Describe the role played by the private sector in terms of attracting international investment.
YOUSEF AL NOWAIS: A healthy private sector is fundamental for economic development and essential for attracting international companies to the emirate. The fact that foreign firms choose to stay in Abu Dhabi for many years after doing business gives an indication of the high standards of the local private sector, supported by a business-friendly environment developed by the government. Indeed, the authorities have made significant progress in this regard; for example, by developing advanced logistics systems through infrastructure investment.
The private sector has evolved over the past years, and has proven itself to be efficient and robust, even during a period characterised by volatile oil prices. This, in turn, has had a positive impact on government spending. The resilience of the private sector has proven crucial to overcoming the challenges faced in recent years and, now that global economic conditions are improving, the private sector will once again play a fundamental role in increasing foreign direct investment (FDI) in Abu Dhabi. In addition, Mubadala has successfully closed deals with top international firms in various areas of the economy, including aviation, machinery and defence.
As the emirate continues to pursue its economic diversification agenda, how are private and public stakeholders working to channel FDI flows into strategic growth sectors?
AL NOWAIS: A great number of countries in the Middle East are making efforts to diversify their economic portfolio and move towards a knowledge-based economy. Recently, there has been greater emphasis on attracting FDI to sectors such as infrastructure, communications, health and education in Abu Dhabi. Attracting investment to strategic sectors that are less prone to business cycles ensures greater economic robustness and provides greater leeway to manage the ups and downs in the market. In addition, as a result of population growth in Abu Dhabi and the broader UAE, more job creation is needed to ensure a healthy labour market.
The government is doing an important job in providing the right incentives to promote private sector investment and create a diversified economy. Furthermore, the government is encouraging greater collaboration between the public and private sectors in areas such as education. This is particularly significant, given that education is the backbone of any country, if you fail to provide high-quality education the economy will inevitably suffer in the long run.
How can the local business community be encouraged to innovate, and invest more in research and development (R&D)?
AL NOWAIS: In order for any country to be competitive in a globalised world, an important share of private sector investments should be focused on innovation. The challenge is to promote private sector innovation spending in an environment where margins are shrinking and competition is growing. Abu Dhabi needs to develop a clear programme to boost innovation, one that is grounded in international best practices and includes stakeholders from both the public and private sectors in the discussion.
Greater collaboration between businesses and academic entities can produce interesting results in this context, ensuring that R&D conducted in local universities respond to the needs of the private sector. The key is to create an environment where private investment in R&D and innovation produces tangible results. However, there are many examples throughout the world where countries have successfully implemented policy to boost private sector innovation – for example, through improving intellectual property rights – and Abu Dhabi may follow a similar path.
What is the response of the private sector to the government’s attempts to stimulate the economy?
AL NOWAIS: Abu Dhabi’s leadership places a strong emphasis on economic development, in particular by promoting its young population, encouraging them to become entrepreneurs and ensuring that they have the necessary tools for their development. Economic support from the government is actively promoting investment in fields other than the traditional oil and gas industry. We in the private sector recognise a strong dedication from the highest political level, throughout all departments of the Abu Dhabi government, towards stimulating the economy, and this is being well received by the local business community. However, patience is required at this stage, as the results of these efforts will be seen over the longer term. Considering all the measures that the emirate has announced and implemented in recent years, I predict a bright economic future for Abu Dhabi.