Impressive growth in Ras Al Khaimah has been attracting the attention of local and international investors. The emirate saw an 18 per cent jump in its GDP in 2007. Emirates Business sat down with Khater Massaad, an economic advisor to RAK Crown Prince and Deputy Ruler Sheikh Saud bin Saqr Al Qasimi and CEO of the emirate’s Investment Authority (Rakia), to discuss RAK’s strategy for managing the boom and what it has planned for the future.
What is the Government of RAK’s vision for the development of the emirate?
The vision was to create economic development that serves social prosperity. Economic and social development require continuous economic growth, the creation of wealth, fruitful employment and the generation of income and revenue in support of public services and social welfare.
The mandate from His Highness Sheikh Saqr bin Mohammed Al Qasimi, Supreme Council Member and Ruler of Ras Al Khaimah and Sheikh Saud bin Saqr Al Qassimi is clear – to make RAK the best place to live and do business, with a mission to promote socioeconomic development of RAK hand-in-hand with the private sector by modelling the government as a supportive enterprise and not a competitor.
What was RAK’s GDP in 2007 and what is the emirate aiming for next year?
RAK’s GDP reached $2.25 billion (Dh8.26bn) in 2007, reflecting a 50 per cent rate of growth over the past four years with a 12 per cent annual rate of growth. In 2007, the GDP recorded an 18 per cent rate of growth, which is four per cent more than the 14 per cent rate of growth set by the government. It has been on track to achieve $5bn (Dh18.3bn) GDP with a rate of 14 per cent annual growth in the next five years.
How did the different sectors of the economy contribute to RAK’s GDP in 2007?
RAK’s economy depended significantly on manufacturing, which amounted to 25 per cent of GDP, followed by trade at 12 per cent, mining and quarrying at 12 per cent, tourism at 11 per cent, construction at 10 per cent, real estate at 10 per cent, services at eight per cent, transport at seven per cent and agriculture at five per cent.
What are the pillars of RAK’s development?
RAK, as you know, does not have large deposits of oil and gas but we are blessed with a beautiful coast, majestic mountains, expansive deserts and a lovely green belt. We are utilising these advantages to bring prosperity to our people. Industries, trade and commerce, tourism and real estate are the four pillars of the RAK economy.
When did RAK’s growth start?
The real development of RAK started in 2003 when Sheikh Saud became the Crown Prince and Deputy Ruler. Under his leadership, we perused the goal of making RAK a regional hub for investment, industry, trade and tourism. In addition to that, we are striving to create sustainable communities that will become a magnet for talent from all around the world. Our efforts have started producing results and recently we were rated the best investment destination by FDI magazine, Financial Times, London.
How have you started implementing the ambitious vision?
To attain the vision of our Crown Prince, we established various mediums. Our first success came in developing RAK Ceramics from humble beginnings to the largest single ceramic tile manufacturer in the world – producing in its 12 plants more than 100 million square metres of tile and three million pieces of sanitary wares that are annually exported to 128 countries. All of this took place while achieving over 400 times return on investment for our original invested capital. We set up plants all over the world and learnt a lot about the investors’ needs and difficulties.
What project came next and has it been successful?
To duplicate the success of RAK Ceramics and expand our investments, RAK Investment Authority (Rakia) was born. Rakia’s area of responsibility includes the Industrial Zone and the Free Zone in Al Hamra, and the Industrial Park in Al Ghayl.
Since its inception in April 2005, Rakia has achieved overwhelming success. The 2007 revenues have reached Dh118.04 million, an exceptional 311 per cent increase from 2006. Commercial licences are currently in-demand making up 38 per cent of the total licences issued by Rakia, followed by industrial licences (30 per cent), consultancy licences (18 per cent), media licences (seven per cent) and trading licences (seven per cent).
What makes Rakia different from other free zones?
In the Gulf and Middle East, free trade zones have been traditionally viewed as real estate operators and licence issuers. Rakia went the extra mile in attracting investors on the basis of partnering with them by not only being a landowner but also by offering advisory services and capital participation on selected projects. This created an atmosphere of trust among investors and generated a solid network of opportunities.
Currently, we are encouraging regional and international investments by offering prospects based on stable and freely convertible currency, 100 per cent repatriation of capital and profit, zero foreign exchange controls and trade barriers, 100 per cent free zone foreign ownership, services and infrastructure, safety, security and lifestyle options.
What is the current volume of investments in Rakia and what are your expectations for the future?
We already have more than 1,000 investors and been able to attract over $2bn (Dh7.3bn) of investment in various industrial and commercial segments. These businesses are diverse and strategic and are in the areas of glass and tableware, float glass sheets, cement, a DVD media factory, renewable energy, consumable hygienic products, vehicle assembly, hospitality businesses and the tourism industry. We have become one of the fastest growing free zone/ industrial zone organisations in the Mena region. Rakia is expecting to channel inward investments worth $15bn (Dh55bn) across various sectors into the fast growing emirate in the next five years.
