Doing Business in the UAE

Currency and Exchange Rates

The UAE dirham (AED) was officially pegged to the Special Drawing Right (SDR) from November 1980 to December 2002, though, in practice, it was pegged to the U.S. dollar at a fixed parity. Since then, and in line with commitments agreed with other GCC countries including the movement toward the adoption of a common currency (currently planned for 2010), the UAE dirham has become officially pegged to the U.S. dollar. The mid-point between the official buying and selling rates for the dirham has been AED3.6725 per US$1 since November 1997.

The UAE’s exchange system is free of restrictions on payments and transfers for international transactions, except for certain restrictions under terrorist financing provisions that have been taken in accordance with UN resolutions. The UAE accepted the obligations under Article VIII of the IMF Statutes on 13 February 1974.

Banking and Financial Services

The UAE is a small country undergoing rapid economic growth. Its financial environment is made up of a multiplicity of institutions, including two separate market environments, consisting of three stock exchanges and supported by two regulatory bodies. Historically, companies in the UAE have been family owned and managed and investing in equities is a relatively recent phenomenon. However, with the increasingly international nature of business in the country, there is a growing trend for local companies to pursue IPOs to finance their business activity. Given this tradition of family ownership, and the rapid pace of development in the UAE, there is an urgent need to enhance the standards and understanding of corporate governance, the risks associated with inaction, and the clear opportunities to be gained from implementing strong governance structures. In addition there is a need to further improve the levels of trust in the UAE market by further developing the rule of law and voluntary disclosure. The government recognizes that additional enhancement of corporate governance standards is essential to increasing domestic and foreign investment, which in turn acts to accelerate the pace of economic development. Corporate governance and its associated issues – shareholder’s rights, management responsibilities, conflicts of interests and transaction transparency – are crucial to the development of functioning markets in the UAE that are linked to, and realize the benefits of the global market place.  The issue of granting new licenses to banks or allowing existing foreign banks to open additional branches is a policy decision that is under consideration by the Board of Directors of the Central Bank of the UAE. The Board of Directors sets the policies for the financial sector for the country, and as such the Board of Directors reviews the UAE’s existing commitments in financial services. According to banking sources, most UAE banks were able to overcome the sharp slumps of the stock markets in 2006 by diversifying their income sources, depending mainly on core banking operations and benefiting from the current momentum of most sectors, particularly the real estate sector, by financing major real estate projects. The aggregate profits of Abu Dhabi-based national banks grew by 5.7 percent to AED7.4 billion in 2006 while the profits of Dubai-based banks grew 9 percent to AED6.7 billion. The UAE is developing an expertise in Islamic banking, which has quickly emerged in the last few years as an alternative to commercial (interest-based) loans. In time, this expertise may be exported to other markets through international investments and acquisitions as well as online services. The insurance sector has also grown. Over AED18.3 billion was invested in this sector in 2005 according to the Ministry of Economy. The premiums within the branch of general insurance increased from AED4,740 million in 2004 to AED6,181 million in 2005 – an increase of 30%. A large portion services the hydrocarbon and construction industries – sectors that have significantly developed over the last few years and are expected to continue to grow. Given the UAE’s fast population growth and the government’s mandate to insure all workers, the sector’s outlook is very good.

Intermediation Services

Banking and financial intermediation services are regulated at federal level by the Central Bank of the UAE; insurance services are also regulated at federal level under the authority of the Ministry of Economy. In addition, the Government of Dubai launched the Dubai International Financial Centre (DIFC) in early 2005, offering insurance, banking, and financial intermediation services.

Insurance Services

The UAE’s stable economy and the development of economic and social activities in the country have positively reflected on the insurance sector. The Ministry of Economy asserts that the insurance sector plays a substantial role in the national economy due to the huge funds invested in it. Most companies are based in Abu Dhabi or Dubai, and carry out the full range of insurance business. Life policies account for only a small proportion of overall business while oil sub-sector represents a large share of the insurance sector. The insurance sub-sector is under the responsibility of the Ministry of Economy. Federal Insurance Law No. 9 of 1984 is the main law covering the supply of insurance services.

The UAE made no specific commitments in its GATS Schedule regarding insurance services. Cross-border supply of insurance services is not possible for companies located abroad. All assets and risks in the UAE must be insured domestically (by domestic companies or by local branches of foreign companies, or by ‘agencies’). The maximum foreign ownership of domestic insurance companies allowed by law is 49 percent. Representative offices cannot engage in business or act as agents. This does not apply to reinsurance services, for which commercial presence is not required: UAE insurance companies can reinsure their risks from international reinsurance markets. UAE-based companies can insure risks located abroad. Ministerial Decision No. 333 issued by the Ministry of Economy on 25 November 2004 changed the conditions of licensing for foreign insurance companies. In particular, the Decision specifies economic needs criteria, such as the level of domestic demand for classes of insurance offered or whether new classes of insurance coverage are to be introduced by the applicant. In addition, the Decision requires the appointment of a minimum number of UAE nationals as staff (10 percent of the staff and at least two persons in the first year, rising to 25 percent of the staff and at least 12 persons in the fourth year). In January 2007 the Ministry of Economy issued new, tougher regulations on insurance brokers in order to further improve professional standards in the industry. The new regulations set out eleven guidelines which include raising the bank guarantee for the main branch of a company from AED300.000 to AED1 million, and from AED150.000 to AED500.000 for branch offices.

Insurance companies wishing to establish in an emirate must first apply to the emirate authorities for a license; the authorities then submit the application to the Ministry of Economy. Eligible foreign insurance companies can either open a branch or enter into an agency contract with a local insurance agent representing them. Both domestic companies and foreign branches must have a minimum fully paid-up capital of AED50 million (US$13.6 million), and must deposit AED4.5 million for non-life, and AED3 million for life insurance with a local bank. Combined life and non-life or non-insurance-related operations are not allowed. The manager of a foreign branch must be resident in the UAE. The applicant must specify the expected premium rates to be applied, and the volume of expected local insurance business. The foreign branch must, in addition, appoint a ‘local sponsor’, whose main function is to facilitate licensing and registration. As noted, foreign companies may also supply the UAE market through the appointment of a local agent to represent them and market their products (as distinct from the local sponsor employed by the branch). A copy of the agency contract between the company and the local agent must be registered at the Ministry of Economy. No taxes or stamp duty are levied at federal or emirate level on settlements from life and nonlife insurance, on insurance companies.

(Insurance Law can be downloaded at www.economy.ae )

Banking

The UAE has a large financial sub-sector relative to its size and population. At the end of 2005, UAE banks accounted for about one fifth of the total equity of the Arab banking market. The UAE has 46 commercial banks, of which 21 are national (with 496 branches as at September 2006) and 25 foreign (with 119 branches). In addition, some 50 representative offices of foreign banks are present in the market, but may not conduct transactions, accept deposits, open accounts, extend loans, perform or participate in any transactions.

The UAE banking sub-sector is also generally sound and profitable: in 2005, all 46 banks operating in the country met the minimum 10 percent capital-assets ratio, which exceeded 16 percent (tier 1 capital to assets ratio) for the sub-sector as a whole. Bank loans have grown substantially, with assets and deposits increasing at double digit rates on average between end 2001 and end 2005, and are well distributed across industries. Profitability of banks remained strong in 2003 and 2004 and increased further in 2005. A recent GCC study says that the UAE banking market is “efficient and competitive”. In March 2007 Emirates Bank International (EBI) and the National Bank of Dubai (NBD) merged to create the largest bank in the UAE and one of the largest in the region. The government of Dubai owns 76 percent of EBI and 14 percent of NDB. The new entity will have assets of AED165 billion and will help the UAE to compete in global markets and develop the Federation’s banking sector.

The Emirates Banks Association, founded in 1982, aims to represent and defend the interests of its domestic and foreign member banks and to exchange information regionally and internationally. Membership, which is not compulsory, covered 38 banks at end 2005. Banking and financial intermediation services are regulated at federal level by the independent Central Bank of the UAE, under Federal Law No. 10 of 1980. This law establishes five principal categories of institutions: commercial banks, investment banks, financial establishments, financial intermediaries, and monetary intermediaries, each of which must be licensed by the Central Bank. Foreign banks are required to have the legal form of a branch, licensed and regulated by the Central Bank. Every commercial bank, including branches of foreign banks, must have a minimum paid-up capital of AED40 million (US$10.9 million), or 10 percent of risk weighted assets in the UAE, whichever is greater. Since 1981, there has been a moratorium on the licensing of new foreign banks; this moratorium followed a banking crisis with a run on the local currency in 1977. Foreign banks with more than eight branches had to close down the excess branches; those with less than eight had the number of branches frozen. There are numerous pending applications for new foreign banks. The Central Bank has reportedly announced that it will be issuing new licenses to banks and allow existing foreign banks to open new branches provided they comply with emiratisation quotas. Foreign banks pay a 20 percent local emirate tax on profits in each emirate. There are no restrictions on the presence of foreign senior staff in foreign banks but this is likely to change. All banks in the UAE are required to employ a minimum of 10 percent UAE nationals in total staff (excluding auxiliary staff) as per Central Bank regulations, and there is a proposal to increase this percentage. Additionally, Council of Ministers Decree No.10 of 1998 effective January 1999, requires all banks to increase the number of UAE national staff by 4 percent annually. Due to the demographic structure of the UAE, whereby UAE nationals represent only approximately 9 percent of the total workforce, compliance with these regulations has not been achieved by many banks. However, the Central Bank and other authorities continue to encourage adherence, and have resorted to implementing penalties. Certain senior UAE bank figures reportedly consider that encouraging such labour market rigidities will not increase the UAE’s comparative advantage, and run counter to its efforts to attract domestic and foreign investment. In its specific commitments under the GATS, the UAE has, with limitations, made commitments on all banking and other financial services as specified on the Central Products Classification list, with the exception of settlement and clearing services for financial assets. According to the authorities, this exception was due to the absence of a stock exchange in 1996 when the UAE became a member of the WTO. The UAE has bound measures on all these services for cross-border supply and consumption abroad without limitation. Measures affecting mode 3 supply (commercial presence) remain unbound for new licenses to operate bank branches, and to expand activities of existing financial entities.

