First Media e-Session with the UAE Prime Minister (2nd add)Apr 18, 2009 - 07:46 - WAM x x x acceptance.
By Thabet Amin Awad of Al Ahram Egyptian newspaper Q: There is no doubt that good planning is one of the key factors behind the success of the UAE, backed by the close monitoring of the ongoing challenges and opportunities. In your plans, what are the challenges that you foresee? What is the country's level of readiness to address them? A: Humans face challenges throughout their lives. Through commitment to proper planning of projects and programmes, and following up on their implementation, challenges can be successfully addressed. It is also crucial to anticipate challenges without ignoring any possibility. Yet, there are some unforeseen challenges that originate remotely but influence us -- as in the global financial crisis that erupted in the United States and spread to the economies of developed countries and the rest of the world. One must be prepared to effectively deal with the implications of such challenges to one's country, economy and security. We, in the UAE, are aware of the challenges that we face and are always prepared for the worst, and are also willing to face whatever unforeseen developments regardless of their magnitude and impact.
Q: You have always stressed that the main challenge facing the Arab world, is that of the development of human resources in the knowledge era. Do you believe that the current education systems are equipped to prepare a new generation that is able to face this challenge and How? A: I am not in a position to assess the efficiency of the Arab educational institutions. But a common concern across the Arab world is the poor education systems at both school and university levels. The international rankings of the Arab universities are unsatisfactory to both the keen learners as well as the academic institutions.
Yes, the main challenge facing the Arab world is the challenge of human development in the era of knowledge. Without the development of strong education systems, we will not easily achieve the desired development. Despite the importance of the state's role in the development of education, the development effort is the responsibility of society as a whole; the State must lead these efforts and involve the broadest segments of society. Isn't strange that we approach the second decade of the third millennium with the average percentage of illiteracy in the Arab world more than 30 percent? Q: Amid the growing global crisis and in the latest G20 summit, many were demanding a re-consideration of the global economic system, and declaring the failure the entire system of capitalism. Would the United Arab Emirates -- with its regional and international reach -- consider a new financial direction, such as the Islamic banking system as a substitute, even temporarily, to the current global economic system - which is currently deteriorating? A: The United Arab Emirates, on its own or through the GCC, the Arab League and the specialized international institutions, plays an integral role on this front. The capitalist system did not fail. What has failed is the excessive economic liberalism, which pushed to minimize the intervention of the regulatory government institutions in the markets and banks' activities.
Certainly the world is witnessing the birth of a new economic and financial order. The results of the G20 summit are a prelude toward this end. However, consensus on the format and the content of this new global economic system would not be reached soon. Different factors determine the future of this system, including growing global competition and conflicting national economic interests. No party would easily give up its position and gains for the benefit of the global economy recovery.
As for the suggestion on the Islamic banking, it is of interest to the global banking sector. However, to be a substitute to the current economic systems, even if only temporarily, is a much more complex approach, which relates to the nature of economic systems, the size of the economies of nations, and the size of Islamic banks in the banking sector worldwide. As you are aware, there are a lot of factors that govern this, such as the distribution of the economic, military, scientific and social powers in the world, as well as the competitive nature of civilizations, and the strong links between the civilizations and religions.
Q: There are many other positive aspects of the global financial crisis which were embodied in refining the current competencies, reviewing the need for expatriate expertise, and strengthening the bonds of the federal entities that supported the UAE. In your opinion, what are the lessons learned from this crisis both on the local and federal level? A: There are many lessons to be learned from the crisis, the most important one being the assertion of the state's role in regulating and monitoring the overall economy and markets, and confirming the fact of the global economy's unity, in addition to the unification of the global market. The widening scope of the crisis, which includes all parts of the world, confirms this unity and the common international pursuit. In addition, President Obama's public statement, which verifies that the United States cannot overcome the global crisis on its own, is further confirmation of the unity of the economy and the market. Other lessons learned from the crisis is realizing the urgent need to develop the regulations, terms of reference and working mechanisms of international financial institutions to be commensurate with the unified markets and economies, and the involvement of many influential players.
In the United Arab Emirates, we perform a wide range of reviews through specialized federal and local committees which are well aware that within the challenges of the crisis, remain many opportunities. The first opportunity to be seized is to benefit from the lessons learned from the crisis, and be prepared to deal efficiently with the world after the crisis; a world completely different than what it was before. As for the forces of federal entities, the fact is that the strength of these entities is what enabled them to cope with the crisis and contain its negative effects.
