BRIGHT FUTURE

UAE 2018 | DUBAI | INTERVIEW

TBY talks to Yu Tao, President & CEO of China State Construction Engineering Corporation (CSCEC) Middle East, on working despite the construction slump and areas of interest to CSCEC.

Yu Tao
BIOGRAPHY
Yu Tao is the CEO & President of CSCEC Middle East and oversees CSCEC’s regional operations in the GCC as well as other countries in the Middle East. He holds a master’s degree in project management from the National University of Singapore and a bachelor's degree in civil engineering from Chongqing University. Tao has over 20 years’ extensive overseas experience in the management of corporate affairs and construction projects.

There have been liquidity issues around construction and real estate, and although no large projects were canceled, there has been a delay in some major real estate and a 92% decline in construction projects awarded in 1H2016. How is the CSCEC maintaining activity in the midst of these issues?

Due to the low oil prices coupled with a global slump, government expenditure was reduced. In the Middle East, the construction sector has slowed down to a certain extent and, as a contractor, we have been trying very hard to diversify. From our base in Dubai we are looking after operations in the GCC, which allows us to have some more choice. For example, for the past two years we have been doing well in the Kuwaiti market, which has helped us balance the slowdown in other countries. Over the past 10 years, we have established a reputation and long-term partnership with most of our clients. We are receiving tender invitations and signing contracts from repeat customers that include government developers and major private development companies. We are also trying to bring in project financing and funding to ensure that clients can start projects promptly with adequate backing. Instead of remaining a contractor, we are trying to become a developer as well.

What specific sectors, both locally and regionally, look attractive for CSCEC?

The real estate market is still quite active, and comparing 2008 to today, there is probably less government involvement in the sector. Private investors remain very active, and there is good reason to believe in the future of Dubai. There is transport infrastructure to be developed here, as well as a lot of additional tourist attractions such as Dubai Park and Dubai Water Canal. Once they start the new airport it will trigger more construction and attract more professionals to the region, the UAE, and Dubai.

Of the tourism, general infrastructure, transport, and trade infrastructure sectors, is there a particular one the company will prioritize?

As per the Chinese government's initiative for One Belt, One Road, we are very much interested in infrastructure. Megaproject infrastructure like the Etihad Railway, ports, and the airport are one of our core businesses. We have been following this market for many years within the region. Hopefully, with the improvements in oil prices, the government will have the luxury of a deeper budget in order to spark more investment in the sector.

A 5% VAT will be implemented in 2018, with full integration by 2019. How will that affect your business?

It will have a certain impact the real effects of which we have yet to fully understand. We have a general understanding that the consumer will probably pay for the extra 5% at the end of the day. However, in certain cases, we are likely also the end user, so it is likely that our construction costs will become higher. All in all, it is likely that the end result will be an increase in company expenses.