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A discussion panel on the partnership between public and private sectors in Abu Dhabi recommends updating legislation and releasing strategies to stimulate the private sector

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A discussion panel on the partnership between public and private sectors in Abu Dhabi recommends updating legislation and releasing strategies to stimulate the private sector

Monday, November 28, 2011
HE Mohammed Omar Abdullah, Undersecretary of the Department of Economic Development in Abu Dhabi delivered an opening speech today at Abu Dhabi Chamber of Commerce and Industry at the opening of the discussion panel entitled (Towards the Activation of the Partnership between Public and Private Sectors) in participation of directors and general managers of more than 20 private sector companies representing real estate, business and industry.HE The Undersecretary of the Department  said, We look forward to  the contribution to this dialogue and brainstorming in shedding light on key issues and topics related to the concept of partnership between the public and private sectors. Anticipating that recommendations and the results would strengthen this partnership and help achieve desired goals and in the forefront of which is highlighting the role of private sector in achieving sustainable economic development”. HE added that the government of Abu Dhabi lays great emphasis on the private sector private sector as a real partner of the public sector in achieving sustainable economic development, a goal clearly stated by Abu Dhabi Economic Vision 2030. His Excellency Mohammed Omar Abdullah in specified that Paragraph 17 of Article 4 of the Law No. (2)/2009 Concerning the Establishment of the Department of Economic Development, stresses the activation the role of the private sector through Proposing policies and strategies to develop the private sector, in coordination with the concerned authorities. “This orientation was embodied into the Strategic Plan 2011-2015, as the Department identified the priorities to support the growth of the private sector, with focus on targeted industries. In this respect, Five-Year Economic   revealed the weak performance and the contribution of the private sector in managing the emirate's economy. The first report of the Industrial strategy also s highlighted a number of constraints facing the private industrial sector, with regards to several aspects, including finance, marketing, legislation, high operating costs, and skilled labor”.HE also stressed the keenness of the Government of the Emirate of Abu Dhabi and the guidance of the sagacious leadership to overcome these difficulties and challenges, within the frameworks, plans and scheduled programs, consistent with the Economic Vision’ in addition to the Industrial. Accordingly, several steps were taken. A Competitiveness Office was established in the Department of Economic Development, in addition to a number of steps yet to be implemented with regards to modification of a set of legislations and relevant regulations and the establishment of a business center. The Undersecretary of the Department of Economic Development said that although the contribution of the private sector in the total GDP of the Emirate of Abu Dhabi in 2010 was (25%), however we are more ambitious. Still the pace of growth of this sector is slow, but the emirate's economy is moving in the right direction, despite the repercussions of the global crisis and the global financial problems in the past few years. HE Mohamed Omar Abdullah pointed out that all current efforts are in line with the 2030 Vision,   and endeavor to diversify the economic base, promote investments, provide capital, and adopt knowledge-based modern technology in various focus sectors. HE added that the discussion panel came to shed light on various matters and issues that contribute effectively to achieving greater cooperation and coordination, in build solid partnership between the public and private sectors, taking into account the economic issues, social dimensions and responsibility of the private sector establishments. In Conclusion, Mohamed Omar said that the social responsibility of the private sector is not limited to   rendering of aid and support, but goes beyond that to contribute to strengthening the capabilities of scientific research, and providing opportunities for pilot projects, training and upgrading citizens’ work force capabilities, and standing as peers to government in providing employment opportunities.  For her part, HE Engineer Fatima Obeid Al Jaber, Chairperson of the Abu Dhabi Businesswomen Council (ADBWC) Executive Board (EB), Chairperson of the Committee of Contracting and Construction of Abu Dhabi Chamber of Commerce and Industry, delivered a speech, in which said that the economic diversification policy in vital and most important sectors of industry, trade and services constitute one of the core pillars of the 2030 Vision of the Emirate of Abu Dhabi.Engineer Fatima Al- Jaber, noted that the 2030 Vision aims  at raising the contribution of non-oil sectors to GDP to 64% by 2030, and that the ratio   had exceeded the exceeded the 50%  score during the year 2010.    Engineer Fatima stated that the emirate plans ahead to advance economic diversification, expand the economic base and provide investment opportunities. Engineer Al-Jaber emphasized that in order to achieve this Vision’s goals, concerned entities in the emirate have launched several development initiatives and investment projects to deepen partnership and cooperation between the public and private sectors; and exchange experiences.  