Q&A with Dr Khater Massaad
Ras Al Khaimah´s Gross Domestic Product has grown by more than 50% over the last 4 years and is expected to achieve an annual rate of 14 or 15% over the next few years. What factors are fuelling this massive growth?
I think the first factor of this growth is the appointment of His Highness. He has decided to develop this emirate and to do his best to attract investment and develop Ras Al Khaimah. He is the main leading figure, leader and motor of the development of Ras Al Khaimah.
You mentioned that some of the most important spearheads of the economy are industrial, real estate and tourism. Which one is the most important for RAK?
In my opinion, the industrial sector is the most important part of any economy. Today, the industrialised countries are the richest countries. G7 members are industrialised countries.Therefore, it is important for us to concentrate on and attract industrial investments in Ras Al Khaimah. Industry will continue to grow. The RAK Investment Authority has given licences to more than 400 industries in the last three years. This is very interesting. The real estate sector is important to support the development of industry and tourism but the sector in itself is not a money-maker or generator: you cannot export real estate. Tourism is also very important as we have 65 km of beautiful coastline and we have to take advantage of the tourism boom which has taken place in the UAE. Europe can be a very good destination. Therefore, we have to develop the tourism sector. I believe the industrial sector will grow. At least 3 sectors will grow in the same way and at the same level.
As head of Ras Al Khaimah Investment Authority, how would you describe your role in the development of the emirate?
My role, and the role all of us at Ras Al Khaimah Investment Authority, is to attract industrial and sustainable long-term investments into Ras Al Khaimah. Therefore, all of our concentration is focused on attracting investments and we are promoting Ras Al Khaimah to the outside world by declaring that it is a place where anybody can invest, we are doing good business here and we have a lot of good examples of success stories such as Ceramics, the cement factory in the Gulf. So, our first aim is to attract investments. RAKIA´s second job is then to show that an investor’s life is very easy and to help all the investors achieve their goal of good profits and good establishment of their businesses. So we have land, licensing and language. We are leasing industrial lands. We have industrial zones, free zones, Media City and even zones for tourism development. All this is our job in RAKIA. We have also simplified investing; it is very easy. The investors, who come here, will deal with a one-stop shop, which is RAK Investment Authority. Everything is simplified, straightforward, clear and very easy.
You mentioned RAK intends to attract Fortune 500 companies to invest in its industries and other sectors as part of its long-term plans. How would you describe your current industrial base?
Actually, our aim is to attract as many industries as possible. I do not know if we will be able to attract Fortune 500. We describe Ras Al Khaimah as a fertile land for industry because we have already 5 cement plants, that is to say, exporting cement to the UAE and all the Gulf countries. We have a ceramic factory, which – after 15 years - has become the biggest manufacturer of ceramic products, exporting 84% of our production to more than 135 countries around the world. This is actually an excellent performance and achievement and also shows that, although ceramic products are not necessarily the most luxurious and the heaviest, we have been able to export to 128 countries. From this extrapolating, we can believe that any other industry can be equally and probably more successful than RAK Ceramics. So, I think we have established a good base and, in addition, we have examples of success stories in industries and we invite everybody to come and benefit, to share and to understand the reasons and parameters of this success, so they can do the same thing.
How would you like to structure your economy? Is your major focus on the manufacturing sector or are you also trying to attract high-tech?
Not only do we want to attract building materials but also industries that are sustainable in the long term and not cyclical or seasonal. A good manufacturing base does not necessarily mean cheap manpower, cheap raw material or cheap energy. It is a combination of everything, combination of facilities and simplicity of doing business. In Ras Al Khaimah, we have combined everything. Here we have complete freedom to do business, no corruption, and no taxes. You are free to do anything to set up your business. You can have manpower from anywhere around the world. This is also a very important point. Raw materials can be imported from anywhere you want and the energy is not very expensive. Therefore, we have all the parameters to be a place for any type of businesses here in Ras Al Khaimah.
How do you see the future compositions of industries? What will Ras Al Khaimah become in its industrial base?
We hope that we will have several international industries in 5 years; several industries that are based here and that are doing good business and that are exporting their business from here. Ras Al Khaimah will develop the necessary infrastructure, accommodation and real estate to cope with this development.
What are your thoughts on the growth of the GDP?
I have good reason to believe that we are going to continue at a rate of 15%
RAK Ceramics is an example of a success story of RAK. It has become the largest producer of ceramics in the world. What made you outperform anyone else?
