A STRATEGY FOR ALL SEASONS

Ras Al Khaimah 2018 | ECONOMY & FINANCE | INTERVIEW

TBY talks to Abdulrhman Al Shayeb Al Naqbi, Director General of the Ras Al Khaimah Department of Economic Development (RAK DED), on improving the ease of doing business, key diversification pillars, and the impact of new VAT.

Abdulrhman Al Shayeb Al Naqbi
BIOGRAPHY
After receiving a master’s from the University of Pittsburgh and a PhD from the University of Essex in finance, Abdulrhman Al Shayeb Al Naqbi served in more than 10 administrative and academic positions at UAE University as well as other government institutions. After serving as General Director of the RAK Chamber of Commerce and Industry, he is now Director General of RAK DED. He also chairs the economic committee of the RAK Executive Council and the board of directors for RAK Statistics and Studies Center. In addition to being a certified accountant, he is a former board member of the GCC CPA technical committee and served as a vice-chair of the Equivalency Committee at the Ministry of Higher Education.

How does Ras Al Khaimah differentiate itself from the other Emirates?

Ras Al Khaimah has a strong trading heritage and an extraordinary geographical location at the mouth of the Arabian Gulf. It has grown into an industrial and trading hub with strategic access to the UAE's major logistical centers and emerging world markets. Conducting business in the Emirate is extremely safe, secure, and stable. Ras Al Khaimah has earned 'A' ratings from both Fitch and S&P. The economic structure is highly diversified, dynamic, and strong, and Ras Al Khaimah is the most industrialized Emirate of the seven. Manufacturing here contributes more than 26% of the Emirate's industrial GDP. The major factors behind its high level of industrialization include the availability of natural resources, a strong blue and white-collar labor force, and the ease and low cost of doing business, especially when it comes to rent, cost of living, and relatively low wages and salaries. The large industrial base Ras Al Khaimah has managed to create has added significantly to its competitive capabilities, attracting many industrial companies to the Emirate. Several de facto industrial clusters have also emerged here.

What are the major key pillars that stand out in Ras Al Khaimah's economic diversification plan?

While the manufacturing sector will still be a major source of economic development and diversification, Ras Al Khaimah's economic strategy is still to emphasize the importance of other sectors. For example, tourism is increasingly becoming more important and is expected to be a major source of growth in the medium term. The growth rate of tourists coming to Ras Al Khaimah in 2016 was almost 11%, compared to the global average of 3-4%. In 2015, the growth rate of gross capital formation in the sector was around 34%. The annual nominal growth rate of the sector's value added in the period of 2011-2015 was above 13%. Such positive developments in these sectors will maintain our momentum into the future. In addition to these, construction and real estate will play a larger role. For example, Emaar recently decided to invest extensively in Al Marjan Island. Our goal is to transform Ras Al Khaimah into a regional and international service hub.

How will the introduction of VAT affect commerce and investor sentiment?

As VAT is a form of consumer tax and not an accelerating tax, the end consumer will completely incur the costs. From a merely accounting perspective, it will not affect the cost and profit of businesses. However, from an economic perspective, the general prices index will increase by 5%, as indicated by IMF experts, and this may cause a temporary slowdown of sales in the short run. However, in the long term, consumers will adjust to the new prices and consumption will return to its previous levels. Registering business for VAT, administering, and accounting for it may lead companies to hire new staff to deal with it.

How are entrepreneurship and start-up mentalities being incentivized in the Emirate?

The RAK Incubator & Accelerator focuses on innovation and technology, with entrepreneurs welcome to register their entities with RAK DED, and establish local companies, or register with RAK Economic Zones (RAKEZ), and set up a free zone entity. This presents a great opportunity for aspiring entrepreneurs to tap into mentorship and funding to realize their dreams.

How do you plan to improve the ease of doing business in the coming year?

At RAK DED, we are relentlessly looking for innovative techniques to improve the ease of conducting business. Perhaps the most prominent achievement in this area has been to reduce the number of days needed to establish a company from 12 in 2013 to eight in 2016. Currently, RAK DED seeks to exert greater effort and work in cooperation with all the related governmental bodies to adopt several initiatives to improve the process of issuing economic licenses in accordance with the World Bank's recommendations and other best practices from around the world.