How do you see the contribution of SMEs to building Dubai’s economy over the last decade?
The SME sector represents an important segment of Dubai’s development strategy over the last decade. Today, it forms 95 per cent of all firms registered in the Emirate, 42 per cent of the labour force and 40 per cent of GDP.
What further aspects of diversification do you feel are necessary in refining the current economic mix?
The current economic mix shows that the following six sectors, namely: wholesale, retail trade and repairing services; manufacturing; construction; real estate; transport, storage and communication; and the financial corporations contributed close to 90 per cent of GDP in 2013. These sectors are labour intensive ones. The wholesale, retail trade and repairing services sector alone contributed a little more than 29 per cent to GDP, while the manufacturing sector contributed only 13.7 per cent. The current economic structure will be diversified away from low skilled and unskilled labour intensive activities to high tech, high skilled labour activities as the Dubai economy is transformed into knowledge and innovation-based economy. This transformation is a target for the Dubai Plan 2021.
Do you believe we will see the rise of the ‘techno SME’ here in the region, in the same way as in Singapore or California?
The UAE Government declared that 2015 is the year for innovation. This declaration and the establishment of techno park and innovation centre in Dubai set the stage for a rising trend for techno SME in Dubai. However, my expectation is that it will take some time before we will see ‘techno SMEs’ flourishing here. This trend needs to be supported and nourished by research and development (R&D). Techno SMEs in Dubai/UAE will appear as a result of determination and changing technology.
In fact, ‘Majid Bin Mohammed Innovation Centre in5’ has been launched in Dubai to promote entrepreneurship and technology innovation in the UAE. The Centre is located at Dubai Internet City (DIC), one of the largest information and communications technology (ICT) free zones in the region. It will focus on the five key objectives of accelerating the development of new start-ups, fostering entrepreneurships, driving technology innovation, contributing to shaping an ICT ecosystem and, most importantly, promoting Dubai as an ideal location for tech start-ups.
How important do you believe it is for an SME in the UAE to trade overseas, or with other GCC nations?
Trading overseas or with other GCC countries is one channel of improving quality of products and services, and a test for competition and growth. However, the SMEs could expand their activities once the barriers to free trade and services are removed. In this regard, the Chambers of Commerce and Industry in Dubai and UAE, the Federation of Chambers in GCC countries in collaboration with the relevant authorities could play an important role by highlighting the different issues that still hinder trade development.
What areas of management education do you believe it is most important for an SME entrepreneur to understand?
It is most important for an SME entrepreneur to identify the main factors that restrict his expansion and growth in his industry. Experience shows that SME entrepreneurs fail because they face challenges such as: lack of management skills, experience and know-how; not keeping complete and accurate records; poor marketing; weak financial control; lack of strategic planning and inadequate financing. In view of the mentioned barriers to the growth of SMEs entrepreneurs, it is important that education should focus on mitigating these factors.
Do you believe that Dubai can play a leading role in defining the terms and ambitions of the new ‘West-East Corridor’ of emerging global markets?
Dubai is well placed to play such a role being one of the most competitive economies in the region.
Do you think that we will see a greater volume of IPO activity in 2015?
It is expected that the IPO activity would continue with the same pace as in 2014 despite the non-favourable international environment. A number of factors are currently combining to drive such expectation, such as low interest rates and the consumer spending, in addition to the newly-announced Dubai’s public budget 2015 which shows nine per cent increase in expenditures relative to 2014 which account 41 billion dirhams.
Will Expo 2020 prove to be a powerful factor in encouraging public/private sector liaison between businesses in the region?
I think it has a high likelihood as Expo 2020 will be an appointment for all stakeholders to take part. The public/private sector liaison between businesses in the region is rather seen as an opportunity to find another orientation within a participative development model especially if the obstacles that would prevent such liaison are removed.
Most vitally of all, how do SMEs fit into the Dubai Plan 2021?
SMEs occupy a central place in Dubai Plan 2021, especially this ambitious plan aims to bring Dubai to the smart side of life and found the base for a knowledge-based economy. The SMEs play a critical role in that respect. It is well established that SME contributes significantly to the employment, re-distribution of income and wealth, as well as bringing technology and robust innovation and entrepreneurship.
Rushika Bhatia Editor
Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of SME Advisor magazine - the flagship title of CPI Business. She is passionate about infographics – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.