Investment & Development – the Ras Al Khaimah model

Doing business has come to be regarded the most constructive form of engagement in today’s world; trade is now inseparable from co-operation, partnership and peace. Its teething problems apart, globalisation of trade has done away with many barriers and curtains.

The Arab and Islamic world stand to gain from this new scenario, provided its abundant capital and resources are deployed in promoting cross-cultural interaction and inter-regional trade and investments, thus creating an environment where free trade and entrepreneurialism can flourish.


Ras Al Khaimah (RAK), one of the seven emirates that make up the United Arab Emirates, is now on a
journey to position itself as a favoured investment and tourism destination in the region. RAK’s development
agenda set by Crown Prince & Deputy Ruler His Highness Sheikh Saud Bin Saqr Al Qasimi, has witnessed
immense success and will promote co-operation and investment in an environment of stability and
sustainability, while driving Ras Al Khaimah forward.

It took a combination of real vision, strong leadership and a can-do attitude to deliver upon many of our
promises, thereby enhancing Ras Al Khaimah’s brand and strengthening its credibility.
Ras Al Khaimah’s GDP grew by a phenomenal 18% in 2005 to $2.5 billion; a growth in Compound Annual
Growth Rate (CAGR) of 10% in the period 2001-2005. Per capita GDP exceeds $12,600.

If we were to look at the Arab World, its population is 4.35% of world population, whilst its combined GDP
contributes to less than 2.8% of World GDP. Furthermore, the population of the Muslim World is 29% of
world population whilst its combined GDP contributes to less than 8.8% of world GDP.
One of the first steps which Ras Al Khaimah took to implement its development agenda was the setting up of
the Investment & Development Office (IDO). This government body, incorporated in January 2004 by an
Emiri Decree, is tasked with promoting business into Ras Al Khaimah, enhancing the business environment,
creating business opportunities and presenting these before local, regional and international investors.
IDO is focusing on developing investment projects that can be promoted to targeted investors. We find it
more meaningful and effective to offer economically attractive business plans and business opportunities that
stand up to challenge and scrutiny and which offer clear economic benefits to investors. This is compelling
and enhances credibility.

IDO is introducing a private sector mentality into government. We view ourselves as RAK Inc. vis-à-vis RAK
Gov. in the way and speed with which we operate. We’re in effect the Corporate Finance & Advisory Arm of
the Government - the ‘Goldman Sachs’ per se. WE are involved in M&A, lead Management, Spin offs,
Placements, Syndication, IPO’s etc.

Furthermore, we were often referred to as the Economic Ambassadors of the Emirate. We toured the globe
promoting business and investments in Ras Al Khaimah.

We were entrusted with change and to change the perceptions of people has been a real challenge, which
IDO has met successfully. Successful governments and winners, in our opinion, are those that improve their
perception to change, and remain ahead of others. Ironically, the only constant in today’s world is ‘change’
which has advocates but much more adversaries. The impressive thing about RAK Government is that it has
gone through self-reform and self-adjustment.

Albert Einstein once said that people keep “doing the same thing over and over again and expecting different
results”. It is neither the strongest nor the biggest bureaucracy that will win in modern-day environment, but
the ones most responsive to change. The same applies to companies.

You may find it hard to believe that a staggering 95% of Sun Microsystem’s revenue comes today from
products that were not commercially available just 5 years ago. It is unbelievable when one thinks that it took
radio 20 years to reach 10 million customers, 10 years for TV, but only 1.5 years for hotmail. The web
connected as many people in five years as phones did in 100. Eighty per cent of the technology we will use
in our day-to-day lives in just 10 years hasn’t been invented yet.

The point is, given the forces shaping the market, the successful business of tomorrow is the one that is
likely to do things in a very different way, may be organised in a very different structure, and will require its
staff to think in a very different mind set.

In RAK we have our clear differentiators be they in industry, hospitality or leisure. We are not trying to copy
other success stories - we are not in the Xerox business. There are, of course, similarities - or points of parity
– such as sand, sea and sun, but there are also points of difference. These are what RAK is building on and
this is where the edge comes in.

We also believe in the ‘power’ of Public-Private Partnerships whenever the need presents itself. The
participation of the Government whether in seed capital or on more substantial basis can instill great
confidence and an even greater determination to succeed. In most cases we participate as a minority and
leave it to able and professional management to run these companies.
Ras Al Khaimah has undertaken several initiatives to change direction and improve the economic
performance. The Government has taken great steps to modernise and strengthen its different departments,
initiated reforms in land and property ownership and in the functioning of local municipalities.
The easiest resource among all resources for business to find is probably average or less than average
human resources. The most challenging and difficult resource to engage is talent since it requires exciting
yet fulfilling and comfortable living environment.

