In August 2007 fDi presented the Middle East Personality of the Year award to you, based on the strong performance that Ras Al Khaimah Investment Authority (RAKIA) had in its first year of formation. What have been the significant developments since then?
The investments continue to come in the same way and the trend is improving because we have many more companies. In our offshore business we now have more than 800 companies registered, and in total in RAKIA we have close to 2000 companies. We are targeting specific industries and we are calling them directly; very soon this year we will see breakthroughs from Japan, India and even from Europe. And we are finishing all the infrastructure for the industrial zones and completing all the works to make the whole thing a nice and smooth operation.
The companies are growing but we have challenges – we have a lot of requests for visas, for employment permits, and we are trying to streamline this. We are studying software issues because there is no software for free zones or industrial zones at present. We are engineering software to automatically renew the licences of the companies for registration, for online, for visa requirements, for all the needs of the industrial zone. We have a team of IT people who are working on this and it should be completed in two months.
Other than this, Ras Al Khaimah is booming and RAKIA has been keenly monitoring the reclamation and infrastructure works at Majan Island and Dana Island. The Majan Island reclamation project started seven years ago and is now completed, with the infrastructure – roads, sewage, electricity, water and air conditioning – are is under construction. Dana Island’s reclamation has been undertaken by Dredging International and all the studies have been completed; it is in the process of starting the reclamation, which should take about two years.
We are also looking after the masterplan of the Gateway City, a new city in the desert at the entrance of Ras Al Khaimah where His Highness (the Crown Prince of Ras Al Khaimah) wants to make sure we have an environmentally friendly city, with a green building code, shaded pavements, and a friendly and relaxing environment where people will come live and work.
Are you worried about the global economic climate? How will this affect Ras Al Khaimah?
Well, people will still need to have housing, they will still have to eat and drink and live, so there will be needs. What is more worrying is the psychological effect rather than the crisis itself. It has created such a fear in the minds of people. However, if we check the fundamentals, the economic parameters of the area, I am not really worried because in the Gulf countries there is a boom and the population is growing. There will be a need for real estate. For the industrial sector I am not worried at all because it will continue to be a very cost-effective destination and a destination of choice. Many industries are successful and if we look all the industries that started with RAKIA over the past three and a half years, they are producing, they are happy and they are making money.
In real estate there will be a slowdown for some time but still the price of oil is better than at any time in the past two years, there will be good income, the local population is growing, the foreign population is growing, businesses are coming in, so there will be a need for real estate.
Ras Al Khaimah does not have enough accommodation for the workers for all the industries we have been attracting. We want investments in real estate because otherwise we would end up with very high rents and very high costs of building, which we are not keen on because it would have a negative effect on industry. So we are really promoting the real estate where there will be a genuine need. In my opinion there is a shortage of about 20,000 flats at a minimum, and if we continue with the same inward investment levels the requirements will increase by 10,000 per year.
How do Ras Al Khaimah property prices compare to those in Dubai?
Land prices are probably less than half of Dubai. Apartment prices are also lower. The thing is here we have a genuine demand, we don’t have speculators. What we are looking for are real developers who will build a project and lease it, rent it or sell it and make money out of it – this is our way.
What other sectors are you looking to develop?
We are really keen on industry – I believe in industry. If you look at the world today, what are the G8 countries? The most industrialised countries. I personally am an industry man, from RAK Ceramics, therefore I am pushing as much as I can for industry. We are looking for long-term, sustainable industries. We don’t want seasonable industry. If you have too many building materials companies, for example, if you have a slowdown in the construction activity your industrial area will become a phantom city, which we don’t want.
We are trying to diversify and attract investments from around the world for people whose products can be exported to anywhere around the world. If we take the example of RAK Ceramics, today we are exporting 84% of our production to 126 countries. This is the example we want to follow for any other industry, to come to Ras Al Khaimah, to be able to produce in Ras Al Khaimah and to export to the rest of the world.
Where are your foreign investors coming from?
Our foreign investors are coming primarily from India and other parts of Asia, but also from Europe and US. We are focusing on Europe because I believe many industries in Europe can survive if they relocate in a cheaper destination for cost of production. That’s why we are focusing on medium-sized European industries who cannot continue to produce in Europe, for taxes, for manpower, for cost of land, for various costs. By producing in Ras Al Khaimah they can survive and continue their marketing and so on.
What about your investment in Georgia? How is that going?
In Georgia we have bought an industrial free zone; we have bought 51% of the port of Poti which is the biggest port in Georgia. Our aim there is to do business – and it’s a profitable business. And we bought four million square metres of land attached to the port to make a free industrial zone. We have started preparation of this and we want to start marketing of this free zone from January 1st.
Did you find that the war has made potential investors more hesitant to consider Georgia?
Of course. There will always be a hesitation when you have war. Investors do not like to go to war-torn places. But the US and EU have invested money in Georgia and they wanted to support the Georgia government, and we hope it will boost the economy. We are worried but still the port is doing well and we hope it will do better.
Do you have plans to expand into other countries in a similar way?
At the moment I would be foolish if I told you yes. We have to wait until the crisis is over. This financial crisis is still causing uncertainty because it has not yet hit the real economy. The real economy will be hit for sure because you have many industries that will be affected, so let us hope this crisis will pass and then afterwards we will restart studying where would be good investments for us.