Coauthored by Mary Mendoza
Dubai’s glitz and glamour are reflections of its economic success, seen and felt by its population, be they foreign direct investors, small-medium entrepreneurs, tourists, or the workforce that made Dubai their home. On our fact-finding mission, we uncover the secrete sauce of Dubai’s success.
Diversification
The United Arab Emirates’ (UAE) oil reserves reached 97.8 billion barrels in 2019, as published by the Federal Competitiveness and Statistics Authority, of which Dubai’s reserves accounted for four billion barrels.
In 2014-2016 oil prices have collapsed, whereas in the 2008 financial crisis real estate development was in turmoil, and in 2020 Covid-19’s impact on the economy resulted in a 6.2% contraction. Dubai’s economy quickly recovered from the 2008 crisis and the 2014-1016 oil price plunge, through the federal government’s support and thanks to Dubai’s diversified economy. In 2021 Dubai is expected to grow by 4%, recovering from the previous year.
Diversification became the strategic plan of Dubai from the 1980s to-date and fast forward to the vision for The Centennial Plan 2071 that coincides with the 100 years from the UAE formation. Diversity in the forms of economy, population, and religion has served the Emiratis well.
Under the leadership of His Highness (H.H.) Sheikh Mohammed bin Rashid Al Maktoum (Vice-President and Prime Minister of the UAE and Ruler of Dubai), Dubai attracted 523 foreign direct investors in 2018 drawing AED38.5 billion (USD10.5 billion) this is up 43% from the previous year, according to Dubai FDI Annual Results & Ranking 2018.
The tourism sector plays an important role in Dubai; hence the world’s greatest show, “EXPO 2020” shall be hosted in October 2021 – March 2022 (a year delayed due to Covid-19), with 438 hectares of area to be attended by delegates from 192 countries. This is expected to propel the growth of retail, transportation, accommodation, food & beverage, and arts & culture in visitation and revenue.
In 2019, Dubai ranked the as fourth most visited city in the world with around 16 million international overnight tourists, and ranks the highest in spending power per day with an average of USD553, compared to Paris at USD296, Singapore at USD272, Palma de Mallorca at USD233, Tokyo at USD196, Bangkok at USD184, New York at USD152 and London at USD148, as published in Mastercard Global Destination Cities Index 2019.
Dubai continually creates the best and biggest attractions for today’s generations and future generations. For example, Burj Khalifa is the tallest building in the world standing at 828 meters, The Pointe at Palm Jumeirah which opened in October 2020 features the world’s largest fountain with 14,000 sq meters of seawater, and the Gevora Hotel, which stands at 356 meters with 75 floors, is the world’s tallest hotel.
As documented by Dubai Statistics Center, Dubai had a population of 3.3 million in 2019, with local Emirati accounting for only 8% and the remaining 92% comprised of a foreign workforce coming from 200 nations; the larger part of the workforce is from Pakistan and India. Diversification of industries covers not only real estate, tourism, technology, education but also other advanced industries and scientific research including the Emirates Mars Space Mission program. The Government of Dubai believes in the brilliance of the society when diverse minds connect, they generate innovation and new ideas, thus making Dubai what it is today.
Islam is the official religion, which strongly influences the daily life and practice of its society. In 2015, the UAE federal government enacted the “Anti-Discrimination Law”, criminalizing discrimination in any shape or form on the grounds of people and religion. Hence, several religious communities’ conflux is present in Dubai, including Christianity, Buddhism, Hinduism, Sikh, and Judaism. UAE’s legal code was built upon a combination of Sharia Islamic Law and International legal practices, thus representing a global tolerance standard.
Emirati Culture
Dubai grew rapidly and the merging of cultures became inevitable. Therefore H.H. Sheikh Mohammed bin Rashid Al Maktoum established Sheikh Mohammed Centre for Cultural Understanding (SMCCU) in 1998 to bridge the gap of other cultures and to educate expatriates on the traditions and customs of the UAE with the motto “Open Doors, Open Minds”.
In 2016, H.H. Sheikh Mohammed bin Rashid Al Maktoum created the Ministry of State for Tolerance aiming to eradicate ideological, cultural, and religious bigotry in the society. A year later, his Highness appointed Sheikh Nahayan bin Mobarak Al Nahayan to the minister of Tolerance, who is a member of the ruling family in Abu Dhabi. Since then, his ministry has sponsored several initiatives to host international conferences for persons with disabilities, emphasizing rights, opportunities, and the importance of social inclusion and tolerance. However, in July 2020, a British citizen, Caitlin McNamara , the 1st Hay Festival curator accused Sheik Nahyan bin Mubarak Al Nahyan of sexual assault. Though the Crown Prosecutor Service (CPS) declined to prosecute the Ministry of Tolerance, this claimed assault undermines his government’s attempt to work with Hay Festival to promote free speech and female empowerment.
