The Gulf News reported about $41.5bn worth of imports or 32.6 percent of Dubai’s total imports — valued at $85.5bn — were carried out by companies in the free zones in 2009. Dubai houses around 20 free zones with more than 20,000 companies, and major imports, exports and re-exports happen via Jebel Ali Free Zone, Technopark and Dubai Airport Free Zone (DAFZ).

Albeit Dubai does not produce oil as compared to other key trade centers in the Middle East to fuel the economy, it relies solely on various business processes of exim trade. Dubai free trade zones are understood to have grown largely owing to its transit point status between growing economies of Asia and Africa as well as plunging into free zone strategy much early on.

Dubai’s first free zone was launched in the early 1980s when the government commissioned Jebel Ali port — now the main trading hub of the Middle East. The free zones across the globe have prospered mainly due to the possibilities of having controlling stake in investments and repatriable revenue generation opportunities.

And Dubai is case in point to it as foreigners can own 100 percent stake in companies within the free zones. It should be noted the UAE’s Commercial Companies Law restricts foreign investment in private companies to 49 percent and foreigners cannot do business without a local partner except at free zones.

Last week, DAFZ said it had recorded a 63 percent jump in sale during the first half of this year while Ras Al Khaimah Free Trade Zone reported that 785 companies have already registered for businesses during the first half of the year. Hamad Bu Amim, Director General of Dubai Chamber, said, “Dubai’s free zones are a major source of attraction for global companies and firms due to the many advantages they offer to investors looking for all the benefits of operating in the designated free zone areas.”

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A recent research from the Institute of Personal Care Science of Australia finds that the global cosmetics market is worth $334bn (Dh1.2tn) and the global halal cosmetics market is estimated at $13bn. According to another research from Euro Monitor International, the beauty and cosmetics industry is expected to increase globally by 8.5 percent by 2014, representing one of the few sectors that continues to grow despite the global meltdown.

While a Malaysian study described that the global halal business worth $635bn a year, had expanded from the Islamic countries to the Western nations with growing Muslim populations. In France, which is home to about five million Muslims, sales of halal food are set to reach $7.2bn by the end of this year.

Mah Hussain-Gambles, Founder, Saaf Pure Skincare, one of the first halal cosmetics companies in Europe, said “The industry has also benefitted from a rising concern about the use of harmful ingredients in cosmetics and 75 percent of my customers are non-Muslims.” She further added “The principles are the same – they want something that does not harm the body, the purity and that is exactly the same as the halal movement.”

Ahmed Pauwels, CEO of Epoc Messe Frankfurt, organisers of Beautyworld Middle East 2010 apprized that with growing consumer awareness and the drive for quality ingredients, halal personal care products were a high-growth segment with tremendous potential. Similarly, Elaine O’Connell, Senior Show Manager of the beauty trade show opined customers in the prosperous and high-growth markets of the Middle East were becoming increasingly selective of the quality and content of the products they used, and this was reflected in the surge in demand for halal-certified beauty products.

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Mary Lascelles Relocation Director at Moving Links 4 You commented “My son recently went to Kashmir, India where he spent three months working on a project. So many folks advised against it as it was an unsafe place, and the newspapers certainly lead us to believe it was nuts for going. He has now returned and he said he never felt unsafe while there. Goes to show that a lot of times fear is instilled by media hype. Still, it’s important to use your intuition – while still living life and not shutting out important experiences.”

Barbara Holtzman, Executive Consultant & Management Coach said she would follow her intuition and did not avoid any place based on an alert alone, and also endorsed Lascelles’ view. While Sally Shiff Social Network Coordinator at Maoz Inc. opined “I live in the Middle East (Israel) and have learned to be aware of safety. What we don’t have here is the theft and harm that I used to see on the streets in the US or as a traveler abroad.” She later added that the places which were unsafe to travel were often found barricaded, and was glad rather to comply with such warnings.

However, some participants in the poll are of the opinion that it would be unwise to overlook these advisories. Similarly, those in the travel and transport industry are also found to be paying attention to the alerts as they feared it would hurt their businesses.

The poll clarification on as to why ask this question read – It is observed that advisories are used these days as foreign policy. Instead of pinpointing the terror strike areas, and helping those countries to nab the perpetrators before the event, most governments just release a terror alert to put that country/ies and administration/s in all kinds of trouble.

The recent terror advisories issued by the US, Britain, Australia and Canada on the Indian capital has forced the government to turn New Delhi into a fortress with heavy deployment of security forces and also increased security checks. Furthermore, some analysts believe operatives under the guise of crank callers could be involved in hoax calls (the recent series of anonymous calls about bombs being planted at various locations in New Delhi) to destabilize day to day business of the city.

It should be recalled that in February the Home Minister of India P Chidambaram had said about a US advisory then “I don’t think it was based on any new information nor do I think that it was intended to send any alarm signal. I think it was a routine advisory and it should be seen as such.”

