Industry Overview: Middle East Connections 2014

Moving Forward and Onwards

Singapore and the Middle East have a longstanding relationship that began as far back as the 9th century when Arabian traders in dhows temporarily docked in Singapore while plying the Maritime Silk Road to trade with China. This trade relationship was boosted in the 19th century when the Suez Canal opened, strengthening trade relations. Then-Prime Minister Goh Chock Tong also initiated a series of diplomatic visits, which continues until the present day.
 

THE STATE OF THE GLOBAL ECONOMY

Development in advanced global economies was generally weaker in 2013 than expected, with the US yet to solve its fiscal impasse and the weak domestic demand in Europe. While recovery in advanced economies in Asia is likely to lift export demand, structural reforms in China and fiscal consolidation in some ASEAN economies are likely to moderate growth. In view of this, the Singapore economy is expected to show slow recovery of 3.5 to 4 per cent in 2013, with gradual growth of 2 to 4 per cent expected in 2014.
 

THE MIDDLE EAST IN 2013

Travel, Tourism and Hospitality

Amidst the numerous new hotel launches and revamps taking place in the Middle East in 2013, Raffles Dubai announced the launch of the Dubai Floor, formerly the private residence of a sheikh, transformed into private accommodation targeted at wealthy visitors around the world. The sprawling 2000sqm space includes a nine-seat cinema, three kitchens, a spa and hair salon, a majlis and six spacious suites. Accessed via a private elevator, visitors will be entitled to butler, chef, limousine and custom linen services.

In February, the Dubai Properties Group signed an agreement to develop the first Miracle Garden project in DUBAILAND®. The 721,000sqft outdoor leisure facility includes unique special vertical and horizontal landscaping designs.  Featuring more than 45 million flowers, The Miracle Garden also houses a flower pyramid and the world’s biggest flower clock.

With women lamenting the loss of ladies’ beaches for a long time, 2013 finally saw Abu Dhabi making plans to open a new female-only beach, complete with female security guards and lifeguards. The highly-demanded beach replaces the Emirates’ first ladies’ beach which was closed due to re-development plans at the Ras Al Akhdar area near the Emirates Palace Hotel.

Two Dubai-based Jumeirah restaurants, Al Mahara and The Rib Room steakhouse, made it to The Daily Meal’s first annual “101 Best Hotel Restaurants Around the World” list in 2013. Based in the United States, The Daily Meal is one of the largest resources for food and drink information on the web. Described as “a carefully curated collection of hotel feasts”, the list was compiled through recommendations from The Daily Meal’s editors who have travelled extensively around the world. The only two restaurants who managed to make the cut in the Gulf region, Al Mahara and The Rib Room appeared alongside internationally renowned restaurants such as Alain Ducasse at Plaza Athénée Hotel (Paris) and Joël Robuchon Restaurant at MGM Grand Hotel & Casino (Las Vegas).

Health and the Environment

According to the International Diabetes Federation, healthcare businesses in the Gulf region are expected to flourish, with lifestyle diseases like diabetes on the rise. February saw the United Arab Emirates adopting regulations to cut prices of more than 6,600 types of imported medicine by up to 40 per cent.  Pharmacies were given three months to adjust their prices, and medicine prices were unified with other states in the six-member Gulf Cooperation Council.

In September, in a bid to improve on the healthcare industry’s standard of service, Saudi Arabia was reported to be expected to sign SR3 billion worth of health contracts. Arab News reported that contracts would include new hospitals, information technology facilities, as well maintenance and cleaning.

UAE also took action to launch its anti-tobacco campaign in 2013. Regulations include bans on smoking in public vehicles in the presence of children younger than 12 years old, tobacco advertisements, and sale of tobacco products within 100metres of places of worship and schools. This follows the No Tobacco Day in May, where more than 200 retail outlets ceased the sale of cigarettes for 24 hours.

The Middle East saw one of the worst disease outbreaks this year, and continues its fight against the Middle East Respiratory Syndrome (MERS). The SARS-like coronavirus which emerged in the Middle East last year had Saudi Arabians accounting for the vast majority of the worldwide MERS death count.  A resolution made during a conference held in Saudi announced taking action to monitor latest developments, studies, and research and setting up treatment protocols.

Caused by a virus transmitted via contaminated food and water, polio has also broken out among young children in northeast Syria, and poses a threat to millions of children across the Middle East. Targeted to begin in early November 2013, there is a campaign that aims to vaccinate 20 million children, and is expected to last at least six to eight months.

Green Initiatives

The year 2013 saw many regions in the Middle East embracing clean energy initiatives. In January, Abu Dhabi-based clean energy company, Masdar, announced its plans to test three pilot programmes over 3 to 3.5 years for a seawater desalination plant that aims to be commercially viable by 2020. The three pilot plans will be a part a programme where the pilot plants will be developed to test different desalination technologies to meet long-term water needs for the growing economy and population.

Also in January, Bahrain was reported to be in talks with Masdar about their intention to launch renewable energy plants in the Gulf kingdom. A feasibility study on setting up at least two renewable energy stations was scheduled to be conducted, and Sheikh Abdullah bin Hamad Al Khalifa, personal representative of Bahrain’s King Hamad and president of Bahrain’s Supreme Council for the Environment, expressed his readiness to provide all facilitations to Masdar in the implementation of the second phase of the project.

The Dubai Airports also did its part by introducing a string of energy efficient green initiatives to help reduce its carbon footprint. This includes installing 192 solar panels measuring 450 sqm which will be erected on the roof of the building. Recycling will also play a major part in the construction of the new concourse to reduce the amount of waste being disposed of in landfills.

