0:00:00 > 0:00:05minute break through.
0:00:05 > 0:00:12That's all the sport for now.
0:00:12 > 0:00:16Dubai made its name as a global hub or trade and travel and for tourism.
0:00:16 > 0:00:22It used the proceeds of oil to transform its economy. But as that
0:00:22 > 0:00:27trade shifts from West to East, what does that mean for the economies of
0:00:27 > 0:00:36that region? IV Gulf country is ready for life after oil? -- Are
0:00:36 > 0:00:48the. We will find out in this week's Talking Business.
0:00:56 > 0:01:01Located between Asia and Europe, the United Arab Emirates has been a
0:01:01 > 0:01:08natural hub for international trade. From the old wooden dowells that
0:01:08 > 0:01:12still ply the waters of the Gulf to the vast containerships of cargo
0:01:12 > 0:01:20from around the world. This port in Dubai and also the 17 million
0:01:20 > 0:01:27containers a year. That is expected to ship 22 million next year. These
0:01:27 > 0:01:33containers used to travel from east to west. Full of goods made in Asia
0:01:33 > 0:01:37are like cars, computers, and clothes. But a shift in global
0:01:37 > 0:01:42demand means a change in direction. Asia and China in particular are
0:01:42 > 0:01:49booming markets for exporters. And for the golf, that means oil. China
0:01:49 > 0:01:55is now the world's largest importer of Middle Eastern oil. But the
0:01:55 > 0:02:00booming economy means goods and services as well. And most of those
0:02:00 > 0:02:04passed the reports like this. So, let's talk about some of those
0:02:04 > 0:02:14issues raised. With me is the president of the US- UAE business
0:02:14 > 0:02:16council responsible for business links between the two countries.
0:02:16 > 0:02:23This is the Chief Executive and head of trade and finance. One of the
0:02:23 > 0:02:27biggest transporters of shipping containers. And the president and
0:02:27 > 0:02:37Chief Executive of GE Gulf, responsible for strategy here in the
0:02:37 > 0:02:43Gulf. Welcome. And for joining us. Perhaps I could start with you. You
0:02:43 > 0:02:49have a great insight into where trade is coming from and where it is
0:02:49 > 0:02:53going to. What does the data tell you about how it is changing?Global
0:02:53 > 0:02:58trade has been consistently growing steadily since World War Two. The
0:02:58 > 0:03:04past few decades have seen a real exponential growth. The last 60
0:03:04 > 0:03:10years has led to this, and low transportation cost. Everything you
0:03:10 > 0:03:14touch from when you wake up in the morning, a cup of coffee, going to
0:03:14 > 0:03:18bed, it has come from somewhere else in the world. That has given rise to
0:03:18 > 0:03:25value chains. Everything consumed in one country, parts of it or all of
0:03:25 > 0:03:31it is usually made elsewhere.We think of trade in terms of
0:03:31 > 0:03:35containers and goods being shipped around the world. Many people know
0:03:35 > 0:03:39GE as the company that makes commercial jet engines. And also
0:03:39 > 0:03:44shipping people around the world. Where is the demand for jet engines
0:03:44 > 0:03:49telling us about where people want to be in the world?If you look at
0:03:49 > 0:03:56the way the economy has evolved, 40 years ago when GE first started off
0:03:56 > 0:04:00in this region, I could describe this region as more of a recipient
0:04:00 > 0:04:04of technology. That has transformed into a assembly and further into
0:04:04 > 0:04:08manufacturing and then research and development and now innovation and
0:04:08 > 0:04:12inventing things that can be exported.If you look at the
0:04:12 > 0:04:19statistics as far as UAE and US trade is concerned, it is
0:04:19 > 0:04:27staggering. A more than $20 billion surplus from the US to the UAE. You
0:04:27 > 0:04:31have been doing this a while and things must have changed.We had a
0:04:31 > 0:04:39$25 billion surplus year in and year on for the last 5-6 years. The UAE
0:04:39 > 0:04:45is the largest export market in the region for the US, larger than
0:04:45 > 0:04:52India, Turkey. This is the hub as we were talking about, with goods
0:04:52 > 0:04:56brought in and additional services added to that before they go onto
0:04:56 > 0:05:05something else.I want to talk quickly about your council itself,
0:05:05 > 0:05:12the UAE US Business Council. It was built from controversy. It bought up
0:05:12 > 0:05:20the ports of P&O that angered people.We started to get more
0:05:20 > 0:05:25information and statistics. I refer to the relationship is having three
0:05:25 > 0:05:33legs added to the stool. Trade is the most important and vibrant.I am
0:05:33 > 0:05:39interested in this idea of the new Silk Road from China. Certainly,
0:05:39 > 0:05:43from the leadership in China, they want these new trade routes to be
0:05:43 > 0:05:46what does that mean for your business?As a shipping company, 150
0:05:46 > 0:05:50of our trade routes come through this region. It is part of the
0:05:50 > 0:06:00diverse investment we have away from oil. Talking about pharmaceutical,
0:06:00 > 0:06:06and getting away from conventional oil.Added into the mix what we have
0:06:06 > 0:06:11heard from the White House of late about protectionism and wars going
0:06:11 > 0:06:18on, America being first. What is that mean with trade booming in this
0:06:18 > 0:06:23region? De facto away with talk of protectionism?First of all, the
0:06:23 > 0:06:29trade is pretty much one-way. Not much goes on to the UAE at this
0:06:29 > 0:06:34point We don't get much energy from the UAE, mosque is the other way to
0:06:34 > 0:06:40China and Japan in places like that. -- most. There is some steel and
0:06:40 > 0:06:45aluminium. We are going to give the wall down for things going outward
0:06:45 > 0:06:51from the US to many of these countries going forward. I worry
0:06:51 > 0:06:55about, you know, storm clouds on the horizon, if you will in the future.