Well, everything that I said before, that is to say, all the parameters that RAK Ceramics is about, when you have complete freedom in your decision. Actually, we have 10 plants of RAK Ceramics. It takes us ten months, from the day we decide to build a plant, to start producing. I have friends in Europe and I know it can take up to 15 to 16 months from the day they apply to get clearance from the government. So this makes the difference. Today, the world and development is very fast, everybody knows everything thanks to fast developing technology. So not a minute should be wasted from the time you decide to put a plant to the time you produce because you might end up with technology that is obsolete. In addition, all the facilities are available and very competitive. The cost of construction of a plant here is a quarter or a fifth that of the same plant anywhere else in the European sector. There also no income tax, no personnel tax, no corporerate tax and no custom duty, which makes import and export very easy and effective. You put your balance sheet, your profit and loss account, your cost of sales and your profit all into your own pocket. So it makes it very easy for an entrepreneur to do business and to develop. Another point is the recruitment of manpower around the world: if you find a specialist in the USA you make him come and he will get a work permit very easily. You can bring people from Asia or from Europe. You can have talents or expertise from anywhere around the world at a competitive rate. You will not have social or extra costs like you have anywhere else. The labour law is also very simple. In addition, we have an excellent port facility: you can import bulk raw materials. We can offload one vessel of 40,000 tones in less then 24 hours or even in ten hours. If you want to export, it is also very convenient. We have 5 ports in the UAE. Of course, we have the Ras Al Khaimah Port which is excellent and recommended, but we have 5 to 6 other ports in the UAE. If you call the container at 8 am, it will be in the factory at 10 am. You can load it by 5 pm and it will sail with the vessel at 6 p.m. All the documentation is done online; it is easy and straightforward. So it is very efficient to do business here.
You mentioned that this trend is thanks to the exclusive relationship between the private and the public sector. How do you assess the relationship between private and the public sector?
The authorities here, and especially in Ras Al Khaimah His Highness, have clear directions to simplify the instructions to the government. We are here to serve people and to do all our best to simplify business. So, the government is like a big company. We are here to serve our clients, the inhabitants and the people who live and do business here. Our job is to take care of them.
The Emirates’ unique natural environment offers various lucrative property development opportunities. The ongoing projects represent nearly 80 billion UAE Dirhams in investment within the next 5 years. As you mentioned, real estate development is one of the pillars of the economy. What are some of the major projects you envisage, such as Gateway City?
Since His Highness became Crown Prince, he has made an organised and proper development of the Emirates. He has been working on a proper master plan of Ras Al Khaimah. He himself was following and assigning. He called several international companies specialised in master planning. The master plan of Ras Al Khaimah is today more or less the last and final master plan. It includes industrial zoning , free zoning, urban development, real estate, tourist areas on the beaches, the desert, the mountains, etc. All this has been planned in a very organised way, taking care of the infrastructure, of the traffic flow and all the various utilities needed. He created two mediums of real estate development in Ras Al Khaimah. The first one is RAK properties, which already has several projects here with 9 hotels, 2 towers and other developments. He then created Rakeen with the purpose of assisting in master planning and to undertake several iconic projects in Ras Al Khaimah. Today, Rakeen is master planning and finishing Gateway City, a completely new city including environmentally friendly technologies such as the green building technology, which was checked and approved in Switzerland and elsewhere in cooperation with universities in order to put the final touches on the green building. Gateway City will be a beautiful city where everybody will live together and work in the same place. There is easy communication, walking and shaded areas. All this together will make it a lovely place to live in for more than 250,000 people. Another project, the Iconic Convention Centre, is a centre where there will be conventions, conferences, concerts, social and cultural activities, exhibition centres and shopping malls and 3 hotels where people can sleep after having visited exhibitions, concerts or operas. So, they can stay and shop in the same place. This will be close to the Emirates Road and at the entrance of Gateway City. Rakeen is also developing Dana Island and RAK offshore centre which are 12 iconic buildings. There is also a masterplan of several other projects.
What is the main underlining message behind all this real estate development?
Actually, we build real estate to satisfy everybody’s needs. Since we said that Ras Al Khaimah is developing its industry sector a lot, every year we create more than 30 000 new jobs in Ras Al Khaimah. All these people need to be accommodated. We do not build real estate purely for the beauty of the building; it should not stay empty, it has to be full. So, we develop projects and buildings for the needs of people, that are sustainability, well designed as well as iconic in structure. For most of these projects we have been calling on major international architects with fantastic track records and landmark businesses.
Let’s go over to the challenges. With the increasing growth, some of the major challenges will be the pressure on infrastructure and power, as RAK does not have as extensive oil reserves as its neighbours. How do you intend to overcome this?
