Monday, August 6, 2007
Ten years ago, Dubai was an underdeveloped speck in the desert.
Today, however, it's rapidly becoming a cosmopolitan metropolis with GDP growth of 16%. The emirate manufactured this incredible economic growth by attracting foreign capital, investors, and tourists.
The first two groups come to Dubai for the "free zones" – large cities in which businesses can operate without paying corporate taxes. The last group comes to Dubai for the beaches, condos, megamalls, and soon-to-be-unveiled theme parks. Tourism currently accounts for 30% of Dubai's GDP. And tourists outnumber residents by a ratio of five to one.
However, what will ultimately position Dubai on the world stage will be its financial significance. Dubai is positioning itself as the Switzerland of the Middle East: a business-friendly, politically neutral place where anyone in the MENA (Middle East, North Africa) region will go to do business.
The underlying idea here is that Dubai is trying to attract a highly skilled, sophisticated workforce to stay. The Emirate certainly has no shortage of unskilled workers (much of its incredible growth relies on the massive immigration of cheap labor from India and other neighboring regions). However, Dubai needs businessmen, lawyers, and the like to inhabit all those skyscrapers and offices that are going up.
Singapore is out to do the same.
There are many similarities between the two areas. Both are city-states. Both are small – Singapore's population is 4.5 million, Dubai's is 1.4 million. Both have engaged in massive construction efforts to increase their available land – Dubai's "palms" and waterfront have added more than 300 miles of coastline, while Singapore has increased its land by 20% in the last 40 years, "reclaiming" it from the sea. And both are trying to attract highly skilled workers.
According to the Financial Times, Singapore has the largest percentage of foreign workers in Asia if you include permanent residents that were born abroad... 33% of the country's employees are foreign. However, 87% of them work in low-wage jobs.
The government is set on changing this and hopes to attract 240,000 highly skilled permanent residents in the next five years. It's opening two casinos and is loosening its tight regulations concerning nightlife.
To be sure, the country has a lot going for it. Despite its small size, Singapore is the 18th wealthiest country in the world. The Monetary Authority of Singapore (MAS) estimates there is roughly $200 billion in assets being managed by private banks there. It expects this to grow by 25% next year.
I'm interested in seeing just what Singapore has to offer foreign investors. So I'm heading there on Friday. If you or someone you know lives there, I'd love to hear from you. E-mail me at [email protected].
I'll detail everything I learn on these pages. Until then...
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