For talent to relocate, it must be well rewarded naturally, but it must also trust the living conditions particularly
healthcare and education. After all, people want a good work life but also a quality home life. Hence, the
quality of life here is developing and progressing all the time across all areas.
Immense incentives for business do exist in Ras Al Khaimah, such as:

Tax Free Environment
Duty Free Environment in Free Zones
Import Duty of only 5% for locally incorporated companies
Full repatriation of capital and profits
Easy access to labour (skilled or non-skilled)
Lower cost base
Location must be leveraged as an opportunity as within a 2-hour flight you can reach a region of
more than 2 billion people.
Pro-business Government whereby every decision taken is on national interest with transparency,
fairness and seamlessness.
Less-layered bureaucracy
Business-friendly local rules & regulations

In reality, everything starts with Infrastructure Development by ensuring the right mix between “hard” and
“soft” infrastructures are in place.

Hard infrastructure typically includes the traditional areas of connectivity – roads, bridges, pavements, trees
& beautification, ports, airports, power, water, telecommunications, zoning & building codes, etc.

Soft infrastructure includes areas such as legal infrastructure and courts procedures, rules & regulations,
policies, procedures, company incorporation, incentives, talent pipeline, education, training, etc.
IDO follows the route of Economic Diversification across Two core areas:

Lifestyle Development; and
Industrial Development

As for Lifestyle Development, we chose consciously this term versus real estate development, or hospitality
development, to reflect our holistic perception. The home one lives in, the hotel one stays at, the restaurant
one frequents, the school one’s children go to and the hospital one has to be treated at all influence lifestyle
in one way or another. By simply developing certain components and ignoring others may be self-defeating
and may not deliver the fully integrated lifestyle and quality of life one aspires to.
Among Ras Al Khaimah’s key Real Estate Projects are:

RAK Properties (IDO Lead Manager $550M)
Saraya Islands ($1.6 billion)
Al Hamra Development
The Cove
La Hoya Bay
Al Marjan
Tilal Resort
Others

As for hospitality, we estimate more than 20 hotels will be completed in the next 3-5 years adding up to new
6000 keys in RAK. Among the new developments:

Banyan Tree
Marriott
Rotana
Hilton Beach Resort
Al Hamra Palace
Others

As for Leisure:

Mina Al Arab Theme Park
Golf Courses
Shopping Malls

Bill Gates was absolutely correct when he said” Learning is the only sustainable competitive advantage”.
Sadly, out of the top ranking 300 universities in the world, not a single one is from the Islamic World, let
alone the Arab World.

Last year, India and China together produced nearly 1.2 million Science and Engineering Graduates which is
more than USA, Europe and Japan.

In any forward thinking economy, one of the most important industries that contribute to reform is education.
IDO was lead manager in the formation of EDRAK ($400M). This company is attracting global educational
institutions with great brands and long histories to reflect a true point of difference.
Among the great institutions that we attracted into EDRAK Campus are:

George Mason University
Tufts University, Friedman School of Nutrition Science & Policy

Al Hamra Academy
College of Culinary & Hospitality Management
Film & Fine Art Academy
Medical & Health Sciences University
These comprise a total investment in excess of $225 Million.

Healthcare is also a top priority for Ras Al Khaimah. Good healthcare identifies well with good economic
development as it contributes directly to better quality of life and greater peace of mind. IDO has entered
into a strategic partnership with Methodist Hospital, Houston, which is one of America’s premier hospitals.
Another private hospital, Arabian Healthcare Hospital, will be operational in the second quarter of this year.
These comprise a total investment in excess of $70 Million.

Industrial development is another target area where IDO realizes that growth cannot happen without a clear
strategy or diversification. Here are some interesting statistics on the industrial sector in the Muslim world:
None of the Muslim Countries are in the top 20 countries in terms of spending on R&D.
None of the Muslim countries are in the top 20 countries in terms of using and implementing IT.
Ras Al Khaimah has set an example to follow in industrial development too. Some of the examples are RAK
Ceramics and Julphar Pharmaceuticals. Ras Al Khaimah is also a leader in cement manufacturing, and with
its new industries and expansions, will have over 50% of UAE Total Production Capacity.
New industries and industrial companies have started over the past 3 years, amongst which are:

RAK Petroleum (IDO Lead Manager ($800M)
RAK Lube Oil Co
RAK Therm Industries
Domopan Industries
Ashok Leyland
Guardian Flat Glass Manufacturing
Ship Building & Ship Repair
Falcon Industries (DVD)
Logistics & Distribution Centres
Zamil Steel

All in all, Ras Al Khaimah presents a good model for the right framework, environment, strategy, and
innovation that can guarantee success to the Muslim and Arab world. We have a framework for challenge
augmented by a perception for change. Our local success is only a token of the inter-Arab and inter-Moslem
immense opportunities to develop and do better.

by:
Dr Izzat Dajani,
Chief Executive,
Investment & Development Office,
Government of Ras Al Khaimah
United Arab Emirates