Free-market key to Sharjah's growth

Eton and Harvard-educated, Majid Jafar could have gone on to reach the pinnacle of success on Wall Street or the City of London – maybe even both. Yet, his roots are deeply implanted in the UAE, both in terms of culture and family. Among the leading group of second generation businessmen in the Emirates, Jafar, in his early 30s, is helping to ensure Crescent Petroleum, the company his father started more than three decades ago, remains on its successful trajectory. Emirates Business caught up with him to discuss oil prices, the current financial crisis and his respect and appreciation of the emirate of Sharjah where his commercial interests are based. From your point of view, as a Sharjah businessman, how have you seen the impact of the development of the Emirates' economy? Sharjah is the third largest economy in the UAE, and one of the most diverse, and has the widest industrial base in the UAE with many SMEs, several successful free trade zones, and world-class ports on both coasts. The approach of the government has been very free-market oriented, encouraging the private sector and with hardly any state-owned companies in any sector. As examples – there are local private sector companies in the oil and gas sector, port management, oil products, hotel management, and Sharjah is also home to Air Arabia, the first airline in the Middle East to be publicly listed. At the same time, and although Sharjah has also experienced phenomenal economic growth in recent years, the emphasis has not just been on growth but on social and educational development and quality of life, with top quality universities such as the American University of Sharjah, cultural activities, and 25 museums. I must take this opportunity to highlight the world-renowned Sharjah Biennial Art Fair, which is currently on and which we as Crescent Petroleum are proud to be sponsoring. How is the current economic downturn affecting Sharjah. Are the consequences of the slowdown different than those being felt in Dubai and the rest of the UAE? Of course, no economy on earth has been spared by the global downturn, but in Sharjah some of the effects have been less severe, mainly because the exposure to real estate was much less. The economy, trade and identity of Sharjah has been more regional and linked to the Arab world, and the proportion of expats is a bit lower. As such there was not much speculation in property investment or major freehold developments. How dependent is Sharjah on the economic growth in Dubai? All the economies of the UAE are interdependent and yet all of them choose slightly different models for development and emphasise different aspects. This is in my view the key to the success, resilience and diversification of the UAE economy – the federal system has allowed a larger number of companies, positive competition, and a higher quality of goods and services, leading to the second largest economy in the Arab World, and by far the most diverse and competitive. The wisdom and vision of the nation's founding fathers continued by the current rulers, combined with the tolerance and openness of the Emirati people, lead to a unique climate where people and businesses of all types can interact, grow and flourish. For me, that is the beauty of the UAE, and the true spirit of Islam if one looks at our history. Sharjah has announced wide ranging initiatives including a plan for boosting tourism. Are there other initiatives the business community would like to see the government implement? We in the Sharjah Chamber of Commerce are in regular dialogue with the local government departments on initiatives to improve the business climate and needs of the local private sector, such as the needs of the local industrial sector, traffic issues and improvements in the road infrastructure, which is currently ongoing, streamlining processes for businesses, and in other areas. Where do you see oil prices going from here? Is it realistic to assume that price levels can increase given forecasts of a drop in global demand? With the global economic slowdown, prices have fallen to about $50 per barrel, and commentators are calling it an oil price collapse, but I remember when I started in the business about 10 years ago, oil was $9 per barrel and we were running economics at as low as $6 per barrel, so we need to take a historical perspective. Last year of course prices reached $150 per barrel, but that was artificially high and I feel between $50 and $80 is probably reasonable to expect over the short to medium term. In the long-term all I can predict is that all the forecasts will be wrong as usual! What is important is not really the level of oil prices but ensuring price stability. Also, regardless of a short-term drop in demand, world demand has on average grown annually by two million barrels per day, which means we have to add the equivalent of a new Saudi Arabia every five years – the days of cheap oil are gone. What is the outlook for the oil and g