dubai business advisor-no.3

8/9/2019 Dubai Business Advisor-No.3

http://slidepdf.com/reader/full/dubai-business-advisor-no3 1/22



Table of Contents

Introduction 5

Note 6

Legend 7

DubaiEconomy:Overview 8

EconomicSectors:RatingOverview 9

Agriculture&Fishery 10

Mining&Quarrying 11

Manufacturing 12

Electricity,Gas&Water 13

Construction 14

Trading&Repairing 15

Hotels&Restaurants 16

Transport,Storage&Communications 17

RealEstate,Renting&BusinessServices 18

Education 19

OtherServices 20

Conclusion 21



Introduction

DubaiChamber supports thebusinesscommunity through the provisionof

currentmarketinformationtopractitioners.

Information in this Dubai Business Advisor supplements and provides a

contextual overview on the company credit ratings in the Dubai Chamber

Business Information Reports. Credit rating is a qualied assessment and

formal evaluation of a company’s credit history and capability of repaying

obligations. This is a joint initiative executed with Coface Emirates. The

Business InformationReports enable strategic focusonhonourable clients

with high business potential, enable time-efcient business decisions, and

advanceconcealeddataonyourpotentialclientportfolios.TheDubaiBusinessAdvisor,RatingEconomicSectorsinDubaiisreporting

ratingopinionsatsectorlevel.Thepurposeofthisreportistoserveasaguide

foryourmarketassessment.AsnapshotoftheDubaieconomyisprovided

atthebeginningofthisguide.Thisisfollowedbyanaggregateoverviewof

the rated companies, according to the breakdown in the Dubai Chamber

database.

ForindividualratingopinionsandmoreinformationonBusinessInformationReports, contactMsDeemaDajani, BusinessDevelopmentExecutive, on

04–[email protected].



Note

Rating Opinion:

TheCreditRatingOpinionisaratingsystemdesignedtoassesstheability

of a company to fulll its nancial commitments, using a standard scale of

evaluation.

Benefts:

• Acreditassessmentscoregivenbyacreditexpert

• An identication of potential risks associated with the rated company

• Reliabledataontheratedcompanyanditscredithistory

RatingOpinionsaremonitoredforoneyear.



Legend

A Credit Opinion is reected in a 5-level scale and shows the credit limit for the

companiesincludedinthesample:

R € 10,000

@ € 20,000

@@ € 50,000

@@@ € 100,000 and above (Customized Credit Opinion is required)

X Companyshowsweakness,nocreditwillbegranted



Dubai Economy: Overview

Source:MinistryofEconomy

Thegraphoffersabreakdownofeconomicactivitybysectoraccordingto

mostrecentlisteddatafromtheMinistryofEconomy.



Economic Sectors: Rating Overview

Ratings were concluded for 5,585 cross-sector Dubai-based companies.

Almost a quarter of the rated companies have a credit limit of € 100,000 orabove. Another quarter is rated with a credit limit of € 50,000. The remainder

represent a credit limit of € 20,000. A minor number of companies are weak

andthereforeillegibleforcredit.



Agriculture & Fishery

Agricultural and shery activities are a relatively small segment of the Dubai

economy–lessthanonepercent–butstillaccountforoverAED1bnofDubai

GDP.Thissectorwillcontinuetoattractattentionasfoodsecurityandwatermanagementissuescontinuetobeattheforefrontofpeople’sminds.

Dubaifarmsproducednearly90,000tonnesofcropsin2005,foratotalvalue

of AED 160m. Fifty-eight per cent of the crops were classied as ‘crops &

fodder,’ 37 per cent were fruits, and ve per cent were vegetables. In addition,

farmsproducedover38,000tonnesofmilk,nearly7,000tonnesofchicken,

and over 111m eggs. Approximately 16,600 tonnes of sh were caught by

Dubai shermen.The sector includes rms engaged in traditional farming and shing activities

aswellasbusinessesprovidingsupportservicestothesector,insuchareas

asirrigationandpestcontrol.

Thissectorisrepresentedby42companiesintheaggregateratingsample.A

quarter of these companies have a credit limit of € 100,000, whereas one third

has a limit of € 50,000. Less than half of these companies represent a credit

limit of € 20,000.



11

Mining & Quarrying

Although Dubai is located near many large oil-producing nations, the

contributionoftheminingandquarryingsector–whichincludesoilandgas

–isquitesmall;onlythreepercentofDubai’sGDPcomesfromthissector.

