RAK plans to lure Fortune 500 companies
Sheikh Faisal bin Saqr Al Qassimi, Chairman of Ras Al Khaimah Finance Department, underscored the plan by using the term "Fortune 500", an annual list compiled and published by Fortune magazine that ranks the top 500 American public corporations as measured by their gross revenue.
In an interview with Oxford Business Group (OBG), Sheikh Faisal said Ras Al Khaimah, the fourth largest UAE emirate, has already opened investment representative offices in the UAE and other countries and is planning to set up another one in the United States as part of that drive.
Another RAK official quoted by OBG said the $500 million (Dh1.8 billion) in bonds issued recently by the government would be used to expand the emirate's infrastructure and build additional power stations to meet the rising needs of investors.
"We have opened RAK representative offices in Dubai, Abu Dhabi, India, Turkey and Germany. We will continue to expand this network, as we will soon open an office in New York. In the long run, we wish to have a presence in the major global economic blocs since it is a very good way to market ourselves to the world," he said in the interview, sent yesterday to Emirates Business.
"The RAK free trade zone has its own international marketing drive. For now, it is primarily targeting small and medium enterprises, but the long-term objective is to attract Fortune 500 companies. Our goal is to provide great opportunities to companies that want to open regional headquarters here… the vision is here, and so are the opportunities."
In the other direction, Sheikh Faisal said the emirate would also intensify a drive to invest abroad but hinted it would avoid Europe due to high costs.
"We will increase our foreign investment effort over the course of the next three years. Asia is the emerging market that everyone is talking about. The major challenge is to try and find low-risk sectors. Investing in Europe has a high entrance fee and most markets there are highly competitive," he said.
"In the energy, real estate and manufacturing sectors, however, I think RAK's true potential lies in this region. It's the same culture, which, therefore, allows us to assess our strengths and weaknesses more accurately."
Sheikh Faisal said efforts by the emirate to diversify its economy and increase income had produced results given what he called its poor energy resources. He noted that the private sector is already playing a key role in the local economy.
"Unlike other emirates, RAK has not been blessed with an abundance of natural resources. This has led us to develop other industries and create other sources of revenue. This is how we became a leading supplier for cement and aggregates in the UAE and the region," he said.
"Through our free trade zones, we have also attracted private investment in the industrial and commercial sectors and have raised revenues through customs duties and other taxes. So all in all, the sources of revenue are quite diversified and well balanced. Finally, new sources of economic activity and government income are being expanded right now." According to Sheikh Faisal, the government's priority in the next stage is to improve the infrastructure, such as roads, the ports and the international airport to ensure RAK can cope with the increased activity and population, and allow it to become a more attractive industrial, business, and logistics hub.
"Every sector is prepared for expansion but the services sector, which includes tourism, education, and health care, as well as financial services and logistics, have the most potential," he said. Another official quoted by OBG agreed that priority would be given to the development of the emirate's infrastructure, citing last month's decision by the government to issue $500m in Islamic bonds.
Khater Massaad, Adviser to Ras Al Khaimah's Crown Prince and CEO, RAK Investment Authority (Rakia), said industry would be the focus of the emirate's investment drive given the high feasibility of such projects.
"Rakia launched its first sukuk in the form of a $500m five-year issue, to be listed on the Dubai International Financial Exchange and the London Stock Exchange. It was the first to be launched since the US sub-prime credit crisis. The investment will go towards developing Ras Al Khaimah's infrastructure, and making the emirate more attractive to foreign investors," he said.
"Industry will be our primary focus. Last year we were given a certificate by Financial Times's fDi as the most cost-effective destination in the Middle East. We have begun construction of Al Ghail industrial park, which will add 21,000 square metres of space, and we are in the process of completing its infrastructure."
Asked about power projects in the emirate to cover a supply shortage and ensure sufficiency electricity to investors, he said a 200MW plant had almost been completed and another one with a capacity of 80MW is under construction.
"We are working to ensure that electricity is provided to all occupants of the free zones. We were depending 100 per cent on the Federal Electricity and Water Authority. However, we are now in the process of upgrading our own energy facilities. RAK Energy was commissioned to install a large, 200MW power plant in the north near RAK's cluster of cement plants."
"We understand that there is currently a shortage of supply, and we cannot afford to delay electricity to any incoming investor. We are building an 80MW power plant in the Al Ghail area, which will be operational by this month," he said.
"We are also working on the installation of another plant in Al Hamra under RAK Power, which will be ready by September. Despite the shortage, all present investors receive power."