0:06:55 > 0:07:02And I think the talk in Washington, I think the talk of protectionism
0:07:02 > 0:07:06fans the talk of protectionism around the world in general. And
0:07:06 > 0:07:11that is the trend line I worry about.Do you worry about that when
0:07:11 > 0:07:16you suddenly see talk of protectionism about those walls
0:07:16 > 0:07:24going up? Does that worry you?The writing on the wall is pretty clear.
0:07:24 > 0:07:29Wherever in the world we have seen bilateral trade agreements, free
0:07:29 > 0:07:33trade practices, policies, the growth has been much higher than the
0:07:33 > 0:07:44global economy growth rate. The Pacific alliance, the EU, 7.5,
0:07:44 > 0:07:53Mexican trade outperforming the largest economy, and Brazil.
0:07:53 > 0:07:59Protectionism is the reality of the world. Fight protectionist measures
0:07:59 > 0:08:04are being rolled out by the developing world a week. But today's
0:08:04 > 0:08:10world is about opening doors, not closing.We talk about the Gulf
0:08:10 > 0:08:13Cooperation Council, but in some respects, it doesn't actually
0:08:13 > 0:08:18deliver too much in terms of agreement. Each country is doing
0:08:18 > 0:08:24something different. Different industries. Are they competing?No,
0:08:24 > 0:08:30they are compliment in each other. Even though the progress is not as
0:08:30 > 0:08:35much as we want, there is progress. We have been at the forefront. But I
0:08:35 > 0:08:43think that has encouraged other countries. It is a big focus area
0:08:43 > 0:08:49for Saudi Arabia and a focus area for Kuwait etc. There is a sense of
0:08:49 > 0:08:54collaboration and each country encouraging each other to move
0:08:54 > 0:09:01towards a certain sector.I would say with regard to the GCC, the
0:09:01 > 0:09:05cooperation in the past two years has increased so they are even more
0:09:05 > 0:09:11close. The VAT added by the end of the year is a good example of that.
0:09:11 > 0:09:19For the first time there will be a G GCC wide new standards are being put
0:09:19 > 0:09:27in place. It is part of closer cooperation between the GCC
0:09:27 > 0:09:33organisation.And in today's globalised world, it is not entirely
0:09:33 > 0:09:36up to governments and corporation between countries to build this
0:09:36 > 0:09:42movement to the next level. It is also for corporations and
0:09:42 > 0:09:45individuals and businesses to play a role and make this all work
0:09:45 > 0:09:49together.When we look at the region, we talk about cooperation
0:09:49 > 0:09:56twin countries here. One issue right now is the blockade as far as
0:09:56 > 0:10:07traders concerned, and politics. What does that mean for the region?
