Profile:
Emirates: Ajman
Emirates: Ajman
Ajman, the smallest of the seven emirates of the United Arab Emirates (UAE), is witnessing a large influx of construction activities in the industrial areas, the port and Al Zora. Its ambition to play a significant role in the region's industrial, commercial and tourism sectors will continue to dramactically alter the emirate's landscape. The Ajman Free Zone has been a great impetus for industrial activity in the emirate due to its significant cost advantages and corporate benefits. Its strategic location at the entrance of the Arabian Gulf places it at the crossroads of both eastern and western markets. The emirate's lucrative real estate market is expected to continue to grow and prosper as a result of its appeal to local and foreign investors.
ISBN :1-90202339-82-7
ISSN (Online): 1756-6894
ISSN (Print): 1756-6886
TABLE OF CONTENTS
COUNTRY PROFILE
This section provides a quick overview of some facts about the country, its population, language, natural resources, geography, history and climate.
POLITICS
Political reform in the country has been proceeding apace with the first elected members of the Federal National Council (FNC) taking office. This has been widely viewed as the first step towards greater political participation. For the first time, women were allowed to participate in the FNC with Ajman accounting for two of the 30 women running for a position in the council. The country's constitution and the organic evolution of the government have allowed traditional consultation to work hand-in-hand with more contemporary methods. The introduction of e-governance has streamlined interaction between residents, businesses and the government and has allowed citizens to give feedback on proposed legislation. Through leadership, strong political ties in the region and generous development assistance to poor countries as well as efforts to encourage foreign investment through land progressive land ownership laws, the emirate is gaining a strong and positive reputation. Ajman boasts quick access to the airports in Sharjah and Dubai, as well as a free zone that allows 100% foreign ownership and competitive tax benefits.
This section includes interviews with Sheikh Ammar bin Humaid Al Nuaimi, Crown Prince of Ajman, and Sheikh Rashid bin Humaid Al Nuaimi, Chairman, Ajman Municipality. Anthony Harris, Director, Robert Fleming Insurance Brokers Middle East, and former British Ambassador to the UAE contributes a viewpoint on the history of Ajman.THE ECONOMY
The emirate is experiencing a rapid transformation with some of the highest growth rates in the UAE. The past decade has seen average annual GDP growth in Ajman of 11%. According to the emirate's chamber of commerce, GDP rose to Dh7.5bn ($2.04bn) in 2006, contributing 1.25% to the UAE's overall GDP in 2006. Ajman has benefited from its small size, which means individual developments can have a significant impact, as well as a strong surge in several key sectors - particularly tourism, banking, education, health care and industrial plants. Price increases in other parts of the UAE have begun to drive investors to look to Ajman for less expensive and more convenient locations. The Ajman Free Zone is the largest in the Northern Emirates and hosted 2115 companies at the end of 2006, an increase of 5.75% on the previous year. This growth has caused officials to relocate the free zone to Al Zora, where it will be part of a mixed-use development. Foreign businesses have been attracted by local political leadership, which has been very open to outside investors. There is no ban on foreign property ownership and business licences have been available to nationals and expatriates since October 2005. Ajman is located along the UAE's main transport links, both federally and internationally.
This section includes an interview with Sheikh Mohammed bin Abdullah Al Nuaimi, General Manager, Ajman Free Zone, and Rami Dabbas, Head of Real Estate Development, Ajman Development & Investment Authority (ADIA).
FINANCIAL SERVICES
Ajman's financial services sector contributed approximately Dh28.42bn ($7.74bn) to the UAE economy in 2005, the most recent year for which statistics were available. This nearly doubled the $4.03bn the emirate added in 2000. The fundamental factor for this growth, beyond the rise in oil prices and subsequent high liquidity and an increasingly diversified economy, has been a preference in the region to keep wealth and investment close to home. The banking sector in particular has enjoyed remarkable growth, which intensified dramatically starting in 2002. It has included the development of retail banking and initial public offering financing in addition to sustained low interest rates. The long-standing leader in the emirate's banking sector is the Commercial Bank of Dubai. With the opening of the Ajman Free Zone, the bank has been able to offer its complete range of services to many foreign institutions. This has resulted in growth of $13.61m in 2000 to $1.36bn in 2005. The insurance sector has also witnessed strong growth although penetration rates are still low. This is being partly overcome with the introduction of takaful, Islamic insurance, to overcome any religious uncertainties regarding insurance products. Growth in banking loans and insurance underwriting is expected to be driven by increasing economic development and population pressures, both of which look very likely to increase over the next three to five years.