What are Rakia’s latest projects?
Our latest project is the birth of RAK Offshore, a facility and regulatory body offering complete offshore non-resident business registration and services.
What other projects have been rolled out by Rakia?
We have established two real estate development companies, RAK Properties and Rakeen Development.
How are you ensuring sustainable growth and financial resources for Rakeen?
Rakeen is considering profitable investments abroad. It has oversees projects including: Isfahan City Centre (Iran), Tbilisi Heights (Georgia) and Uptown Tbilisi (Georgia).
Building such mega projects and increasing investment will mean population growth. Does the emirate have plans to serve more people and families?
Complimentary to all of our developments are education, services and health segments. Education has been always the cornerstone of RAK, therefore, schools are being set up and universities are under construction – including the George Mason University. Thinking about the future, the government has instituted substantial student scholarship programmes for nationals in RAK Higher Colleges of Technology and other institutions like the RAK Medical and Health Sciences University.
Health has also been given a similar attention. Recently a multi-speciality hospital with Swiss collaboration has been set up. The hospital offers a comprehensive range of services in key specialities like cardiology, neurology, orthopaedics and oncology. Other hospitals are to be set up soon.
Our flagship pharmaceutical factory “Julfar” the largest pharmaceutical production unit in the region also contributes to the well-being and health of the entire region.
What about logistics?
With these developments, logistic and transportation become a vital element, therefore Port Saqr is being expanded and modernised and RAK Airport is also being upgraded. Road, telecommunications and energy projects are all under way to keep up with this growth.
What are the emirate’s plans to further boost tourism?
We have witnessed growth of almost 40 per cent in tourist arrivals in the past couple of years. There are more than 25 hotels planned with capacity of 120,00 beds in the next five years. The government is implementing a tourism master plan and private developers are also being encouraged to make investments like the Dh850m amusement park to be opened this year.
The tourism sector is central to the strategy of presenting RAK as a modern and fun destination that offers the best in the industrial world with good living conditions.
Dr Khater Massaad
CEO of the emirate’s Investment Authority (Rakia)
Dr Khater Massaad is an economic advisor to RAK Crown Prince and Deputy Ruler Sheikh Saud bin Saqr Al Qasimi and CEO of the emirate’s Investment Authority (Rakia). He holds
a Master’s degree in engineering and a Phd in geophysics from the University of Lausanne, Switzerland. Originally from Lebanon, Massaad’s career in the Middle East began in the early 1980s when he worked on surveys for clay deposits and water, and on dam projects in GCC countries. He has also served as project manager for a variety of underground water projects in the UAE and Oman. A professional pilot, he likes to fly his jet in his spare time.
GDP in 2007, an 18 per cent rate of growth
RAK’s expected GDP in the next five years
Investment attracted by Rakia
Investment in Rakia in next five years
Rakia’s 2007 revenue, a 311 per cent increase from 2006
Value of Rakeen
RAK Properties is a public joint stock property developer that is engaged in the development of a number of local projects including:
Mina Al Arab
With nine hotel complexes, multiple residential dwellings and tourist attractions Mina Al Arab is a mixed use leisure and holiday beach resort situated along RAK’s coast. The Dh10bn project covers an area of 30 million square feet and will be spread along 13km of beachfront and a group of islands.
This Dh400 million project comprises two 40-storey towers, one residential tower and one office tower in Ras Al Khaimah.
Rakeen Development is a private joint stock company with a wider mandate that encompasses local, regional and international developments. The company was established in December 2006 with Dh4bn in assets and Dh400m in paid up capital. The initial value of Rakeen is now up to Dh9bn. Rakeen is the owner, developer and master planner and manager of key projects in Ras Al Khaimah and overseas, including:
Al Marjan Island
280 hectares of reclaimed land on a man-made island that will be a “Paradise on the Sea”. The island will have multiple projects in housing, time-share apartments, hotels, resorts and commercial buildings and will have the latest infrastructure technologies.
Bab Al Bahr
A Dh918m island project. Residents on the island will have an uninterrupted 360-degree beachfront. The development also features a 290-room four-star hotel resort and 120 time-share apartments. In addition, a 20-storey Bab Al Bahr commercial tower will be built to accommodate a mall and offices. Ownership of office space will be under free zone licence conditions, while the residential ownership will be 100 per cent freehold.
The Gateway City
It is a prototype city and its landmark will be a one-million-square-metre convention and exhibition centre. The Gateway City will house 180,000 in its first phase.
Industry and trade drive RAK growth