Selling sand in Dubai...
...applying wasta in Kuwait, and feathered 'hand luggage' in Qatar.
“After eight years I travelled to Dubai again. Back in 2007 the purpose was to explore Islamic finance which resulted in the setting up of an Islamic Finance unit in our Malaysian office in Labuan; shortly after the crisis hit… This time around the purpose was to visit (prospective) corporates clients across the Middle East together with our colleagues in the Dubai office, to explore further opportunities across our European and global network. Dubai has since emerged as a global city and business hub, attracting all the major international companies - and going about it at high speed!
Dubai has easily doubled in size to over 2 million inhabitants, including many migrant workers from more than 200 countries (!). The city experienced a boom-bust cycle with neighboring emirate Abu Dhabi bailing out the Dubai government when the real estate bubble burst. Modeling after Singapore it has developed further into a commodity trading (mainly gold), and a logistics hub for the region. A new airport is under construction to facilitate the 24/7 duty free shop-till-you-drop experience. The current international airport surpassed Heathrow as the busiest airport on the world in December 2014, so about time to build a bigger one!
Jeroen Plag, head of Client Coverage Americas, Asia & UK at ING Commercial Banking, regularly shares his opinion on market developments and perspectives, based on extensive travelling across the global ING network.
Multiple Indian companies set up shop here to export into Africa, while gold and other precious metal traders are present everywhere, from the souks, to Dubai airport to the shiny office towers. Apparently Singaporean government officials have been advising the Dubai government on getting properly organised including on the tax free shopping event of the year - the Dubai Shopping Festival 2015. The extravaganza included more than a 150 events across the city luring shoppers from around the world to spend. In a city where yellow Bentleys are the norm, extravaganza is the right word! Dubai did get another mentioning in the Guinness world book of records: 100 craftsmen completed a gold chain of 5, 5 km, weighing 256 kilos, in 45 days - another first…
One country that saw its numbers of citizens visiting Dubai dropping is Russia, the drop in oil prices and the ruble has had its effect. In multiple restaurants you can ask for an Arabic, English or Russian menu, while a lot of office workers are also from the former CIS states. Hotels catering for Russian tourists have seen occupancy rates of as lows as 20%. The geopolitical struggle over oil, with prices having recovered slightly last week, is having not only an effect on Venezuela, Iran and Russia, but also back 'home' in the Gulf States. Nevertheless, the 'selling of sand' as they refer to the selling of Dubai apartments across the region continues. Construction is everywhere, from offices to apartment complexes, shopping malls, art galleries and ample hip-and-happening restaurants.
From Dubai we flew on to Qatar and Kuwait meeting with corporates and family offices, running multiple conglomerates with activities ranging from infrastructure, to real estate, oil & gas and financing operations. In both countries there is the same level of infrastructure and building construction, with Qatar preparing for the World Cup. At the same time a USD 38 bio metro system is being completed, for merely 2 million inhabitants. In both Kuwait and Qatar the regime on alcohol is much stricter in line with religious guidance, very different from Dubai. According to some local Qatari we met that should be the case during the upcoming World Cup as well; remains to be seen how major (alcoholic beverages) sponsors will be going about that.
Across the region, (government linked) companies are looking overseas to invest the oil and gas dollars to diversify their portfolios. While clearly providing for opportunities, serving them across our European network, being close and building strong local relationships are a must. 'Wasta' is a similar term as Guanxhi in Chinese, meaning as much as making the network work, or 'humanising the bureaucracy'. Clearly being part of an influential family has its advantages, however, for the multiple immigrant workers from India, Bangladesh and even the Philippines, wasta is not applicable at the same level…
Traveling across the region, I opted for only hand luggage to speed up after customs clearance. A Qatari father and his son en route to Doha were also traveling light - with their pet falcon! The one year old bird, used for hunting, was comfortably sitting on a leather glove - its head covered with a cap to keep it calm. Although only a 40 minute flight to Dubai, obviously the bird was going to be home faster this way!"
Follow Jeroen on Twitter: @JeroenPlag