Security Markets

At the end of 2005, there were seven financial investment companies (of which three were foreign), seven finance companies, twelve financial consultancies (all locally incorporated), and two investment banks. There is no moratorium on the licensing of new financial institutions. The UAE’s two securities markets were established in Abu Dhabi and Dubai in 2000 under Emirate laws. They are regulated by the Securities and Commodities Authority (an independent body, chaired by the Minister of Economy) under Federal Law No. 4 of 2000. Brokers wishing to operate on the UAE exchanges must have at least 51 percent national ownership. Capital must be at least AED10 million and financial guarantees must be provided. There is also a securities market, the Dubai International Financial Exchange (DIFX), with its own regulator, within the Dubai International Financial Centre (DIFC) free zone. Transacting business in dirhams is not permitted in DIFC, nor is the acceptance of deposits in any currency from a natural or juridical person in the UAE. DIFC aspires to be the financial hub of the Middle East, bridging the geographical and time gaps between the major capital markets of New York and London in the West and Hong Kong in the East. Regulations on investment funds are set out in Central Bank Resolution No. 164/8/94. The fund manager must be a company licensed by the Central Bank, which can permit foreign companies to set up branches or representative offices. All companies must nevertheless have a principal centre of administration in the UAE. Investment funds/products must be marketed by a Central Bank licensed financial institution (bank or securities market). Currently, there is only one commodities exchange in the UAE, the Dubai Gold and Commodities Exchange (DGCX), which operates from the Dubai Metals and Commodities Centre (DMCC). The DGCX commenced trading in November 2005. It is a joint venture between the DMCC and two Indian companies. Since the DGCX is a financial free zone, foreign broking and trading companies can operate freely. In practice, the licensing procedure is in two stages: operators first apply for membership to the DGCX, which requires full disclosure as to ownership, directors, financial conditions, home regulator and suitability to act as brokers or traders in a commodity futures market; companies are given initial approval, and the information is passed to the Securities and Commodities Authority (SCA) for final approval. DGCX trading hit new heights on November 9th 2006 when the value of contracts traded amounted to US$157.42 million. This surpassed the earlier high of US$122.44 million in May 2006 when gold and silver prices were at 25 year highs.

Privatization:

As a result of large public investments, generally in partnership with foreign enterprises that bring in their technologies, many state-owned companies have grown large and efficient enough to compete effectively on world markets. However, the government is moving towards privatization of its state-owned utilities, specifically, water and electricity. The only significant steps towards privatization have been in Abu Dhabi’s electricity and gas sub sectors. The emirate of Abu Dhabi has also initiated plans for the sale of certain companies in the manufacturing sector. The first IWPP undertaken by Abu Dhabi Water and Electricity Authority (ADWEA) was the Taweelah A2 project situated in the Taweelah complex about 60 kilometers north-east of Abu Dhabi City. Emirates CMS Power Company (ECPC) was established to build, own and operate the plant. As in other IWPP joint ventures, the government, through ADWEA, retained 60 percent of the shares of ECPC, and CMS Generation Taweelah Ltd, a wholly-owned subsidiary of CMS Generation, has a 40 percent stake. The Taweelah A2 Operating Company Ltd, also a wholly-owned subsidiary of the US Company, CMS Generation, provides management, operations and maintenance of the facility under the terms of a 20-year agreement. The first 185 MW power unit started up in July 2000 and the whole complex was fully operational by April 2002. In June 2005 a AED2 billion (US$544 million) IPO of ECPC was launched comprising 50 percent of Abu Dhabi government’s 60 percent stake. This means that 60 percent of the total stake in the firm is now held by the government (30 percent) and UAE citizens (30 percent), while 40 percent will stay with CMS Generation. This formula will be repeated with other IWPPs. Taweelah A1, comprising the sale, refurbishment and extension of an existing plant, previously run by the Bainounah Power Company, was the second IWPP formed under ADWEA’s stewardship. This was undertaken by a consortium in which ADWEA’s partners were Total (20 percent) and Tractebel (20 percent). Commissioned in 2003 and operated by Gulf Total Tractabel Power Company (GTTPC), Taweelah A1 produces 1350 MW of electricity and 84 mg/d of desalinated water. The third privatization involved the development of a complex at Jebel Dhanna near Shuwaihat. This is a brownfield venture 250 kilometers west of Abu Dhabi City consisting of a gas-fired, combined cycle power station with a capacity of 1500 MW and a 100 mg/d desalination plant. The plant was developed by Shuweihat CMS International Power (SCIPO), a joint venture between ADWEA (60 percent) CMS Energy (20 percent) and UK’s International Power (20 percent) that was formed in mid-2001. The first units started up in the spring of 2003 and the whole complex was fully operational by the third quarter of 2004. Privatization of the Umm al-Nar Power Company (UANPC), set in motion in 2003, was the fourth in the series. This time a slightly different corporate structure was put in place. UANPC ran an electricity generation and water desalination plant located 10 kilometers northeast of Abu Dhabi City. This was acquired by the newly-formed Arabian Power Company (APC),60 percent of which is controlled by ADWEA’s wholly-owned subsidiary, United Arabian Power Company (UAPC); ITM Investment Company Ltd, a joint venture between International Power plc (50 percent), Tokyo Electric Power Company (TEPCO) (35 percent), and Mitsui & Co. Ltd (15 percent), controls the remaining 40 percent. APC not only took over UANPC’s existing capacity (850 MW/162 mg/d) and two recently commissioned units with associated infrastructure, it also assumed responsibility for the development, financing and construction of 1550 MW of new capacity and additional water generation. Commissioning of the first power unit took place in 2005, and full operations started in summer 2006. Abu Dhabi’s fifth IWPP, Taweelah B, involves construction of a new plant and expansion of the existing Taweelah B. This is the biggest electricity and water privatization project in the region to date in terms of investment cost and energy output. The existing plant already produces 1000 MW of electricity and 90 mg/d of water. The new plant, which will commence operations in 2008, will add a power generating capacity of 1000 MW and produce 65 mg/d of water. At the beginning of 2005 ADWEA signed aAED11 billion (US$3 billion) agreement governing the Taweelah B project, AED6.2 billion (US$1.7 billion) for the sale of the existing station and AED4.8 billion (US$1.3 billion) to cover the cost of expanding the complex. The Japanese corporation Marubeni and its partners – Japan’s JGC corporations, US-based BTU Power Company and Malaysia’s Powertek Berhad – are the sole shareholders in Al Taweelah Asia Power, which will take a 40 percent stake in the new Taweelah B project company. The remaining 60 percent will be held by ADWEA through its wholly owned subsidiary Al-Taweelah United Power Company. Plans to privatize Al Mirfa, which was supposed to be the fifth IWPP, have been put on hold. However, ADWEA has initiated its sixth independent IWPP, the takeover and expansion of UWEC’s plant in Fujairah. ADWEA’s remaining non-privatized production companies include Bainounah Power Company (BPC), which has two separate power and desalination stations in Abu Dhabi City (540 MW/16 mg/d) and Al Ain (461 MW); Umm al-Nar Power Company, which runs the 120 MW Baniyas power plant; and the Al Mirfa Power Company (AMPC), operating the 190 MW/39 mg/d Mirfa combined-cycle plant and the 143 MW Madinat Zayed power plant west of Abu Dhabi City. In January 2005, ADWEA announced its intention to sell 51 percent of its stake in the Al Wathba Company for Central Services to the Abu Dhabi Investment Company (ADIC). Al Wathba Company is the procurement arm for all ADWEA owned companies, supplying transportation vehicles, both light and heavy vehicles, machinery, and equipment. In a further development, a new public joint stock company, the Abu Dhabi National Energy Company (TAQA), a subsidiary of ADWEA, was established in Abu Dhabi in June 2005 and listed on the ADSM stock exchange in September 2005. The activities of the new company, which will have a capital of AED4.15 billion, will include acquiring shares in companies or projects operating in the water, electricity, oil, gas and mineral sector inside or outside the UAE. It is envisaged that this company will take over the state’s interests in IWPPs. One of TAQA’s first moves was to acquire a 60 percent in the Union Water and Electricity Company.

Double Taxation Agreements

In late November 2006, at a workshop on ‘The Formulation of Tax Treaties,’ organized jointly by the Paris-based Organisation for Economic Cooperation and Development and the Ministry of Finance and Industry, the UAE announced plans to negotiate double taxation agreements with Russia, Azerbaijan and Japan. The UAE already had double taxation agreements with various countries and has also signed an agreement with the OECD to harmonise taxation issues with the Arab region. The government considers double taxation agreements as being important to encourage foreign direct investment flows. The UAE government is keen to work with other countries on Double Taxation Agreements in order to expedite investment opportunities in the UAE and other economic partners.

