Asia Times: Dubai: New chip on the block


	September 28, 2000	atimes.com

Special Reports

Dubai: New chip on the block

At a time when oil is a dirty word, Dubai, the second largest of the seven United Arab Emirates (UAE) states behind Abu Dhabi, has introduced an ambitious plan to ensure that 100 percent of its GDP comes from non-oil sources by 2010.

At present the emirate derives about eight percent of its US$14 billion GDP from revenue earned from the 200,000 barrels of oil it pumps per day. However, indirectly, oil plays a much bigger part. Investment by people from Abu Dhabi - which pumps 2 million barrels a day - and government and federal authorities, which are dependent on Abu Dhabi for the bulk of their revenues, play an important role in the Dubai economy.

Similarly, Dubai's trade, the single largest contributor to the economy at 20 percent of GDP, relies largely on oil prices as Dubai's re-export trade, worth over US$4 billion a year, hinges on oil-producing markets such as Iran, Saudi Arabia and Kuwait.

Pivotal to Dubai's plan to shift away from oil is its commitment to fully embrace the so-called New Economy, and what it has identified as New Economy industries - IT companies, multimedia businesses, telecommunications, Internet start-ups, remote service providers, venture capitalists and "incubators" - the development and application of new ideas. The vehicle for realizing this is Dubai Internet City, a US$700 million project bankrolled by the government and which has its official opening on October 29.

Further, Dubai has introduced the first phase of a scheme, dubbed "e-government@dubai", to revolutionize the government service so that by September 2001 all government business - either with the public or with other public bodies - will be done via the Internet.

Dubai Internet City

Plans to build a self-contained city on a 163 hectare plot between the Dubai town center and Jebel Ali Port were only unveiled in November 1999, with the official opening to take place less than a year later on October 29.

The City will comprise a free zone with fully-serviced offices catering to e-commerce, media and other high-tech businesses, with the ultimate aim of creating a global industry center to rival Bangalore in India and Silicon Valley in California. It will also include housing and recreation facilities, as well as an Internet University which is being touted as the first of its kind in the world. Dubai Internet City will also have a science and technology park housing a research and development center for new technology initiatives and for the development of projects for the industry.

The driving force behind the initiative is the Crown Prince of Dubai and the defense minister of the UAE, Sheikh Mohammed bin Rashed al Maktoum, the effective ruler of Dubai. He has pointed out that the City is well placed geographically for New Economy businesses that want to serve a region stretching from Egypt to the Indian sub-continent and from Southern Africa to the Commonwealth of Independent States. This area contains a population of about two billion and represents about US$1 trillion in trade, which rates it second to the United States.

Leases of up to 50 years will be available for non-UAE and Gulf Cooperation Council (GCC) nationals, (Bahrain, Kuwait, Qatar, Oman, Saudi Arabia), only the second such foreign leasing opportunity in the entire GCC after the nearby Dubai Investment Park. Companies will also not need a local "sponsor", the complex and potentially risky requirement of foreign companies setting up in the UAE.

The free zone status also means that foreigners will be able to establish 100 percent-foreign-owned companies. In unzoned areas, the foreign limit is set at 49 percent. Other incentives include zero corporate and personal tax and free repatriation of profits and capital. These latter incentives, it should be noted, are available anywhere in Dubai.

Dubai Internet City has already gained international recognition as it has been selected to host the Organization of Economic Cooperation and Development (OECD) emerging market economy forum in January 2001. The meeting, which will attract more than 500 representatives from 60 countries, will focus on global policy on e-commerce legal issues, taxation and public policy.