CrudeoilandnaturalgascontributednearlyAED7bntoDubai’s2006GDP,

whilequarryingactivitiesaccountedforonlyAED140m.Nevertheless,many

multinational companies in this space have a signicant presence in Dubai.

PerhapsthemostfamousexampleisHalliburton,whichannouncedin2007

thattheyweremovingtheircorporateheadquarterstotheEmirate.

Withitsproximitytokeysourcesoffossilfuels,anditsreputationasaglobal

tradinghub,Dubaihasbecomeacentreforthetradeinrawmaterials.TheDubaiGovernmenthascreatedtheDubaiMultiCommoditiesCentre,a free

zone authority focused on precious metals and stones, energy, and other

commodities.

Mostcompaniesintheminingandquarryingsectorareinternationalcompanies

engagedinprovidingservicesrelatedtooilexplorationandextraction.Also

on the list areUAE companies engaged in various aspects of oil and gas

extraction, rening, and distribution.

Fourty per cent of the companies are ratedwith a credit limit ofminimal

€ 100,000. Thirty-six per cent of companies received a rating of € 50,000,

whereas twenty-two per cent are limited at € 20,000.



Manufacturing

Althoughnot thebestknownofDubai’seconomicactivities,manufacturing

isitssecondbiggestsector–accountingforover15percentofGDP.Over

160,000workersareemployedinDubaimanufacturingventures.Metalsand

petrochemicalshavetraditionallybeenstrongsuitsoftheDubaimanufacturing

sector, although there are many competitive rms manufacturing goods in

areassuchasfoodstuffandapparelandtextiles.DubaiAluminiumCompany

Limited–orDubal–isoneofthelargestindustrialconcernsintheUAEand

oneofthelargestaluminiumproducersintheworld.

Dubai has also worked to encourage small and medium-sized enterprises

engaged in manufacturing to set up operations here. Spearheading theseefforts is the creation of two free zones, Dubai Industrial City (DI) and Dubai

Maritime City. DI has several zones, each allocated to a specic sector. The

zones offer dedicated areas for rms engaged in the food and beverage,

basemetals,minerals,transportandequipment,machineryandmechanical

equipment,andchemicalssectors.

Halfofthecompaniesinthissectorreceivedanotable“@@@”distinction.One

fourth is rated with a credit limit of € 50,000. The remaining one fourth of the

companies are rated with a limit of € 20,000.



13

Electricity, Gas & Water

Electricity,gas,andwaterproductionanddistributionmakeupasmall,but

vital, percentage of Dubai economic activity. This sector can be seen as

being divided into two main components: traditional utilities (including service

providers to grid operators) and bottled drinking water. These businesses

have experiencedexceptionaldemand growth over the past several years,

aspopulationgrowthandanexpandingdevelopmentfootprintintheemirate

havecreatedconsiderablyincreasedneedfortheseservices.Between2005

and 2007, the size of this sector in the UAE as a whole grew at more than 12

percentperyear.

Dubai Electricity and Water Authority (DEWA) provides electric power andwaterservicetoDubairesidentsandbusinesses.Tomeetanticipateddemand

growth, DEWA has recently conrmed its commitment to its AED 72.5bn plan

– rst launched in 2007 – to increase the production capacity of water and

electricity.DEWAcurrentlyhasnearly6,700megawattsofpowerproduction

capacityandplanstoincreasecapacitybyninepercentbytheendoftheyear.

Watersupply islargelyprovidedbydesalination;DEWAplanstoexpand its

currentdesalinationinfrastructuretoreachacapacityof333mimperialgallons

perdaybytheendoftheyear.

The ratings for this sector are evenly distributed over the credit limits of € 100,000(@@@), € 50,000 (@@), and € 20,000 (@).



Construction

Dubai’s construction industryexperienced remarkablegrowthoverthepast

years.Ground-breakingprojectstestingnewboundariesinbuildingtechniques

have grabbedworldwidemedia attention, including the Palm Islands – anambitiousprojecttocreateman-madeislandsforresidentialandcommercial

use. Dubai also boasts the world’s two tallest hotels (the Rose Rotana and Burj

al Arab), the world’s tallest skyscraper (Burj Dubai), and the largest shopping

mall in Europe and the Middle East (Dubai Mall). Thirteen of the 100 tallest

buildingsintheworldarelocatedinDubai.Onethirdoftheworld’sconstruction

cranesarebeingusedintheemirate.

