How is Dubai protecting investors, supply chains and businesses during conflict

Dubai: Dubai’s economic priorities have not changed despite the pressure placed on oil, shipping, business costs and investor sentiment by the US-Israel-Iran conflict, according to a senior official at the Dubai Economic Development Corporation.

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Mohamad Sharaf, Chief Operating Officer of Investment Attraction at DEDC, the economic development arm of Dubai Economy and Tourism, said the emirate remains committed to the Dubai Economic Agenda D33 and its target of doubling GDP by 2033.

“Our goals and our targets have not changed and have not shifted,” Sharaf said in an exclusive interview. “We are still moving forward with D33 and the stated ambitions, it does not deter us.”

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The current regional backdrop has forced Dubai to look more carefully at how resources are allocated across initiatives, but the direction of travel remains intact, he noted.

“It has forced us to look at reprioritising allocation of resources towards certain initiatives more so than others based on the current geopolitical situation,” Sharaf explained. “But we still feel very strong about these are fundamentals that have made Dubai the special place that it is and gotten us to where we are. And these are areas where we want to continue to expand and double down on.”

Supply chains face a live stress test

Regional tensions have placed shipping routes, supply chains and operating costs under pressure, but Sharaf said Dubai’s long-running investment in infrastructure and global connectivity is helping the city absorb the impact.

“Dubai and the UAE have always prioritised being not only a local hub but a regional and global hub that focuses on connecting the world through its world-class infrastructure,” he said.

During periods of conflict, supply chains come under “a lot of stress testing,” Sharaf noted, adding that investments made by Dubai and the UAE in building a resilient global network have proved important for local and international markets.

“Our investments as a city and as a country into bringing resiliency to our global network were tested in this period and have proven to be valuable, not only for our local economy and local consumption, but also for global economies,” he said.

With shipping affected, Dubai has been working on alternative channels to keep trade moving.

“We have found unique ways to be able to create green lanes and green corridors with other ports across neighbouring countries, as well as continuing to ramp up our connectivity by air to countries both east and west,” Sharaf said.

Cost pressures hit businesses

Businesses in Dubai are facing higher costs linked to fuel, freight, insurance and supply chain disruption, Sharaf said, but the emirate is watching the market closely to prevent unfair pricing behaviour.

“What we are seeing in Dubai and the UAE is obviously pressures of the conflict that are creating some challenges,” he said. “Our role as Dubai Economy and Tourism is to make sure that we don’t have any predatory activities as a result. And therefore, our consumer protection and fair trade colleagues are constantly on top of these matters.”

Higher fuel prices have affected many companies, he noted, making targeted support measures more important.

“We do see that increasing fuel prices has had an effect on many businesses,” Sharaf said. “And that’s why things such as the package that Sheikh Hamdan announced at the end of March, with the deferral of many government fees, has been a step in the right direction of alleviating some of these pains and some of these pressures.”

The support measures are being studied on a continuing basis, with decisions guided by market conditions.

“These measures are not taken as a reaction,” Sharaf said. “These measures are continuously studied so that based on certain factors determines whether these are prolonged packages of support, or if there need to be further packages of support that are warranted.”

Investor confidence rests on stability

When asked about what is Dubai doing to keep foreign investors confident during this period of regional uncertainty, he stated that investors need to understand the strength of Dubai’s legal environment, including the availability of civil and common law jurisdictions such as the Dubai International Financial Centre.

“There is transparency and there is justice in a legal system that is proven,” he said. “There is familiarity in legal systems also in Dubai, whether it’s civil or common law jurisdictions, such as in the DIFC.”

Safety and security remain central to the emirate’s investment proposition, especially during periods of regional uncertainty.

“Most importantly, it is to understand what Dubai and the UAE have promoted for quite some time, the concept of putting people’s and businesses’ safety and security at the forefront of priorities,” Sharaf said.

The latest period of uncertainty has again tested those fundamentals, he added.

“We’ve seen resilience play an important factor in business sustainability and supply chain robustness,” Sharaf said. “What they have seen, I think it helps to create more credibility for future investors and new investors that have a more robust understanding of how Dubai and the UAE is a land of prosperity, a land of welcoming but also a land of execution.”

Manufacturing gets a stronger role

Manufacturing, logistics, AI, green economy and advanced technologies are central to Dubai’s diversification strategy and to reducing exposure to oil and geopolitical cycles, Sharaf said.

The D33 agenda, announced in January 2023, set an ambitious goal of doubling Dubai’s GDP within a decade. Sharaf said that target depends on productivity and production, making manufacturing a key sector.

“The goal of doubling our GDP in the span of a decade is something that is ambitious, but achievable,” he said.

Manufacturing is tied closely to logistics, he added, with Dubai’s early investment in air, land and sea connectivity creating an advantage that continues to support growth.

“That was a very important step early in the history of Dubai, to create a logistics and a trading hub from Dubai and investing into that infrastructure, which is paying dividends and has been paying dividends now for four decades,” Sharaf said.

National champions such as Emirates Airlines and DP World remain critical to that model, giving manufacturers access to global markets.

“Building physical channels and connections through air, land and sea, with national champions like Emirates Airlines and DP World, have also been critical to the success of the Dubai hub story, which has brought value again to manufacturers, as their goods can reach every corner of the world in a more efficient manner,” he said.

Incentives and export support

Dubai is also putting more focus on incentives for manufacturers looking to expand existing facilities or build new ones, Sharaf said.

The emirate is studying financial incentives based on the economic impact of investments, while DET has developed an exports assistance programme to connect manufacturers with customers overseas and build new channels.

DEDC is also working through its elite buyers programme, which brings major international purchasers closer to UAE-made products.

The programme helps global buyers gain “a better understanding of Emirati-produced products, their quality and the reliability of being able to stock those in a timely manner,” Sharaf said.

Industry 4.0 is another area of focus, with Dubai helping manufacturers upgrade processes, automate operations, adopt AI and use advanced technologies to improve efficiency.

The emirate is also placing greater weight on in-country value at both federal and local levels, giving local manufacturers added advantages in government tenders.

Sustainability is part of that industrial push, with the UAE’s net-zero 2050 commitment feeding into manufacturing policy.

“We are also cognisant of the fact that we’ve made a commitment as a nation to be net zero by 2050 and how we can help to be more sustainable in our manufacturing is another priority of ours,” Sharaf said.

The adoption of solar energy and changes in solar policy have helped lower costs for manufacturers, he added.

Businesses need different forms of support

Companies are not all asking for the same type of help, Sharaf said, with needs varying by sector and business model. Some require cost relief, others need supply chain support, financing access or clearer policy guidance.

“It varies from sector to sector and business to business,” he said. “There are businesses that require some of each of what you’ve pointed out, and there might be some continuity of themes based on sectors.”

Dubai’s role is to monitor those needs and respond with targeted solutions where required.

“Our role is to listen, our role is to monitor and our role is also to come up with solutions,” Sharaf said. “How and when these solutions get executed is dependent on a number of factors that we are in constant review of.”

The broader aim, he added, is to help businesses move through the current period and return to the growth Dubai has seen over the past few years.

“Our major goal here is to help businesses continue to get through this phase and get back into the growth that we had seen in Dubai over the past couple of years, which has been outpacing the growth of most advanced economies around the world,” Sharaf said. “We want all partners and investors in Dubai to play a part in that journey.”

Areeba Hashmi contributed to this report.