2012. We are also optimistic about 4% economic growth this year. Business Monitor International predicts that we will witness a 9% increase in tourist arrivals to 9 million guests; as the region's tourism hub, this will spell big business for the UAE. These are just some of the many barometers pointing to a strong business performance for the remaining months.