By Ayman Abualkhair
In one of our recent articles we discussed the digitalisation of our society, or what it is also known as, the 4th Industrial revolution. It is characterized by a fusion of technologies that blurs the lines between the physical, digital, and biological spheres…The phenomenon transforms the entire system of production, management, and government, and even impinges on the basic notion of the market place and trade. Essentially, the 4th industrial revolution is shaping the entire way we do business.
Switzerland is preparing itself for this upcoming industrial revolution. Even far in the Arabic peninsula, another partner who emerged from the desert is already seizing the opportunity, to transform its processes. Dubai, the city of gold, is looking forward to being a smart city with a knowledge-based economy.
In fact, Switzerland and UAE have several similarities. Both are strongly competitive, leaders in innovation, and are attractive for skilled people, investors, and tourism. Switzerland is a leader in terms of innovation, and it is prepared to consolidate its position in light of industrial changes.
Switzerland’s economic force stems from huge, innovative SMEs (about 95% of Swiss companies are SMEs) and the diversity of its economy. UAE has also managed to diversify its economy far from petrol, which dominates the economic scene in the region.
The cooperation between Switzerland and UAE is very strong and becoming more and more important. UAE is the first trade partner of Switzerland in the Arab world, and there are many joint projects as well. The applied science institute EPFL, for instance has a branch in UAE and Switzerland has Business Hubs in Dubai and Abu Dhabi.
Dubai is a place of innovation. It has six dimensions that comprise the Smart Dubai initiative. They cover Smart Economy, Smart Living, Smart Environment, Smart Governance, Smart People and Smart Mobility.
These similarities between Switzerland and UAE are very interesting when it comes to deal with the new industrial revolution. In this context we had the pleasure to interview a very dynamic personality in the economy of the region.
H.E. Hamad Buamim, President and CEO of Dubai Chamber of Commerce and Industry, enlightened us with his vision and the preparations undertaken by Dubai Chamber in order to cope with the new industrial paradigm:
How big is the UAE’s digital economy and where do you see the most growth potential within its e-commerce sector? (e.g. Internet of Things, 3D printing, simulation, big data and analysis, etc.)
Hamad Buamim: The UAE leads the Middle East in digitalisation which aligns with the National Innovation Strategy and the UAE Vision 2021. This vision identifies technology as one of the top seven primary national sectors. Efforts are ongoing within the country’s public and private sector to fully transition towards e-Services and eventually transform into a knowledge-based economy.
Looking at progress within Dubai specifically, it’s clear that the emirate is well on its way to becoming one of the smartest cities in the world. Innovative technologies are being utilised to improve the lives of citizens, and residents in line with the vision of H.H. Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai. A recent report from Cisco and the Government of Dubai estimated that the public and private sectors stand to benefit from a AED 17.9 billion opportunity through the adoption of Internet of Everything (IoT) technology by 2020, which is critical to establishing the foundation of any global smart city.
Several areas of the digital economy have massive potential for growth. For instance, in 2016, the UAE announced plans to develop and exploit 3D printing, with the aim of revolutionising the construction industry. The emirate’s government also recently set an ambitious target to make a quarter of all transportation driverless by 2030. Meanwhile, the government has unveiled strategic initiatives to accelerate progress in this areas, such as the Dubai Future Accelerators and the Sheikh Mohammed bin Rashid Al Maktoum Fund to Finance Innovation.
In addition, most government services in the UAE are now accessible via mobile devices, and the target usage rate of smart services has been increased to 80% by 2018. Beyond trade and investment, the UAE is playing an important role as a knowledge and technology hub for the wider Middle East region. Some of the world’s most innovative companies are choosing to test out their new technologies and solutions in the UAE, while many have opted to build data centres here.
-What is your long-term outlook for the e-commerce sectors in the UAE and GCC region?
Buamim: E-commerce is one of the main engines of growth that’s driving the Middle East’s digital economy. A recent report by online payment provider Payfort stated that the Middle East’s e-commerce market is set to nearly triple in value, from $25 billion in 2015 to $69 billion by 2020. Three of the region’s biggest economies, Saudi Arabia, Egypt and the UAE are expected to see a lot of momentum within the sector.
The UAE, which has the biggest share of the region’s e-commerce market, will see the value of its e-commerce market grow to around $10 billion by 2020 as more businesses build and expand their online presence, while new businesses in the space will create new job opportunities. At the same time, Saudi Arabia and other GCC markets are forecast to see steady growth within this market.
Yet, there remains untapped potential in the sector amid the evolving needs of the region’s tech-savvy and predominantly young generation that is increasingly turning to Smartphone and mobile devices to shop and access services. This is not to deny that there are not challenges in this sector, but considering the growth in disposable income, fast-growing population in the GCC, and the high smartphone and Internet penetration within these markets, the long-term outlook looks quite positive.
-What are the biggest challenges facing this sector?