UAE’s DOUBLE TAXATION AGREEMENTS

Algeria

Armenia

Austria

Azerbaijan

Belarus

Belgium

Bosnia – Herzegovina

Canada

China

Czech Republic

Egypt

Finland

France

Germany

Italy

India

Indonesia

Korea

Lebanon

Luxembourg

Malta

Malaysia

Mauritius

Mongolia

Morocco

Mozambique

New Zealand

Pakistan

Philippines

Poland

Romania

Seychelles

Singapore

Spain

Sri Lanka

Sudan

Syria

Tajikistan

Thailand

Tunisia

Turkey

Turkmenistan

Ukraine


Property

Land and natural resources are owned by the ruling family of each emirate. There is no legislation governing land ownership at the federal level and the matter is left to the discretion of each emirate. Acquisition of land for commercial or private purposes in Dubai is restricted to UAE citizens and, to a certain extent, GCC citizens. However, the emirate of Dubai has recently granted foreigners the right to purchase private properties in exempted areas in three partly government-owned housing projects; under two of the projects, the ownership allowed is freehold, the other allows leasehold for up to 99 years. An order has been issued to clarify all ambiguities surrounding the legal status of land ownership and long-term leased real estate in the exempted areas. Dubai, has issued a three-page, five article Order No. 3 of 2006 (published in the government’s official gazette on July 3rd) designating areas where expatriates can enjoy freehold ownership in the emirate. The list includes 23 areas and 45 plots including Jebel Ali, the Palm Island projects, the World islands, Dubai Marina, Emirates Hills and Al Barsha. More than 15,000 expatriates have already moved into their freehold homes since Dubai opened its property sector and about 5,000 more people are expected to move in 2007. In Abu Dhabi, a law on land ownership was adopted in 2005. The law stipulates that real estate granted by the Government to a citizen before or after issuance of the law, is his or her own property; the citizen has the right to register such ownership and is entitled, within the limits of the law, to use, exploit, and dispose of such property. The law also allows GCC citizens to own real estate located in investment areas, and specifies the terms of the surface lease contracts on real estate outside investment areas. Foreigners have also been given the right, under the new law, to lease real estate in investment areas located in Abu Dhabi for a limited duration. Other emirates have their own regulations and decisions governing land/property ownership. The emirate of Sharjah has begun offering property for foreign ownership but adopted a resolution (in 2005), which stipulates that the owner of a property is only entitled to sell it to non-GCC citizens after approval by the ruler of the emirate and under specific conditions.  Ajman has also announced various freehold residential projects including the Al Naeemiya Towers, the Al Khor Towers and the massive Al Ameera Village which is being built on the Emirates Ring Road. Umm al Quwain is expected to pass laws

allowing expatriates to acquire plots on 99-year leases in the Emirates Industrial City development, promoted by real estate company Tameer. Fujairah is offering residential apartments in its new Al Jabar Tower as a freehold development. Ras Al-Khaimah was the first government after Dubai to offer freehold property ownership rights allowing expatriates to purchase in selected developments of the emirate. The RAK government set up its own public joint stock property development company RAK Properties PJSC and granted 4.6 million square meters of land for the development of a wide portfolio of residential and industrial projects.

Free Zone Areas

Ownership of interests in land in the Free Zone Areas (FZA) has already been guaranteed by all the emirates subject to the FZA internal rules and regulations. In addition, the Emirate of Dubai Law No. 7 of 2006 confers on non-nationals the right to acquire and register interests in land either by freehold, 99 years leasehold, or otherwise.

Electricity and Water

Electricity production was estimated at 48,100 GW/h in 2003. Some 97 percent of the production is fuelled by gas while the remainder is produced by diesel generation or steam turbines. There are no imports or exports. There are plans for interconnection of electricity transmission and distribution networks among emirates, and among members of the Gulf Cooperation Council (GCC). The interconnection of all emirates was achieved in 2006, with a medium term project to connect with other GCC states. Water production and distribution are closely associated with electricity generation, and are carried out by the same companies. There are four electricity-water authorities in the UAE: the Abu Dhabi Water and Electricity Authority (ADWEA), The Dubai Electricity and Water Company (DEWA), the Sharjah Water and Electricity Company (SEWA), and the Federal Agency for Water and Electricity within the Ministry of Energy, which supplies the four northern emirates and parts of Sharjah. All entities, except ADWEA, are owned and controlled by the respective governments, and have monopoly over all segments of the electricity sub-sector. Installed generation capacity has increased from 9,500 MW in 2000 to 14,500 MW in 2004; the share of ADWEA increased from 46 percent of the total to 54 percent over the period. Coordination is by the Ministry of Energy.

Privatization

In 1997, the Emirate of Abu Dhabi formed a Privatization Committee for water and electricity. In early 1998, a law was passed for the comprehensive restructuring of the sub-sector. Since then, the Abu Dhabi electricity and water industry has been unbundled. Currently, the Regulation and Supervision Bureau is the sector’s regulator. ADWEA is now a holding company that owns 100 percent of four producing companies and 60 percent of four other producing companies, the Independent Power and Water Producers (IPWPs), private foreign and domestic stakeholders hold the remaining 40 percent. Since 1999, the sector has attracted about US$5 billion of foreign investment. Electricity transmission is under the monopoly of the Transmission Company (TRANSCO). Electricity distribution is under the monopoly of Abu Dhabi Distribution Company (ADDC) for the Abu Dhabi region, and Al Ain Distribution Company (AADC) for the Al Ain region. Aside from the IPWPs, all entities are 100 percent owned by ADWEA. The prices of electricity and water are determined at emirate level.

ADNOC

Abu Dhabi National Oil Company (ADNOC) also produces electrical power. In 2002, the latest expansion of the Ruwais refinery involved the addition of four gas turbines and two water desalination units. The output from the Ruwais refinery was initially intended to supply power and utilities only to plants in the Ruwais industrial area. In 2000, ADNOC and ADWEA signed a Memorandum of Understanding to interconnect their electrical grids to exchange power in the future. Ruwais electricity plant now supplies power to the ADWEA National Grid.

Fujairah II

International companies formed alliances in anticipation of the October 25th 2006 deadline for submission of expressions of interest for Abu Dhabi’s AED11 billion (US$3 billion) seventh independent water and power project, Fujairah II. The green field project will have a capacity of 2000 megawatts of power and 100 million gallons per day of water. ADWEA expects to select the developer for Fujairah II by March 2007 and achieve financial closure by October of that year. Singapore’s Sembcorp Utilities is developing the Fujairah I project which, after takeover and expansion will have a capacity of 656 megawatts and 100 million gallons daily. According to ADWEA, investments of more than AED40 billion have been pumped into the water and power sector since Abu Dhabi embarked upon its privatization drive in 1998. Abu Dhabi now has a power generating capacity of more than 7,000 mega-watts and 500 million gallons daily of water. ADWEA is the sole buyer from all the producers.

DEWA

Dubai Electricity and Water Authority (DEWA) will invest more than AED55 billion to triple the emirate’s power generation and water desalination capacity in the next 10 years. This will allow the emirate’s utility sector to meet expected demand. DEWA expects to increase its production capacity to 13,250 megawatts of electricity and 575 million gallons of water in the next decade.

Emirates National Grid

With the interconnection of Abu Dhabi Water and Electricity Authority (ADWEA) and Dubai Electricity and Water Authority (DEWA) grids, the country is set to link up making Emirates National Grid (ENG). The main objective of the ENG project is to provide a flexible operation, enable electric power trading between all the UAE electrical authorities, allowing them mutual assistance for a better network stability and reliable power supply to their customers. With the interconnection of ADWEA and DEWA, the virtual interconnection of the GCC Grid has come closer. The interconnection of 400 kv transmission lines into the Emirate National Grid (ENG) will optimize the electricity generation and power transmission system. After the complete emirate interconnection, the ENG will be connected to the six GCC states, which is expected to be completed by 2010, costing over US$1.1 billion.

Distribution and Logistics

Dubai Logistics City (DLC) is part of the mega Dubai World Central airport city development in Jebel Ali and a key element of the world’s first integrated logistics and multi-modal transport platform. A recent industry report has valued the GCC logistics market at over US$11 billion. At present, ground impacting work continues on the 25 square kilometers Dubai Logistics City site. The facility, which will also be a freighter airport, is to be operational in 2007 and is designed to eventually handle more than 12 million tons of air cargo annually in up to 16 air cargo terminals capable of handling the new generation Airbus A380-800F freighter version of the giant airliner.

DLC is to be the preferred location for businesses which require, or offer, logistics and multi-modal transport services to the GCC, the wider Middle East, India, Africa and the CIS — a market of more than two billion consumers. Kuwaiti freight and logistics firm Agility (PWC Logistics Group) will invest AED550 million in expanding its UAE facilities under a AED1.83 billion plan to grow its global network in two years. Agility will build a new logistics centre in the Jebel Ali Free Zone covering 300,000 square meters and is set to open a facility in Dubai Investment Park. Agility employs 20,000 people at 450 offices in more than 100 countries. Top companies within the Group are Geo Logistics, Trans Oceanic and Trans-Link.

Logistics Tower

Dubai-based developer TSA International will construct a 28-storey tower dedicated to the logistics industry in the Middle East. The exclusive logistics tower was officially unveiled during the first annual Middle East Logistics Awards (MELA) 2006. Some 800 logistics industry leaders attended the MELA Awards ceremony on November 21 at Dubai’s Madinat Jumeirah hotel. The logistics tower will provide a strategic location for the logistics industry players who are planning to have their corporate offices at Business Bay, the emerging business district of the region. It will be called Hydra 28 – The Logistics Tower and will form part of the five iconic, state-of-the-art towers that will soon rise to become a commercial landmark.

