Imagine you could freely trade onshore in Dubai from a free zone or complete your move to the emirate in just four days – or even set up a virtual residency or a trial business.
These are some of the radical suggestions for innovation that the Dubai Airport Freezone Authority (Dafza) has put together in a white paper, after working with different departments of the Dubai government for several months on what it has dubbed the “Big Conversation”.
The Big Conversation is a “disruptive programme” challenging the way the Dubai Government does business and putting the client, customer and resident at “the heart of everything we do”, says its lead proponent, Anthony Denatale, the head of Dafza’s innovation unit.
“Government departments tend to work in silos,” says Mr Denatale, who spoke on the subject at the Innovation Arabia conference last month.
“We knocked them down, so there was no hiding. This was the first time looking outside of the silo.”
Since September, Dafza has been running workshops and interviews with eight Dubai government entities, such as Dubai Customs, Dubai Economic Department, Dubai Police and Smart Dubai, and 50 Dafza businesses. Those include the courier FedEx, the energy drink brand Red Bull, the cosmetics firm Estee Lauder, the car group Audi Volkswagen, the luxury goods holding company Richemont and the local travel holding The Emirates Group.
The 20-year-old free zone was originally set up to support Dubai’s economic diversification and accounts for almost 10 per cent of Dubai’s non-oil foreign trade– Dh110 billion out of a total Dh1.3 trillion in 2015, according to Dafza. It is host to over 1,600 companies from more than 20 business sectors.
Many of the suggestions mooted in the Big Conversation were “incremental” and would only require involvement from a single government entity, says Aman Merchant, the co-founder and chief executive of the business incubator and innovation lab Impact Hub Dubai, which worked with Dafza to facilitate the programme.
But what Dafza was looking for, he says, was entire “system change”, for free zones to become “sand boxes for future growth”. In software development, a sand box is a testing space where experimentation can happen safely and isolated from the live production.
About 32 recommendations have made it into Dafza’s white “futures” paper and are being discussed with their government partners.
They include free zones becoming incubators for their customers to do business onshore, or expanding the customs corridor to centralising all data so that the same information and identity papers do not have to be submitted repeatedly at different government departments.
In one example Mr Merchant gives, an investor had to provide 500 physical photocopies of his passport and ID when setting up five years ago.
In another, it took four months for a multinational client to bring a new employee in from Switzerland and get them and their family fully settled. A real challenge would be to bring that down to four days, he says.
Dafza and its government partners are also now investigating free zone memberships, where foreign businesses can easily try a local branch for a few months, and “e-residency”, which Estonia already offers to virtual entrepreneurs globally.
Although it has reached the top 30 for the first time, the UAE still only stands at No 26 in the World Bank’s Ease of Doing Business rankings for 2017, with particularly low ratings for resolving insolvency, getting credit and trading across borders. Estonia currently sits at No 12.
Earlier this year it was announced that all Dubai government departments must now come up with three innovative ideas annually that can be implemented within a decade, under the new 10X initiative.
“System innovation is risky,” says Mr Merchant, who also spoke at the Innovation Arabia conference. If one company experiments with innovation and gets it wrong, they can “get away with it” but system innovation “has a ripple effect.”
“If one government entity sneezes, another entity gets the effect as well,” Mr Merchant says. “When we look at how we drive true disruptive change, it cannot just happen by way of one entity doing it by itself.”
Dafza played the unusual role of a “servant leader” for the project, he says. “someone who does not lead from the front but who is there to facilitate”.
He adds, “It was an investment in courage, an investment in a project that was not just designed for Dafza but for the future of Dubai itself.”
So what next for the project? Mr Denatale says it could take two to four years for some of the results to be fully realised. Meanwhile he is happy with the biggest outcome – getting government departments to talk to stakeholders face to face.
The next Big Conversation will kick off at the end of the year, on a new topic – possibly on free zones and the halal and Islamic economy.
“Dubai is going to be the leader in innovation, there’s no doubt about it,” says Mr Denatale.
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Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
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UAE currency: the story behind the money in your pockets
THE%20SPECS
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UAE currency: the story behind the money in your pockets
The specs: 2018 Nissan Patrol Nismo
Price: base / as tested: Dh382,000
Engine: 5.6-litre V8
Gearbox: Seven-speed automatic
Power: 428hp @ 5,800rpm
Torque: 560Nm @ 3,600rpm
Fuel economy, combined: 12.7L / 100km
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
Founder: Ayman Badawi
Date started: Test product September 2016, paid launch January 2017
Based: Dubai, UAE
Sector: Software
Size: Seven employees
Funding: $170,000 in angel investment
Funders: friends
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
A Long Way Home by Peter Carey
Faber & Faber
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Six tips to secure your smart home
Most smart home devices are controlled via the owner's smartphone. Therefore, if you are using public wi-fi on your phone, always use a VPN (virtual private network) that offers strong security features and anonymises your internet connection.
Keep your smart home devices’ software up-to-date. Device makers often send regular updates - follow them without fail as they could provide protection from a new security risk.
Use two-factor authentication so that in addition to a password, your identity is authenticated by a second sign-in step like a code sent to your mobile number.
Set up a separate guest network for acquaintances and visitors to ensure the privacy of your IoT devices’ network.
Change the default privacy and security settings of your IoT devices to take extra steps to secure yourself and your home.
Always give your router a unique name, replacing the one generated by the manufacturer, to ensure a hacker cannot ascertain its make or model number.
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Asia Cup Qualifier
Venue: Kuala Lumpur
Result: Winners play at Asia Cup in Dubai and Abu Dhabi in September
Fixtures:
Wed Aug 29: Malaysia v Hong Kong, Nepal v Oman, UAE v Singapore
Thu Aug 30: UAE v Nepal, Hong Kong v Singapore, Malaysia v Oman
Sat Sep 1: UAE v Hong Kong, Oman v Singapore, Malaysia v Nepal
Sun Sep 2: Hong Kong v Oman, Malaysia v UAE, Nepal v Singapore
Tue Sep 4: Malaysia v Singapore, UAE v Oman, Nepal v Hong Kong
Thu Sep 6: Final
Asia Cup
Venue: Dubai and Abu Dhabi
Schedule: Sep 15-28
Teams: Afghanistan, Bangladesh, India, Pakistan, Sri Lanka, plus the winner of the Qualifier
