The Dubai Chamber of Commerce & Industry and the Data Management and Research Department (DMRD) jointly organized one of their series of seminars highlighting current economic issues yesterday (Wednesday) at the Dubai Chamber Auditorium. The meeting was attended by HE Eng Hamad Buamim, Director General of Dubai Chamber, Dr Belaid Rettab, Director, DMRD, and a number of the Chamber’s members, businessmen and the media.
The Director General of Dubai Chamber said that the seminar goes in line with the Chamber’s mission of providing its members with quality services, useful information and best business practices which also introduces them to the latest trends in the business world besides helping them out in the improvement of their business style.
Dr Belaid Rettab informed that this economic seminar was a very important one for all the members of Dubai Chamber as the open forum provided them with ample opportunities to voice their opinions about the current economic situation and to pass on their comments and suggestions as to how things could be improved and be feasible for the business community in regards to the GCC Economic Integration with special focus on the UAE and the fast growing Dubai Food Processing Industry and the Dubai Real Estate Sector.
The Forum opened with the hot topic of the GCC currency peg due to the depreciation of the US dollar in the wake of the recently-concluded Doha Summit and the integration process of the GCC Monitory Union (MU) that is slated for a 2010 launch and the problems faced as Kuwait depegged from the commonly adopted US dollar peg earlier in the year while Oman decided to opt out of MU beforehand. And, though the convergence criteria indicate that the economies of the GCC are fairly well harmonized in terms of
economic structure, cyclicality and openness, still factors like disparities in inflation, interest and exchange rates undermine the convergence of economies in real terms as the GCC MU was threatened by the changing structures of the GCC economies.
In 2004, the GCC countries agreed to adopt the official convergence criteria of the EU but research has found that this criteria to be almost unbinding for the members as due to oil revenues and gas reserves that showed considerable disparity which the experts felt would inevitably impact the structure of the economies in the future while the surplus budgets of member countries met the official convergence criteria, the fiscal budgets between the resource rich and the resource poor countries were picked as the debilitating factors. Experts advised that the inflation rates are not to exceed 2% of the lowest three’s average citing the example of Saudi Arabia with the lowest and Qatar and Kuwait with the highest inflation rates.
The Forum also discussed the challenges faced by Dubai’s Food Processing Industry that came under the spotlight of a survey conducted by Dubai Chamber which indicated that the industry was growing at a very fast pace and needed an increased level of demand, automation, technology and efficient energy utilization. Availability of raw materials and competition within the industry were identified as unfavorable conditions for the industry that instantly required governmental support and self regulation to establish high quality standard and efficiency within the industry.
The number of companies that responded to the survey amounted to 36.2% of the total number of 221 active food processing companies. Out of this, 33% of the respondents were engaged in food processing of fish, vegetable products and edible oils, 29% were engaged in bakery products, 10% in dairy products and 28% in other products. In regards to production, 33% said that their production ranged from AED1 million to AED 10 million, while 17% said the production range was more the AED10 million and less than AED20.1 million.
Another study on the real estate sector pointed out that the real estate market is not likely to cool down in the next five years as the market dynamics will take time to adjust to the discrepancy in the supply and demand. The study also revealed that the real estate price has increased by
a cumulative annual growth rate of 10% in the medium term while the long term increase was 4% which gives an average price increase of 7% which is equivalent to the current rent cap imposed by the Government of Dubai.
The real estate sector study further revealed that the Government policies measures that positively influence population, income, cost and availability of financing, buyers’ tastes and preferences, and the buyers speculation about the future prices will contribute to the increase in demand while the increase in supply will be determined by the costs of production inputs, cost of financing, advances in construction technology and expectations about future demands.