More than 180 companies have already been licensed to operate in the City, with several hundred pending. Authorities have little doubt that they will have the full complement of 400 companies by the end of 2001. Companies that have been licensed include Microsoft, Oracle - which is moving its Europe and Middle East user group from Vienna, IBM, Hewlett-Packard, MasterCard International, Arabia Online, Compaq, EBI, DLG Direct, Expatsite, Arrowpoint Communications International, Tech Access, Diwan software, Computer Associates, Middle East, Symbol Technologies, Tel-e-serve, Entity, aspgulf.com, Bangalore Labs, eGulf Systems Limited, Altitude Software and Ras Infotech Limited

Infrastructure: The technical infrastructure at the City is designed to world-class standards of capacity, reliability, costs and service levels. Businesses will have a high bandwidth, low cost, state-of-the art telecom infrastructure with redundant connections to Internet primary backbone providers with a 24-hour set up and service guarantee.

Siemens Business Services (SBS), Cisco Systems International and Sun Microsystems will provide the information and communications infrastructure for the City. Their contracts require them to design, build and operate systems in four key aspects of the City's operational structure. These include a data center, telecommunications and network infrastructure, Internet connectivity and ISP (Internet Service Provider) infrastructure and billing solutions. The three companies will work in partnership on the project.

In a release, Siemens said it saw its involvement as a "major step forward in strengthening our position as a leading provider of integrated high end business solutions. We regard this opportunity as exciting and challenging and are extremely pleased that Dubai Internet City has demonstrated its confidence in our ability to deliver a technical infrastructure that will be unequalled anywhere in the world".

A Cisco company statement says that it will bring in its "New World" networking technology, which amalgamates data and voice communication. "This will provide real cost and functionality benefits for companies within the City," the statement said. Commenting on Sun,s involvement, the company said it would provide the computer platform and software applications for the project

Dubai Internet City was formally constituted in February 2000 following a decree establishing the Dubai Technology, Electronic Commerce and Media Free Zone Authority, of which Sheikh Mohammed is chairman. The law gives the authority responsibility to "provide telecommunications and media services" and for the "provision of services through the Internet or through any other medium".

This is an important provision as Internet City will not have to use Etisalat, the UAE's monopoly telecoms provider. Critics intially said that if Internet City had been forced to use Etisalat, they would have had to rely on its relatively slow and expensive Internet services. Companies operating in the zone will also be exempted from the proxy, allowing greater freedom and speed on the web.

Human resources: Dubai is strategically located midway between two large pools of high-skill knowledge workers - Egypt/Jordan and the Indian subcontinent. In 1999, the US issused 110,000 visas for Indian subcontinent IT workers. If similar opportunities arise for them in Dubai, the attraction could be great as they will be much closer to home, the immigration process will be easier, and they will be joining an already large and established ethnic Indian community in the emirate. A talent Body Shop (data base) located in the Internet city will provide companies access to temporary or permanent workers as their needs demand, by monitoring industry trends.

Regulatory: The City will facilitate company registration laws, immigration processes and legal procedures. Various licensing options are available. These include licensing for individual start-ups, branches of a UAE-based company, branches of a foreign company and limited liability companies.

e-government@dubai

Sheikh Mohammed bin Rashed al Maktoum has called on all civil servants to bring all public services online by September 2001, or lose their jobs. His initiative is aimed at acting as a catalyst to accelerate the growth of e-business in and around Dubai, and to send a message to the world that Dubai is serious about becoming a leader in the New Economy.

Preparing the government for the Internet age will run in tandem with another initiative to provide every schoolchild in the emirate with a computer and Internet access by 2003, starting with high-school pupils. In July 2000 the UAE was ranked 18th in the world in an Internet access survey.

In the first phase, which is already under way, citizens can pay traffic fines, apply for or renew driver's licenses, and pay utility bills online. These services are tailored to support the Wireless Application Protocol (WAP) standard for mobile phones. Government-to-government services will also be targeted, with the integration of information systems and streamlining and standardizing of processes across government agencies. The initial focus will be on the deployment of groupware, intranet and the redesign of procedures such as form processing and archiving.

The next phase will focus on government-to-business services aimed at saving costs and increasing productivity. Specifically, all government purchases will be done online. Another project will focus on solving administration issues such as visa application and work permit processing.

(Special to Asia Times Online)

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