UAE/UK debate: Partnership and trust take on the trade challenge

Chris Wright
Published on:

The UK and UAE sailed past their original bilateral trade target two years ahead of schedule and have now set the bar even higher – to hit £25 billion a year by 2020. Banks and advisory firms, along with government-sponsored bodies and trade fairs are encouraging small and medium sized enterprises to lead the way. Euromoney gathered representatives from several of these organizations to discuss the future of this burgeoning market

UAE debate cover

Executive summary

• The UK and UAE want £25 billion of bilateral trade by 2020

• SMEs hold the key and there is plenty of support for them
• Building relationships is vital
• UK firms enjoy an in-built level of trust in the region
• Banks and advisory firms strengthen ties with local partners
• Local banks want to demystify their market for outsiders

 Read more about the participants

Chris Wright, Euromoney In 2009, the governments of the UK and the UAE set an ambitious target of £12 billion, or Dh70 billion, of bilateral trade by 2015. They didn’t just meet that target, they beat it by two years, achieving it in 2013. Let’s set the scene with the patterns we see in trade flows between the UK and the UAE, and how they might develop.

Timi Okuwa35px

TO, UKTI A lot of the trade to the UAE tends to be from small to medium-sized businesses. They account for about 60% of the trade flows. The way we in UKTI support these businesses is to offer end-to-end connectivity here in the UK from our international trade advisers – there are about 230 – who support SMEs in their export journey and our colleagues based in posts in the Middle East.

Going into the UAE is not necessarily something for the novice small business. The advice our trade advisers would give is that there should be a level of experience: a well-seasoned business that has enough capability, access to finance and is very clear about the opportunities to pursue in a market before going in-country. They need to consider having some kind of representation, and spending time understanding the culture, market and any language barriers (English is the business language in the UAE). Although the UAE, particularly Dubai, is very liberal, other parts of the region can be more conservative. Contracts tend to be robust, but being clear about the partnerships you are signing up to is an important part of being successful.

Euromoney Karen, what’s your perspective?

KW, UKTI We were delighted to meet that target in 2013, and now our new target is to hit £25 billion by 2020. The aim is £1 trillion globally by 2020.

We are seeing, especially in Dubai, that the oil price has not really affected trade, and this is true of all the oil-producing nations in the GCC. They are continuing to finance infrastructure, and Dubai is still seeing many mega-projects being announced. There are many high value opportunities and these are what the UKTI programmes are skewed towards. The ones we concentrate on the Expo 2020, education –16 new schools are needed by 2020 – the experience economy and airports, with the new Al Maktoum International Airport, a $30 billion project. In Abu Dhabi there are opportunities in healthcare, oil and gas, rail and metro and airports. Abu Dhabi is more conservative in terms of the big infrastructure opportunities because of the decline in the oil price, but in most projects we are not seeing any change.

To mobilize the supply chain, if I can use the example of Al Maktoum airport, we have developed a working group of all interested parties from top design consultants to contractors who are interested in bidding for contracts. They all signed non-disclosure agreements and we put 70 companies in front of the client. We communicate regularly with any interested company regarding where the project stands. We have adopted the same approach with Expo 2020. We are also using the leverage of UK Export Finance (UKEF) for the larger projects, which ensures a minimum of 20% of content goes to UK companies. For example, UKEF have given Dubai Airports Engineering Projects (DAEP) a letter of interest for $2 billion for the Al Maktoum International Airport project, and $500 million for Expo 2020.

Although Dubai is focused on high value opportunities, that’s not to say we don’t have other things for SMEs. Dubai is home to the majority of regional trade shows, and trade shows are a good way for a company to do initial research into the market.

But it’s not all about Dubai and Abu Dhabi. There are leisure and tourism opportunities in Ras al Khaimah; in Sharjah, Shurooq (the investment arm of the emirate) has plans to build a mixed use commercial/residential development and is keen to involve UK Export Finance; expansion of the airport in Fujairah, and a gradual makeover of its infrastructure due to its strategic importance to the UAE.

Companies have to be prepared to spend time developing and cultivating relationships. The British are sometimes not good at sharing personal details, but if you don’t do that in this part of the world you won’t get very far. 

Euromoney UKTI is presenting a picture of great opportunity, with some challenges. What is Santander seeing?