Page 271 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

Getting Things Done: Operations Strategy and the GCC 253

The other Gulf states, similarly keen to expand their shipping
capabilities, are expanding or building out ports. Bahrain is build-
ing a new port at Hidd, with capacity for the world’s largest
22
container and bulk vessels. Kuwait is pursuing a leadership role
in global logistics—the Kuwaiti firm Agility (formerly PwC
Logistics) is poised for expansion through both organic growth and
acquisitions. 23 Kuwait’s many ports are undergoing continual
enhancement and improvement. Oman’s Port of Salalah benefits
significantly from its location along the southern coast of the
Arabian Peninsula. The port has drawn leading firms such as China
Shipping Container Lines (CSCL), Maersk, CMA-COM, and
American President Line (APL.) 24
As port facilities expand and improve throughout the Gulf,
multinationals can benefit by incorporating the region more deeply
into their logistics strategies. Leading American (e.g., Colgate-
Palmolive, Xerox, and Black and Decker), Asian (Fuji, Tata, and
Hyundai), and European (Nokia, Adidas, and Shell) firms have
long had a presence in Dubai’s Jebel Ali Free Zone. As Gulf markets
become inherently more attractive and logistics capabilities con-
tinue to improve, the case for using GCC ports strengthens further.
The large capacity that would be created if all port expansion plans
play out as envisioned may also lead to very attractive pricing and
financial incentives to draw more multinationals in and secure a
greater level of port utilization.

ALL THE INGREDIENTS: SUPPORT FOR
INDUSTRY AND MANUFACTURING

Gulf economies have long had abundant access to some of the
key ingredients for heavy industry and manufacturing. Not sur-
prisingly, energy costs are remarkably low, especially for oil and
gas. Capital is abundant, and the currencies of nearly all GCC coun-
tries are pegged to the dollar. Labor costs—drawing on expatriates
for most low-skill work—are also quite attractive. Access to
waterways, for transporting raw materials and finished goods,
is plentiful. What has held back the manufacturing sector, from
a multinational’s perspective, is the matter of property rights.
Historically, foreign entities have not been allowed to own factories
and manufacturing facilities without local partners. The risks