DIFC Economics Workshop Discusses the Evolution of Economic Hubs and the Emergence of 'Aerotropolis'Press Release23 May 2011 07:59 am
- Highlighted Dubai's success as a global trade, business, tourism and logistic hub
- Guest speakers included Greg Lindsay, author of 'Aerotropolis: The Way We'll Live Next'
- Discussed the role of infrastructure in economic growth
- Proposed the creation of a MENA bank for reconstruction and development to meet infrastructure demand and boost the economy
The Dubai International Financial Centre (DIFC), the financial and business hub connecting the regional emerging markets and the world, hosted today an economics workshop to discuss the role of infrastructure in contributing to economic growth and the evolution of urban economic hubs from city airports into airport cities, or 'Aerotropoli'.
The event, sponsored by Dubai World Central and titled "Dubai Aerotropolis", brought together important players in the logistics and infrastructure development and financing sector including senior government representatives, multilateral agencies, infrastructure developers and financiers as well as guest speaker Greg Lindsay, journalist and author of 'Aerotropolis: The Way We'll Live Next'. The workshop explained the foundation upon which Dubai has built its status as a global transport and logistics hub, and the way to export this model across the region.
Speaking at the event, Dr. Nasser Saidi, Chief Economist and Head of External Relations of the DIFC Authority said, "Infrastructure investments can transform economic geography and is the basis for sustainable development and reconstruction of countries. DIFC is committed to the development of financing solutions for MENASA's infrastructure and logistics. We need some USD 75 to 100 billion annual financing for the region. DIFC has the financial platform to support governments and the private sector in meeting infrastructure demands of a growing and increasingly urbanised population."
The first two sessions in the event discussed how Dubai developed its role as a regional hub reaching a position of prominence in the global logistics network. These were followed by two sessions on the importance of aviation finance in emerging markets and the different infrastructure sectors that remain to be developed in the region.
Rashed Buqara'a, Chief Operating Officer, Dubai Aviation City Corporation said; "We are very pleased with the opportunity to collaborate with DIFC on hosting the Aerotropolis economic workshop. As part of our mandate to develop the Dubai World Central Aerotropolis, we recognise the importance of having a robust dialog with the investor community, exploring the economic effects of Aerotropoli and demonstrating how DWC is supporting Dubai in this direction."
Dr Saidi added; "Dubai has become in a very short time one of the pivotal trading, business and tourism hubs in the world. Taking advantage of its location mid-way between Asia and Europe, its ports today are among the most active and efficient in the world. Dubai is investing $33 billion in Dubai World Central's infrastructure, which once completed will include the world's largest airport in volume for both passengers and cargoes. This will further drive business location and urban development, and will be an engine of local economic development, further enhancing Dubai's position as the region's Aerotropolis."
Investment in public infrastructure has long been considered central to the economic expansion of any country at any stage of its development. It improves the production process, raising efficiency and productivity of the private sector, increasing the distribution potential of output, and ultimately leading to higher living standards. At the same time, productivity can enhance returns to infrastructure and overall long-run economic growth.
Core infrastructure sectors include transport, water, energy and Information and Communication Technologies (ICT). It is estimated that half of the population in MENA does not have adequate access to water which is expected to drop even further in the next 15 years. In the meantime and as the population grows, electricity consumption is also expected to increase significantly requiring significant investments to meet demand. An investment of between $75 and $100 billion a year in the infrastructure is needed to sustain MENA's growth rates at the same levels it has achieved over the last few years, and to boost the region's economic competitiveness. The last two sessions in the event discussed financing options available for the MENA region in these changing times.
Dr Saidi said, "Only half of the investment required for infrastructure in developing countries is spent. The Arab Firestorm has demonstrated that the people want improved public services and this means better and more efficient infrastructure services. These require substantial capital investment which traditionally came from the governments, but with budget constraints, these MENA governments should look into enabling the participation of the private sector.
"There are some public-private partnership (PPP) schemes in the regional power sector, but changes to tendering policies and processes as well as the introduction of special PPP laws to mitigate the risks are required to develop this participation. Moreover, as we strive for greater economic integration across the region, we need to have an institution in there - a MENA bank for reconstruction and development - that can allow the governments and the private sector to invest in the future growth of this region."
Adil Marghub, Head - Infrastructure & Energy, MENA Region, IFC: "Private sector investments in infrastructure projects in the MENA region have increased from the low level seen in 2009. Demographics, urbanisation and a focus on job creation remain as key drivers for the growing need for infrastructure services. Lower and middle income countries in the region continue to face challenges in attracting private capital. IFC and other IFIs continue to play a central role in financing the infrastructure needs of the region."
A development bank coupled with outside investment could also create better investment opportunities for domestic money. "One of the objectives of setting up the DIFC is to develop the financial sector so that we can manage and control our own financial wealth. DIFC is home to the main players in the infrastructure finance industry from international and regional financial institutions to lawyers and specialised consultants. Its legal and regulatory framework also provides the necessary platform to develop the required financial products. Creating such a bank would be a constructive way to channel financial resources to countries in transition and would serve as a catalyst to attract other investors, in order to foster the growth of private businesses. We look forward to working on this concept with interested parties and making it a reality," Dr Saidi added.
Other speakers at the event included Ram Menon, Divisional Senior Vice President Cargo, Emirates Airlines; Antony Single, Counsel, Clifford Chance; Martin Sutton, Vice President Commercial, Pembroke Group, Standard Chartered PLC; Gayane Afrikian, Senior Economic Policy Adviser, DED; Peter Avery, Partner, Clifford Chance; Raymond Bourdeaux, Lead Infrastructure Specialist, MNSSD, World Bank; Dolan Hinch, Head of Project Finance Middle East & Africa, Deutsche Bank; Kieran Zubrinich, Managing Director, Macquarie Capital Advisors; Kersi Patel, Regional Head of Trade and Supply Chain for the MENA region, HSBC; and Abdulla Bin Damithan, Director, Account Management - Container Terminals, DP World.