The UAE is emerging as a model for economic growth, not only for the region but for the whole world, said Dr Thani Al Zeyoudi, Minister of State for Foreign Trade. Pawan Singh / The National
The UAE is emerging as a model for economic growth, not only for the region but for the whole world, said Dr Thani Al Zeyoudi, Minister of State for Foreign Trade. Pawan Singh / The National
The UAE is emerging as a model for economic growth, not only for the region but for the whole world, said Dr Thani Al Zeyoudi, Minister of State for Foreign Trade. Pawan Singh / The National
The UAE is emerging as a model for economic growth, not only for the region but for the whole world, said Dr Thani Al Zeyoudi, Minister of State for Foreign Trade. Pawan Singh / The National

Business

Economy

UAE seeks investment in various sectors to diversify economy

Country is encouraging investment in scientific research, logistics, health care, food security and renewable energy, says minister of state for foreign trade

Fareed Rahman
Fareed Rahman

October 19, 2021

  • English
  • Arabic

The UAE aims to attract investment in a number of new sectors to diversify its economy away from oil, the country’s Minister of State for Foreign Trade said.

“As the UAE strives to push forward its economic diversification agenda, we are encouraging investments in scientific research, logistics, health care, food security, manufacturing and advanced technologies, and renewable energy, among many other areas,” Dr Thani Al Zeyoudi told the World Investment Forum on Tuesday.

“Additionally, we are focused on driving innovation and empowering small businesses and start-ups by improving access to finance and encouraging public-private collaboration.”

The UAE, the Arab world's second-largest economy, is undertaking various measures to attract more FDI into the country. This year, it unveiled a new industrial strategy to boost the contribution of the industrial sector to Dh300 billion ($81.68bn) in the next 10 years from Dh133bn.

The country overhauled its commercial companies' law last year to attract more foreign capital and annulled the requirement for onshore companies to have an Emirati shareholder.

“The UAE today has all the makings of an ideal innovation hub complemented by advanced infrastructure and supportive legislative and regulatory frameworks,” Mr Al Zeyoudi said. “Through such forward-looking strategies, the country is establishing itself as a dynamic hub for advanced industries.”

The UAE economy is expected to grow 3.1 per cent in 2021, the International Monetary Fund said. That is higher than the Central Bank of the UAE's estimate, which projects the country’s economy will expand 2.1 per cent this year and 4.2 per cent in 2022.

“We are confident that our efforts in the current phase are key to strengthening the very foundation of our economy for the future by ensuring its ability to keep up with the sudden shifts in the global economic landscape,” Mr Al Zeyoudi said.

The country was “emerging as a model for economic growth … not only for the region but for the whole world”, due to its bold actions on the economic front, he said.

The UAE continues to attract investment in a number of sectors to boost its economy. The total foreign direct investments in the country surged 11 per cent in 2020 despite the pandemic.

The UAE climbed up in the inflow of FDI’s ranking to reach 15th position last year, Mr Al Zeyoudi said, citing the UN report. It also moved up six spots to 13th place in FDI outflow.

“These achievements can be attributed to many factors such as stability, modern infrastructure, effective economic policies and legislations, the UAE’s strategic location and open economy, free transfer of profit and revenues and assets, as well as a diverse modern tolerant society, among many others," he said.

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Family: I have three siblings, one older brother (age 25) and two younger sisters, 20 and 13 

Favourite book: Asking for my favourite book has to be one of the hardest questions. However a current favourite would be Sidewalk by Mitchell Duneier

Favourite place to travel to: Any walkable city. I also love nature and wildlife 

What do you love eating or cooking: I’m constantly in the kitchen. Ever since I changed the way I eat I enjoy choosing and creating what goes into my body. However, nothing can top home cooked food from my parents. 

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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.”

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Updated: October 19, 2021, 11:31 PM
EconomyUAE