Dubai invests in ICT innovation

The UAE’s Cabinet declared 2015 the “year of innovation”. “We convene today in a 500-year-old castle,” said Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai and the prime minister of the UAE. “Our vision is setting the foundation to build a future that will be for hundreds of years to come.”

The government has backed up this message with planning and investment. Under the UAE’s seven-year National Innovation Strategy (NIS), which was launched in October 2014, all UAE federal government entities are required to dedicate a minimum of 1% of annual expenditure to research and development (R&D) projects. This is expected to push expenditure well above the Dh10bn-14bn ($2.7bn-3.8bn) currently spent on innovation in the UAE on an annual basis. Furthermore, a considerable number of private sector firms – including technology companies and entities carrying out business across a wide range of other sectors – have made plans to invest in NIS-related initiatives and projects in the coming years.

Local Initiative

A month after the NIS was announced, Dubai revealed its own innovation programme, the Dubai Innovation Strategy (DIS), a three-year plan made up of 20 individual initiatives with an initial budget of Dh4.5bn ($1.2bn). The DIS aims to boost R&D in renewable energy, transport, health, education, water and space, technology, hospitality, economy, government services and tourism. Since they were announced, the NIS and the DIS have progressed considerably, with a range of additional initiatives. For example, in July 2015 the Dubai Chamber of Commerce & Industry announced the establishment of the Dubai Innovation Index, which will rank private sector firms on various innovation-related metrics, and the Dubai Chamber Innovation Lab, an in-house business incubator that will be established in conjunction with the US-based professional services firm PwC. “Innovation in Dubai needs to come from new companies, including small and medium-sized enterprises (SMEs) and start-ups,” Andrew Horne, the general manager of Xerox in Dubai, told OBG.

Federal Plans

The NIS is a central component of UAE Vision 2021, the nation’s overarching, seven-year development plan launched in January 2015. The UAE ranked fourth in the MENA region and 47th overall on the Global Innovation Index, which is compiled by an international advisory board of business leaders. Under the NIS the federal government aims to improve this ranking. The strategy focuses on seven key sectors: renewable and clean energy, transport, technology, education, health, water and space. Furthermore, under the NIS the government is now working to streamline regulatory frameworks, boost investment in technology infrastructure and tailor investment incentives to meet the needs of SMEs, while increasing investment in the education sector. “Many students will have to be responsible for the creation of their own jobs in the future,” Vajahat Hussain, CEO at Amity Education Middle East, told OBG. “Therefore, fostering entrepreneurship should be one of the key roles of educational institutions.”

As of late 2015, work had progressed in all of these areas. For example, the UAE Space Agency, which was launched in 2014, has been busy over the past year, establishing working relationships with space agencies around the world and hosting the Global Space and Satellite Forum in May 2015. The agency hopes to design and build the Arab and Islamic world’s first unmanned Mars probe by 2021.

Dubai At The Helm

Under the DIS, meanwhile, Dubai aims to build on its long-standing reputation for technological development, as embodied in Dubai Internet City (DIC), which was formed in 2000 as the emirate’s first non-industrial free zone. Since then Dubai has launched a variety of other knowledge-based free zones, including Dubai Media City and Dubai Knowledge Village. According to Mohammad Al Gergawi, the minister for Cabinet affairs and Future, and the chairman of Dubai Holding, the emirate’s investment vehicle, as of the end of 2014 more than 70,000 people worked in Dubai’s non-industrial free zones at more than 4500 companies in total.

Growth Plans

To build on this success, TECOM Investments, which manages DIC and is 100% owned by Dubai Holding, has announced a range of new projects, including an innovation hub at DIC and the launch of both a new start-up fund and start-up competition. Over the next decade TECOM aims to attract an additional 30,000 knowledge and creative workers to its free zones, lifting the total to around 100,000. The company also hopes to bring an additional 10m sq feet of leasable office space to the market, up 166% from the 6m sq feet currently in use, and to attract another 5500 new businesses to set up shop in Dubai, more than double the number of firms currently registered in TECOM-managed free zones.

In March 2016 a new free zone was also announced which is set to be the biggest of its kind in the world. The 550m-sq-ft Wholesale City is projected to cost Dh30bn ($8.2bn) to develop over the next 10 years. The zone is being developed with wholesalers’ needs in mind, with logistics support and exhibition facilities in one location, augmented with smart services.

Incubation Centre

In late 2014 TECOM announced plans to build the DIC Innovation Hub, which will occupy 1.6m sq feet and could eventually house as many as 15,000 new workers. It will likely have much in common with the in5 Innovation Centre, a business incubator established in May 2013 by DIC. Currently housed at the Dubai Knowledge Village, in5 offers support for entrepreneurs from the earliest stages of idea generation and development through to bringing a product or service to market.

Specifically, in5 helps entrepreneurs register a business, acquire proper paperwork, seek funding from angel investors or venture capital firms, and facilitate production and shipping. The centre also operates a co-working space, where it hosts regular training and networking events with industry specialists. In its first year of operation, in5 received over 500 applications from entrepreneurs and start-ups. The incubation centre shortlisted 77 of these applications, and 48 were eventually accepted as members.

Fresh Ideas

The scheme has already supported the development of innovative young companies. For example, Crowd Analyzer, an online service that allows businesses to track their popularity across Arabic-language social media content, has garnered attention from The Wall Street Journal and Bloomberg Businessweek. Marhababy, another in5 member firm, distributes boxes of products to new and expectant mothers across the UAE. With in5 assistance, Marhababy secured long-term marketing agreements with a variety of baby product manufacturers. Finally, in5 member FishFishMe helps fishing enthusiasts book charter boats online in nearly 40 countries.

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The Report: Dubai 2016

ICT chapter from The Report: Dubai 2016