0:10:07 > 0:10:11There's no getting around that this is a very serious problem and it is
0:10:11 > 0:10:14a political problem which now has economic dimensions as well. Most
0:10:14 > 0:10:18companies have found a way to be quiet about what they're doing and
0:10:18 > 0:10:22continue the business, continue the movement of goods and services, they
0:10:22 > 0:10:26may have changed some of the ways and directions they're bringing the
0:10:26 > 0:10:31goods and services in but they are doing the business that needs to be
0:10:31 > 0:10:33done to move the diversification forward.From a purely practical
0:10:33 > 0:10:40point of view, what does it mean for how you operate?Maersk is a global
0:10:40 > 0:10:45company that operates in 130 countries and it's important for us,
0:10:45 > 0:10:49like any other big corporation, but we are totally compliant with any
0:10:49 > 0:10:54regulations or laws, and likewise in this case, we stop moving cargo to
0:10:54 > 0:11:02and fro from Qatar, we are moving it from elsewhere. Companies have found
0:11:02 > 0:11:06it hard to ensure business goes on but not to the same scale, it has a
0:11:06 > 0:11:11huge economic impact as well outside of the political.Thanks row much
0:11:11 > 0:11:15for now. That's how changes in global trade
0:11:15 > 0:11:19are reshaping the business landscape in this region -- thanks row much
0:11:19 > 0:11:23for now. But what about the other concern here, the price of oil? --
0:11:23 > 0:11:27thanks very much for now. Prices have fallen considerably over the
0:11:27 > 0:11:30last two years and that causes concern for the governments of this
0:11:30 > 0:11:35region that rely on it to meet their spending commitments. So other
0:11:35 > 0:11:39governance here too reliant on oil? I've been finding out that the
0:11:39 > 0:11:43governments here. Many countries across the Gulf have
0:11:43 > 0:11:48been diversifying their economies but progress has been mixed -- so
0:11:48 > 0:11:55are the governments here too reliant. There is a gateway being
0:11:55 > 0:11:59created through aviation to Africa and Europe. Creation of tourism,
0:11:59 > 0:12:05financial services and banking has helped create new sources of income.
0:12:05 > 0:12:08But there are still challenges, cutting red tape and improving
0:12:08 > 0:12:13education and skills are key. That could determine how well economies
0:12:13 > 0:12:19here cope with life after oil. Let's talk about some of those
0:12:19 > 0:12:26issues with my guests here today. Maybe I can start with you,
0:12:26 > 0:12:29diversification in the region clearly a big focus, we have heard
0:12:29 > 0:12:33announcements from various countries in the Gulf, what does
0:12:33 > 0:12:36diversification mean for countries here?There's two things we could
0:12:36 > 0:12:41talk about here, emoji diversification and economy
0:12:41 > 0:12:46diversification. For energy diversification -- energy. Looking
0:12:46 > 0:12:52at the UAE, a country that's been 99% dependent on gas as a source of
0:12:52 > 0:12:57fuel, it has now progressed a lot in terms of diversifying their
0:12:57 > 0:13:00portfolio, particularly around bringing solar energy into the mix
0:13:00 > 0:13:06and coal as well with the 2.4 gigawatts Hassey and project. That
0:13:06 > 0:13:13is one aspect. The other aspect in terms of economy diversification, a
0:13:13 > 0:13:17lot of what we had spoken about before, which is looking at
0:13:17 > 0:13:26innovation, building entrepreneurship, ecosystem,
0:13:26 > 0:13:29allowing for innovation not only with trade but all sorts of services
0:13:29 > 0:13:35and the smart by initiative and bringing digital into the day-to-day
0:13:35 > 0:13:40lives of the citizens in UAE.Each country in the region concentrating
0:13:40 > 0:13:44on different things, in Dubai, you look at the tourism and financial
0:13:44 > 0:13:48services and banking, it is not easy to compare like-for-like because all
0:13:48 > 0:13:51these countries are doing different things but who's made the most
0:13:51 > 0:13:56progress in the Gulf?I wouldn't want to say that one are doing more
0:13:56 > 0:14:00progress than the other but I like to see them as all complementing
0:14:00 > 0:14:04each other. I think there's a lot of similarities in these countries and
0:14:04 > 0:14:08there's a lot they learn from each other. As you mentioned, yes,
0:14:08 > 0:14:15Dubai... There's advancement in terms of bringing digitisation,
0:14:15 > 0:14:20positioning Dubai as a smart city. But then also in Abu Dhabi, and the
0:14:20 > 0:14:24industrialisation of the whole oil and gas markets and the servicing of
0:14:24 > 0:14:28the oil and gas fields and being more efficient there, driving
0:14:28 > 0:14:32efficiency there as well, and then renewable energy, which we see also
0:14:32 > 0:14:37across the border, so you see the demand, for example, among Saudi, a
0:14:37 > 0:14:41great place for wind technology as well, whereas you may not have so
0:14:41 > 0:14:45many wind opportunities here in the UAE and you see solar panels being
0:14:45 > 0:14:49flourished more here. They all come ferment each other in a very
0:14:49 > 0:14:54cohesive white.Danny, we heard in that piece about how important it is
0:14:54 > 0:14:58to address some of the challenges, those challenges being skills and
0:14:58 > 0:15:02education and cutting red tape. When you're dealing with American
0:15:02 > 0:15:05businesses here, is it as easy as the authorities would have us
0:15:05 > 0:15:10believe to set up and operate in the Gulf?It's got a lot easier. The UAE
0:15:10 > 0:15:16in particular is constantly trying to be on the cutting edge of
0:15:16 > 0:15:19business reform because it wants to be the place where foreign companies
0:15:19 > 0:15:23set up first to establish their beachhead if you will in the region
0:15:23 > 0:15:26and then broaden out to other countries as their business grows.