ConstructionaccountedforjustovereightpercentofDubaiGDPandemploysover250,000workers–nearlyone-fourthoftheworkforce.Despitetherecent

slowdownintheglobalrealestatemarket,therearestillhundredsofbillions

ofconstructionprojectsunderwayinDubai.JonesLangLaSalleestimatethat

overthenextthreeyears,currentconstructionprojectswillbringnearly35m

square feet of ofce space and 90,000 new residential units to market. Over

thenexttwoyears,retailspacewillincreaseby50percenttoaroundthree

millionsquarefeetofgrossleasablearea,withcompletionofmajorshopping

centreprojects.

Thirteen per cent of this large sector was rated with a credit limit of € 100,000

or above. One third was rated with a limit of € 50,000. Half of the sector was

limited at € 20,000.



1

Trading & Repairing

Thetradingandrepairingspace–whichincludeswholesaleandretailtrade,

distribution, maintenance, and repairs – is the largest sector of the Dubai

economy,accountingforoveronethirdofGDPintheemirate.Asof2006,thissectoremployed29percentoftheworkforceofDubaiandoccupied60per

centofestablishments.

Tradeconsistsofwholesaleactivities–includingimport/export–andretail.

Exportsareapproximately95percentofGDP,andimportsmakeuptwothirds

oftotaleconomicactivity.Ahistoryasatradinghub,moderninfrastructure,and

the creation of numerous free trade zones all play a role to make Dubai a leading

centre in international trade. The free zones provide a business environmentcatering to rms engaged in international trade, allowing full foreign ownership,

no limits on repatriation of capital, and long-term tax holidays for free zone

basedbusinesses.

Domestically, Dubai’s robust consumermarket provides strongdemand for

wholesaleandretailtradingservices.TheDubaiStatisticsCentreestimates

2007populationatover1.5m,82percentofwhichwerebetweentheagesof

15and49.Since2000,populationgrowthhasbeenoversevenpercentperyear,largelyduetothegrowingexpatriatecommunity.Privateconsumption

makesupabout40percentofDubaiGDP.

One fth of the rated companies has a credit limit of minimal € 100,000. Anotherquarter of the companies was rated with a limit of € 50,000, whereas half of the

companies has a credit limit of € 20,000.



Hotels & Restaurants

HotelsandrestaurantsformthebackboneofDubai’srapidlygrowingtourism

sector.Mega-projectsinthesectorhavegrabbedheadlinesaroundtheworld,

including the ultra-luxurious Burj al Arab project and the recently-opened AtlantisHotelonPalmJumeirah.

Dubaihotelssawnearlysevenmillionguestsin2008,surpassingtheprevious

recordsetin2007.Asofthemiddleof2008,340hotelswereoperatingin

Dubai.HotelrevenueintheemiratereachedAED15.25bnlastyear,a15per

centincreaseoverthepreviousyear.Thetotalnumberofhotelroomsandhotel

apartmentsinDubaistoodat49,598asoftheendof2008.Forthesecond

quarterof2008,theoverallroomoccupancyratestoodat80.1percent.

The restaurant industry in Dubai reects the cosmopolitan nature of its resident

population.Fromworld-renownedhautecuisinetoneighbourhoodeateries,

Dubai restaurants cater to all tastes and serve dishes originating from all

cornersoftheworld.Inadditiontolocally-establishedrestaurants,Dubaiis

hosttonumerousinternationalchainsandfranchises.Manyfast-foodchains,

includinginternationalbrands,havereportedsteadysalesintheUAEinrecent

months,suggestingthatthissliceofthemarketisholdingupwellinthecurrenteconomicclimate.

Twenty-eightpercentofthecompaniesinthissectorreceivedanotable“@@@”

distinction. One fth is rated with a credit limit of € 50,000. Fourty-two per centof the companies are rated with a limit of € 20,000. In addition, eight per cent

ofthecompaniesareratedasweak.



1

Transport, Storage & Communications

Transport, storage,and communicationaccount for aboutnineper cent of

DubaiGDPandemploysover 90,000 people. Although this sector seems

relativelysmall, itiscriticaltotheproper functioningofothersectors intheeconomy.

Dubai International Airport handled over 37m passengers last year – an

increaseofninepercentfrom2007–aswellas1.8mtonnesofcargo.Figures

at the beginning of 2009 show continued growth in passenger trafc on a

year-over-yearbasis. AlMaktoumAirport, currently underconstruction,will

offeranairfacilityneartheJebelAliFreeZone,aswellasconsiderablecargo

transportationcapacity.

Dubaiportsare ledbyJebelAliPort andPortRashid,bothpart of theDP

Worldportfolio.DubaiDrydockandJADAFDubaiprovideshiprepairingand

maintenancefacilitiestomembersofthemaritimecommunity.

