Post-Brexit: Business as usual for British trade group in Abu Dhabi
Richard Oliver is in his fifth and last year as chairman of the 350-member British Business Group (BBG) Abu Dhabi, and has lived in the emirate since 1995.
Bilateral trade between the UK and the UAE was at £12.9 billion (Dh62.5bn) in 2014, up from £7.5bn in 2009, and the aim is for it to reach £25bn by 2020.
What effect will Brexit have on British businesses in the UAE and Gulf region?
Because of the market volatility immediately before the UK’s referendum, and magnified greatly since Brexit, the UK currency has moved sharply downwards against the dirham, and so for British expatriates and businesses who are sterling-based but residing in the UAE – paid in US dollars or dirhams – there has been a corresponding nominal increase in their remuneration. For sterling-based entrepreneurs looking to break into the UAE to invest, however, the deterioration has made it significantly more expensive to establish in the UAE. So the UK’s foreign direct investment in the UAE is, in my opinion, going to be reduced. British goods and services will now seem cheaper to Emiratis and GCC-based entities generally, and so in sterling terms, the import-export balance is likely to improve and FDI into the UK from the UAE will increase in volume terms. One factor is hard to assess – how much will UAE investment be deterred by the lack of clarity around the UK’s future with the EU? My own feeling is that this factor will be very limited as regards the UAE. Net, I think that UAE-UK business and investment will not be heavily affected by this referendum. Overall, I am not too pessimistic about the future climate for UK-UAE business. Although, the additional uncertainty is unhelpful.
Do women play an active role in the BBG?
We have four ladies on the board: Jenny Hunt runs events; Lubna Qassim runs the government relations for us, and she is excellent; Kate Harris is in charge of cultural projects; and Stephanie Jerron-Quarshie is the business development manager.
What is the most significant hurdle British businesses face when setting up in the UAE?
I think everybody would agree that the most difficult thing to do in the UAE is first, to get your first deal, and second, to get your first payment, because it is a long time before you get your first deal and a longer time to get your first payment. The misunderstanding is how quickly it takes to get cash flow moving in a positive way in the UAE.
What would be the time frame between deal and payment?
It differs from person to person, but if you are setting up a new business it would take you a few years from scratch to breaking even.
How do you view the future of the UAE after the oil price crisis?
When I came here 20 years ago, there was one UAE economy and now there are three UAE economies: Abu Dhabi, which revolves around big government [spending], around very specific sectors – oil, securities and financial services; the Dubai economy, which is much more broadly spread and has wider penetration from SMEs, has a more significant logistics and transportation dimension through facilities such as Jebel Ali, the airports; and the Northern Emirates, some of which are very strong. So Sharjah is the centre of excellence for downstream industrial companies and Ras Al Khaimah is growing in tourism. The sum of that, the UAE economy, as compared with when I first came here, is much more diverse and vibrant a field and it means whenever one is not doing very well you have got some support from the other two. We went through a golden period when all three were doing pretty well. That is not always the case. I would say Abu Dhabi is adjusting to lower oil [prices], and Dubai is not oil-dependant but it depends on others that are oil-dependent, so it would be a mistake to say that Dubai is unaffected. Probably the economy that is the least affected is the Northern Emirates’, which are doing pretty steadily as they were doing before, and you can see that in the individual emirate’s GDP statistics.
How do you view the progress in the diversification of the economy?
I think in the past two years, I would say there has been a healthy reassessment about how money has been spent by the Government, and it feels as if the adjustment has been overdone and maybe the cutbacks have been severe in some areas. I would say, a post-oil [UAE] will have a healthier economy. Opportunities have been taken to reduce subsidies, to socialise the concept of VAT and other taxation measures, so I think there will be a structural improvement in the budget position, a structural improvement in the trade position. I think there may have been an overreaction to the low oil prices.
What are the opportunities for British companies in this period of diversification?
If we are going to classify into clusters, there is a “business as usual" cluster, which includes logistics, food and beverage and media. This is the fast-moving consumer goods or consumer packaged goods cluster, which should expect to grow. And then there is the traditional high-value opportunity segment, which is driven by much higher infrastructure requirements, by the large projects around oil and gas, around Saadiyat Island’s cultural developments. Again, I would analyse in two segments – structures and Vision 2030.
Have you had any company pulling out in the past 12 to 18 months?
You do see companies pulling out. I am pleased to say not many are British, but I have seen a couple of multinationals pull out when they feel they don’t want to be in the region. I think the last place you pull out from is the UAE. If you are going to be in the region the UAE is the place to be. In Abu Dhabi, if you take all the effort to get in, you have to show why before you pull out, because it takes you an extremely long time to recover.
How has the experience been of Emiratisation?
A key thing is that government employment is much easier to find than private employment. And private employers making decisions not to employ an Emirati means there is something wrong. It is easy to say for an outsider, because after 21 years I am still an outsider. I think it is important to wait and recruit the right people. The multinationals will have systems in place for training and development, for recruitment, for assessing across the globe. If you want to recruit somebody that stands out, it is better to delay your programme than taking somebody to fulfil a requirement. There is kudos in supporting the government, which is not found in the West. There is kudos for government companies such as Adia and Adnoc. We need to see this with private companies.
And what do UAE nationals need to find jobs with British companies?
A good, general training, a willingness to work. You have to do it quite early, get some time in New York, London.
How do you view Emirati women in terms of their role in the economy, especially compared to their male colleagues?
I find that the first Emirati women I employed years ago were really engaged, but now in 2016, it is much more level and the men have recognised that they have got to do more. There has been a significant improvement in the engagement between the private sector and Emiratis. I think the public sector will always be the same.