Share of non-oil sector in country's economy will rise to 80% in next 5 years
Be it rising China, fastest-growing India or the Belt and Road Initiative, the UAE is rightly-placed to capitalise on the global trade as this century certainly belongs to Asia, bankers and trade industry executives said at a conference on Sunday.
They say the UAE is already among the top trading partners of Asia's biggest economies from the Middle East including China, India, Japan and South Korea.
"This is Asia's century and it is affecting those living here and people in Europe as well. China is now the top trading partner of every single economy in the Middle East and India is the second-largest partner and this gives you the picture of what is going on in the world economy," said Lord Green of Hurstpierpoint, chairman of Asia House.
Latest figures show that the UAE's total non-oil foreign trade reached Dh1.2 trillion in the first nine months of 2018.
Highlighting the growing importance of Asia, Abdulla Al Saleh, Under-secretary for foreign trade at the UAE Ministry of Economy, said the Asia-Pacific was the UAE's biggest trading partner, accounting for 42 per cent of total non-oil trade, followed by Europe.
He also noted that the share of the non-oil sector in the country's economy will rise to 80 per cent in the next five years, resulting in a decline in oil sector's share due to huge investments in other sectors as the government encourages more foreign direct investment.
"In our scheme of growth in foreign trade relations, Asia is of prime importance because it contributed more than one-third of global GDP and 37 per cent of global exports in 2017. Asian countries account for 60 per cent of non-oil foreign trade. In addition, Asia contributed more than 38 per cent of the accumulated FDI into the UAE in 2016. With value exceeding $45 billion, 71 per cent of non-oil exports go to Asia," he said while addressing a trade summit in Dubai on Sunday.
China's FDI into the UAE totalled $9.1 billion by 2017-end, mainly in oil and gas, infrastructure, finance, construction telecom, trade and other sectors. Indian investors accumulated investments of $1 billion in 31 FDI projects in 2018, making it the second-largest investor.
Sultan Ahmed bin Sulayem, group chairman and CEO of DP World, said trade is shifting to Asia.
"China handles 100 million containers and India sees 10 million containers a year; hence, we invest in India because there is a growth potential."
Abdulfattah Sharaf, CEO of HSBC UAE, said prospects for two-way trade between the UAE and China remain bright despite a cloud of gloomy global economic sentiment cast by Washington's trade war with Beijing. "The fast-paced trade growth between China and the UAE is a standout example of what can happen when countries collaborate," Sharaf said.
Bilateral trade between the two countries hit $53 billion last year, a 17 per cent increase on 2017, and is forecast to double over the next decade.
"That this is happening at a time of rising trade tensions and protectionism elsewhere in the world is a true indication of what can happen in an environment that supports inward investment, entrepreneurship and is focused on the future. We are seeing results across a wide range of sectors," Sharaf said on the sidelines of The Future of Trade: The Middle East Pivots to Asia conference.
Chinese property investors are now among the top four foreign nationalities who invest in the emirate of Dubai. According to industry research, the UAE saw a 245 per cent increase in Chinese tourists in the third quarter of 2018 and double-digit annual growth is forecast until 2022, and the number of UAE businesses seeking to expand into China is also an upward trend.
HSBC's Navigator: Made for China survey revealed that nearly half of UAE businesses already doing business with China plan to grow sales there in the next three to five years. A further 10 per cent of UAE companies yet to enter the Chinese market will prioritise expansion in the country.
He added that by 2030, over half of all Belt and Road Initiative-related projects are anticipated to be funded by private capital, multilateral banks and foreign governments.
"It is clear that the UAE and the Middle East sit at the heart of connectivity, a type of connectivity that global trade needs to succeed. If China and the UAE continue to collaborate in the way that they have been, then the two stand to play a powerful role in how trade will shape the future," Sharaf said.