0:15:26 > 0:15:30The UAE makes great efforts to cut down on the red tape but there's
0:15:30 > 0:15:33still more things that can be done. They're working on a company
0:15:33 > 0:15:37ownership law and other measures that will come in the years ahead,
0:15:37 > 0:15:41but the UAE and Saudi Arabia and other countries have made great
0:15:41 > 0:15:46progress in this area and will continue to do so.Is that progress
0:15:46 > 0:15:50fast enough? We talk about life after oil, we seen the big fall in
0:15:50 > 0:15:53the price of oil and revenues falling and governments in the
0:15:53 > 0:15:56region have to balance their books, is that change coming quickly
0:15:56 > 0:16:00enough?It is but we have to think about how quickly a society can take
0:16:00 > 0:16:05change and we have to make it palatable for the people. Just 40
0:16:05 > 0:16:09years ago, I've only really been travelling in this region for 30
0:16:09 > 0:16:14years, and 40 years ago the difference... The economy was 90%
0:16:14 > 0:16:19dependent on oil revenue. They've turned that on its head. Today the
0:16:19 > 0:16:23economy is 30% dependent on oil revenue in the UAE and the
0:16:23 > 0:16:27diversification strategy has resulted in the economy being 70% of
0:16:27 > 0:16:30all these other verticals, that's a huge change to occur in such a short
0:16:30 > 0:16:35period. And it will continue. And the leadership here, who has a great
0:16:35 > 0:16:39vision, will continue to work with the people to bring them along in
0:16:39 > 0:16:43that regard but it's got to be at the pace they can be comfortable
0:16:43 > 0:16:48with and that can be achievable. And sustainable.It strikes me
0:16:48 > 0:16:52diversification will be about trade policy, about the role of a country
0:16:52 > 0:16:56in the world and how it sees either competitors or trading partners,
0:16:56 > 0:17:01what do you see of that with your business?I think clearly like Danny
0:17:01 > 0:17:07said, the leadership has made it very clear and the change has been
0:17:07 > 0:17:12massive, especially over the last three decades. There's definitely
0:17:12 > 0:17:15manufacturing but trading has huge potential. UAE is the third-largest
0:17:15 > 0:17:22trading hub to Singapore and Hong Kong. Maersk themselves do about 25%
0:17:22 > 0:17:31of exports and imports into the UAE. A good start has been made. The
0:17:31 > 0:17:37change has had different stages of progress depending on how the change
0:17:37 > 0:17:41was brought in. I think leadership has made there in ten very clear,
0:17:41 > 0:17:46that it has to be a diversifying economy.Danny, when we talk about
0:17:46 > 0:17:50the diversification of these economies, there's always an
0:17:50 > 0:17:54underlying issue about jobs. We know this region has a huge young
0:17:54 > 0:17:57population and finding enough jobs for that population is going to be a
0:17:57 > 0:18:01key issue. How do you make sure the economy
0:18:01 > 0:18:04diversifies while creating those jobs, where will those jobs come
0:18:04 > 0:18:07from? In the UAE what's been a great
0:18:07 > 0:18:11advancement is putting a Minister of youth in place, it's a lady and she
0:18:11 > 0:18:23is in her early 20s. That's given a voice to the youth of the UAE. And
0:18:23 > 0:18:28it's really incorporated into the vision of the UAE and where we want
0:18:28 > 0:18:34to take this country next and how do we incorporate the youth and make
0:18:34 > 0:18:40them also accountable to that strategy? I think once you have that
0:18:40 > 0:18:46engagement and that dialogue, the more empowerment you give to the
0:18:46 > 0:18:51youth, the more likely that you would take them into consideration
0:18:51 > 0:18:54as you draw your employment strategy.
