Infrastructure in the UAE
The UAE has the most advanced and developed infrastructure in the region. From roads to airports to telecommunications, the UAE is home to world class facilities that have supported economic growth and enabled the development of business.
If you want to have a strong economy, you have to have strong infrastructure.
The UAE’s extensive road network connects each of the seven emirates and links major transportation hubs and population centers. The road network also links the UAE with neighbouring Oman and Saudi Arabia, facilitating trade. Traffic, and congestion on the roads, was once a major problem, particularly in the emirates of Dubai and Sharjah. However, traffic and congestion have eased with continued expansion of the road network.
Aviation was one of the earliest drivers of non-oil economic growth in the UAE. Today, the UAE is a global aviation hub.
There are 7 international airports throughout the country and the UAE is home to two major international airlines, Emirates and Etihad, as well as the two leading low-cost airlines in the region, Air Arabia and flydubai. The emirate of Dubai in particular has long focused on leveraging aviation to drive economic growth.
The aviation industry here in Dubai is actually an incredibly important industry; it forms 28% of the total GDP of Dubai and contributes $22bn annually to that GDP. It is also incredibly important for employment. It accounts for 19% of all employment here in Dubai, which is 250,000 jobs that are in the aviation sector or are related to the aviation sector.
The growth of aviation capacity throughout the country is set to continue with expansions planned at several of the country’s airports, the biggest of which is the development of Al Maktoum International at Dubai World Central, which, once complete, will be the world’s largest airport.
By 2030, the six largest airports in the country are expected to have a total combined capacity of 300m passengers per annum. The addition this level of capacity has left some critics openly questioning the feasibility of this expansion. However, local aviation insiders counter that the increased capacity will cater to the global market.
Obviously Dubai World Central will be the largest airport in the world for international traffic when it is completed, with 5 runways and capacity for 160m passengers. With the current population of the UAE at something like 5.6m, this might sound like somewhat of an aggressive plan. But I think the thing is, airports in Dubai and other parts of the UAE and indeed the GCC, are not actually being created for a domestic market. They are actually there to compete on the world stage.
The UAE’s strategic location has not only allowed the country to become a global aviation hub, but also a center for maritime activity and transportation. The country has numerous port facilities catering to general cargo, container shipping, and the oil and gas industry.
Most ports are located on the country’s Western coast, including the Port of Jebel Ali, the world's largest man-made harbor and the biggest port in the Middle East. The ports of Fujairah and Khor Fakkan are located on the Eastern coast and offer direct access to the Indian Ocean without the need to navigate the Strait of Hormuz.
Until recently, railways have been the missing element in the UAE’s transportation infrastructure story. However, that situation is currently changing. On September 9, 2009, the Dubai Metro was inaugurated and on the next day it opened to the public. It is the first urban train network in the GCC. Currently, the Dubai Metro consists of 75km of track between its two lines and cost $8bn to construct. An additional two lines are planned for the future.
While the Dubai Metro ushered in the era of rail in the UAE, the Etihad Rail project is set to bring rail transport to the entire country. Etihad Rail will cover a network of approximately 1,200 km of track stretching across the Emirates and is expected to cost $11bn to construct.
Phase 1 of the project, which is currently underway and expected to be complete by 2014, will link the industrial port city of Ruwais in the Western Region of Abu Dhabi with the Shah gas field near the Saudi Arabain border. Phase 2 of the project will extend the network throughout the rest of the emirate of Abu Dhabi, including links to the GCC rail network via Saudi Arabia and Oman. The third phase of the project will see the railway extended to the Northern Emirates, to Port Saqr in Ras Al Khaimah in the North and the ports of Fujairah and Khor Fakkan in the East.
Infrastructure in the UAE is not just about transportation. Telecommunication infrastructure in the country has been steadily developed and the telecommunications sector accounts for a significant portion of the economy.
The telecommunications sector is contributing around 5.3% to the GDP of the UAE. It has been increasing over the past few years, it was at 4.1% 3 years ago and now it is 5.3%. It is really significant.
Can we imagine today the development of a banking sector without really top communications capabilities? The education sector, the healthcare sector, information, media, etc, without having proper capabilities, which means by consequence proper infrastructure, proper connectivity.
With the UAE mobile penetration rate at 200%, the highest rate in the world, the country is now turning its focus to developing internet infrastructure and broadband connectivity.
I see the UAE becoming probably the first country to become completely fiber connected. There are other instances where the government stepped in being completely convinced that the broadband story is a key driver and a key enabler of economic growth. Here in the UAE, with the current policy that is put in place and the insistence on broadband, I see this country being at the forefront of the capabilities from an infrastructure point of view.
The global economic downturn has had a tangible impact on some of the UAE’s infrastructure development projects. Although these projects provided high-grade investment opportunities with very attractive yields, the lack of liquidity and timid investor sentiment caused delays in many projects.
The most severely affected projects were real estate developments. However, there were also some delays in transportation infrastructure including sea ports, airports, and roads.
We have continued to have a very good amount of growth. From 2003 to 2010, we have achieved a total investment of $27bn.
In the RTA, we did not cancel any projects. We did two things. We redefined our priorities and changed our plans, and we rescheduled some of the projects.
Different emirates felt different degrees of strain from the crisis. Abu Dhabi, due to its resource wealth and conservative development plan, has emerged the least scathed. Although some of the other emirates were not so fortunate, future outlook and investor sentiment have already rebounded.