MELA 2006

The UAE’s flagship facility, the Jebel Ali Port, won the award for Best Seaport as well as the award for Best Container Terminal at the Middle East Logistics Awards (MELA) 2006. The awards criteria are based on leadership, innovation and a contribution to the advancement of the Middle East logistics industry. To that extent, DP World – UAE sets the benchmark for quality service and employs innovative and state of- the-art technologies to provide customers with the highest level of service.

Empost

Emirates Postal Corporation (EPC or EmPost) was formed in 2001 following restructuring of the UAE General Postal Authority to assist in the reorganization of the existing postal service in line with global developments. The introduction of integrated IT systems, automated sorting centers and agreements with international postal authorities improved efficiency and reduced postal tariffs, Alliances with world giants such as Western Union and AEDL facilitated the introduction of money transfer services and cross-branded products such as ‘International Express’ whereby consignors using Emirates Post packaging can utilize AEDL’s airway bill system and worldwide network.

As part of Emirates Post’s strategy to diversify its services and transform UAE post offices into one-stop-shops, several new, non-postal services are available at its network of 77 post offices, including consumer banking in alliance with Union National Bank, prepaid telephone cards, payment of utility bills, provision of Internet stations, sale of mobile phones and accessories, prepaid parking cards, payment of parking fines, degree verification and sale of stationery items. Emirates Post has also forged ties with private sector companies such as Air Arabia and Cellucom. The company’s efforts in the marketplace received high recognition at the Second International ‘Stevie’ Business Awards in New York where its Training and Development Centre won the ‘Best New Service Award’, and its Director-General was a finalist in the ‘Best Turnaround Executive’ category. The Universal Postal Union (UPU), the United Nations specialized agency that controls postal operations in 190 countries, selected the UAE as the venue for its 2006 Strategy Conference – the first time that the conference has been held outside Switzerland, the headquarters of UPU. Over 1,000 postal experts from over 130 countries attended the conference to chart a new strategy for global postal services and prepare for the World Postal Strategy to be adopted at the 2008 Universal Postal Congress in Nairobi. Emirates Post has succeeded in launching many pioneering products and projects. Aided by technology, Emirates Post aims to be one of the leading postal corporations worldwide and in June 2006 announced plans to purchase a 60 percent stake in Wall Street Exchange Centre’s operations in the UAE, Middle East, Europe, and Asia. (See: www.emiratespost.ae)

Roads and Transportation

Since the mid 1980s, a strategic priority of the UAE has been to become a major aviation and maritime transport hub between Europe and South-East Asia. The country has largely succeeded in this. The governments of each emirate have invested vast resources in developing port and airport infrastructure, which have also been among the leading sub sectors attracting foreign investment, albeit always on the basis of minority shareholdings. Transport not only plays an important role in the economy of the UAE, but the transport network has effectively become central to the entire region. Operational management is under the responsibility of the airport and port authorities of each emirate. A National Committee for Port Security is responsible for the security of the main ports.

Road Transport

The UAE has a good highway transport system, which connects all the main cities of the country. There are about 4,000 km of mostly hard-surfaced roads. The UAE is connected by road to Saudi Arabia and Oman. Road transport companies, which must be majority-owned by UAE nationals, generally employ foreign drivers. One of the most important highways is the 55 kilometer Sheikh Zayed Road between Dubai and Abu Dhabi and linking via the arterial routes to the other emirates. All the emirates have launched ambitious projects to update and modernize their road and traffic infrastructure to keep pace with the burgeoning real estate sector and the rapidly rising population.

Rail

A study is underway to build a 700 km-long railway system to link Abu Dhabi and Dubai, with the northern emirates. The project would add to the UAE’s competitive edge, create job opportunities and serve as a magnet for foreign investment. Meanwhile construction has already begun on the Dubai Metro Scheme. The metro system will be one of the most advanced urban rail systems in the world and will be the catalyst for tourism, financial and economic growth. Investment costs for the full system have been assessed at a grand total of AED14.3 billion. The two-line network will total nearly 70 km, with 55 stations, 18 kms of tunnels and 51 kms of viaduct.

Aviation

Airports in the UAE are investing more than AED46 billion in airport expansion projects which will increase their capacity from 33 million passengers annually at present, to 120 million passengers by 2008. The country’s airlines have placed AED200 billion worth of orders for new aircraft, of which Emirates airline alone accounts for AED110 billion. Dubai’s share of the total passenger throughput in the region is almost 65 percent. There is no question that the UAE’s aviation sector has played a significant role in the country’s current economic success. This is highlighted by the throughput at the air cargo operations at Dubai International Airport, which has witnessed remarkable geometric growth from around 250,000 annual tons in 1991 to 1 million tons in 2005, a little over 10 percent growth a year. If this trend continues, then by 2040 it could be handling, every day, what is currently being handled in a month! The UAE welcomes the further benefits that may come through greater liberalization in the air transport sector over the coming months and years. Transport has rapidly become a strategic priority. The objective is to make the UAE a major transport hub between Europe and South-East Asia. Accordingly, public funds were invested in developing port and airport infrastructure, airlines, and shipping companies and agencies. Passenger and cargo transportation have risen in importance over the last few years. According to the World Travel and Tourism Council, international visitor arrivals to the Middle East were 50 million in 2005 and are forecast to reach 90 million by 2016. UAE airlines (Emirates Airlines, Ittihad Airlines and Air Arabia) are updating their fleets and are capitalizing on the increased passenger demand by pursuing several strategies, including transportation options that focus on superior passenger experiences as well as options that emphasize affordability. At the end of the decade Emirates Airlines will have 150 aircraft transporting 33 million passengers to and from Dubai.

Airlines

Each emirate is fully responsible for developing its civil aviation; this partly explains the reason why the UAE has six international airports each of which is becoming a regional aviation hub connecting Europe and South-East Asia. The UAE’s aviation industry has advanced sizeable over the past few years, fuelled by considerable airport expansion in each emirate, as well as by the launch of five new airlines. Moreover huge aircraft purchases have been made by all the UAE’s carriers. The UAE civil aircraft registry contained about 110 aircraft in 2003, a number expected to double by 2013. Some 20 airlines were in operation in late 2005. One of the strategies that has led to the development of air transport services in the UAE is the use of the UAE territory as a land-bridge on intercontinental routes. Typically, bilateral air service agreements have been concluded with countries in Europe and Asia and UAE airlines have subsequently exploited sixth freedom rights, e.g. serving routes between European and Asian cities with a stopover in a UAE city. UAE airlines have also exploited fifth freedom rights on routes where available. As a result, certain UAE companies are now among the dominant airlines on the New Zealand-Australia route. There are no preferences for GCC carriers or companies in air transport. The UAE is an ICAO Contracting State. Gulf Air and Emirates airline are members of the International Air Transport Association (IATA).

Emirates Airline

Emirates Airline, which is fully owned by the Government of Dubai, currently flies to 87 destinations in 59 countries around the world. It operates from Dubai Airport, and since its creation in 1985 annual growth has never fallen below 20 percent. Emirates airline carried over 14.5 million passengers in 2005-6, and declared a record US$762 million profit. The airline also announced the largest order in commercial aviation history worth US$19 billion at the Paris Air Show in 2003. With 45 A380-800s on order, Emirates airline is the largest customer of the Airbus super-jumbo. Emirates current order book stands at 100 aircraft with a total value of approximately $US30 billion. Emirates Sky Cargo, the cargo division of Emirates airline, moved more than 660,000 tons of freight in 2003-04. Emirates airline has also purchased large shares in foreign air companies, such as Air Lanka in 1998. Emirates airline is not a member of the three major international airline alliances, but operates in code-share on a number of routes, notably with major U.S. airlines.

Etihad Airline

In July 2003, the Abu Dhabi Government launched Etihad Airways, fully funded and owned by the Abu Dhabi Government. The airline has grown at a phenomenal pace – adding one new route a month to reach a current total of 30 destinations. By 2010 the airline plans to touch 70 international destinations and in March 2007 launched its inaugural flight to Sydney Australia. Etihad has ordered 24 Airbus aircraft, including four A380s, and has taken options to purchase 12 additional aircraft; the total value of the agreement exceeded US$7 billion. The company won the World’s Leading New Airline of the Year Award in 2004, 2005 and 2006 and the World’s Leading Flatbed Seat Award in 2006. A cargo division was launched in late 2004. The Government of Abu Dhabi is a shareholder in several other aviation companies. Abu Dhabi Aviation, established in March 1976, is the largest commercial helicopter operator in the region, with a fleet of over 40 craft. It is 30 percent owned by the Abu Dhabi Government. The bulk of the company’s business is in support of Abu Dhabi offshore oil, engineering, and construction companies, but also includes offshore rescue services and the aerial application of agricultural sprays. The company has expanded its operations in recent years to other countries, including Oman, Yemen, Saudi Arabia, Spain, and Iran. Royal Jet, a luxury air charter service was launched in May 2003. It currently operates a fleet of four aircraft. A division of Royal Jet, the Royal Med service, attracts passengers travelling for medical assistance; the Royal Med air ambulance, equipped with state-of-the-art medical equipment, was launched in 2003. Royal Med now accounts for almost half of Royal Jet business. Royal Jet is a joint-venture, shared equally by Amiri Flight of Abu Dhabi and Abu Dhabi Aviation.