Right from the beginning, His Highness was aware that we have to solve the problem of the infrastructure and power. Today, we are working on several projects. Many contracts have been awarded to do the infrastructure, that is to say, the roads, water, electricity, networks, connection and so on. As for power itself, the government of Ras Al Khaimah is working with the federal government to create extra capacity for future developments. Our needs are probably in the region of 3000 megawatt and power plans will be constructed in the coming 3 years to cater for all the needs of Ras Al Khaimah.
Is this also going to be environmentally friendly?
Absolutely. His Highness is very environment-oriented. The Ras Al Khaimah Environment Authority, which takes care of the regulations and emissions, checks each business in order to make sure that we are environmentally friendly as far as international regulations are concerned.
In its first 2 years, RAKIA has attracted more than 2 billion dollars in industrial investments into Ras Al Khaimah. You also have some of the leading companies in the region. What effects has RAKIA had on the development of the Emirates, directly and indirectly ?
This money has been invested and spent in Ras Al Khaimah. It has contributed to the economic growth of Ras Al Khaimah. This will create employment and generate other businesses. As a result, it will boost the economy. This is the purpose. We hope to continue the same way.
You are also a board member of RAK airways. What do you want this airline to become?
An airline is always a generator of business; it puts you in communication with the rest of the world. It helps to make Ras Al Khaimah a known place and to put it on the map. There is an airport in Ras Al Khaimah which has been there for the last 25 years. This airport has a 4 km long runway, complete with latest technology in aviation support. So His Highness said, since we have an airport and a base of people who stay and live in Ras Al Khaimah, we can have an airline which can go to niche destinations to compliment the other airlines which exist in this country. Thanks to this we can operate our airport, initiate communication and probably bring tourists. I am happy to say that the start-up of our airline was very successful. RAK airways flies to Sri Lanka, Indian, Beirut with many new destinations in the pipeline. They made a contract with a company in Dublin to commence weekly flights to Dublin later this year. There is also a growing number of holiday charters arriving from Europe and Russia.
I can imagine that with the RAKIA economy, especially industrial growth, it becomes increasingly challenging to preserve environment.
Yes of course. That is why the master plan includes natural parks, protected zones even on the beach here, and that is very rare, we have 4 km of protected areas with turtles, pelicans, all kind of birds. We have a lot of turtles on the sea and on the beach, they lay their eggs. This shows that His Highness and the government take care of the environment. There are also areas in the mountains that are protected here.
Speaking about RAKIA in the international context, are you developing strategic partnership and analyses to facilitate the exchange of technology and expertise?
Of course. Today, we have tour reserve institutes CSEM, Centre Suisse d´Electronique et de Microtechnique, and RAKAN with the British and Indian developing row. We have also signed the MOU with the Ecole Politechnique Federale of Switzerland to build a research centre of various products, composites, the soil of energy and all types of energy as well as to teach at universities at postgraduate level. We also have a lot of universities coming to Ras Al Khaimah. His Highness is very keen on creating a lot of relations. He himself is highly educated. His father was already pushing for education; he established schools. In the 1950s, he forced parents to send their children to school when it was not yet compulsory; he made education compulsory for everybody. This decision was very good for the population in Ras Al Khaimah. His Highness Sheikh Saud is very motivated to create contacts with a lot of research developments, to check the latest technological developments and to try to attract them here.
How would you comment on the international presence and expansion strategies of the companies you are managing?
We are managing RAK ceramics, for instance. It is the biggest ceramics company in the world. It has a good reputation. It is also exporting to 135 countries. Our best market outside the Gulf is Germany. Overall, our best markets are the UAE and Saudi Arabia, then Germany, Greece, France, UK, USA, Australia , South Africa and so on. We have supplied to Wembley Stadium, to Terminal 5 Heathrow. We are supplying Giorgio Armani, Mercedes Benz, Hugo Boss, about 12 hotels and many international projects. Today, RAK ceramics is a brand. We are fully booked and, here in Ras Al Khaimah, it is good because we have possibilities, we have no limitations and a lot of facilities. We have always been opting for the best technology that is why we have good quality products and a big demand for RAK Ceramic products. We also have other companies that are successful. We have the Gulf Pharmaceutical industry and the cement plants, which are also exporting around the world. We have Arc International producing glass tableware and exporting to around 70 countries. We are delighted as many companies have come here and we hope to attract new industries that succeed here.
In the long term, would you like to nurture your own domestic industrial base to become global? What is the distinction between domestic and international support for these companies?
All our companies are located in a country based on the free economy so it is interesting to see that all our companies are successful without any governmental support or subsidies. That means that they are healthy and when a healthy company exports from here to any company in the world, it is safe and immune and can therefore go a long way.
What would you like RAK industries to be associated with?
Quality, prosperity, sensibility, reliability.
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