United Arab Emirates once again at the centre of global trade
(16 Nov. 2015) Meeting with clients, prospects and journalists at the Financial Times’ 3rd Middle East Banking Forum, in association with the UAE Banks Federation, in Dubai today, the buzz in the air is unmistakeable.
By Gerald Walker, CEO ING UK, Ireland and MEA region
ING has supported clients in the Middle East for a long time – having opened its first office in the United Arab Emirates in 1978, only a few years after the creation of the UAE in 1971.
And when the Dubai International Finance Centre opened its doors just over a decade ago, we were one of the first tenants and it has since been our base for servicing clients all over the Middle East.
Over those years, the financial services industry has developed enormously. The latest addition to the Gulf’s financial infrastructure is Abu Dhabi Global Market, a new international financial centre that opened for business this year.
We have built close client relationships across the region both with local companies and financial institutions such as First Gulf Bank and Abu Dhabi Commercial Bank. This year, for example, we have been involved in a number of high-profile debt issues for these institutions and others in the region. Back in our home market of Europe, ING is a very important Euro payment partner for our clients.
We also follow our clients from Europe and other regions as they invest in the Middle East – companies such as Besix, the Belgian construction and infrastructure group, that has worked with Veolia of France on the Ajman wastewater treatment plant and Vopak, which has built a major oil storage facility in Fujeirah. But equally we are supporting companies based in the region such as telecoms group Etisalat, power company TAQA, the Saudi conglomerate Olayan as they invest across the world.
Our strategy is not driven by a focus on market share. Rather, we know where our strengths lie and we are keen to do business in the areas where we have understanding and solid knowledge. We are growing globally and our Middle East operations are just one part of that. One of our strengths is our industry lending capability – we follow an industrial strategy rather than a geographic one – and there are a number of sectors that are particularly strong in the region, including infrastructure, oil and gas, metals and mining, transportation and financial institutions. Our clients appreciate the fact that we have specialised knowledge in these industries.
With oil prices hovering around the $50 mark after a prolonged period of being above $100, it is clear that the Middle East is at an inflection point, with a number of countries having to make adjustments in order to balance their budgets. All around the Gulf, governments and businesses are recalibrating and reflecting on what the new oil price environment means, but that does not mean that the region will stop growing. Investment may be delayed but growth can be sustained even at this level.
Middle Eastern counties have long been investing with the future in mind in a range of diversified industries both internationally and, more importantly, locally to provide growth and employment for future generations – through entities such as Mubadala and IPIC. This is leading to the emergence of a number of key regional blue chip companies such as Etisalat and EGA (Emirates Global Aluminium), DP World and Emirates Airlines.
While the local economy has been focused on oil and gas in recent decades, the Middle East has a history of being a key hub for global trade, having been a key stopping off point for those travelling between east and west since such trade began. Dubai serves as not only gateway to Africa but to a 3-4 billion population within 4 hours flying time. With its world-class airlines, airports and seaports, the UAE is once again at the centre of global trade. This enviable transportation infrastructure has also opened up the region as a tourist destination, further diversifying its economy.
Being a network bank that has operations in more than 40 countries, we take a global view of trade and finance and this perspective helps us to understand a region that by virtue of its location has always had a global outlook. We are the number one bank in commodity trade finance, for example, which is vital in a part of the world that not only produces commodities in the form of oil and gas but also is a staging post for many others as they travel from Asia to Europe. Our network is there to allow us to support our clients wherever they want to do business.
Over the next 5-10 years, oil and gas will remain central to the Middle East’s economies but the region will also increasingly embrace renewable energy technologies, in particular solar power. Masdar City, south of Abu Dhabi, is a remarkable project which demonstrates this. Once scientists manage to make energy storage more affordable and available, off-grid solar projects will open up further areas of the Middle East.
We also expect the growth of the tourism sector to continue unabated in countries such as Oman and the UAE, with all the infrastructure that goes with it, such as roads, rail and airports, expanding as well.
The region also has a fantastic opportunity to showcase the diversity and growing maturity of its economy in the 2020 World Expo. The six-month event will be held in Dubai with a focus on three areas – Opportunity, Mobility and Sustainability. The event’s overall theme – Connecting Minds, Creating the Future – recognises that generating sustainable solutions to global problems demands collaboration across cultures and regions, something that sums up ING’s aims in the Middle East.