Page 123 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

Silicon from Sand: Essential Background on the GCC 107

Cleveland Clinic Abu Dhabi—combining the expertise of the
renowned Cleveland Clinic in Ohio, often ranked America’s top
hospital for heart disease, with Mubadala’s capital—catering to the
health care needs of a wealthy and growing region.
Active government investment, while crucial in jump-starting
the UAE economy, does carry the risk of “crowding out” the private
sector. The various emirates are managing this balance by
increasingly focusing their investments on early-stage and strategic
projects for which the private sector may lack the expertise or
appetite and by building zones for the private sector rather than
building businesses. Another important step is that government
investment agencies are funding companies that later list on stock
exchanges and thereby transfer to the private sector. Tabreed
(a cooling company) and Aldar Properties (Abu Dhabi’s leading
real estate company) are two of Mubadala’s listed investments.

Foreign Ownership Rights
Despite their remarkable prosperity, the GCC nations remain
largely closed economies. Deregulation is occurring rapidly, but
rules requiring majority ownership by local citizens remain the
10
norm throughout the Gulf and also in UAE. For example, operat-
ing companies require 51 percent ownership by UAE nationals. As
implied in their names, however, the “free zones” are business
parks in which foreign individuals and firms are able to fully own
their businesses.
By providing foreign ownership rights, free zones have been
able to attract a diverse set of businesses and entrepreneurs. Major
multinational firms such as CNN, Microsoft, and Oracle have set up
offices in Dubai’s Media and Internet cities in order to take advan-
tage of both the commercial opportunity of the broader region and
the entrepreneurial freedom of full ownership rights. Major bank-
ing institutions such as Deutsche Bank and Goldman Sachs feel
comfortable entering the Dubai International Financial Centre,
where they can fully control their own businesses. Giving majority
control to local partners, as required outside a free zone, would
almost certainly not be acceptable to these companies.
Far greater in number than these large multinationals, how-
ever, is the pool of entrepreneurs from the Arab world, South Asia,