UAE: Local Businesses Benefiting from Iraq’s Reconstruction

By IPS Correspondents Reprint | | Print |

Meena Janardhan

SHARJAH, Aug 10 2003 (IPS) - Unfazed by the sweltering sun and the oppressive humidity, Sunny Matthew stands for hours watching cargo being loaded on to trucks from his shop in the used goods market in the Industrial Area here in Sharjah, one of the seven emirates in the United Arab Emirates.

”These are for Iraq,” he explains in an interview. ”The reconstruction efforts there have provided a major fillip to our business – we have a huge demand for cheap and used consumer and household items.”

It is not just demand for used goods that UAE businessmen hope to cash in on. The end of the U.S.-led invasion in Iraq and the rebuilding programme there has led to sky-rocketing opportunities for the electronics, building, construction, shipping, energy, foodstuff and general trading sectors.

In a statement to the press, UAE Central Bank Governor Sultan bin Nasir Al Suweidi said, ”Our country possesses great capability, infrastructure and a sound economy, which would enable it to participate actively in the reconstruction of Iraq or any other country in the region.”

”As the UAE adopts an open market economy, it would leave the opportunity to its national private companies and contractors to contribute towards the reconstruction of Iraq,” he said.

Matthew agrees: ”Till now local demand has been our mainstay, but now Iraqi demand is high too and we are going to make full use of this opportunity.”

The bill for rebuilding Iraq, called the biggest reconstruction effort since World War II, is estimated to be 100 billion U.S. dollars. It is also expected to take years to rebuild the infrastructure and revive the oil sector – and these both contribute to the optimism for economic growth in the Gulf Cooperation Council (GCC) countries.

The United Arab Emirates, especially, stands to benefit a great deal.

Located on the coast and with state-of-the-art port facilities, the country serves as an ideal berthing post for international trade carriers.

As the main trading centre in the region, it will particularly contribute toward the emergence of re-exporting opportunities, which will also benefit firms providing supplies to the U.S. and British forces. It is equipped with some of the region’s latest technologies and is the seat of most international businesses in the region.

”Dubai would be in the forefront,” Naved Ali, sales director at a leading computer firm, explains in an interview, ”As the regional hub, most of the goods will be sourced from here. It also has excellent marine facilities.” ”As for the information technology (IT) industry, we expect a boom – Iraq will need over one billion U.S. dollars worth of IT products and services. There has also been mention of Iraq needing at least a million personal computers in the first 12 months of the full lifting of the U.N. sanctions. We will be there to cash in,” he added.

Similar views are echoed by traders from other sectors.

The UAE satellite receiver and antenna market is already poised to catch the post-war export boom to Iraq.

Demand for receivers and accessories surged 100 percent in April and May alone, sparking an increase in prices of 30 percent. Dealers estimated that around 500,000 receivers and accessories have already been exported to Iraq.

The United States Agency for International Development (USAID), the U.S. agency that awards deals for the reconstruction of Iraq, has picked Dubai as one of the three centres that will be used to provide logistical support to the post-Saddam rebuilding effort in the war-ravaged country.

Part of an upcoming deal that according to USAID sources has not yet been awarded, the decision promises to open up huge opportunities for Dubai-based businesses.

”Dubai is strategically placed to play a vital role in the reconstruction of Iraq,” said Abdul Rahman Al Mutaiwee, director general of the Dubai Chamber of Commerce and Industry. ”We expect to see a big increase in exports and re-exports as reconstruction gathers pace.”

For instance, he added, ”Iraq is effectively a new market, not just for the auto parts industry. There will be opportunities in all sectors and Dubai, as the leading regional trading hub, is ready to play its part in helping put Iraqi economy back on its feet.”

It is estimated that the Middle East spare parts and accessories trade is worth eight billion U.S. dollars and is expanding at five percent annually. U.A.E-based dealers said they expect demand for vehicle components to soar in the wake of the war.

Riaz Azeez, who works at a leading Sharjah-based supplier of spare parts for U.S.-made cars, said that his company was already working to establish contacts with Iraqi importers who own spare parts outlets or supply existing outlets.

He added, ”The large Iraqi population, its vast landscape, longer driving distances, punishing climate, badly maintained cars and nationals eager to build their lives after years of deprivation, make Iraq a very lucrative market for the auto spares sector in the post-Saddam era.”

The same demand applies to air-conditioning parts, water pumps, air filters and brake components, tyres and suspension parts.

To help UAE investors penetrate the Iraqi market, an Iraqi Business Council (IBC) has been set up. This will have a list of tenders on prospective projects in Iraq ready for distribution among the business community. The Provisional Coalition Authority (PCA) in charge of Iraq has begun announcing tenders for different projects that will upgrade the infrastructure of the country.

Iraq’s health care sector itself requires between 300 and 500 million U.S. dollars to bring the sector back to normalcy. Huge investments are also required for the oil and gas, education, electricity and water sectors.

Further, Iraq’s electricity generation capacity is about 10,000 megawatts and needs huge investment for upgrading, spares and maintenance. The construction and infrastructure contracts, according to the PCA, will be about 2.4 billion dollars this year.

Iraq’s mobile phone subscribers could touch 5 million in three years, and heated competition is expected among telecommunication infrastructure suppliers and service providers.

”Dubai has long-standing business links with Iraq. UAE companies are ideally situated to benefit from the huge commercial opportunities that will arise as Iraq re-opens for business,” added Naved.