The most important of which are, the Khalifa Industrial Zone (Kizad), the Higher Corporation for Specialized Economic Zones, Masdar and other strategic development projects. HE Fatima Al Jaber confirmed that private sectors companies and establishments play a prominent role in the development of infrastructure in the emirate; and that the private sector adds new capabilities and value to the business and investment climate.HE Fatima Al Jaber said that the Economic Vision of the Emirate of Abu Dhabi focuses on expanding areas of cooperation between public and private companies and establishments, as this will have a great impact in promoting the national economy, and provide several unique investment opportunities to the business community. At the end of her speech Fatima Al Jaber said that Abu Dhabi Chamber as a representative of the [private sector companies and establishments in the Emirate of Abu Dhabi, is committed to providing all forms of support to the private sector and enabling it to take advantage of network of services and investment opportunities offered by the Emirate of Abu Dhabi; through the inviting and distinctive investment climate In a presentation made by the Department of Economic Development, Fatima Al Mansouri the Economic Researcher at the Studies Directorate, highlighted the determinants of Abu Dhabi Economic Vision 2030 governing public and private sectors partnership; and the role set the Vision for the private sector as one of the main nine pillars of vision for the economic, social future of the Emirate.Fatima Al Mansouri pointed out that the law No. 2 of 2009 Concerning the Establishment of the Economic Development Department, focused on the importance of activating the role of the private sector, and emphasized preparation of studies and proposing policies and strategies to developing its capabilities, in coordination with the concerned authorities.She added that reports on competitiveness, indicated that the private sector companies still lag behind the public sector in terms of capacity to locally compete. The private sector also needs to raise its competitiveness to cope with regional private sectors, in view of the Gulf Common Market requirements. Al Mansouri indicated that  such  critical issues  and factors prompted the  Department of Economic Development to develop a strategy to stimulate and spur the private sector  based on the from the Economic Plan and the Industrial Strategy; and to  set effective,  practical and applicable  mechanisms and procedures for can to empower the private sector is play its key role. Dr. Ibrahim Abed the Economic Specialist at the Economic Department made a presentation on the reality of the partnership between the public and private sectors in the Emirate of Abu Dhabi, in which he noted that the achievement of the objectives of the Abu Dhabi economic Vision 2030 requires the transformation towards the development of non-oil economy, which requires increasing private sector contribution to GDP, which currently does not exceed 25%. Dr Al Abed said that obstacles embedding should facing the private sector should be overcome.Dr. Al Abed noted that the private sector average contribution to GDP of the Emirate of Abu Dhabi during the period 2006-2011 was 22.4%. In 2010 and 2011, the private sector contribution to GDP was 22.9% and 23.4% consecutivelyDr. Ibrahim Al Abed in his presentation reviewed a number of challenges facing the private sector in the Emirate of Abu Dhabi, most notably the rise in some investment costs (such as ... fees and rentals), finance related obstacles(interest and bank guarantees) in addition to marketing and contracting  issues. Al Abed added that the challenges faced by the partnership between the public and private sectors in areas of (industry, tourism and real estate)  include high rent  of land compared to other countries, the length the licensing procedures, and delays in the provision of services and facilities such as water,  and electricity for industry. Obstacles also include excess of supply, low occupancy rates and the lack of attractive events to encourage tourism. According to Dr. Al Abed, there is need for many laws and regulations. Challenges embody excess of supply, falling prices and that the majority   real estate units are intended for high-income groups. Dr. Al Abed highlighted other challenges facing the effective partnership between the public and private sectors in the Emirate of Abu Dhabi, such as the rising cost of expatriate labor (recruitment - accommodation - transport - wages), and high land and real estate rents compared to the other emirates and neighboring countries.Al Abed said that the private sector faces several financing challenges, especially after the global financial crisis, including the difficulty in obtaining finance from commercial banks, with conditions that suit the private sector and productive activities, in addition to the high cost of capital (interest on loans) for private industrial projects which reached 12%. Al Abed explaining pointed out that   set tight conditions for guarantees of up to 100% of loan value. Banks also have some reservation for lending despite the availability of liquidity, and in turn they tend to increase personal loans. Dr. Ibrahim Al Abed explained that the volume of (cumulative) loans offered to the private sector has fallen since the end of 2008, down from AED 630 billion to AED 607 billion at the end of 2009, to AED 588.8 billion at the end of September 2010.DR Al Abed added that private sector loans amounted to AED 13.6 billion in 2010, of which AED 9.2 billion were personal loans which accounted for 67% of the total financial facilities while the share of business sectors was AED 4.4 billion constituting 23% of the total.  Al Abed reviewed a number of regulatory challenges facing partnership between public and private sectors, according to the study prepared by the Studies Directorate of the Department of Economic Development. The most importantly, was the delay in issuing a number of laws and regulations related to improving the investment environment for the private sector, such as legislation concerning competition bankruptcy, commercial concealment, SMEs, foreign investment, and other laws.Dr. Abed said that the study identified some other challenges such as the lengthy administrative procedures for licensing,  and  inspection carried by multiple entities, and  the multiple approvals required for licensing ( Ministry of Health, Ministry of Labor, Environment Authority, Civil Defense, Department of Economic Development ... etc)Dr. Al Abed as well highlighted issues related to SMEs n the Emirate of Abu Dhabi under the “Khalifa Fund for Enterprise Development” responsibility for financing of projects proposed by the citizens, pointing out that 367 projects were funded by the end of the third quarter for the current year, with total value of AED 600 million, distributed according among agricultural, industrial, and service sectors, noting that there is lack of data and information on SMEs.Al Abed explained that Tasnee (manufacturing program), of Khalifa Fund which was launched at the beginning of this year, allocated AED 55 million for industrial financing. The percentage of women who obtained financing constituted 31% of to all financed persons.  