Ras Al Khaimah to grow by 10% this year despite crisis

Over the past few years, the emirate of Ras Al Khaimah (RAK) has emerged as an attractive destination for tourists, investors and industrialists.

Since its establishment in 2005 – the Ras Al Khaimah Investment Authority (Rakia) – has worked for the development and expansion of the emirate's economy, especially its tourism and industry sectors. In the current economic slowdown regionally and globally, the economy of RAK is expected to buck the trend and grow by 10 per cent in the year 2009 – one of the highest in the region.

Emirates Business caught up with Dr Khater Massaad, CEO of Rakia, who said the authority played a major role in keeping the impact of the slowdown to a minimum and pursued projects believing that RAK complements what other emirates offer in terms of an investment environment and economic and social growth.

How do you rate RAK's economic developments from the day Rakia was established?

Over the past four years, Ras Al Khaimah has enjoyed an annual growth rate of 14 per cent, which is an indication of how things have been going. We cannot ignore the current global crisis, but compared to other economies in the country and the region, we have the fastest growth rate.

Since 2003, Sheikh Saud bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah, has been working on re-organising the local government to improve its performance to international standards and prepare it to be investor-friendly.

Also, look at companies that are RAK-based such as RAK Property, RAK Petroleum, Rakeen, Julfar and others. They are well-managed and prosperous. As you know, RAK has no oil, so we knew early enough that we needed to develop in two areas: industry and tourism.

What according to Rakia sets Ras Al Khaimah apart as an investment destination? What do you tell prospective investors?

We are targeting companies by sharing professionally done, high-quality feasibility studies. We want to attract industries that are not present anywhere else in the region but are required here.
We conducted a study that revealed how countries such as Qatar, Saudi Arabia and others in the GCC import pharmaceutical and medical products. It also revealed there were no manufacturers of pharmaceutical-grade glass products in the region. So we realised if you can set up a factory that produces such products, and encourage drug manufacturers in Europe and America to use such a facility for packing, labelling and selling their products at cheaper prices, then this would be a good investment and offer job opportunities. We found a company doing this in Pakistan, so we offered them a base here to set up a plant and production started two months ago.

The same thing goes for glass bottles and flasks that are used for laboratory and medical purposes. There was no such factory in the Arab World, except Egypt, where the whole production was only for the American market. There was no factory catering to the Arab World.

We found a German company, named Ghani Glass, and entered into a partnership with it to start production here, which they did less than a year ago.

Such plans have not changed. We have been focusing on industries that support long-term sustainability and do not have to make quick profits. This would create more stable jobs for people. Otherwise, it would not be sustainable for the long term.

Rakia has been promoting investment into RAK but it also is investing abroad. How much do investments abroad contribute to the economic development in the emirate? And what is the status of your current investments in Georgia and in the Indian state of Andhra Pradesh?

To give you a true picture, Rakia is here to promote industrial investments into RAK. This is our purpose. Rakia's main investments are in the emirate itself and they help promote further industrial investments.

Our investments abroad are strategic and solely for the purpose of bringing in more revenues to support developments in RAK. We have invested in the port of Poti in Georgia but the amount invested is only $85 million (Dh312m), which includes an industrial free zone. The Poti port is a very attractive investment, because nearby countries have no access to the sea and it is the only major port in Georgia – so it is a profit-making venture. We have invested in it to complement the RAK Industrial Free Zone to cater to the Commonwealth of Independent States countries (former Soviet republics). We got four million square metres of land as free zone.

In India, we entered into an agreement with the state of Andhra Pradesh a year ago whereby we are going to develop an industrial zone like the Rakia Industrial Zone, and to develop a port. We have already bought the land and we will have partners with us, but we will be the operator/manager of the free zone. This will make a substantial income for us. It is $50m investment.
The Government of Andhra Pradesh gave us a concession for one of the most lucrative aluminium mines in India to construct an on-site production facility in which we have invested $25m. This is another strategic investment, which will enable us to bolster the reserves of aluminium in our region. We are working on the feasibility study and waiting for feedback from interested investors.