This section includes an interview with Wamidh Al Jarrah, General Manager, Union Insurance.
CONSTRUCTION & REAL ESTATE
Ajman's place in the Middle East's $1.5trn construction boom is assured. In 2005, the emirate's property market was worth an estimated Dh3.5bn ($953.05m), according to transaction records. This acceleration arrives as conditions in the construction industry across the UAE are tighter than they have ever been. In October 2007, it was reported that the average price of building materials had gone up 20% from the previous year and that outsourced labour costs had gone up 30%. However, the emirate's ability to use local contacts and knowledge to get work done, as well as price caps on some materials, has helped to restrain these inflationary forces. In addition, cheaper and more liberal work permits in the emirate mean fewer problems with labour as has been seen throughout the rest of the UAE. Despite Ajman's advantages, challenges remain. One of the major concerns for developers is infrastructure, particularly in roads, electricity and other public services to keep construction projects running on time. However, the emirate remains a key destination for new investment in real estate and construction projects. The UAE has seen its population grow by nearly 75% in the past decade. As a result, new property laws have had to be introduced in order to accommodate nationals and non-nationals. Ajman has led the UAE in this respect, being the first emirate to offer 100% freehold rights to non-nationals in 2004. The real estate sector has a strong government presence in the form of three major developers controlled by the ruling family. Several private companies from outside the emirate are also entering the market. All of this has led to an increase in the mortgage market whose target customers are young families who are trying to purchase their first homes and cannot afford to pay rent on their existing apartments as well as making down payments on a new home. Land prices have sky rocketed from just $11 per square foot to as high as $100 per sq foot. By the third quarter of 2007, developers in Ajman had announced projects with total investments of approximately Dh80bn ($21.78bn), a remarkable figure considering the transactions market was valued at $953.05m in 2006, well up on the $118.81m seen in 2003. These projects are expected to add at least 65,000 units and are expected to become available between 2009 and 2012.
This section includes interviews with Nasser Chammaa, Chairman and CEO, Solidere; Sulyman bin Abdulaziz Al Majed, Chairman, Tanmiyat; and Omar Ayesh, President, Tameer Holding.
TRANSPORT & INFRASTRUCTURE
With a population currently growing at 18% per year and real estate investments worth more than Dh80bn ($21.78bn), current projects to improve the emirate's transport and infrastructure are increasingly important. Most of the current focus has been on the Ajman Port, improved road links to neighbouring emirates and a new state-of-the-art sewage and wastewater treatment plant anticipated to come online in 2009. The plant is a public-private partnership being constructed on a build-operate-transfer basis. The government initially owns 20% of the plant, gaining full ownership after 25 years. Because air conditioning is a necessity and places a heavy burden on the electricity supply, the introduction of district cooling that provides cooling from a central location to various locations has been introduced as an alternative. It initially met with some resistance due to high start up costs. However with electricity becoming an ever more precious commodity as greater demands are placed on the system, the technology is starting to catch on in Ajman, as well as throughout the rest of the UAE. Additionally, the municipality's planning department is making efforts to systemise and rationalise land use in the emirate for maximum economic benefit with an eye towards environmental sustainability. Despite recent updates to the Port of Ajman, which can now handle 3000 twenty foot equivalent units each month, competition with other, much larger, regional ports has left officials looking to relocate the port to a more advantageous location within the emirate.
INDUSTRY & RETAIL
The textiles industry has historically dominated Ajman's industrial profile but it is now on the wane. A shift in the last few years has attracted investors in the areas of chemicals and machinery production. In the area of chemicals, everything from plastics for retail packaging to perfume are being made. Steadily increasing investments have been made in fabricated metal, machinery and equipment operations in the emirate. Meanwhile, Ajman's industrial sector is evolving from a focus on low-skilled, volume-reliant products like textiles to higher-skilled and more value-added production. One additional area in which this is happening is the boat-building sector. Long a centre for traditional dhow boat building, the emirate is well positioned to take advantage of a new trend in leisure marine products - luxury yachts. With a high number of leisure boat builders, Ajman's yacht manufacturers have been able to meet local demand and develop a sustainable export market. With the possibility of 100% foreign ownership, repatriation of profits, no personal or corporate tax and a one-stop approach to bureaucratic concerns, the emirate's free zone is an appealing place to locate a manufacturing concern. Ajman's residents are hungry for additional retail offerings, which are soon to be at least partially sated with the introduction of the Dana Mall, a Dh400m ($108.9m), 150,000 square foot retail complex that is expected to be completed by the end of 2008.
