Local, regional and international companies from the defence sector will be in the capital next week to showcase their latest technology as the industry looks to shake off two years of lower spending following the oil price slump.
Budgets in the region are expected to recover by 2019, according to consultancy IHS Jane’s, due to growing instability in the region.
The Middle East was the fastest-growing region in terms of defence spending between 2012 and 2014 but the near-halving of oil prices since mid-2014 dented military expenditure, the consultancy said.
The UAE ranked 14th globally with a US$19 billion defence budget last year, according to Jane’s. The UAE does not publish its defence budget.
The International Defence Exhibition and Conference (Idex) taking place in Abu Dhabi next week will feature a record number of participating local companies as the UAE beefs up its defence industry.
“The biggest participation is from the local companies, which represent a 17 per cent increase from 2015,” said Staff Major General Pilot Faris Al Mazrouei, the chairman of the higher committee organising Idex and Navdex, at a press conference.
About 125 local companies will occupy the biggest wing in the 13th edition of the biennial exhibition, which is being held alongside the fourth edition of Naval Defence Exhibition (Navdex), organisers said on Wednesday.
The biggest exhibiting company is Emirates Defence Industries Company (Edic), which is a joint venture between Mubadala Development and Tawazun Holding.
A total of 1,235 companies will take part, a 3 per cent increase on 2015. And in a 10 per cent increase on 2015, 57 countries, will be represented. Participating companies include Boeing, Lockheed Martin, Northrop Grumman, Raytheon, and Russia’s Rostec. More than 100,000 visitors are expected to descend on the Abu Dhabi National Exhibition Centre (Adnec), with the size of the event having expanded by 5 per cent to more than 53,500 square metres.
The last edition of Idex, in 2015, attracted more than 100,000 visitors and 1,200 companies, with more than Dh18.3bn of deals signed during the event.
The UAE is bolstering its local defence industry through an offsets programme and by awarding them an increasing number of contracts to help diversify the economy away from its dependence on oil.
Mubadala, Tawazun Holding and Emirates Advanced Investment Group agreed in 2014 to combine their defence services businesses into Edic to help develop the local defence industry.
Edic provides manufacturing, training, mapping, logistics, technology development and communications as well as maintenance, repair and operations services for air, land and sea platforms.
The UAE’s attempts to carve up a local defence industry is being emulated elsewhere in the Gulf, with Saudi Arabia setting its eye on having a local sector of its own.
Saudi Arabia’s 190bn Saudi riyal military budget (Dh186.06bn) for this year is 7 per cent lower than last year’s 205bn riyal actual expenditure.
Still, Saudi Arabia last year was the fifth biggest defence spender in the world, according to IHS Jane’s.
Saudi Arabia’s deputy crown prince Mohammed bin Salman told Al Arabiya TV in April the country planned to set up by the end of this year a holding company for the military industries that will be owned by the government and later floated in the kingdom.
Only 2 per cent of the kingdom’s defence spending is within its borders but that will rise to between 30 and 50 per cent, he said, without giving a timeline.
dalsaadi@thenational.ae
Follow The National's Business section on Twitter
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
La Mer lowdown
La Mer beach is open from 10am until midnight, daily, and is located in Jumeirah 1, well after Kite Beach. Some restaurants, like Cupagahwa, are open from 8am for breakfast; most others start at noon. At the time of writing, we noticed that signs for Vicolo, an Italian eatery, and Kaftan, a Turkish restaurant, indicated that these two restaurants will be open soon, most likely this month. Parking is available, as well as a Dh100 all-day valet option or a Dh50 valet service if you’re just stopping by for a few hours.
Ain Issa camp:
- Established in 2016
- Houses 13,309 people, 2,092 families, 62 per cent children
- Of the adult population, 49 per cent men, 51 per cent women (not including foreigners annexe)
- Most from Deir Ezzor and Raqqa
- 950 foreigners linked to ISIS and their families
- NGO Blumont runs camp management for the UN
- One of the nine official (UN recognised) camps in the region
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.”
Shipping%20and%20banking%20
%3Cp%3EThe%20sixth%20sanctions%20package%20will%20also%20see%20European%20insurers%20banned%20from%20covering%20Russian%20shipping%2C%20more%20individuals%20added%20to%20the%20EU's%20sanctions%20list%20and%20Russia's%20Sberbank%20cut%20off%20from%20international%20payments%20system%20Swift.%3C%2Fp%3E%0A
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
'Top Gun: Maverick'
Rating: 4/5
Directed by: Joseph Kosinski
Starring: Tom Cruise, Val Kilmer, Jennifer Connelly, Jon Hamm, Miles Teller, Glen Powell, Ed Harris
CONFIRMED%20LINE-UP
%3Cp%3EElena%20Rybakina%20(Kazakhstan)%3Cbr%3EOns%20Jabeur%20(Tunisia)%3Cbr%3EMaria%20Sakkari%20(Greece)%3Cbr%3EBarbora%20Krej%C4%8D%C3%ADkov%C3%A1%20(Czech%20Republic)%3Cbr%3EBeatriz%20Haddad%20Maia%20(Brazil)%3Cbr%3EJe%C4%BCena%20Ostapenko%20(Latvia)%3Cbr%3ELiudmila%20Samsonova%3Cbr%3EDaria%20Kasatkina%3Cbr%3EVeronika%20Kudermetova%3Cbr%3ECaroline%20Garcia%20(France)%3Cbr%3EMagda%20Linette%20(Poland)%3Cbr%3ESorana%20C%C3%AErstea%20(Romania)%3Cbr%3EAnastasia%20Potapova%3Cbr%3EAnhelina%20Kalinina%20(Ukraine)%3Cbr%3EJasmine%20Paolini%20(Italy)%3Cbr%3EEmma%20Navarro%20(USA)%3Cbr%3ELesia%20Tsurenko%20(Ukraine)%3Cbr%3EEmma%20Raducanu%20(Great%20Britain)%20%E2%80%93%20wildcard%3C%2Fp%3E%0A
