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Economics & Development | Global Arab Network
Ras Al Khaimah achieves stable economic progress
Global Arab Network - Oxford Business Group
Saturday, 09 January 2010 11:30
Ras_Al_Khaimah_completes_400m_Sukuk_issue_under_its_2bn_Programme
The year 2009 was a turbulent time for global business, with the UAE in particular facing some stiff challenges. To say that Ras Al Khaimah (RAK) sailed through the economic hurricane untouched would be false, but thanks to sound economic planning, 2009 was a year of stable progress for the emirate.

The authorities have encouraged the development of the manufacturing sector, part of a long-standing policy aimed at diversifying the economy that has resulted in industry contributing more than 8% to RAK's GDP. This policy, bolstered by state incentives and the establishment of dedicated industrial zones, has made a number of manufacturers in RAK sectoral leaders in the region and beyond. In particular, RAK's mineral wealth, which includes limestone, gabbro and silica, provides the materials for successful cement, ceramic and glass industries.

That being said, industries in RAK have had to contend with challenges in the past, especially a shortage of electricity to keep plants powered-up and a transport infrastructure grid attempting to keep pace with the expanding demand put on it by the growing economy. The government has made significant moves throughout 2009 to install additional generation capacity over the next few years, and committed $5bn to a programme of improvements to the transport network. The busy port of Mina Saqr will be updated to allow a 400% increase in cargo-handling capacity, allowing materials and finished products to move more quickly. These developments will help put the final pieces in place to allow RAK's industrial sector to expand further and faster in the coming years.

RAK has not been unscathed by the real estate slump that has beset the Gulf. But there are substantial grounds for confidence in the future of the property sector in this emirate of around a quarter of a million people. RAK is increasingly being seen as an alternative to Dubai, offering a more laid-back atmosphere while still maintaining enviable proximity to the other emirates - at a fraction of the price.

The emirate is also now capitalising on its natural attractions, including mountains, beaches and archaeological sites, to build its tourism sector. A far cry from the theme parks springing up across the Gulf, RAK hopes that its back-to-nature approach will appeal to those seeking a more authentic taste of Arabia.

Apart from trying to create a niche market, off-the-beaten track holidays bring with them the added advantage of requiring local guides and experts, further boosting employment in the more remote regions of the emirate.

At the close of 2009, RAK was somewhat a victim of its own success in these efforts, with many hotels overbooked. Therefore, a further 3700 rooms are expected to be added in the coming years. Growing tourism should also stimulate population growth (and hence the residential market), as well as the retail sector. And with the development of more housing and tourism options, companies that once monitored RAK from nearby Dubai are finding compelling reasons to move their headquarters to the emirate.

RAK has long held a lower profile on the international scene thanks to its late-bloomer status and lower hydrocarbon reserves, but this is changing. RAK Investment Authority and RAK Free Trade Zone have attracted investors with tariff-free trade, installed infrastructure, light-touch regulation and a favourable location. The Department of Economic Development (DED) follows the federal regulations of the UAE, but also has flexibility to adapt rules and regulations to cater to RAK's market needs: for example, it has created a one-stop shop to obtain a business licence in the emirate by maintaining representative offices of the RAK Chamber of Commerce inside the DED.

A less obvious but equally important factor in RAK's development has been its continued investment in its own citizens through improved health care and education. An ambitious programme of reforms designed to open up these sectors to private investment and enterprise has resulted in a fast-growing system capable of training a new generation of workers - and creating higher-level jobs in-country to employ them when they finish their studies.

The private sector has not been slow to enter the health sector to supplement state-provided services. In November, plans were unveiled for a $21m private hospital to be built in the Al Diq Dag district on the Airport Road. The RAK Medical and Health Sciences University, established in 2006 by the Human Development Foundation (HDF), a joint venture between the government, Al Ghurair Investments and ETA Ascon Group of Dubai, today offers a wide range of accredited courses, aimed at producing medical professionals. As a fee-charging institution, the university looks to attract students from abroad, as well as from RAK, putting it in competition with other medical teaching facilities across the region, in particular Dubai and Abu Dhabi.

Education, especially higher education, is seen as integral to the development of the work force and as such is a key ingredient in the push for diversification. Efforts are being made to improve the quality of academia, not just the quantity of students in schools. More funding is being dedicated to research rather than vocational training programmes, with the aim of training a class of creative entrepreneurs that will create jobs within the country. This is not to say that practical skills are being neglected: on the contrary, the government has been keen to see funding directed towards projects that tackle domestic issues, while maintaining an international draw-card by offering most degrees in English.

Year 2010 will be an interesting one in this dynamic emirate, as the effects of ongoing development become clearer. What is already obvious though is that RAK's days as a smaller player in the UAE are in the past.

Global Arab Network

This article is published in partnership with Oxford Business Group

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