WHAT A YEAR

Ras Al Khaimah 2017 | DIPLOMACY | YEAR IN REVIEW

Ras Al Khaimah, known colloquially and affectionately as RAK, has its eyes on the prize; a post-oil economy based on knowledge, backed up by a value-adding industrial matrix and services landscape, with top-notch infrastructure to boot.

Ras Al Khaimah is well informed on the need for diversification, and today boasts seven of the UAE's 11 cement plants and a wealth of heavy industry, including RAK Ceramics, one of the world's largest ceramics producers. Indeed, a large chunk of the building materials used to transform the UAE over recent decades are sourced in Ras Al Khaimah, an Emirate that has honed its standards to meet the expectations of even the more discerning investors.

The Emirate sources only a small amount of its revenues from hydrocarbons, mainly through RAK Gas. For investors, this diversified environment makes RAK a safe haven, and the authorities have worked hard to make them feel welcome, with a network of industrial zones and free trade areas acting as a magnet for FDI. And that is not just the official line; Ras Al Khaimah enjoys an 'A' rating from both Fitch and Standard & Poor's, and was recently included on the Financial Times' Top 10 Small and Mid-Sized Cities list, entering at eighth overall, ninth in terms of human capital and lifestyle, seventh in economic potential, fifth in connectivity, and ninth in business friendliness. RAK was also the subject of a special survey carried out at the sub-national level by The World Bank for its 2016 Doing Business Study. Should RAK be placed on the list of countries, it would occupy 45th position, with the UAE itself coming in at 26th.

The Emirate enjoys autonomy over internal affairs, fiscal policy, and economic develop, while subject to federal law in areas such as health. Strategic direction comes from HH Sheikh Saud bin Saqr Al Qasimi, Member of the Federal Supreme Council and Ruler of Ras Al Khaimah, and one may only look deeper at the shape of the RAK economy to see that the Emirate is in safe hands; no single sector accounts for more than 20% of GDP, while manufacturing and mining form the thrust of economic motion.

Back with Fitch, and a recent May 2016 rating announcement affirmed RAK's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'A' with a 'Stable' outlook. This confidence resulted from RAK's membership of the UAE and its low debt-GDP ratio and strong fiscal performance, despite lingering slowdown across the region. Going forward, the Emirate's continued growth is set to be supported by infrastructure spending, with Fitch identifying expansion of Saqr Port, new developments at the RAK Free Trade Zone, and work on Al Marjan Island, a community project and RAK's first manmade island. All considered, Fitch is expecting growth of 4% in 2016 and 2017. But any summary of RAK's ambitions going forward would be incomplete without a nod to tourism. A recently new endeavor, the Ras Al Khaimah Tourism Authority (RAK TDA) was launched as recently as 2011, and is currently is the midst of a three-year tourism strategy entitled Destination Ras Al Khaimah 2019. The Emirate is looking at revenues of AED2.4 billion by 2018, as well as 1 million visitors by 2019 and employment in the sector at 15,000. The Emirate is already well on the way, attracting 740,383 visitors in 2015, up 15% YoY. This figure is expected to hit 820,000 in 2016, boosted by growing arrivals from countries including Germany and China, as well as an expanding medical tourism offering. RAK is looking to develop the affordable luxury tourism sector as it works toward boosting hotel capacity. Total keys by 2020 is forecast to hit 12,000, according to a Colliers report citing RAK TDA sources. This activity will also give a shot in the arm to the construction sector, which is expected to up its contribution to GDP to 11.5% by 2021. In terms of mining, RAK boasts high-quality limestone deposits, and produces oil-well cement, white cement, and lime. Its products are not just consumed domestically, but exported around the world.

Looking at the whole, RAK has much going for it. A strategic location on the Arabian Gulf, a solid port network, and a much-lauded, business-friendly regulatory environment put the Emirate in a prime position to drive sustainable growth and diversification across the UAE.