Telecommunication,television,andotherinformationserviceshavedeveloped

rapidly in recent years, in response to rising consumer demand for these

services.In the communications space, Etisalat is the primary provider ofmobile and xed line phone service, internet, and cable television. Du begun

competinginthesemarketsrecently.

Thissectorisrepresentedby615companiesintheaggregateratingsample.

Almost ten per cent of these companies have a credit limit of minimal € 100,000,

whereas twenty per cent has a limit of € 50,000. Sixty-ve per cent of thesecompanies represent a credit limit of € 20,000. The remaining ve per cent are

ratedasweakcompanies.



Real Estate, Renting & Business Services

Thesectoraccountsfor15percentofDubaiGDP,makingitthethirdbiggest

sectoroftheeconomy.Nearlyninepercentoftheworkforceisemployedin

realestate,renting,andbusinessservices–over90,000workers.

The companies listed in this specic sector overview fall into four major

categories: general business services, computer services (including various

information consulting services), real estate (including brokerage and property

management), and renting services (including everything from heavy machinery

to passenger car rental).

There are numerous free zones for rms in the business services sector.ZoneshostinginformationtechnologycompaniesincludeDubaiInternetCity,

DubaiSiliconOasis,andTechnoPark.Additionally,DubaiOutsourceZone,a

venture of Dubai Internet City, has been set up specically for rms offering

professionally-outsourcedservicestocorporationsworldwide.

Withinthissectoronefifthofthecompaniesareratedwithacreditlimitof

€ 100,000 or above. Another one fifth was rated with a limit of € 50,000.

Half of the sector was limited at € 20,000. Five per cent are rated weak.



1

Education

Theprivateeducationsector inDubaihaswitnessedrapidgrowthinrecent

years, as it expands to meet the needs of a knowledge-based economy.

Interestindevelopingeducationalorganisationsintheemiratehasledtothecreation of several free zones, including Dubai Knowledge Village (DKV) and

Dubai Academic City (DAC). Both zones offer a base for leading international

organisations to provide education and training to the local population. DKV is

primarilyfocusedonknowledge-basedentities–includingtrainingcentresand

learningsupportentities–andishosttoover350educationalpartners.DAC

ishometotraditionalprimary,secondary,andtertiaryinstitutionsfromaround

the world. Dubai International Academic City (DIAC), which is located in DAC,

caters specically to higher education organisations, and currently hosts 32internationalinstitutionsfromallcornersoftheworld.

Among primary and secondary institutions, the private sector is the main

provider of education; more than 80 per cent of students, nearly 150,000

pupils, attend private institutions. Themarket for higher education is also

substantial.Approximately12,000studentsarecurrentlyenrolledininstitutions

based in DIAC. The numerous professional training organisations in DKV offer

programmesinadiversevarietyofsubjects,fromBiotechnologytoFashionDesign.

Fourty-fourpercentofthecompaniesinthissectorreceivedanotable“@@@”

distinction. Thirty-three per cent is rated with a credit limit of € 50,000. Twenty-two per cent of the companies are rated with a limit of € 20,000.



Other Services

Otherservicescoversavarietyofactivities,includingsanitation,businessand

professionalorganisations,recreation,newsagencies,andcleaningservices.

ThissegmentaccountsforarelativelysmallportionofGDP,around1.5percent. Companies proled in this report from the ‘other services’ category

include rms engaged in refuse removal, recycling, and waste management;

drycleaningandlaundry;andcultural,recreational,andsportingservices.

Sixteencompanieswereratedunder“otherservices”.Twenty-ninepercent

of the companies were ratedwith a notable “@@@”distinction. Seventeen

per cent is rated with a credit limit of € 50,000. Fourty-one per cent of the

companies are rated with a limit of € 20,000. In addition, eleven per cent of thecompaniesareratedasweak.



21

Conclusion

The Dubai Business Advisor, Rating Economic Sectors in Dubai is a pilot

initiativeoftheBusinessDevelopmentDepartment.

Information inthis report serves asan instrumenttoassessDubaimarkets

bysector.Datawasgatheredonthevarioussectorsandcompiledintobrief

overviews.

The total number of rated companies add up to 5,585 companies. This

aggregatenumberisdividedoverthevarioussectorsinthisreport.

TheBusinessDevelopmentDepartmentprovides knowledge instruments tofacilitatebusinessesinDubai.

TheBusinessDevelopmentDepartmentiscontinuingtodesignnewmarket

benchmarkingproductstoassistinyourbusinessdecision-making.

dubai business advisor-no.3

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