Buamim: Challenges and market gaps are a natural part of any fast-growing e-commerce market, especially within emerging markets. For example, within the UAE and other Gulf countries, online spending is relatively low when compared to developed economies. This is due to a number of reasons including concerns over online payments, as well as consumers’ preference to shop at traditional malls. This means that many merchants still have to deal with cash transactions. At the same time, the high cost of logistics services such as shipping and importing products, and the lack of well-established addressing systems have created some obstacles for e-commerce players.
-What are the conditions for opening a company in the digital sector? Is there any aid given in this sector?
Buamim: The UAE has served as launch pad for some of the region’s most successful e-commerce and digital businesses such as Souq.com, Careem, and Fetchr, to name a few. The country continues to attract startups from around the region in search of new growth opportunities, and it does so by providing them with a supportive business environment that enables companies to set up with little hassle.
The government is continuously looking to new ways to support this sector and foster innovation and business growth among SMEs and startups, which remain the backbone of the country’s economy. For instance, the Dubai Industrial Strategy 2030 was launched by H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister, and Ruler of Dubai, to elevate Dubai into a global platform for knowledge-based, sustainable and innovation-focused businesses. In addition, the AED 1 billion Dubai Future Accelerators programme was also recently launched, which is a competitive scheme that pairs government departments with innovative companies to find solutions to existing challenges.
For its part, the Dubai Chamber of Commerce and Industry provides a wide range of e-commerce support and services for businesses in the emirate, such as a training sessions, market intelligence, our Trusted Member Label, and access to Alibaba.com, which has opened up the door for companies to expand their activities online. We have also established partnerships with local and international companies and organisations in recent years to promote knowledge sharing and accelerate progress on Smart City initiatives, with the aim of improving efficiency, competitiveness and ease of doing business in the emirate.
-How is Dubai Chamber supporting the emirate’s vision to become a knowledge and innovation hub for the region?
Buamim: As a leading representative of Dubai’s private sector, Dubai Chamber has made innovation a key focus of its 2017-2021 strategy. The Chamber is playing an active role in communicating plans and objectives of the Dubai Plan 2021 to the business community, while it’s encouraging companies to contribute more towards the emirate’s post-oil strategy.
As part of our efforts to foster a culture of innovation within the private sector, we partnered with PricewaterhouseCoopers (PwC) in 2015 to develop the Dubai Innovation Index, which covers 28 global cities and measures innovation output. The index is an important learning and development tool that enables us to see where progress is being made, as well as key areas where businesses can improve.
In the second edition of the index in 2016, Dubai improved its position and placed 15th, outperforming business hubs such as Shanghai, Moscow and Madrid. This progress was attributed to an increase in innovation-focused investments and closer cooperation between the emirate’s public and private sectors.
-How does the Chamber assist entrepreneurs and SMEs that want to build and expand their digital presence?
Buamim: We have been focusing a lot on providing the right infrastructure to support entrepreneurs in Dubai and the UAE. We firmly believe that we can enhance and expand the range of value-adding services offered to SMEs and entrepreneurs by better understanding their needs and concerns.
Tejar Dubai provides workshops and training to commercially-minded youth that gives them a unique opportunity to experience the entrepreneurial cycle and learn what it takes to start and grow a business. Participants are provided access to investment capital, mentoring and networking, allowing them to focus on establishing their own businesses.
The Chamber is working to nurture and develop the entrepreneurial ecosystem through the Dubai Startup Hub and the Dubai Smartpreneur Competition. The Smartpreneur Competition, launched in collaboration with Smart Dubai Office, has become an important platform for generating innovative ideas that support Dubai’s transition to a smart city.
The Dubai Startup Hub, established in 2016 in collaboration with IBM, connects startups, entrepreneurs, developers, venture capitalists and students, enabling them to learn about new opportunities and create new partnerships that accelerate innovation and stimulate the local economy. The hub allows the local community to interact with cloud technology in new ways, with special offers for startups to join IBM’s Global Entrepreneur Program, which provides mentoring, support and access to development tools and cloud resources via IBM Cloud. This interactive cloud environment is the first digital home for Dubai’s tech scene where virtual visitors can learn about new job opportunities and local tech news; sign up for tech-focused events, classes and meet-ups and more.
-Will Dubai Chamber be planning any events in the near future that focus on the digital economy and entrepreneurship?
Buamim: The Chamber regularly organise events and workshops, and seminars that focus on e-commerce, entrepreneurship and innovation under our various initiatives and programmes. These events provide businesses and startups with the tools, knowledge and tools they need to succeed. We are constantly looking to create more value for our members through strategic partnerships. Recently, we signed a MoU with the Hamburg Chamber of Commerce to promote innovation and IoT through mutual cooperation. We organise workshops with Alibaba to help companies get practical tips and strategic insights on how to make the most out of their presence on the platform. In addition, through our Tejar Dubai initiative, we work with other organisations, such as the Dubai Silicon Oasis Authority and the Dubai Technology Entrepreneurship Centre to help companies enter this arena.