Emirati tradition & culture is based on Arabian culture, Islamic religion, and Bedouin traditions. Combining these three elements has had a strong influence on lifestyle, cuisine, outfit, architecture, and legal system which is different from the western system. Hence, it is important to be mindful of business etiquette and cultural sensitivity before conducting business, interacting with Emirati women, or visiting. Certain behaviors could be considered a legal offense.
A few differences between UAE practices and other countries are that weekends are enjoyed on Fridays & Saturdays; foreign women are advised to wear below their knees, and that cover their shoulders. Ramadan is a holy month in the Islamic calendar whom adherents practice fasting from sunrise to sunset. Therefore, it is best to avoid eating in front of Muslims. Since Muslims do not consume alcohol, hence choose a meeting place that does not serve alcoholic beverages, and public display of affection is an offense.
To boost the productivity of one’s business deals, it is suggested to remove cultural barriers that hindered communications and interaction with the locals by understanding what is important to Emiratis.
How It All Began
Although excavations in Hatta, Al Qusais, and Jumeirah indicate that the area was inhabited 3,000 years B.C., Dubai was not spoken of as a city until 1833, the year when the Bu Flasa tribe, led by the Maktoum family, settled on the outskirts of Dubai Creek and ruled Dubai since then. At that time, the livelihood was based on livestock, harvesting dates and pearls, and fishing. The ruler capitalized and transformed Dubai Creek into a thriving trading port city. In the 1950s, Dubai began to trade with gold and expanded Dubai Creek so that its maritime trade continued to grow.
The 1960s marked Dubai’s awakening. The hard work of the past decades begins to pay off with oil discovery and began exporting by 1969. During the late 1960s, it began to transform the barren desert into a city with all the infrastructure to be able to grow freely: roads, bridges, electricity and water supply networks, a good telecommunications system, and the airport. By the 1970s the first Islamic bank in the world was established called “Dubai Islamic Bank (DIB)”. The eighth ruler, H. H. Sheikh Rashid bin Saeed Al Maktoum, ruled Dubai from 1958 to 1990.
In 1980, Dubai prospered economically when it took a strategic decision to diversify and to develop as an international tourism destination. The airport expanded to house Emirates Airlines. Sports and recreational complexes were also built, and tourism began to be seen as an additional income source. At that time, new oil and gas deposits were discovered in the Margham desert.
In 1990, H.H. Sheikh Rashid bin Saeed Al Maktoum died, and his son, H.H. Sheikh Mohammed bin Rashid Al Maktoum, inherited the position. Even more ambitious than those of his father, he launched “Dubai Plan 2021” which pave the way to the city we now know as Dubai and positioned Dubai as a key player in the global economy. Thanks to government efforts, Dubai’s economy currently depends on just 20 % from oil. Today Dubai is one of the top five centers for trade, logistics, finance, tourism, and other service industry. The tax exemption made many companies start to think of Dubai as the headquarters of their operations.
Conclusion
This fact-finding mission allowed us to explore what is behind the façade of Dubai’s glitz and glamour. We argue that Dubai’s success is due to its diversified economy, people, and openness to integrating international standards in its legal framework and culture. Dubai’s development is reliant on the federal government’s leadership and Emirati leadership pass on within family circle, the legal system that protects both local and foreigners through the integration of Sharia Islamic Law and international Legal practices, which is important for the development, security, and sustainability. To thrive in such an environment, one is advised to respect and embrace the Emirati culture and tradition while introducing innovative approaches for future development.
* Coauthored by Mary Mendoza : Mary Mendoza is managing director of The Platinum Limited, a gaming-hospitality consulting firm. Mary has over 20 years of experience within the hospitality, gaming, and tourism industries. She previously held positions as AVP of Casino Marketing at Hoiana in Vietnam, Vice President of Marketing at The Grand Ho Tram in Vietnam, and before that was Vice President of Marketing at Imperial Pacific in Saipan, CMNI, USA. She also held management positions at Sands China Ltd in Macau. Click here to follow her on Linkedin
