Vision 2030: Abu Dhabi focusing on growth strategy
When the global financial crisis and the wave of unrest swept several Middle East countries, Abu Dhabi's senior strategists went back to the drawing board to reconsider all their assumptions and development plans.
The changed - and more battered - global and regional economic landscape is likely to be reflected in the emirate's soon-to-be published second five-year financial plan, spanning from this year to 2017, which seeks to set out the emirate's short-term development priorities to keep it in line with Vision 2030.
The new plan, said Sheikh Hazza bin Zayed, National Security Advisor and Vice-chairman of the Abu Dhabi Executive Council, in a rare on-the-record interview with the Oxford Business Group, is focused on a drive for economic diversification in eight key sectors: cultural tourism, aviation, manufacturing, media, health care, petrochemical, financial services and renewable energy.
It comes as the capital reaches the end of its first rolling plan, 2008-2013, a blueprint put together on the back of a five-year year bull run in oil markets that, for a while, showed few signs of softening. But after the US credit crunch in 2008 lit the touchpaper on a global crisis, sending oil prices tumbling, and freezing credit markets, many assumptions and projections had to be revisited.
Prices have since rebounded but the shock served as a reminder of the fragility of the global economy and, with it, the region's fortunes. The Arab Spring that rocked several regional countries further focused officials' attention in a different way.
The result has been a change of short-term priorities to "accommodate the changing realities on the ground," Sheikh Hazza said. The emirate's long-term strategy for diversifying away from oil remains intact. The Abu Dhabi Vision 2030, which the five-year plans form part of, "remained unchanged", he said.
Instead, the path to achieving that goal has been redrawn.
"These priorities are reflected in the list of projects announced by the Executive Council in January 2012," he said. "For example, the Abu Dhabi Louvre and the Abu Dhabi Guggenheim museums projects on Saadiyat Island will form the cornerstone of our strategy of diversifying cultural tourism."
Capacity building in the high-tech aviation industry through Mubadala's investment in Strata, investment in the aluminium, steel, copper and petrochemicals sectors further highlight those strategies. The Executive Council is also "reviewing our investment in the media sector to ensure that it generates a contribution to our GDP."
The emirate's investment in the media sector includes Abu Dhabi Media, which owns several entities including The National, and twofour54, the media zone.
Just as notable, he said, the private sector is embraced as "a strategic partner that effectively supports the public sector and contributes to the implementation of the government's economic plans." Electricity, maritime transportation and aviation, among others, are critical areas of involvement for the private sector.
"To fulfil the economic strategy, the government has set strict standards to ensure that the investment programme benefits rather than contends with the private sector," Sheikh Hazza said.
He said cultural tourism, aviation, manufacturing, media, health care, petrochemicals, financial services and renewable energy remained the eight areas of focus.
Giyas Gokkent, the chief economist at National Bank of Abu Dhabi, said: "There is more focus on a quicker return in investment and projects standing on their own feet."
Ultimately, the focus is on projects being self sustaining. Investments in energy and industry would likely be given even more priority in the future, said Farouk Soussa, the chief economist of the Middle East and North Africa at Citigroup. Property was likely to be one of the areas given more of a backseat role.
The cornerstones of diversification remain intact.
"Abu Dhabi has gone back to basics," said Mr Soussa. "It has been looking at where it has a comparative advantage."
Updated: March 11, 2013 04:00 AM