Air Arabia

Air Arabia, the Sharjah government-owned airline, commenced operations in October 2003 as one of the Middle East’s first low-cost services. The airline carried over 160,000 passengers in its first six months. Presently, it operates flights to 30 destinations in 20 countries within the Middle East and the Indian subcontinent. In November 2006, Air Arabia announced the operation of a new route to Armenia. The owners of the company are the Sharjah Department of Civil Aviation and the Sharjah Airport Authority.

The General Civil Aviation Authority

(GCAA) is a federal, autonomous body established by Federal Law No. 4 of 1996. It oversees all activities related to civil aviation and provides navigation services, registration, and licensing services for the UAE aviation industry. Companies wishing to conduct commercial air transport in the UAE must obtain an Air Operator Certificate from the GCAA. The GCAA proposes air transport policy general guidelines and relevant legislation to the Council of Ministers, and enforces international agreements and conventions. New foreign entrants are allowed into the market on the basis of bilateral air transport agreements. The UAE also signed open-sky agreements with the United States in April 1999 and with five other countries thereafter. However, the authorities have stressed that the UAE prefers an open tariff regime freely determined by the airlines. Cabotage is reserved for UAE carriers unless specifically authorized. “Wet” leasing of aircraft (with crew and, typically, fuel, maintenance, and insurance) by UAE carriers is not restricted to UAE companies or citizens. There are no nationality requirements for crews engaged in domestic or international air passenger and freight services. However, the GCAA has embarked on a nationalization programme since 1998. This has led to an increase in the number of UAE nationals serving in the GCAA, including in the Air Traffic Control Centre, and more generally in the Air Navigation Services directorate. According to the GCAA, this policy has resulted in 54 percent nationalization of the GCAA’s total personnel.

Airports

The UAE’s six international airports vary considerably in size and capacity. Dubai, the world’s 16th in terms of international passenger throughput, and 17th in terms of cargo tonnage, has become the main aviation hub in the Middle East. Abu Dhabi, 170 km away, is competing rapidly, thanks to government support and the new airline Etihad Airways, which is headquartered there. While air transport services are regulated at federal level, airports are run at the emirate level.

Dubai International Airport

Dubai International Airport in the city centre is one of the busiest in the region with over 105 airlines. This airport handled over 21.33 million passengers in the first nine months of 2006, an increase of 15 percent over the same period of 2005. Its rapid growth has been concomitant with massive expansion of the supporting infrastructure. In 2002 Dubai’s Department of Civil Aviation began phase two of an expansion programme estimated at AED9.25 billion which includes the construction of a third terminal and is aimed at increasing the airport’s capacity to 60 million passengers a year. Forecasts project the airport to be handling 70 million passengers per year by 2016. In the first nine months of 2006, Dubai Cargo Village handled 1.034 million tons of goods, as compared to 969,296 tons during the corresponding period in 2005 – an increase of 6.72 percent.

Dubai World Central Airport

Work started at Jebel Ali in February 2005 for the construction of Dubai World Central, another Dubai airport about 40 kilometers from Dubai’s city centre. When completed, Dubai World Central Airport with its six runways will be the world’s largest passenger and cargo hub capable of handling 120 million passengers. and 12 million tons of cargo annually. The new airport will be part of a new, self sustaining airport city which will over an area of 140 km2 and will offer accommodation, leisure and commercial centres for some 750,000 people. The project is designed to support Dubai’s aviation, tourism, commercial and logistic requirements until 2050 and the infrastructure alone is estimated at $32.3 billion. The Dubai Civil Aviation Authority controls and operates Dubai’s airports.

Abu Dhabi International Airport

Passenger traffic through Abu Dhabi International Airport grew by 28 percent in the first quarter of 2004 partly due to the launch of Etihad Airways. 5.4 million passengers passed through the airport in 2005 and more than 6.8 million in 2006. At present, 50 airlines operate from Abu Dhabi. Phase One of the current AED21 billion expansion programme will double passenger capacity to 20 million passengers a year by 2010 and ultimately to 50 million when the airport is finally completed. Abu Dhabi Cargo Village is competing to become one of the biggest cargo hubs in the region. Al Ain International Airport, Abu Dhabi’s second international airport is located in Al Ain and operates ten airlines. The Abu Dhabi Department of Civil Aviation owns and operates Abu Dhabi and Al Ain airports.

Sharjah Airport

Sharjah International Airport was the UAE’s first airport, built by Imperial Airwarys - the forerunner of British Airways - as a stopover en route to India. Passenger traffic through Sharjah International Airport jumped by 37 percent to 2.23 million in the first nine months of 2006 compared with the same period in 2005. The number of flights reached 31,815 and the volume of cargo reached 411,697 tons. It is a popular trans-shipment point, especially for inter-modal cargo arriving by sea and air-freighted onwards.

Ras Al-Khaimah Airport

RAK is also expanding its international airport to cater for the influx of Europeans that are beginning to discover the emirate as a new tourist destination.

Fujairah Airport

Fujairah Airport is also being expanded and has outlined an ambitious plan to increase its cargo capacity five-fold during the next five years.

Seaports and Shipping

The UAE has developed as a regional hub for maritime transportation and logistics. UAE ports handle large throughput to and from the region, and ship and boat building are emerging as strategic competencies. The much-publicized P&O acquisition will not deter Dubai Ports World’s expansion plans for horizontal integration.

Maritime Transport Services

The growth of maritime transport to and from the UAE has resulted largely from the development of Dubai’s Jebel Ali Port, a large and rapidly expanding deep seawater port infrastructure. The port has allowed the development of major shipping and transshipment activities as well as shipbuilding, repairs, and maintenance services. The UAE has been a member of the International Maritime Organization (IMO) since 1974. The UAE’s merchant fleet comprises shipping companies registered in the UAE and at least 51 percent owned by nationals. It ranked 31st worldwide at end 2001, with 3.1 million deadweight ton, and 180 ships; 42 were under the national flag and the rest under foreign flags. Some 85 percent of all tonnage transported to and from UAE ports was shipped under foreign flags. The total deadweight tonnage at end 2001 was composed mainly of oil tankers (41 percent), container ships (24 percent), and general cargo, including passengers (19.5 percent). Activity of bulk carriers is insignificant. The number of registered large vessels had increased to over 750 in 2005. Foreign flag vessels must have a contract with one of the federal or local governments to operate in UAE waters, and cannot carry out cabotage on their own account. This is designed to encourage local companies to register vessels under the UAE flag. Crews working on ships servicing territorial waters must have residency visas. Foreign companies must obtain approval in the form of a license. All ships operating in the territorial waters must be classed under one of the categories of the International Association of Classification Societies (IACS). In addition, foreign ships must not be older than 25 years, and local ships must have IACS approval issued within five years. The United Arab Shipping Company (UASC) is the largest container carrier to and from the Middle East. UASC was established jointly by the six GCC states, in July 1976. The share owned by the UAE Federal Government is 16.5 percent. A number of other domestic shipping companies are partly or fully owned by the Federal Government or by the governments of the emirates. These include ADNATCO, National Petroleum Construction Company, and National Marine Dredging Company (all three owned by the Federal Government); Itisalat and Delma Co-operative Society, owned by the Abu Dhabi Government; and Arab Maritime Petroleum Transport Company (in which the Abu Dhabi Government owns 9.1 percent, the Dubai Government, 9.1 percent, and nine other Arab countries have 9.1 percent each). The UAE shipping agency and freight forwarding market comprises numerous companies. The UAE is host to one of the world’s largest shipping agencies, Gulf Agency Company (GAC), based in Jebel Ali Free Zone since 2002. The company also supplies spare parts and various services to vessels worldwide. GAC is entirely private. The UAE has 15 large commercial ports (including oil terminals) with a total capacity of over 70 million tons. Dubai’s Jebel Ali Port, which handles primarily bulk cargo and industrial material for Jebel Ali Free Zone, is the world’s largest man-made port. The UAE’s ports export mainly oil and gas, but also raw materials and finished goods. Imports consist of intermediary and consumer goods, as well as a significant re-export trade to other economies in the Gulf region, East Africa, and the Indian subcontinent. The UAE ranks among the top five locations in the world for bunkering and other ship chandelling; and its ship-repair facilities and ship-building capacity are developing rapidly. As previously noted, port services are regulated at emirate level. Most port handling services, including crane lifting, loading, discharging, stevedoring and stowage, storage and warehousing, as well as pilotage, are supplied exclusively by the port authorities of each individual emirate.

Abu Dhabi

The marine terminals of Jebel Dhanna and Ruwais, Umm al-Nar, Das Island, Zirku and Mubarraz islands handle the bulk of the UAE’s crude oil and gas exports. They are owned and operated by the Abu Dhabi Petroleum Ports Operating Company. Port Zayed is Abu Dhabi’s main general cargo port, established in 1972. There are 21 berths for handling general cargo, including bulk cargo, Ro-Ro, project cargo, and petroleum products.  Expansion plans at Port Zayed envisage a two phase development of the port over 15 years, ending in 2013. Operated by the Abu Dhabi Seaport Authority until 2005, Port Zayed has been managed and operated by DP World as of the first quarter of 2006. The port’s affairs are controlled by the Abu Dhabi Finance Department. Certain activities can be supplied by private companies provided that one member of the company’s board is a representative from the Abu Dhabi Finance Department.

