Page 127 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

Silicon from Sand: Essential Background on the GCC 111

For the most part, competition among the emirates has been
good for business, as each one has tried to outdo the others to
attract firms, tourists, and staff. The creation of free zones in smaller
emirates is one example of how competition is creating more oppor-
tunities for business. Competition is also raising service standards
in the public sector: Ras al-Khaimah’s RAK FTZ, for example, has
announced an on-site Naturalization and Immigration Office
dedicated exclusively to serving the more than 2,400 companies in
the free zone. 12
Rivalry among the emirates, may, however, at times lead to the
inefficient allocation of capital. Air travel is a prime example of this
phenomenon. Until 2003, the UAE’s official carrier was Gulf Air: a
joint venture enterprise including Bahrain and Oman. Dubai
launched Emirates Airlines in 1985—in one sense, breaking away
from the national carrier—and rapidly made it an international suc-
cess. Despite Emirates Airlines’ being fully owned by UAE
investors and having a record of excellent performance and a grow-
ing international reputation, Abu Dhabi decided to retain the Gulf
Air joint venture as the UAE’s national carrier. Abu Dhabi then
founded Etihad Airways in 2003, made it the UAE’s national car-
rier, and invested heavily in it to ensure world-class service. The
result is that the UAE now has two state-of-the-art, and very expen-
sive, international airlines with hubs about 90 minutes apart by
road and 20 minutes by air—and the UAE’s total population is less
than half that of New York City!

SAUDI ARABIA: THE CORE MARKET

To many outsiders, the Kingdom of Saudi Arabia (abbreviated as
KSA) raises more questions than answers. Saudi Arabia is a com-
plex place with a long history, plays an important role in world
affairs, and has deep social issues that need to be addressed. Many
outsiders see the KSA as mysterious, opaque, and even scary.
Commercially, however, one fact is clear: Saudi Arabia is the core
market of the GCC, and understanding it is critical to building a
large-scale franchise in the Gulf.
Here are some hard facts about the Kingdom:
● The Saudi population is 25 million—two-thirds of the
GCC total. 13