'2008 is year of amenities projects'

(SUPPLIED)   

How would you evaluate the performance of the UAE economy in 2007? And how do you see the economy – particularly in Abu Dhabi – doing this year?

The economy was unstable and disorganised in 2007 and the year ended with a big drop in the financial markets. We did not make as much progress on infrastructure improvements as was expected. And work on most of the projects that were announced did not start, they existed on paper only.

This happened at a time when the investors in those projects were expecting 10 per cent of the projects would materialise. I believe any company has a right to announce any project, but the basics need to be looked at. There should be more focus on the infrastructure – some projects have been announced in areas where sewerage, electricity and water services do not exist.

Before a real estate project is announced at least 50 per cent of the infrastructure should be ready. I believe 2008 should be the year of launching infrastructure projects. Last year was one of rises in rents, most commodities and living costs – and big losses for investors in the financial markets.

We have to learn from past lessons and avoid last year’s mistakes, such as continuing to peg the dirham to the dollar, which is waning under American economic pressures. This has led to hikes here in the prices of most imported commodities, products and raw materials because their prices are exaggerated compared with their real value.

 Is the greed of traders the main cause of inflation in the country or is it a worldwide phenomenon?

 I believe there are two causes of inflation in the UAE, which reached nine per cent last year. The first is the constant rise in the price of a barrel of oil, which topped $100 by the end of last year. Add to this the drop in the value of the dirham. Look at Kuwait, which has taken a partial decision to depeg and has maintained inflation at acceptable and reasonable levels. We should depeg too so our currency can be balanced. Pressures on the market would then ease.

As for traders, they are investors in the market like anybody else and it is not in their interest to see prices rising as they too suffer from inflation.

You were one of those opposed to the transformation of Saadiyat Island into an industrial area. Now Saadiyat is being turned into a world cultural city with giant projects worth billions of dollars. What do you think of this?

I was opposed to the transformation of Saadiyat into a jungle of concrete, buildings, commercial and residential facilities. The island was at that time a natural reserve for fish and migrant birds, and turning it into an industrial area threatened the environment and wildlife. But now, with sound planning, the island is becoming a city of culture, science and art. This is a big and important development for Abu Dhabi and will provide a huge legacy for future generations.

How do you see the future of the real estate and tourism sectors in Abu Dhabi now that a host of giant tourist, commercial, cultural and residential projects has been launched?

The real estate sector is currently witnessing a major revival that requires the establishment of local administrations, government departments and municipalities in remote areas to facilitate investment and construction.

Such institutions would serve the citizen and investor alike. For instance, Khalifa City has become a residential and investment centre. But if a fire brokE out there in a house there is no fire brigade – the nearest one is in Al Musaffah. And the investor, whether a citizen or expatriate, has to go to the capital’s municipality for any paperwork.

I support tourism investment since it is important and necessary and we urgently need such projects. We have been asking for them for a long time because of the constant increase in the number of tourists. Over the past 18 months the number of tourists in Abu Dhabi has exceeded a million despite the shortage of hotel rooms.

Abu Dhabi Government has taken big steps to privatise its facilities and services. Are you in favour of total privatisation regardless of the resulting social and economic problems?

Privatisation is a civilised process applied by most countries, developed or developing alike. But there should be a government body supervising the process and regulating cost of services. Prices should be no higher than they were when an organisation was run by the government.

The aim of privatisation is to speed up the rate of project execution and to bring down the cost, and there should be strict government control so the process can be beneficial despite the large social cost. We should implement it gradually as 43,000 employees have been laid off in one year.

How would you evaluate the industrial sector? Can industry be the real driver of development? And what is needed from the private sector?

Abu Dhabi’s private sector is growing in a balanced manner and progress is being made on the many industrial projects under way. They need more time to yield tangible results on the ground.

A factory takes two to three years to complete before the production process even starts. I encourage investors to support the industrial sector and enter into small and medium-size industries that are the vehicle of industrial development.

Does Al Fahim plan to invest in industrial projects that add value to the national economy?

We focus on fields in which we have experience, especially tourism, real estate, services and the auto trade. We do not intend to enter the industrial field.

Do you think the private sector needs more support as well as new tools to create a more attractive investment atmosphere?

The private sector is still under government control and is not free enough. The government has to give it more freedom to invest in several vital sectors. For instance if you want to build a project on a 10,000-metre site you have to go to the government to get the land – which means the government still owns the land.

The government has to specify new areas for commercial and tourist investment. Or it should set up a special department that would resolve investors’ problems. I would like to build a small shopping centre for Khalifa City residents but for months now I have not received a reply from the government.

Do you approve of the trend towards investing in Arab and Asian markets?

I am all for benefiting from investment opportunities anywhere in the world, and opportunities should be open to all. Our markets should develop and keep pace with global changes.

Are you in favour of gradually turning parts of family companies into publicly listed companies? When will we see an Al Fahim Group company become a public company?

I support turning private individual companies into private companies with shares, and if the companies are a success some of the shares can be offered to the public.

Mohammed Abdul Jalil Al Fahim

Honourary Chairman, Al Fahim Group

Mohammed Abdul Jalil Al Fahim was born in 1948 in Al Ain. He completed his elementary education at Koran Religious School in Abu Dhabi. He then joined Al Falahiyah School in 1959 before he travelled to the UK to pursue higher education.

Al Fahim joined his father’s business in 1986 and became involved with real estate and the automotive industry, plus industrial projects as well as travel and tourism. Today, Al Fahim is one of the biggest privately owned business houses in Abu Dhabi.

Al Fahim is also the author of From Rags to Riches, which charts the transformation within 30 years of a Bedouin society into a country with the world’s highest per capita income. The author weaves in the story of his own business career with that of the development of Abu Dhabi. The book was written in English and has been translated into Arabic, Japanese and French.