Industry Shipping and Logistics

In industry shipping and logistics, Abu Dhabi Ports Company (ADPC), developer of ports and industrial zones in the emirate of Abu Dhabi, and container terminal operator Abu Dhabi Terminals (ADT) celebrated the handling of one million containers since its commercial opening at the end of 2012.

In 2013, DP World celebrated a milestone as well when its Dubai ports handled the 100 millionth contained to pass through the DP World, UAE region in ten years. Achieved between January 2003 and January 2013, the significant number covers all container boxes handled in both Mina Rashid and Jebel Ali Airport.

The year also saw Mina Zayed, the downtown port in Abu Dhabi City, being confirmed as the new permanent terminal for Abu Dhabi's cruise industry. Formerly the location of Abu Dhabi's commercial hub until container shipments began shifting to Khalifa Port last year, a temporary cruise has been erected to cater to cruise passengers since then.

Dubai-based air services provider dnata revealed details of a plan to build a purpose built cargo logistics centre in the heart of a London Heathrow Airport. The dnata City will include a 20-acre cargo complex centred around five air freight warehouses, a transportation facility, and a yard for airside operations enclosed in a security-fenced area.
 

Strengthening Ties in Singapore and the Middle East

On 1 September 2013, the Gulf Cooperation Council - Singapore Free Trade Agreement (GSFTA) entered into force. This Agreement will further enhance Singapore’s flourishing economic and trade relations with the Gulf Cooperation Council (GCC) which consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). It is important to note that Singapore is the first non-Middle East country to have a Free Trade Agreement (FTA) with the GCC. This is already Singapore’s second FTA with the Middle East – the first one being the Singapore-Jordan FTA in 2004. The SJFTA and GSFTA will eventually reduce tariffs by 100 per cent and 99 per cent on Singaporean goods respectively. This will give Singapore companies a more competitive edge vis-à-vis other foreign imports in these markets.
 

Tourism and Education

Trade and diplomacy are not the only areas in which Singapore and the Middle East work together. Singapore remains one of the favoured tourism destinations for visitors from the Middle East. Visitor arrivals in Singapore from the Middle East showed a total of 68,468 visitors, from January to June 2013.

In 2013, Singapore was voted as the number one Halal-friendly holiday destination in Crescentrating’s non-Organisation of Islamic Counties (OIC) category again. Crescentrating is a company specialising in halal-friendly travel. Other non-OIC countries that made it onto the list are Bosnia & Herzegovina, Thailand, South Africa, India, United Kingdom, Sri Lanka, Australia, Germany and Hong Kong.

The accessibility of Halal food in most of Singapore’s main tourist hotspots is deemed to be comparable even to OIC destinations. Singapore’s Changi International Airport also ranked first in Crescentrating’s top Halal-friendly Airports in 2013, under the non-OIC category. Almost all of Singapore’s shopping malls have numerous Halal food stalls. Other destinations on the list are Delhi, London Heathrow (London), Suvarnabhumi International Airport (Bangkok), Mumbai, O. R. Tambo International (Johannesburg), Hong Kong International Airport (Hong Kong), John F Kennedy Airport (New York), Melbourne Airport (Melbourne) and Barcelona. The destinations were selected based on five criteria: the shopping experience, the availability of halal food, prayer facilities, a family-friendly environment and the presence of hotels that do not serve pork or alcohol.

In Crescentrating’s Top Halal-Friendly Airports for 2013, Singapore ranked second to Suvarnabhumi International Airport (Bangkok) in the non-OIC category. The key criteria for this ranking are the availability of Halal food, prayer & ablution facilities and the quality of service (at transit and public areas of the airport). Also in the list are Manchester Airport (Manchester), Hong Kong International Airport (Hong Kong), O. R. Tambo International (Johannesburg), Munich Franz Joseph Strauss Airport (Munich), London Heathrow (London), Bandaranaike International Airport (Colombo), John F Kennedy Airport (New York) and Melbourne Airport (Melbourne).

Programmes and opportunities are available for students to obtain a better appreciation and understanding of the region. There are study trips to the Middle East, organised as part of the National University of Singapore's STEER programme (Study Trips for Engagement and Enrichment) and Singapore Management University's SMU Business Study Mission. Singapore universities also take in students from Saudi Arabia under the King Abdullah Scholarship Programme. The Middle East Institute (MEI) was set up by the National University of Singapore to promote a deeper understanding of the Middle East in Singapore. The Ministry of Foreign Affairs collaborates with MEI to run the Middle East Eminent Persons Programme (MEEPP), which invites distinguished personalities from the Middle East to Singapore to promote understanding and cooperation.
 

The 2014 Global Outlook

According to Singapore’s Ministry of Trade and Industry’s (MTI), the global economic outlook is expected to grow modestly in 2014. Despite this, there is still a degree of uncertainty. In the US, the eventual tapering of QE3 and the debt ceiling issue might affect markets. In Europe, there could be a recurrence of sovereign debt crises in the peripheral economies. In China, policy adjustments to rebalance the economy might lead to unintended consequences of a sharper-than-expected slowdown in growth. Should any of these risks occur, Singapore’s trade forecasts would be lowered.

Another factor is the very slow recovery of the Eurozone economy, which is expected to grow by 1 per cent in 2014, after an expected 0.4 per cent decline in 2013. Most Asian economies, however, are expected to grow in 2014 at a slightly faster pace than 2013. Meanwhile, China is expected to see slightly lower growth in 2014 compared to 2013 since it is in the process of rebalancing its economy.

The US economy is expected to have a moderate growth of 2.6 per cent in 2014. This is higher than 2013’s expected growth of 1.6 per cent. The downside risks in the US include delays in the raising of the debt ceiling in February 2004 and tightening of its fiscal conditions.