Boeing, the world's largest aircraft maker, has a "historic window of opportunity" to boost its military business in the Middle East and Asia-Pacific as countries such as the UAE upgrade their defence systems, the company says.
The aerospace giant is seeking to increase international defence sales within its overall defence business from 18 per cent last year to 25 per cent by 2013, at a time when it faces incremental growth in the US.
GCC states, as well as India, Japan and Australia, are among countries leading the way, with heavy investments in military aircraft programmes.
"Right now we see the Middle East and Asia-Pacific in a recapitalisation phase, and there is a historic window of opportunity where they are looking to upgrade and procure new capabilities," said Chris Chadwick, the president of Boeing Military Aircraft.
The UAE is set to become the world's third-largest operator of Boeing C-17 heavy lift military transport aircraft, after the US and UK, with deliveries for six planes starting this year. "We will deliver four this year and two next year," Mr Chadwick said.
The aircraft will give the UAE Armed Forces an added measure of mobility at a time when it is beginning to flex its muscles regionally in peacekeeping, anti-piracy and humanitarian missions. In the past two weeks, the UAE has sent 12 fighter jets to join Nato and Qatar in enforcing the no-fly zone in Libya, and successfully deployed special forces off the coast of Oman to rescue a Dubai-bound ship from pirates.
According to US congressional notifications and industry estimates, Boeing is in line to earn up to US$11.4 billion (Dh41.87bn) of orders for equipment, long-term logistical support and training from the UAE, Qatar and Kuwait on pending and recently closed aircraft sales.
That includes a proposed sale of one C-17 to Kuwait with long-term support of the aircraft; the sale of two C-17s to Qatar with long-term support and training; and the six C-17s for the UAE.
The UAE is also considering buying 16 additional Chinook military transport helicopters and 30 Apache attack helicopters from Boeing.
Catering to the UAE's desire to forge industrial partnerships with its contractors, Boeing is also in negotiations for a wide-ranging alliance with Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.
In Saudi Arabia, Boeing is also expected to win the lion's share of an estimated $60bn of arms deals with the US that includes F-15 fighter jets as well as Little Bird and Apache helicopters.
Boeing has also provided the UAE with information on its F-18 fighter jet, although company officials stopped short of calling it a formal request.
The company has been encouraged by its progress in establishing relationships with emerging nations that had not previously purchased western military aircraft.
Boeing has established a foothold in Qatar's defence market by selling the two C-17s and is positioning itself for a new fighter jet campaign there. It opened its first office in the country in December.
India and Brazil are also important emerging markets. "Five years ago, we did not do business in India from a defence perspective," Mr Chadwick said.
Now Boeing is in line for a potential $5.8bn order for 10 C-17 aircraft from India, and its F-18 is one of six finalists for one of the biggest prizes in global aerospace - a contract for 126 fighter jets worth an estimated $10bn.
"This is an exciting historic time frame for international engagement," he said. In addition to existing international customers, Boeing has "new emerging markets like India and Brazil, where they would really like to move to western technology", Mr Chadwick said. "We believe we are very well positioned for that."
igale@thenational.ae
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Essentials
The flights: You can fly from the UAE to Iceland with one stop in Europe with a variety of airlines. Return flights with Emirates from Dubai to Stockholm, then Icelandair to Reykjavik, cost from Dh4,153 return. The whole trip takes 11 hours. British Airways flies from Abu Dhabi and Dubai to Reykjavik, via London, with return flights taking 12 hours and costing from Dh2,490 return, including taxes.
The activities: A half-day Silfra snorkelling trip costs 14,990 Icelandic kronur (Dh544) with Dive.is. Inside the Volcano also takes half a day and costs 42,000 kronur (Dh1,524). The Jokulsarlon small-boat cruise lasts about an hour and costs 9,800 kronur (Dh356). Into the Glacier costs 19,500 kronur (Dh708). It lasts three to four hours.
The tours: It’s often better to book a tailor-made trip through a specialist operator. UK-based Discover the World offers seven nights, self-driving, across the island from £892 (Dh4,505) per person. This includes three nights’ accommodation at Hotel Husafell near Into the Glacier, two nights at Hotel Ranga and two nights at the Icelandair Hotel Klaustur. It includes car rental, plus an iPad with itinerary and tourist information pre-loaded onto it, while activities can be booked as optional extras. More information inspiredbyiceland.com
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
