Leveraging UAE and Singapore as regional hubs

THE United Arab Emirates (UAE) and Singapore are indeed fortunate in being positioned in 2 of the most strategic geo-economic regions in the world. Arising from the pragmatic and visionary leadership that characterise both countries, their inherent central location their being in the Gulf Cooperation Council (GCC) and Asean have been optimally leveraged.

The GCC is a key economic bloc with a combined gross domestic product (GDP) of US$3.6 trillion and the most important oil producing region in the world. The GCC has proven reserves of 497 billion barrels of crude oil representing approximately 34 per cent of the world's total.

Asia receives 66 per cent of GCC's total crude exports and 70 per cent of oil products. GCC producers account for about 50 per cent of Asean's oil imports with Singapore, Malaysia and Indonesia being the top 3 purchasers of GCC oil. The UAE is the second largest oil exporter to Asean after Saudi Arabia. Therefore, the dependence of Asean on GCC sources for energy is a bedrock of the growing relationship between the two regions.

Conversely, Asean has also established itself as significant economic grouping. The 10-member alliance has a population of 640 million with a total GDP of US$3.08 trillion making it the sixth largest market in the world and third largest global workforce. By 2030, if the plan for a single economy materialises, it will rank fourth among economic powers. In 2022, Asean is expected to grow at a respectable 5 per cent as it emerges from the Covid-19 economic slowdown.

The UAE has a strong pro-business environment with increasing incentives and business liberalisation such as the 100 per cent foreign ownership of companies. It has political stability, strong security, a conducive working environment and excellent global connectivity.

Dubai is one of the world's top aviation hubs providing air travel connectivity to all parts of the world with Emirates being the world's largest airline. Jebel Ali is one of the largest ports in the world and the leading port in the Middle East with the largest trans-shipment centre in the region. These factors promote the UAE as a natural gateway for the GCC, Middle East and North Africa (MENA), Africa, Central Asia and Europe.

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Singapore's role as a major global trading, communications, financial and services hub with strong worldwide connectivity makes it a natural gateway to the region. The country has signed 30 bilateral and 11 regional free trade agreements (FTAs) including the GCC-Singapore FTA which is the only FTA signed by the GCC with an Asian country. Singapore's anchor in the global trading network is evidenced by its global trade to GDP ratio of close to 321 per cent in 2020, which is the highest in the world. It has the second biggest container terminal in the world in terms of output of containers handled and the largest bunkering port.

Arising from the common regional and global orientation of the 2 countries, it is unsurprising that there are strong economic linkages between the UAE and Singapore which is characterised by close government-to-government (G2G) relationships and business connectivity. This was cemented by the signing of the Singapore UAE Comprehensive Partnership (SUCP) Agreement in February 2019 during the visit of Sheikh Mohammed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.

The UAE is the leading trading and investment partner of Singapore in the GCC. Bilateral trade in 2020 was S$13 billion. Two-way investments have also steadily grown over the years. The largest investment from Singapore to UAE is GIC's US$600 million stake in the US$20.7 billion Abu Dhabi National Oil Company (ADNOC) gas pipeline project. GlobalFoundries, owned by Mubadala, had in July this year committed an additional US$4 billion investment in its wafer manufacturing plant, bringing its total stock of investments in Singapore to more than US$10 billion.

Several other UAE companies have established operations in Singapore to leverage the country's attractions as a hub for Asean and the Asia-Pacific region.

These include companies such as dnata in ground handling and airport services, Al Futtaim Group in fast-moving consumer goods (FMCG), Borouge in petrochemicals marketing, ADNOC and Emirates National Oil Company Group (ENOC) in the oil sector, Horizon Terminals in oil logistics, IFFCO in food and beverage (F&B), and First Abu Dhabi Bank and Emirates NBD which have regional banking operations here.

Singapore companies have also not been slow in actively leveraging opportunities offered by the UAE within the country and as a base for the region. These include Surbana Jurong in infrastructure and urban development, ST Engineering in aerospace, electronics and defence, PEC and Rotary Engineering in oil logistics and engineering, Olam in commodity trading, DP Architects in multi-disciplinary design, Global Schools Foundation in education, IndoGuna in food manufacturing, Meinhardt in engineering services and DBS Bank and Bank of Singapore which serve the GCC region through the UAE.

The Emirates of Dubai and Abu Dhabi are the major beneficiaries of these investments with Fujairah establishing itself as a major destination in the oil and gas logistics sector and is the largest bunkering port in the Middle East.

IT SECTOR

The UAE IT sector is fast emerging as a growing area for investments from Singapore companies involved in smart city solutions, healthcare, MedTech, AI and robotics. Several Singapore based companies such as Singapore MedTech Accelerator are actively pursuing opportunities.

All the above companies and many others which are actively involved in the UAE-Singapore business nexus are members of the UAE Singapore Business Council (UAESBC) which was established in 2018. The council is actively involved in organising workshops, seminars, talks, networking sessions and business delegations to the UAE as part of its objective to promote greater trade and investment opportunities for Singapore companies.

The UAESBC works closely with its strategic partners namely the UAE Embassy in Singapore, Enterprise Singapore (ESG) and the major business chambers and trade associations. Its executive committee comprises the major UAE companies operating in Singapore and Singapore companies that have significant operations in the UAE.

The UAESBC also receives strong support from its patrons: Jamal Al Suwaidi, UAE Ambassador to Singapore, Lee Yi Shyan, chairman of Business China and former Senior Minister of State for Trade and Industry, and Muhammad Ali Al Nuaimi, chairman of Ras Al Khaimah Chamber.

As we emerge from the Covid-19 era, a key initiative of the UAESBC is to collaborate with ESG, business chambers and trade associations in organising multiple business delegations to the UAE in conjunction with the EXPO2020 Dubai where the council is an official supporter of the Singapore pavilion.

Hence, we can expect that the trade and investment relations between the two countries and their unique position as hubs for a broader hinterland is well poised for a recovery and further growth.

• The writer Dr Brian Shegar is president, UAE Singapore Business Council