This section includes interviews with Mohammed Abdulla Al Hmarani, Director-General, Ajman Chamber of Commerce and Industry; Abdullah Al Shaali, Chairman, Al Shaali Marine; and Obaid Ali Al Muhairi, Chairman, Arab Heavy Industries.
ENERGY
At present, the Federal Electricity and Water Authority (FEWA), which serves the northern emirates of Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah, operates six power generation and three water desalination plants. Work to increase capacity across the board is being undertaken with the major element slated to be located in Ajman, at the Al Zora power plant, which is expected to be completed by mid-2008. By global standards, energy consumption in the emirate and throughout the UAE are exceptionally high in per capita terms. Prospering businesses and real estate developments are creating a growing demand for power. The Abu Dhabi Water and Electricity Authority anticipates the demand for electricity will grow by 7% to 7.5% each year until 2012. Power and water are still sold well below market rates for UAE nationals. Due in part to low revenues, investments in capacity have not kept up with demand, leading to shortages. This has led to a need for rationing with some businesses having to rely on diesel generators. As a result, developers are looking more seriously at alternatives for high demand uses such as air conditioning. The use of centrally located chilled water used to cool buildings is catching on, despite initial resistance because of high start-up costs. The Ministry of Energy is keen to promote renewable energy sources and is currently gathering information for research projects.
TOURISM
Ajman's location within easy flying distance from key markets in Europe and Asia, combined with beautiful beaches, solid transport infrastructure and a warm and welcoming culture make the emirate an ideal vacation spot. With the busier and more crowded emirates next door, Ajman has become a place for holidaymakers to go to get away from it all with hotel offerings targeted more toward people looking for luxury and comfort. While there have been few high-end hotels available for people looking for a low-key holiday, this is slated to change in the near future with a number of five-star hotels being constructed along the Ajman corniche and elsewhere within the city. With hotel occupancy rates in the neighbouring emirates running at about 80%, the anticipated rise in the number of hotel rooms and hotel apartments is expected to provide welcome relief, particularly to business travellers. Another project, aimed at people looking for something with a more natural feel, the Al Zora project on the eastern side of Ajman Creek will provide an exclusive, integrated holiday and residential destination. Overall, Ajman is seeking to create an image for itself with a luxurious, exclusive feel.
This section includes an interview with Saeed Al Dahery, General Manager, Ajman Department of Culture and Information.
HEALTH & EDUCATION
The government has made primary, secondary and tertiary education free to UAE nationals at public schools. Beginning in the 2006-2007 school year, expatriate students were also permitted to attend state schools, albeit for a fee. Ajman has been successful in providing higher education and has worked hard to position itself to take part in the modern knowledge economy by fostering educational institutions and a first-rate teaching hospital. Two examples of the educational system's growth are the Ajman University of Science and Technologies, which was founded in 1988 and now has campuses in other emirates, and US-based Preston University. Between the two, they offer bachelor and masters degree programmes in engineering, computer science, business administration, education, foreign languages and fashion design, among others subjects. It is expected the emirate could grow enough to support three to five new universities and other higher education institutions. Like the rest of the UAE, the emirate offers free medical care for its citizens. The next year or so will see tremendous growth as investments are being made in a variety of publicly funded medical projects including expansion of the Sheikh Khalifa hospital and a new hospital at Masfout, as well as several clinics.
This section includes an interview with Thameer Saeed Salman, Vice-President, Ajman University of Science & Technologies.
THE BUSINESS GUIDE
This section is divided into two parts. The first covers the topics of accountancy and taxes and explains how the emirate encourages foreign investment. The second half is a review of the laws and regulations relating to consumer protection, corporate governance, property, arbitration and employment. Much of the information applies to both foreigners and nationals working and residing in the emirate.
THE GUIDE
This section includes an in-depth look at the Ajman Fortress, which is currently used as a museum showcasing the natural and social history of the region. The museum has information on various aspects of the emirate's history, from its involvement in ancient trade routes to an example of early air conditioning, which can be found in the barjeel, or wind tower. Also included are hotel listings, suggestions for things to do and see, useful numbers and vital facts for visitors.