Dubai

Dubai’s ports, with over 100 berths between them, play a pivotal role in UAE trade, and increasingly in regional and world trade. Dubai Ports Authority (DPA) managed them until September 2005, and handled 5.15 million “twenty feet equivalent unit” (TEU) containers in 2003, the world’s seventh largest throughput, before a record growth of 25 percent in 2004. On 28 September 2005, the Dubai Ports Authority and Dubai Ports International merged into a single new global port operator – DP World. In addition, a new regulator – the Dubai Ports and Jebel Ali Free Zone Authority – was created to oversee the regulation of Dubai’s ports. DP World is fully owned by the Emirate of Dubai. It handles enquiries, cargo clearance, as well as manifest and cargo handling services, online. Registered users can view and pay duties online. Information on port dues and other fees and taxes for the Dubai ports is available electronically. Large outflows of FDI have taken place in port services. Dubai Ports International (now DP World) had recently made large investments in other ports, including abroad. DP World runs the port of Constantza in Romania. In December 2004, DPI purchased CSX World Terminals’ international portfolio, including the operations of Busan’s New Port in Korea, Hong Kong’s Asia Container Terminals, as well as port terminals in Australia and Germany. In January 2005, DPI announced agreements to take over operational management of Abu Dhabi and Fujairah ports. It also bid successfully to build and operate the planned international container transshipment terminal on Vallarpadam Island in India. DPI took over the management of the Djibouti airport in 2003. In early 2006, DP World purchased P&O of the United Kingdom for US$7 billion. (See www. dpa.co.ae)

Sharjah

Sharjah’s ports, Port Khalid, Hamriyah Port and Khorfakkan Container Terminal (KCT) on the east coast have a combined total of 35 berths. Khorfakkan is the country’s second largest container handling facility, and the main port for trade with Iran. Sharjah’s ports are under the Sharjah Port Authority (Sharjah’s Department of Seaports and Customs). Port operations are governed by the Port Act of 1977. In 1976, the Authority established the company Gulftainer to manage and operate the container terminals in Port Khalid and Khorfakkan. Gulftainer also owns one of the largest heavy transport fleets in the United Arab Emirates and a container repair company.

Ajman

Ajman Port, which also services Ajman Free Zone situated in the port, has eight berths designed to handle both container and general cargoes. Plans are under way to deepen the port. It has special facilities to handle cargoes of chemicals, waste paper, and fodder. There are also two dry docks to provide maintenance and repair services.

Ras Al-Khaimah

Cement, marble, and gravel from nearby quarries and factories are the main products shipped from Port Saqr in Ras Al-Khaimah, which is situated close to the major shipping lines and the Straits of Hormuz. In 2004, Ras Al-Khaimah Port Authority awarded the Kuwaiti firm KGL a US$45 million contract to build, operate, and manage its container terminal at Port Saqr for 21 years.

Fujairah

Bulk cargo tonnage of ships calling at Fujairah Port rose from 6.1 million ton in 2002 to 8.9 million ton in 2004, much of it in the form of bunker fuel. Fujairah is now one of the world’s three largest bunkering centers along with Singapore and Rotterdam. Fujairah Port’s container activity is operated and managed by DPI (since March 2005). Most other activities including bunkering continue to be managed by the Fujairah Port under a 1982 Ordinance. However, maintenance services are outsourced to companies such as Arab Heavy Industries Company, experts in the field of structural steel fabrication, tank and ship building, and marine services.

Chambers of Commerce

The Chambers of Commerce of the individual emirates are invaluable sources of information and assistance for all visitors to the UAE. They are also the primary source of business services for investors concerning commercial companies. Apart from Federal Law (No 8) of 1984, investors should also be aware of local laws regarding the issue of licenses, trade names and the types of companies that may be established. The Federation of United Arab Emirates Chambers of Commerce and Industry is the umbrella organisation for all the Chambers of Commerce and Industry in the country.

Abu Dhabi Chamber of Commerce

All natural and legal persons who exercise any commercial, industrial, vocational or professional activity in Abu Dhabi must join the Abu Dhabi Chamber of Commerce and Industry (ADCCI) which acts as a liaison between the business community and government as well as providing services such as company and trade registration (now online), training, information and liaison for UAE and foreign business people. In particular, ADDCI Businessmen’s Centre provides: general information on the UAE and Abu Dhabi Emirate; information on investment opportunities in Abu Dhabi Emirate and how to acquire trade licenses; extensive databases on industry and trade in the UAE and abroad; contact details of ministries, government and non government departments; legal references and resources; advice and consultancy; assistance with arranging appointments; meeting rooms; conference facilities and arbitration services. ADDCI has also instituted the Sheikh Khalifa Excellence Award, to encourage enterprises to develop plans and resources based on performance indicators. (Email: legal@adcci.gov.ae )

Dubai Chamber of Commerce and Industry

Dubai Chamber of Commerce and Industry (DCCI) has been entrusted with: researching and disseminating information, legislation and statistics relating to commerce and industry; provision of information on investment opportunities in Dubai; issuing and authenticating certificates of origin and other commercial documentation; overseeing qualities and standards of goods; settlement of disputes involving Chamber members through arbitration; the holding of economic and commercial conferences and participation in similar events inside and outside the emirate. DCCI’s International Business Club provides meeting halls, internet access, translation facilities, and telephone, fax and mail services. In February 1997 the Chamber set up Dubai Institute for Applied Studies. The institute provides professional education at various levels (Diploma, Senior Diploma and Masters) and also offers practical training and consultancy services. E-services are offered to the Chamber’s 60,000 members, and these include the issuance of certificates of origin, legal and arbitration services, commercial directory information, booking of chamber facilities, viewing and updating membership profiles, library and news and commercial events.

Chambers of Commerce in Northern Emirates

Sharjah Chamber of Commerce offers technical advice and assistance in the preparation of preliminary viability studies. Its Industrial Development Department provides assistance at the operational stage conducts market surveys and assesses the progress of any enterprise. It also recommends different business options and procedures. SCCI’s Data Bank contains information regarding local, regional and international business related activities, a worldwide directory of trade fairs and exhibitions, details on international chambers of commerce, business opportunities in Sharjah and elsewhere. SCCI has also introduced a new on-line information service network – the Sharjah Information Guide. It gives access to a wide scope of information – ranging from trade to tourism, from addresses to maps, from banks to bazaars. Ras Al-Khaimah and Ajman both have thriving Chambers of Commerce which offer full and helpful services to investors wanting to set up business in either of these emirates. Umm al Quwain and Fujairah are currently working hard to update the services offered  by their Chambers of Commerce and will shortly be able to give full on-line assistance.

Federation of UAE Chambers of Commerce & Industry

POB: 3014

Tel: 02 6214144; Fax: 02 6339210

Email: info@fcciuae.ae

Website: www.fcciuae.ae

Abu Dhabi Chamber of Commerce

POB: 662

Tel: 02 6214000; Fax: 02 6215867

Email: mohd.almehairbi@adcci.gov.ae

Website: www.adcci-uae.com

Dubai Chamber of Commerce & Industry

POB: 1457 Dubai

Tel: 04 2280000; Fax: 04 2211646

Email: dcciinfo@dcci.org

Website: www.dcci.org

Sharjah Chamber of Commerce & Industry

POB: 580 Sharjah

Tel: 06 5682888

Fax: 06 5681119

E-mail: scci@sharjah.gov.ae

Website: www.sharjah.gov.ae

Ajman Chamber of Commerce & Industry

POB: 662 Ajman

Tel: 06 7422177; Fax: 06 7427591

E-mail: ajmchmbr@emirates.net.ae

Website: www.ajcci.co.ae

Umm al Quwain Chamber of Commerce & Industry

POB: 436

Umm al Quwain

Tel: 06 7651111; Fax: 06 7657055

Ras Al-Khaimah Chamber of Commerce & Industry

POB: 87 Ras Al-Khaimah

Tel: 07 2333511; Fax: 07 2330233

Email: rakchmbr@emirates.net.ae

Website: www.rakchamber.com

Fujairah Chamber of Commerce, Industry & Agriculture

POB: 738, Fujairah

Tel: 09 2222400; Fax: 09 2221464

Email: fujccia@emirates.net.ae

Website: www.fcci.gov.ae

Health

The UAE ranks second among the Gulf Cooperation Council (GCC) states, after the Kingdom of Saudi Arabia, in terms of the number of hospital beds. The GCC ranks the UAE third after Saudi Arabia and the Sultanate of Oman, with regard to the number of hospitals. A high ranking on the UN Human Development Index reflects the success of the country’s efforts to provide a world-class health service for the UAE population. A sophisticated physical infrastructure of well-equipped hospitals and clinics has increased capacity from 700 beds in 1971 to over 7000 beds spread across 60 public and private hospitals. Most infectious diseases such as malaria, measles and poliomyelitis that were once prevalent in the UAE have been eradicated while pre-natal and post-natal care is now on a par with the world’s most developed countries. Infant mortality and maternal mortality rates have dropped remarkably and, according to the