The political situation in Georgia has been unstable in recent months. How much of an effect could this have on your operations at the Poti port?

We have nothing to do with it. There are two ports in Georgia, a military port and the one that we run. It is a port with the deepest dock area in the Black Sea. It is the only port for countries such as Azerbaijan and Armenia. For their export and import, they have to use the Black Sea and go through Poti, as they cannot go through Turkey.

But for Armenia, things may be warming up with Turkey following the recent visit by the Turkish President Abdullah Gul. These are not issues that effect our operations there, so we have no worries.

What about your investments in coal in Indonesia?

Rakia is only helping out the Rak Mineral Company and RAK Ceramics to partner with a private company in Indonesia and acquire coal mines. This is to have strategic reserves for future coal-fired power plants in the UAE for the benefit of Ras Al Khaimah.

What other investments are Rakia considering abroad ?

Today, we are focusing on what we have already engaged ourselves in and are continuing to bring them to completion. We have no plans for new investments, especially with the current global slowdown. RAK's way of doing things has always been at a stable and steady pace.

RAK Ceramics has reported 20 per cent growth in revenues so far in 2009 compared to the same period last year. How did they manage it in such times?

We are producing, exporting – not re-exporting – and selling. The number of countries RAK Ceramics exports to has increased to 126 today. RAK Ceramics is planning to launch a new brand for a particular type of product as well. The company has increased its production capacity and new markets such as Syria, Egypt, Yemen and Latin America have joined its export destinations.

In a recent trip to Hong Kong, RAK Ceramics products were seen on display at several retail outlets. How is the potential in China?

Hong Kong is becoming an important gateway into China, which is a huge and important emerging market and has great potential for quality ceramics. But let's not forget that China is a major producer, too. So let's see how it goes in the Chinese market.

How do you evaluate the progress of the real estate projects in RAK today?

Whatever projects were announced earlier and started upon are in progress. But in terms of new expansion, the sector has a very cautious outlook. We have ongoing luxury projects, but we should not allow them to distract us from catering to other income levels. The housing projects are progressing well and there is no real problem in the sector. We hope the current economic crisis will start improving soon, and when it does, I believe there will be more logic to things and they will be as they should have been to start with.

What do you think are reasons for this crisis?

Most of the problems that contributed to the crisis came from the banks. Then there was the real estate sector, which blindly focused only on certain types of property for certain segments and marginalised the requirements of other major segments of society.

What lies ahead for Rakia?

We continue to promote Ras Al Khaimah and we will take advantage of this current crisis to offer better services for companies to do their business. If you are a manufacturing facility that is not doing well elsewhere, you can think of RAK as an option for keeping your business running with good facilities at competitive costs.


PROFILE: Dr Khater Massaad CEO of Rakia

Dr Massaad's career started in the early 1980s when he started geophysical investigations for clay deposits and water in the GCC and the Levant region. He has managed several projects for underground water resources in the UAE and Oman.

He planned a ceramic factory in Ras Al Khaimah and set up RAK Ceramics, which was awarded the Mohammed bin Rashid Al Maktoum Business Award for Industry in 2005. The RAK Ceramics brand has been rated as one of the top four brands from the UAE and the best brand in the manufacturing sector in 2006 in a study conducted by Brand Finance Middle East.

In 2003, Massad was appointed as an advisor to Sheikh Saud bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of RAK. He was appointed CEO of Rakia in 2005 and in his first two years at the helm, Rakia attracted $1 billion (Dh3.67bn) in industrial investments to the emirate.

He is also the Executive Chairman of Rakeen – the master land planner and developer in the emirate. He is also the Managing Director of the Al Hamra Fort Hotel and Beach Resort. Massaad holds a masters degree in engineering and a PhD in Geophysics and has a professional pilot's licence.

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