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Infrastructure Management

UAE: Thriving ICT as Neighbours Struggle for Stability and Trust

With oil reserves running out and the crisis-hit real-estate projects barely resurrecting, the United Arab Emirates is leveraging its vast ICT market potential to keep its economy upbeat. Rulers of the Emirates are paying careful attention to technology infrastructure development to bring aboard key players from well-established international IT markets and to grow its own knowledge base.  

The UAE, a country of seven federated emirates (similar to principalities) and home to almost 8.3 million on the Persian Gulf, is benefiting from the fallout from the Arab Spring that has persuaded a number of businesses in the region to relocate to the UAE and its secure environment and stable economy.

The Emirates have responded by investing heavily to wean itself off technology investment and build on already favourable policies for local and foreign businesses, investors and workers. This includes extending the role of technology in education, for example donating 14,000 iPads to university students to replace textbooks, and emphasising English and business-friendly skills training. But it already includes more direct investment in core technologies. For example, Abu Dhabi’s Advanced Technology Investment Co. (ATIC) in January 2014 announced plans to invest up to $10bn over two years in the Global Foundries’ New York semiconductor factory. ATIC owns the fabrication plant having bought out erstwhile partner, US chip designer AMD, from a joint venture. 

As neigbours and others have suffered rapid change and geopolitical turmoil, the UAE has prospered, growing in GDP terms by 4.4% in 2012 when the streets of nearby countries and European nations were roaring with anti-government chants and worse.

Having established itself as a leading business hub presenting vast investment opportunities to global enterprises, the UAE now sees heightened ICT infrastructure demands ultimately driving further growth. Certainly, the UAE has a solid platform. According to the World Economic Forum’s 2103 Network Readiness Index (PDF), a scale that ranks countries in terms of ability to capitalise on ICT utilisation, the UAE ranks top for both mobile network coverage and the government’s success in promoting its ICT market. The country ranks third in the world for ICT utilisation in driving government efficiency and inclination toward technology advancements in the future.

The UAE is also investing in making its cities more digital-centric with Masdar City in Abu Dhabi, a planned development that will rely on solar and other renewable energy sources and host the Masdar Institute of Science and Technology. The university will be advised by the Massachusetts Institute of Technology.

In all, analyst firms expect the UAE to increase ICT spending by over 5% in 2014, pushing total spend over $15bn, in part to support infrastructure preparations for Dubai Expo 2020. Analyst firm IDC expects the broader Middle East to spend around $32bn in ICT technologies next year, a rise of 7.3% on 2013. The region trails only Eastern Europe and Latin America as the third-fastest growing IT market in the world.

Some of the biggest gainers, however, will be foreigners and the UAE’s youth unemployment is, at 12%, three times that of its overall figure, according to National Commercial Bank.

“The UAE is heavily reliant on talented expatriates, well-educated and well-trained to handle booming businesses and challenging development projects,” says an expatriate resident working at a multinational financial corporation in Dubai.

“A significant proportion of unemployed national youth belong to business families with a strong inclination toward entrepreneurship and leadership. Under-utilisation of local human capital is hardly concerning for business owners who prefer hiring foreign workers willing to offer vast international industry experience for relatively low wages.

This is particularly true for the demanding ICT industry.

“Large-scale ICT infrastructure projects are usually outsourced to foreign companies that bring along their own international teams, whereas small and midsize IT firms seek affordable talent, which certainly rules out business-minded UAE youngsters,” says the finance worker.

One outcome could be that ICT growth will favour job-seekers from South Asia and struggling countries in the Middle East and Europe. Already, the UAE is comprised of 91% expatriates, easily outnumbering native Emiratis, especially in Dubai and Abu Dhabi.

 

Ali Raza is a business and technology consultant who covers consumer and enterprise technology issues for US and international publications. As a racing driver and a stunt master, only cars eclipse his love for technology.

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Ali Raza

Ali Raza is a business and technology consultant who covers consumer and enterprise technology issues for US and international publications. As a racing driver and a stunt master, only cars eclipse his love for technology.

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