Q: You have said that "our vision is clear, our goals are obvious, our strengths are great, our will is strong and we are ready. We want Dubai to be a global center of excellence, creativity and leadership, and we are able to achieve excellence, creativity and leadership." Do you still stand by your vision? If yes, how so? A: Yes, we still stand by it. Plans, programs and projects may alter, but the vision does not change. We want the UAE and Dubai to be a global center of excellence, innovation and leadership, and we are indeed on the rightful road. You ask how? I tell you: the global financial crisis is a challenge we have faced and surpassed in its most difficult stages. We are insistent on developing the education and obtaining excellence in all our projects and our work, in addition to protecting our favorable environment for innovation and leadership. What we have achieved over the past 10 years is characterized with excellence and leadership, and we are capable and determined to achieve what is more excellent, innovative and prominent in the future.
AL ITTIHAD Q: Your Highness, you asked the Ministry of Finance last year to prepare the federal budget of the State 2009. The early announcement prior to the global economic crisis has resulted in a deficit-free budget. Would the global crisis have implications on the 2010 budget, particularly with regard to the basic needs of Emirati citizens? A: In the last three years, the federal budget was issued early and before entering the new fiscal year. The submission of the budget for 2009 without a deficit is because its main provisions have not been affected by the global financial crisis. I also do not think that 2010 budget will be affected. We still have seven months for the year to end, and in my opinion this is quite a long period -- we may see by the end of it some positive indicators that would help in accelerating the recovery of the global economy.
Q: There are those who say that the senior positions in Dubai are granted to a few selected people, which is described as the phenomenon of the "Super Man." How would you comment on this? A: My answer is that all positions are available to competent Emiratis and we are very keen on rejuvenating our system. The "Super Man" phenomenon that you are talking about does not exist in our organizations and institutions. I am aware of those reports but would invite you and others to conduct a search within those senior positions to discover the truth on your own.
Q: In light of the global crisis some companies announced the postponement and rescheduling of some projects. What is the status of the infrastructure projects undertaken by the government subsequent to the changes in the strategic plans? A: We will continue working on the infrastructure projects without any delay. What is currently under implementation will be completed, while we will re-schedule the new projects. The changes of the strategic plan will be announced as soon as the committee finishes reviewing them. Plans are always subject to change in normal times and in times of crisis.
By Al-Khaleej Daily Q: Despite the competitive investment environment enjoyed by the UAE, with its advanced regional advantages, there are some aspects of the legislative environment that do not quite match the levels of development and state of the national economy. Do we expect any updating of the present laws, soon? A: The economy is like a living being, whose demands and needs change with constant growth and development. Though we realize this fact, the Council of Ministers has lately decided to establish the Emirates Council for Competitiveness. Its task is to develop strategies and suggest policies and legal frameworks that can support the competitive environment in the light of local, regional and international variables. These frameworks serve the objective of comprehensive development, and protect the Emirates position among the most competitive states on the international arena.
The Council consists of a number of ministers concerned with this question. It is headed by the Minister for Cabinet Affairs, and includes the Ministers of Economy and Foreign Trade, Education, Labor, Health, the Minister of State for Foreign Affairs, and for Financial Affairs. In addition, there are seven representatives of administrative boards in the local governments, the chairman of the Union of Trade and Industry Chambers in the State, Directors of Trade and Industry Chambers in Abu Dhabi and Dubai. We are confident that the Council is able to draw strategies and legislative frames to secure the desired development of the competitive capacity of the UAE.
By Ro'ya Al Iqtesadiah newspaper Q: In the first quarter of this year, accelerating economic events have generated pessimism about the future of the global economy and its growth. There are conflicting reports in the assessment of the national economy, and we read some of the studies questioning the continuation of Western-style development plans and their future in the region in light of declining oil prices and the global crisis. What is the assessment of Your Highness on the national economy today, can it be maintained at the level of growth in the light of the retreat of oil prices? What is the policy that the UAE will use with regard to the latest developments of the global financial crisis? A: Our economy is strong and its potential lies in its great diversity. The proportion of oil in the UAE's GDP is less than 30 percent, and this reduces the impact of oil price fluctuations on the national economy. I agree with you regarding the presence of many pessimistic reports on the world economy, but it's an exaggerated and unrealistic pessimism. Countries with the largest economies are seriously committed to rehabilitating the economy, while the summit of the Group of Twenty came out with encouraging results after meeting in London recently. Our hope is to commit ourselves to the implementation of all decisions. In fact, the negative vibrations will decrease, and will be substituted by cautious optimism. As for the levels of growth, few states in the world are likely to maintain high levels of growth recorded in recent years. We in the UAE will achieve economic growth rates lower than those recorded in previous years.
Q: Attracting foreign investment was among the priorities of the UAE. Today, the "flight of foreign investors" from the UAE is widely discussed in the media, and is supported by both local and official reports. Does Your Highness really think that our national economy's dependence on foreign investment leads to future risks? In the frequent talk about the global financial crisis, does Your Highness have new plans to strengthen, develop or restore foreign investments to the country? A: We cannot use the term "flight of foreign investors" because there has been no "flight." What happened exactly is the drought of liquidity across the world immediately after the collapse of the American investment bank, Lehman Brothers, which marked the beginning of the global financial crisis. However, with this drought, the compilation of available sources of liquidity became the primary concern of investors, banks, and financial institutions throughout the world. Sizeable withdrawals, deposits and liquefaction of all financial centers occurred in the capital markets in the world.