Arab Human Development Report (AHDR), the UAE is one of two countries from the Gulf Cooperation Council (GCC) that have successfully maintained the maternal mortality rate at levels considered low by international standards. The new-born (neonate) mortality rate has been reduced to 5.54 per 1000 and infant mortality to 7.7 per 1000. Maternal mortality rates have dropped to 0.01 for every 100,000 in 2005, mainly because 99 percent of deliveries in the country take place in hospitals under direct medical supervision. As a consequence of this high standard of care at all stages of the healthcare system, life expectancy at birth in the UAE, at 78 years, has reached levels similar to those in Europe and North America. The UAE provides a high level of specialized health care at its medical facilities, including open-heart surgery and organ transplantation. Many of the new hospitals, public and private, offer advanced techniques such as ‘keyhole’, or minimally invasive, surgery, and interventional radiology. Up until recently, these procedures were only available abroad. Despite these major strides and the fact that the Ministry of Health’s budget has increased each year at an average of 4.5 percent, there is ever-increasing pressure on the country’s healthcare services. This is primarily due to the unprecedented growth in population, but other factors come into play, such as the burgeoning cost of technology. Another is that the role of the private sector has been limited to date: of the 7000 or so hospital beds available in the country, as few as 1000 beds are in private hospitals. The reason for this is that free, high-quality care and medicines have been readily available at government hospitals and pharmacies. Expatriates were also entitled to use Ministry of Health facilities for minimal fees on production of a health card which cost as little as AED300 (US$82) per year. This has put a heavy burden on public health care and prevented the development of private facilities. The introduction of compulsory health insurance is considered to be the best way forward, ultimately leading to more cost-effective and efficient services. Abu Dhabi’s new health insurance law (No. 23 for 2005), issued in September 2005, states that except in circumstances outlined in Articles 2 and 3, all foreign residents and their family members must participate in the emirate’s compulsory health insurance system, which applies to both public and private hospitals. The system is, however, optional for UAE citizens. The law obliges employers to enroll all employees, spouses and three children under the age of 18 in the health insurance scheme and employees are required to secure health insurance for persons sponsored by them, who are not covered by the employer. Emphasizing the need to ensure that quality and efficient health services are delivered to UAE nationals and expatriates, the Ministry of Health is also being restructured and streamlined, both at administrative and technical levels, to keep abreast with international developments and reinforce the private health sector. Hospital boards are being revitalized, regular hospital visits are being initiated and a UAE council for medical specialists is being put in place to upgrade the training of UAE medical personnel. The government is encouraging investment to enable the private sector to play a more significant role in providing health services.

Telecommunications

Emirates Telecommunications Corp (Etisalat) reported a 38 percent rise profits of 2006 to AED5.86 billion helped by robust mobile subscriber additions and improved operating efficiencies. A second operator builds capacity. The telecommunication sector in the UAE is one of the most advanced in the world. In the past few years, the sector has witnessed rapid growth in m-penetration (mobile penetration), which in February 2007 exceeded 130 percent of the population. In addition, e-penetration (internet penetration) has reached 50 percent, of which almost one in five subscribers uses broadband, both among the highest in the Middle East. Various initiatives to accelerate the advancement of the telecom sector have been taken by the UAE Government. These include the Federal law by Decree No.3 of 2003 and its Executive Order which initiated the telecom liberalization process and established an independent Telecommunications Regulatory Authority (TRA). The TRA is vested with powers to regulate a competitively sustainable telecom sector. The UAE was the first country in the region to introduce GSM mobile and the first to offer third generation (3G) mobile data services. To help maintain the country’s leadership position, the TRA has established a Telecommunications Development Fund, financed by licensed telecom operators, which will foster research and development in the UAE telecom sector. The UAE has reached one of the highest telephone penetration rates in the world in recent years. Mobile telephone penetration increased from 49 percent to 91 percent in four years and to over 130 percent by February 2007 (with 5.66 million cellular services subscribers). The number of fixed telephony lines has grown recently by about 4 percent per year, although the number of main lines per 100 inhabitants fell from 35 at end 2000 to 31 in February 2007. (1.2 million Subscribers), primarily due to population growth outstripping line growth. The double-digit annual growth rate of mobile subscribers is not slowing, suggesting that the UAE market is not yet at saturation level. The estimated number of Internet users is also increasing rapidly. Important institutional and regulatory changes have taken place, although the sole supplier remains the incumbent operator Etisalat, a 60 percent state-owned monopoly. Etisalat’s profits crossed US$1.6 billion in 2006, mainly spurred by the growth of cell phone services. Under the conditions in place currently, Etisalat pays the Federal Government a royalty of 50 percent of its total net profit. Etisalat offers fixed-line local calls free of charge within cities. During 2006, Etisalat witnessed a number of marked achievements in the local and regional arenas. Etisalat was ranked the best Overall Telecom Operator and best Customer Care Provider in the Middle East and North Africa. Additionally, Etisalat won the GCC Economic Award and the Middle East Customer Care Award. The introduction of its new corporate identity in May brought international recognition and earned it the International Design Week Benchmark Award.  Telecommunications services are among the few activities effectively supervised at federal level, by means of the Federal Law by Decree 3/2003 and the Executive Order No. (3) of 2004. The Supreme Committee for the Supervision of the Telecommunications Sector, consisting of four members appointed by Federal Decree, is entrusted with formulating and implementing the general 2006-10 policy on telecommunications services. The Supreme Committee is also responsible for issuing licenses to providers of regulated activities. The telecommunications law does not preclude other operators from being licensed, should the Supreme Committee so decide. A new Telecommunications Regulatory Authority (TRA) began operations in November 2004. The TRA is designed to facilitate the development of the country’s telecommunication and information technology infrastructure and services, in order to meet national, regional, and international objectives. The TRA is managed by a board of directors appointed by the Supreme Committee. The TRA has full authority for issuing and implementing regulations for telecom services and all licensed operators. It is also responsible for the management of the frequency spectrum, for establishing and implementing standards for type approval of equipment, and for national numbering policy. The TRA also has full authority on interconnection and price regulation. New prices for telecommunication services were set by Etisalat in 2005, subject to prior approval by the TRA. Cross-subsidization is subject to reporting obligations under the Executive Order. Licensees are obliged to “keep separate accounts for the licensed activities and to organize the financial subsidy exchange between these activities”. Appeal procedures are in place against TRA decisions made in connection with interconnection disputes. Providers of telecommunication services are required to ensure portability of numbers, and freedom of choice in the selection of suppliers of national and international connections. The only universal service obligation (USO) explicitly mentioned in the Executive Order is the provision of free-of-charge calls to emergency services. However, according to the authorities, it is likely that Etisalat would be obliged to provide additional universal services should the need exist in the future.  The TRA is required to prepare a national plan on the management of internet networks, to be submitted to the Supreme Committee for approval. Internet service providers require a licence (issued by the Supreme Committee) that specifies the conditions and standards for their activities. Etisalat is pursuing a strategy to invest abroad. The company has acquired green-field licences in Saudi Arabia (Mobily). Sudan (Canar), Egypt (Etisalat Misr), Tanzania (via Zantel) and Afghanistan, and has made investments in incumbent operators in Pakistan (PTCL) and West Africa (Atlantique Telecom). Etisalat Services is a new holding company for many of Etisalat’s most exciting ventures. EReal Estate, e-Facilities Management, e-marin, e-Academy, Ebtikar, EDCH and Yellow Page Directory Services now fall under this banner. Other activities such as Project Management could follow. Following its mission of extending people’s reach, the Corporation supports the nation and all levels of government by contributing to the advancement of education, social welfare, international relations, sports and culture. Etisalat works closely with government bodies in developing and implementing programmes aimed at enriching the lives of people in the UAE and the communities in which they live. Etisalat is involved with a number of organizations and initiatives that reach out to people in the UAE. These include significant cultural festivals, family events and tourist attractions across the nation. Emirates Integrated Telecommunications Company (du) invested AED328.64 million from December 2005 to 30 September 2006 to ensure the delivery of the exceptional quality services that are expected from the new telecom company in the UAE. Since third quarter 2006, du has continued to roll out its mobile network across the UAE, ahead of the commercial launch of its services. The company was adding the final touches to its infrastructure for mobile telecommunications and planning to offer mobile services across the UAE towards the end of 2006.

Education

The UAE Cabinet has approved a federal budget for 2007, in which Education will receive the largest allocation of AED7.11 billion. Education in the UAE is another success story. The UAE hosts the largest number of cultural and higher education institutions in the entire Arab world and is the most popular destination for students. Sharjah’s University City has become a point of pilgrimage for both educators and tourists alike. Although the UAE has achieved much in the field of education, there is a real awareness that constant updating of policy and continual investment in infrastructure is required to ensure that graduates are properly equipped to enter the work force and assist in the country’s development, to this end, the Ministry of Education has produced a policy document outlining a strategy for further educational development in the UAE up to the year 2020, based on several five-year plans. (www.education.gov.ae)

Emiratisation

The government plans to increase Emiratization of teaching staff in government schools to a level of 90 percent by 2020. However, over 40 percent of pupils currently attend private schools, some of which offer foreign language education which is specifically geared towards expatriate communities, usually preserving the culture and following the curriculum of the students’ countries of origin.