Khalifa Fund receives 120 financing requests on average per month.Dr. Abed probed the competitiveness obstacles faced by private companies in Abu Dhabi. Al Abed classified the main obstacles as: administrative barriers, obstacles related to providing required manpower and weak capital markets. Secondary obstacles according to Al Abed include:   the lack of cooperation between establishments, weakness of the innovation initiatives, slow development of the private sector, lack of expertise and experience, lack of Fair competitive environment, the absence of the legal framework for companies and the direct competition from State-owned companies.Within the context of the efforts exerted by the Department of Economic Development, strengthen partnership between the public and private sectors, Dr. Ibrahim Al Abed highlighted the for the implementation schedule of survey, polls and economic indicators intended to meet the needs of the private sector during the period 2010-2014, which include: the “investment map”   that cover a number of production projects (150-200 Project) in various sectors and Regions. These projects will be launched for the private, foreign and business sectors to implement.  The surveys include Confidence in Business Climate Index, in the emirate of Abu Dhabi, the industrial sector, the foreign direct investment FDI, the participation of women and the financial sector. Dr. Al Abed  stressed the need for  be joining efforts to support and stimulate the private sector by providing an integrated package of substantive technical and administrative support, facilitating promotion and marketing,  providing tax, and customs exemptions,  easing procedures, reducing production costs, and giving  certain economic benefits, such as a preference in contracts for local procurement, privatization of some government projects, and strengthening the partnership between the public and private sectors, or the so-called Public-Private Partnership (PPP). Al Abed pointed out that the objectives of the strategy to stimulate the private sector include the acceleration of economic diversification through the creation of a modern balanced economic structure, free from dependence on a single commodity (oil, petrochemical and chemical industries (.Al Abed added that targets focus on   striking a balance between public and private sectors through the reducing dependence of private sector on the public sector for supporting   its economic activities, depending on the public sector’s oil revenues, and its ability to finance government economic activities, budgets, public companies, foreign trade and foreign investment.In this context, Dr. Al Abed laid emphasis on the importance of adopting a set of policies and effective applicable tools and mechanisms, within the framework of an integrated strategy to stimulate the private sector in the Emirate of Abu Dhabi, based on the principle of PPP in the implementation of development projects. According to Al Abed, it is also important to increase the proportion of   the private sector contribution in the total GDP of the emirate.  This requires increasing the participation of the local private sector in projects rather than dependence on external establishments for the implementation of development programs. The imbalances in the structure of the private sector should be corrected as it is currently focusing on non-productive sectors.In his presentation, Dr. Ibrahim Al-Abed presentation, stressed the need to raise the level of competitiveness of the private sector at the regional and international levels, through improving production and export efficiency, and finding appropriate solutions to the obstacles facing the economic sectors in Abu Dhabi, which impede its upgrading and development.Al Abed recommended encouraging integration and mergers among small companies in the emirate, and stimulating the private sector labor market to absorb citizens, and creating an enabling environment to support private sector development especially private business, industrial projects and SMEs. Dr. Ibrahim Al-Abed the Economic Specialist at Abu Dhabi DED shed light on the issues hindering the partnership between the public and private sectors in Abu Dhabi, the most important of which is the absence of diversity in educational outcomes, and that most citizens tend to apt for human studies, which reduce graduates ability and opportunities to take jobs in both sectors.The private sector labor market requirements focus on scientific and applied technical disciplines, (sciences, engineering, medical, nursing, etc ...) this is one of the reasons behind the low percentage of citizens in the private and joint sectors.Dr. Al Abed expected the continuation of private and joint sectors, relying on foreign workers under the acute shortage of technical disciplines among citizens, which would lead to further imbalance in the composition of the labor market, unless strategic remedial actions are taken.Dr. Al Abed explained that this imbalance exerts pressure and burdens to economic and social policy makers, as it will slow down the process of sustainable development, and lead to high cost of lost opportunities for production value in the short and medium term.Al Abed said that there is a continuous relying on non-citizen labor force in the private sector, which could increase unemployment among citizens in the future, especially with the increasing population rates and growing age group of young citizens in the emirate. Al Abed wrapped up  his presentation by stating that there  are  many justification for building a strong foundation of partnership between the public and private  sectors in order to   raise  the competitiveness  of  private sector products in local, regional and global markets;  increase knowledge and improve levels of management and acquisition of  modern techniques, which  would enhance productivity. Dr. Ibrahim Al Abed added that among the most important justifications , is the need to share risk, speed up provision and development of services for all clients, take advantage of the financial resources  provided for the private sector,  reduce public sector capital expenditure,  increase productivity through  raising efficiency and quality, and  finally  enable  both sectors to share social responsibilities.
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