 The United Arab Emirates has seen unprecedented transformation from a primarily rural and trading nation to an emerging regional economic hub. The pace of reduction in oil dependence has been the fastest in the Gulf Cooperation Council countries. Measured by the ratio of the oil revenue as a share of total government revenue, the oil dependency ration of the UAE has gone from being one of the most dependent (about 90%) in 1980 to one of the least oil dependent by 2004 (about 50-60%).
The UAE has indeed realized several economic achievements in various fields since the establishment of the Federal State. The UAE has adopted a free economic policy that gives the private sector a free hand in practicing both production and services activities and the State undertook a supervisory role in economic life through the issuance of legislation which allows individuals and establishments to do their business with full freedom.
The economic policy of the country tends to encourage private capital to invest in different economic sectors enjoying full exoneration from tax on profits, free transfer of capital, exemption from customs duties on production inputs such as materials, machinery and intermediate goods and imposing 5% maximum as customs duties on other goods imported for commercial purposes.
A modern infrastructure was developed consisting of an integrated road network , six international airports linking the UAE to the whole world, six ports and free zones where investment projects receive a unique package of facilities and incentives.
An extensive network of national and international banks and financial institutions operates under a fast and accurate system with support and supervision of the Central Bank. Foreign investment are concentrated mainly in oil, banks, exchange offices, insurance companies, commercial representation offices, gold, electronics, foodstuffs, contracting, freight, consultancy services and building material industry.
Notwithstanding major progress in economic diversification, the UAE's oil and gas sector continues to occupy prime status in the country's economic profile- a fact bolstered by confirmed hydrocarbon reserves now standing at 97,8 billion barrels of oil and 212,1 trillion cubic feet of natural gas. On the worldwide stage, the Emirates rank in firth place in terms of the size of its oil services and fourth with respect to its natural gas reserves. Presently acknowledged oil reserves would allow the UAE to pump oil at 2,55 million barrels per day for the next 105 years.
The structure of the Federation gives a great deal of independence to the individual Emirates I pursuing an economic strategy based on their respective comparative advantages. Abu Dhabi has exploited its advantages in large scale capital and energy intensive downstream industries such as petrochemicals and fertilizers. Dubai with its depleting oil resources has pursued an outward oriented strategy to develop as a commercial hub with trade, finance and tourism. Sharjah has traditionally developed light manufacturing while cement production is one of the oldest industries in Ras al-Khaimah. The Northern Emirates developed in the areas of shipping, agriculture, mining and quarrying. The Emirates of Fujairah is also a popular tourist destination.
The export structure of the UAE has evolved from a dependence on domestic industry based products such as petrochemicals, cement and aluminium to more diversified products such as electronics, light machinery and transport equipments, mainly from the free zone exports. Non-oil export diversification is among the highest relative to the other members of the Gulf Cooperation Council.
The rapid pace of non-hydrocarbon export expansion has been driven mainly by the Free Trade Zones (FTZs). The FTZ host a large number of international companies that cater to the markets in the Middle East and the Indian sub-continent. These zones have been attractive ventures as they have no restrictions on foreign ownership and repatriation of capital and profits and operate in a tax free environment with world class infrastructure. Jebel Ali Free Zone currently hosts over 2,200 companies with total annual revenue of over US$ 8 billion.
The UAE has positioned itself as a major re-export center for the region. The re-export market has seen rapid growth from $5,5 billion in 1990 to $27,4 billion in 2004. The main re-export markets include Iran and Saudi Arabia, which captured about 30% of the total , followed by other regional economies and the Asian countries. The development of the re-export activities is now driven by increased trade with other regions in Africa and Central Asia.
Tourism has become one of the most rapidly growing industries and is set for a major development. Dubai is now a destination for leisure tourism and several international events contribute to the further rise of the tourism industry. Currently about 5 million tourists visit Dubai annually and the industry is targeting 15 million visitors by 2010. Passengers traveling through Dubai International Airport have increased from about 22 million in 3000 to more than 40 million in 2004. Jebel Ali Airport will in the next decade showcase even more impressive figures, as the airport is set to handle up to 120 million passengers per year in 2020.
The services sector is also being boosted by the launching of free zones for media, knowledge and technology services. The latter is a free zone encompassing information and communications technology infrastructure dedicated to promoting media, e-commerce, software development and back office operations for the region. The establishment of Dubai Industrial City and the giant Abu Dhabi Industrial City are expected to spur further growth in the non-oil economy in the coming years.
Numerous Belgian companies have found their way to the UAE , reflecting the excellent relations between the UAE and Belgium , which have been considerably expanded in the past years. Belgian investment and civil engineering companies have participated in the realization of many important projects in different sectors of the UAE economy such as ports, towers, highways, different industrial and complex enterprises.
In 2002, the UAE became the first partner of Belgium in the Arab world with imports reaching 976,56 millions against 440,02 millions for exports. In 2003, the commercial balance has shifted in its favour with exports increasing to 788,15 millions (+75,92%) and imports decreasing to 808,60 millions (-17,20%) compared to 2002 values.
|
2001 |
2002 |
2003 |
2004(prel.) |
(Annual changes in %) |
|
|
|
|
Real GDP |
1,7 |
2,6 |
11,6 |
7,8 |
Non-hydrocarbon GDP |
2,5 |
7,7 |
10,8 |
9,9 |
(In % of GDP) |
|
|
|
|
Investment |
24,7 |
24,0 |
23,4 |
22,1 |
Total revenue |
37,1 |
41,8 |
41,1 |
42,7 |
Hydrocarbon revenue |
26,6 |
32,6 |
32,8 |
33,0 |
Total expenditure |
37,4 |
31,5 |
28,2 |
24,4 |
(In billions of US dollars) |
|
|
|
|
Exports |
47,5 |
52,5 |
67,3 |
82,3 |
of which: crude oil |
17,6 |
16,6 |
22,1 |
29,6 |
Imports |
33,5 |
37,5 |
45,8 |
54,2 |
Current account balance |
6,5 |
3,8 |
7,7 |
12,3 |
In % of GDP |
9,4 |
5,0 |
8,7 |
11,8 |
Central Bank reserves |
14,3 |
15,3 |
15,1 |
18,6 |
In months of imports |
5,6 |
4,0 |
3,3 |
3,5 |
Total external debt |
19,4 |
16,7 |
16,5 |
15,8 |
Source.: UAE authorities and International Monetary Fund
UAE Crude Oil Exports (1,000 b/d)
1998 1999 2000 2001 2002
North America 2,5 - 1,3 19,6 10
Latin America 7,5 - - - -
Western Europe 13 1 1,3 6,1 3
Middle East - 4 - - -
Africa 57 39 34,3 37 26
Asia and Pacific 1,959 1,875 1,778 1,724 1,575
Total 2,039 1,919 1,815 1,787 1,614
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