Education System

The UAE offers free education to all male and female citizens from kindergarten to university. There is also an extensive private education sector, while several thousand students, of both sexes, pursue courses of higher education abroad at government expense. Education at primary and secondary level is universal and compulsory up to ninth grade. This takes place in a four-tier process over 14 years, from 4 to 18. The UAE has established an excellent and diversified system of higher education. Citizens can attend government institutions free of charge and a wide range of private institutions, many with international accreditation, supplement the public sector. The country now has one of the highest application participation rates in the world. Ninety-five percent of all females and eighty percent of all males who are enrolled in the final year of secondary school apply for admission to a higher education institution or to study abroad. Prominent among the UAE’s universities are the United Arab Emirates University (UAEU) at Al Ain, and Zayed University (ZU) for women, which has campuses in Abu Dhabi and Dubai, governed by a single administration. The Higher Colleges of Technology (HCT) is a system of single sex campuses offering programmes nationwide. HCT, established in 1988, prepare nationals for professional and technological careers in both government and private sectors. Since their foundation, the colleges have grown significantly, with staff and students increasing by about 30 percent each year. The Centre for Excellence for Applied Research and Training (CERT) runs a countrywide continuing education programme for all nationalities. The programme has been designed for professional development and personal enrichment for people with an eye for continuing education. Many excellent private institutions also offer a wide range of tertiary-level opportunities and Dubai has announced that it is setting-up a multi university complex, Dubai Knowledge Universities (DKU), in pursuit of its aim to be the regional destination for international education providers. In addition to its higher level institutions, the UAE has several vocational and technical educational centers for those seeking practical training in their chosen careers. These include the Emirates Institute for Banking and Finance, the Abu Dhabi National Oil Company Career Development Centre, the Abu Dhabi Petroleum Institute, the Dubai School of Government, and The Emirates Aviation College for Aerospace and Academic Studies. Etisalat University College (EUC) provides higher education to UAE nationals, offering Bachelor of Engineering degrees in Communication, Electronic and Computer Engineering and a Master’s by Research. A PhD programme will start in 2007. This will be one of the first PhD programmes in Engineering to be introduced in the UAE. The first group Master’s Degree students graduated in 2006 with an impressive record of academic achievements. The newly-established Emirates Foundation is a public and private sector, nation-wide initiative to support creativity and innovation in science, education, technology, art, sports and health. The Foundation will manage a variety of endowment funds to foster and maintain educational institutions and centers of excellence in the UAE. The Technology and Research Endowment Fund is the first to be launched. Ultimately the Foundation aims to act as a forum for active interchange between the private and public sectors.

Special Education Needs

The Special Education Department of the Ministry of Education was set up to cater for children with special needs. One of the most successful ventures has been a self-financing farm run by physically and mentally challenged people, the Zayed Agricultural Centre for the Disabled. Sharjah City for Humanitarian Services has also been prominent in the care, training, education, and integration of the disabled in society. As well as providing for the educational needs of young people, the Government has undertaken an adult literacy programme in cooperation with the UAE General Women’s Union. The UAE is on its way towards achieving its target of full literacy within five years. The UAE also provides free primary and secondary education for those of its citizens who missed out on education during their childhood. The government is seriously considering introducing a free public education system for non-UAE nationals resident in the UAE according to an announcement made at the World Leadership Summit in Abu Dhabi in November 2006.

Labour Market

The people of the UAE are the least xenophobic on earth. There are no fears, apprehensiveness or doubtful attitude towards those who grace the country with their presence. The UAE is proud to have residents from 152 other countries. Some of them are now third generation. The UAE recognizes that sustainable development is only possible through the provision of employment for both nationals and expatriates alike. Construction activities do not fully create sustainable employment in the long run; neither does oil, which is a depletable resource. For this reason, the UAE is actively pursuing a diversification strategy into manufactured industries and services over the short and medium term.

2.15 (a) Employment and Labour Laws

The first draft of an amended federal labour law will be ready by end of August 2007 to meet the pace of progress in the country. The amended law will include an article that allows the minister to approve the formation of labour unions. The UAE values the expatriate labour force that has helped in building the country but workers who protest without one of three valid reasons may face deportation. Workers are allowed to protest over unpaid wages, poor living conditions and the lack of safety procedures. Protests for other reasons are considered a legal violation and proceedings may be initiated. The UAE does not distinguish between employers or workers on basis of nationality or otherwise. The constitution is one of the few constitutions in the world that expressly provides, “foreigners present in the UAE are entitled to the rights and freedoms and are subject to the correlative duties provided for under the respective international instruments or under conventions and treaties to which the UAE is a party”. The UAE is convinced that trade liberalization necessitates countervailing protection of vulnerable groups, facilitation of social dialogue and empowerment where needed, to strike a balance among competing interests of the various stakeholders. The Ministry of Labour (MOL) has already recommended to the competent authorities that workers should be allowed to form trade unions and to bargain collectively. The Council of Ministers of the UAE has approved these recommendations and a legislative bill is now being presented for enactment. In the meantime MOL has strengthened workers’ protection measures and revamped its entire procedures in order to make prompt fulfillment of workers’ rights by employers a precondition for entitlement to the services provided to employers by the ministry. The UAE government is giving special attention to Labour Laws and efforts are being undertaken to improve the conditions of workers. Resolving conflicts and disputes between companies and workers is an important function of the Ministry of Labour and new approaches and mechanisms are being introduced to achieve this goal. Monitoring of working hours, health and safety standards, medical care and other core labour standards are conducted through the following: 1. Field inspection of places of work in accordance with the ILO Convention 81/1947 ratified by the UAE. These inspections are random in full conformity with the ILO standards. 2. De-centralized worker friendly individual grievances complaint system. 3. Collective labour disputes resolution system.

Labour Laws are enforced as Follows:

Preventative and Pre-emptive measures: MOL undertakes administrative measures to prevent violations occurring through a system of an electronic track record of offending employers, holding performance bonds against employers, and compulsory audited reporting of monthly payment of wages and field inspection. Resolution of individual grievances: MOL provides a labour relations tribunal in each one of its 11 labour UAE offices endowed with the task of receiving individual complaints by workers and employers and amicably settling them. The tribunal has the power to summon parties, hear the case of the complainant and the defendant and issue its judgment. Resolution of collective labour disputes: MOL provides a mechanism for settlement of collective labour disputes in each one of its labour offices in the UAE. Litigation in the labour courts of the UAE: If either party does not accept judgment of the above-mentioned labour tribunal, the tribunal will refer the judgment creditor to the labour court which eventually issues a judicially binding judgment. Not a single company in violation of the core labour standards can avoid the penalties prescribed by the law.

2.15 (b) Human Resources (Tanmia)

The Emiratisation policy was introduced in 1998 by the National Human Resource Development and Employment Authority (Tanmia). This policy is an economic partnership between the government and the private sector and aims to increase the number of nationals employed in private sector activities. The targeted sectors were selected based on two principal criteria: the economic health of the industry and its importance to the country; and the availability of skilled jobs for nationals. In 1998, Cabinet Decree No. 10 was introduced requiring all banks, including foreign bank branches, to achieve 4 percent annual increases in their number of UAE staff from 1 January 1999. According to the authorities, banks have since made noticeable progress in recruiting UAE nationals, although not as many as required by the quota. In general, about half of the UAE jobseekers registered with Tanmia (foreigners cannot register) that subsequently secured jobs in the private sector were recruited by the banking sector. In 2001, the Government recommended that 5 percent of the employees of all insurance companies, including foreign companies, should be UAE nationals, and that the number of national employees should increase annually by 2 percent. This was made mandatory in 2003 by a Cabinet Resolution requiring an increase of 5 percent instead of 2 percent. According to the authorities, since the respective quotas were introduced, insurance companies have been mainly unable to increase the share of nationals in their staff. In 2004, a Council of Ministers’ resolution imposed a requirement that 2 percent of staff of “trade sector firms” that employ more than 50 workers be nationals. In late November 2006, the Labour minister told private companies that henceforth they should recruit UAE nationals as human resources managers and secretaries. This will create 21,536 jobs including 671 managers. Private businesses have been given 18 months to replace their human resources and personnel managers with UAE nationals. No more work permits for secretaries will be issued although foreign secretaries who hold valid labour cards will remain in their jobs until the end of their limited-period contracts or until the end of their labour cards, whichever is earlier. UAE nationals currently constitute less than 15 percent of total employment in the country. The Labour Ministry’s new emiratisation plan is meant to strengthen the recruitment of UAE nationals in certain jobs rather than in economic sectors. Emiratisation will now be on the basis of profession. The new rules are applicable to all private companies, regardless of the number of employees. Tanmia also offers training programmes for nationals to ensure that they have adequate skills to be hired by the private sector. In addition, the authorities of certain emirates have also developed programmes to encourage entrepreneurship among nationals through the creation of small and medium-sized enterprises (SMEs). These programmes offer a simplified application process, low interest rates, and favorable repayment terms.

2.15(d) Young Entrepreneurs

In line with its Emiratisation programme, the UAE believes that there is an overwhelming need to harness the entrepreneurial skills of the country’s brightest and best young thinkers. In 2002 the Mohammed Bin Rashid Establishment for Young Business Leaders was launched to nurture the domestic entrepreneurial spirit of the country’s youth. The Government has mandated that all Government departments complete at least 5% of their procurement activities through companies registered with the Establishment. Every year the Establishment organizes a competition to encourage the younger generation to develop business skills and creative thinking. In April 2007 this competition was held for the first time in Abu Dhabi’s Marina Mall. In 2005 Shell sponsored the international Young Entrepreneurs’ Organization (YEO) Conference which was held in Dubai.

2.15(c) Nationalisation of the Labour Force in the Private Sector

The UAE is, perhaps, the only country in the world where foreigners dominate the private sector. In almost all countries that allow immigration, foreigners are only allowed to take up jobs when suitably-qualified nationals are not available. Although it is recognized that expatriate workers will continue to play a vital role in the country’s economy, the authorities feel that the employment of non-nationals cannot be left unregulated. This explains the emiratisation programme and the quota system for nationals in certain sectors. The UAE is committed to a liberal investment climate and is exerting every effort to ensure that social policies for protection of vulnerable groups will not contradict those of free trade.

2.15(e) Labour Cities

In February 2007 Dubai Industrial City (DIC) announced the completion of its Base Metal Zone Labour City – the first of seven Labour Cities that are planned for construction at a cost of AED1.6 billion. The project is part of a master plan to provide affordable, self-contained accommodation with full commercial and leisure facilities within easy access of production centers. DIC plans to complete the construction of all eight cities by early 2008. When completed the Labour Cities will cover 14 million square feet and will provide almost 90,000 beds for supervisors and groups of workers.