0:18:54 > 0:18:59It starts with education. It starts with education. The UAE and the
0:18:59 > 0:19:03region as a whole is really focused on providing opportunities for their
0:19:03 > 0:19:08youth in all of these sectors and areas going forward.Where education
0:19:08 > 0:19:12is important, skill development is equally as important. It is fair to
0:19:12 > 0:19:16say you're worried about how these new technologies might be a threat
0:19:16 > 0:19:20to jobs, but if you're able to create skills for the new age
0:19:20 > 0:19:23technologies then you create new, different kind of jobs. Again, the
0:19:23 > 0:19:27intent in the leadership here is very clear.
0:19:27 > 0:19:31Aviation has been a huge growth area for countries of the Gulf, be that
0:19:31 > 0:19:36Emirates, Etihad or Qatar Airways. We've also seen problems with the
0:19:36 > 0:19:42open skies agreement. And there's that perception that the rest of the
0:19:42 > 0:19:47world is willing to brace the region as long as it doesn't go too far.
0:19:47 > 0:19:51And the open skies dispute about whether Gulf carriers could operate
0:19:51 > 0:19:55in the United States and what landing slots it would get was a
0:19:55 > 0:19:59real issue, has that gone away?It hasn't gone away. The three major US
0:19:59 > 0:20:04airlines continue to lobby in Washington for relief my continue to
0:20:04 > 0:20:08lobby in Washington for the Trump administration to put some sort of
0:20:08 > 0:20:12restrictions on the Gulf carriers. But I have to tell you, the real
0:20:12 > 0:20:15development came when the Gulf carriers decided that the Indian
0:20:15 > 0:20:20market was one that they could access and transport thousands,
0:20:20 > 0:20:26millions of Indian visitors to the United States and Europe with one or
0:20:26 > 0:20:29two flights as opposed to having to take three or four flights, to
0:20:29 > 0:20:34change to get all the way back to California. That's where this really
0:20:34 > 0:20:39started. Again, Dubai and Abu Dhabi and Doha being a hub between East
0:20:39 > 0:20:44and West.Just this week Saudi Arabia announced a $500 billion fund
0:20:44 > 0:20:50for a multicountry free trade area, all sorts of industries, creating
0:20:50 > 0:20:55thousands of jobs. Does the Gulf see that as an opportunity or does it
0:20:55 > 0:20:59see that as a huge threat? Because someone else is doing something may
0:20:59 > 0:21:03be that they're not.The GCC countries want Saudi to be
0:21:03 > 0:21:08successful, they do not want Saudi to fail. There's been a great study
0:21:08 > 0:21:12of the successes here and how they can be educated elsewhere in the
0:21:12 > 0:21:16region. This is a huge commitment by the new Crown Prince and its
0:21:16 > 0:21:21commitment with Egypt and Jordan again, as you said, to make it an
0:21:21 > 0:21:25international city and it is new and it's a big development and I think
0:21:25 > 0:21:28there's a big chance it will succeed.When you hear those
0:21:28 > 0:21:31announcements, or an announcement of such scale and scope and ambition,
0:21:31 > 0:21:36what does it mean for your business? I think it's an exciting thing, very
0:21:36 > 0:21:43exciting. For us it gives us clarity on where these countries want to go.
0:21:43 > 0:21:47It's very important for us to understand the needs of our
0:21:47 > 0:21:51customers. At the end of the day these governments and organisations
0:21:51 > 0:21:55are customers.How important is private sector investment versus the
0:21:55 > 0:21:58support from the government? We've seen the Saudi Arabia announcement
0:21:58 > 0:22:02will involve a lot of sovereign wealth money but also private
0:22:02 > 0:22:06investors, large and small, how does that makes? Do you need the boost
0:22:06 > 0:22:09from the government to get these things going and then it falls to
0:22:09 > 0:22:13the private sector?I think it's a partnership and it always makes
0:22:13 > 0:22:20sense to have that healthy partnership between government and
0:22:20 > 0:22:24the private sector. That's what we've seen in the UAE and I think it
0:22:24 > 0:22:28would work very well in Saudi as well.UAE leaders say all the time
0:22:28 > 0:22:31they want skin in the game by the international companies that come
0:22:31 > 0:22:34here, they don't want people just coming here selling their wares,
0:22:34 > 0:22:38they want international companies to come here, invest and be part of the
0:22:38 > 0:22:46ecosystem.Thank you, all, fascinating discussion. Danny, Vipul
0:22:46 > 0:22:52and Dalia, thank you for your time. Thank you to you for watching.
0:22:52 > 0:22:55That's all we've got time for on this edition of Talking Business,
0:22:55 > 0:22:58but we'll see you again very soon. Bye-bye.