With regard to your point that the attraction of foreign investment has been among the priorities of economic mobility in the UAE; it is an inaccurate assumption. Investment plans have no limits or boundaries. There are foreign investments in the UAE, and the UAE in its turn has countless investments in many regions of the world. Investments imply promising opportunities in a favorable environment. This is what attracted foreign investment to the UAE, and the investment environment remains favorable in the UAE; the opportunities are still promising, and the UAE is still the most important regional center for business and international trade. Today, it is more promising than ever before, and the advent of smart investors to the UAE has not stopped.
Q: "Security and profit" are two very important concepts for the investor, and it is known that the UAE has been a breeding ground for the development of capital in recent years. This was reflected on the arrival of the most prominent businessmen, major companies and famous brands to the country. The active UAE financial market contributed to the success of many companies, which turned into public joint stock companies, with billions of dirhams having been pumped into their capital. This means that thousands of investors were involved in the ownership of shares. Recently, however, we have witnessed legal and financial issues involving prominent names of UAE nationals. What do Your Highness have to say with regard to the investment community in the UAE on the capacity of governmental oversight of corporate governance and management of the shareholders and their rights? A: These legal issues are evidence of firm government concern about good corporate governance and its commitment to sound accounting principles, rules of governance and transparency. The government is constantly working to develop bodies, procedures and safeguards. No one is above the law in the UAE, and whoever crosses the line will be sought by judicial authorities and legally tried.
Q: In light of the talk about the scarcity of liquidity in the domestic market, Dubai US$20 billion in bonds. Central Bank is subscribing to $10 billion of those bonds. Officials of the Emirate stated that there is no current need for the rest of the money. Does this mean that the Government of Dubai has closed the doors for new subscription to a second tranche? Will support be provided by the Government of Dubai for the companies as a grant? A: The doors to subscription have not been shut down. The subscriptions so far meet our requirements. The support given to companies is not a grant, because its origin is the bill, and companies possess productive assets that enable them to meet all the requirements. The problem of these companies is part of the liquidity problem that has afflicted the financial system and banking world.
Q: Looking at the entities that will avail from Dubai government's financial support, can we say that Dubai government affiliate companies have overestimated their financial capabilities to cover development requirements, then subsequently their administrations became responsible for the level of these companies' transparency in handling their projects? A: The global financial crisis took all countries by surprise and was much bigger than any economy or large companies across the world. It is not really helpful for anyone to claim wisdom in hindsight. Learning the lesson well is the true bottom line of this crisis. I have always repeated that only the one who works is one who is likely to commit errors. But the most important thing is to learn not to repeat the same error twice. Definitely gaps that may be revealed through current reform efforts will be immediately addressed and rectified.
Q: Your Highness, you have put Emiratization on top of the country's development priorities. Over the years, the UAE population has grown significantly to the extent that expat residents have become absolute majority. Meanwhile, number of private sector companies has significantly increased as well. How do you see this impacting the UAE nationals' job opportunities? Do you believe it might be necessary to expand the Emiratization plan to cover a larger portion of the private sector companies? A: The Emiratization plan is primarily based on training and qualifying UAE nationals, equipping them with all necessary tools and competencies and supporting them to confidently compete in the job market. I am positive that most of the private sector companies prefer to recruit UAE nationals as part of their Corporate Social Responsibilities. Also salaries of UAE nationals - however high they may appear to be - are far less than those of expats. Employing a UAE national will open the door for more interaction with government departments and local customers, who are eventually the highest spenders. If some companies fall short of their responsibilities toward the local workforce, then the government will intervene through a set of measures and incentives to encourage these companies to live up to the expected level of responsibility.
Q: Many countries have applauded the UAE's hospitality and praised the level of respect it shows to the expat communities and the freedom it offers them to lead their business and social lives in perfect ease. This encouraged many expats to reside in the UAE for long period of time, evolving the same habits and traditions of the local community as well as significant loyalty to this country. Some of those expats felt optimistic about recent announcements made by some real estate companies that property buyers in certain projects in Dubai or Ajman will be offered "permanent UAE residency." Other companies have completely closed the door of speculation regarding the same issue. How does the government perceive the "Permanent Residency" promise? And are there any eventual plans to adopt it in the UAE? A: Offering residency is absolutely far beyond the jurisdiction of any real estate company. It is a sovereign issue governed by laws and regulations. But I wonder if one buys property in London, Paris, Cairo, or Beirut does this mean obtaining a permanent residency there? We are very keen to ensure convenient conditions for expat property owners. However, we will be issuing a new law that includes a long multi-visit permit soon.