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Dubai’s strength comes from the over supply of realty units which in turn reduced prices considerably to make them attractive for investors overseas. Many projects regardless of size those which are either put on hold or shelved will likely factor in on supply and demand quotient to give an edge to the failing real estate firms with higher price and profitability in the near future. “As development projects are temporarily or permanently halted, the oversupply will begin to diminish,” the report said.

However, the challenge for local developers is to confront the coming consolidation wave, review diversification strategies and manage existing assets wisely. The commercial segment may be the most affected as the available office space will jump from 4mn to 6mn square metres by the end of 2011.

AT Kearney report titled “2010 Real Estate Global Opportunity Index” says Dubai’s experience is a cautionary tale for other GCC countries to manage supply in accordance with demand. It also noted that the UAE real estate was cheaper in comparison to its global peers.

In contrast, Abu Dhabi, the UAE’s capital emirate has witnessed increase in tourism and airport traffic, bank lending criteria for residential sales had been relaxed and construction costs were down 30 percent since the end of 2008. Besides, the emirate boasts of $200bn real estate and many high-visibility projects, such as the successful Formula 1 racing event on Yas Island.

A host of luxuries offered by the GCC member states such as, an environment for high style living standards at a lower cost now is likely to attract foreign investors to bet on the future of the region. Nevertheless it is observed that the oil reserves amounting to more than $5 trillion would continue to be central to these economies for many years to come.

Likewise, Saudi Arabia is the largest real estate market in the region with numerous mega projects. Unlike the UAE, Qatar or Bahrain which depends on foreign investors, the Saudi kingdom has its own domestic demands to be fulfilled in its realty domain. It has been forecasted in another study that Saudi Arabia will face a shortage of up to 1mn housing units over the next three years, as residential prices increase nearly seven percent annually.

The GCC real estate is likely to perk up as there are indications of a global recovery ushered in by emerging economies including China and India where reality has started looking up. Millions of new housing units at affordable prices, falling interest rates and job market stability are expected serve as a springboard to a quick rebound for the region.

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Some of the experts argued that the six Gulf nations had planned their 2009-10 budget maintaining oil prices at an average of $45-55 a barrel, therefore, taking into account the month-long stable oil prices at $50/barrel would in fact record marginal surplus rather than deficit budgets. Although EIB had warned of a deficit budget, they had ruled any possibility of 1990’s situation that inflicted heavy debt and low assets among the GCC member states. The reason cited is that they had accumulated huge financial reserves since last five years owing to a steady increase in oil prices, and particularly the first quarter of last year when the prices skyrocketed to reach the all time high of $147/barrel.

In 2008, though GCC member states estimated a budget surplus of $32bn, they amassed about $190bn surplus since the oil prices averaged at $95/barrel throughout last fiscal. Experts pointed out that if at all any member in the GCC to fall short of a surplus would be Saudi Arabia, because it produces almost a third of the total output of the region to make it the biggest loser or gainer while the prices fluctuate. As an OPEC member, Saudi Arabia along with other members had cut oil production several times since last November to halt the slide in oil prices, and the current production stand at 8.2mn barrel/day from last year’s high of more than 9mn bpd.

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Industry observers said though the intra-day trade saw marginal dip in oil prices, however early next month would see further slide before OPEC’s likely production cut on March 15. Nevertheless, they further predicted that the traders were expecting an increase in demand by April in view of lower stockpiles to spark off demand, and a gradual price rise would follow until it stabilized at $60 per barrel by September this year.

Due to the sliding oil prices, most of the companies are reluctant to increase their inventory expecting the prices to fall further and avoid losses. But by April, the depleting stockpiles are likely to prompt the buyers to increase their inventory, and the trend is expected to push oil prices up despite receding global demand.

In its latest monthly report on Wednesday, the Paris-based IEA stated the forecast for global oil demand was revised down by 570 kb/d to 84.7 mb/d in 2009 (-1.1 percent or -1.0 mb/d year-on-year) after the IMF again slashed its GDP growth prognosis to half a percent. The worsening global slowdown was blamed to be the reason for them to crimp the oil guidance further, the report added.

According to sources, the US crude oil inventory unexpectedly fell by close to 2mn barrels.
However, the lower demand due to the US economic crisis has weighed down against their reduced supplies severely. Similarly, the reports from China, the second largest oil consumer after the US have also shown the crude imports dropping by 8 percent, a lowest level in 15 months despite showing marginal increase in domestic demand.

The diminishing demand for naphtha, a by-product of crude which is primarily used as a feedstock for the production of plastic and synthetic fibres has also contributed to the price fall. The IEA warned the lower oil prices were forcing many companies to postpone or cancel many exploration and production projects which would ultimately make a huge dent in supplies when the global economy turned around. Nonetheless, analysts deduce that reaching the high of $147 per barrel once again is most unlikely as governments and companies are investing more on renewable energy sources owing to the fears of higher oil prices and climate change.

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