DIFC Economics Workshop Discusses the Importance of Investment in Infrastructure and Logistics

Dubai International Financial Centre (DIFC), the financial and business hub connecting the region’s emerging markets with the developed markets of Europe, Asia and the Americas, today hosted “Integrating MENA into Emerging Global Supply Chains: Building on Dubai’s Infrastructure and Logistics” supported by Dubai World Central, as part of the annual DIFC Economics Workshops series.

The Workshop addressed various facets of the topic including Dubai as a logistics hub, innovative project financing options, key elements to facilitate regional integration, and infrastructure and reconstruction opportunities in the MENA region. The event also provided a platform for financiers and business leaders to network, share knowledge and discuss the latest trends and developments in infrastructure and logistics in Dubai and the region.

Speaking at the event, Dr. Nasser Saidi, Chief Economist at DIFC said: “Dubai’s investments in infrastructure and logistics have enabled it to diversify, achieve greater openness and transform its economy, changing its position in global economic geography. Dubai’s infrastructure assets and its multinationals should be leveraged to allow the greater integration of Arab countries into emerging, New Silk Road, global supply chains. The Arab region’s young population demographics and rapidly growing urbanisation are driving increased infrastructure spending, while high oil prices have provided the required financing in the Gulf countries. But infrastructure investment requirements are growing as a result of the Arab Spring. We will need to focus on new approaches to infrastructure and logistics investments through greater private sector participation, financing through local currency debt and Sukuk issues, as well as new region-wide institutions. The time has come to create an Arab Bank for reconstruction and development to address the multiple, economic, social and environmental, challenges facing our region and the aspirations of its youth.”

The event opened with a session titled ‘Dubai – The Region’s Trade, Business & Logistics Hub’, which discussed how Dubai’s investments in infrastructure and logistics have transformed it into the region’s trade, tourism and business hub, allowing MENA to integrate into emerging global supply chains.

Participating in this session, Mohsen Ahmad, Director of Operation Development and Stakeholders Relations at Dubai World Central spoke about the current and future projects led by them, including latest developments to maintain Dubai’s status as a logistics hub. He also shared trends in trade and airport traffic with the audience, highlighting Dubai’s interconnectedness. The launch of the DWC’s Al Maktoum Airport was also among the points of discussion, with its benefits, including increased connectivity, outlined. 

Mohsen Ahmad said: "Dubai World Central is positioned to cement Dubai's leading position as a hub for trade and commerce. More than ever, speed and connectivity are increasingly becoming must-haves for global organizations. With the currently operational Al Maktoum International Airport at the heart and integrated logistics and aviation districts, DWC is the ideal platform for business looking to expand their reach into the dynamic MENASA region."

The session also discussed areas that require improvement, touching upon existing inefficiencies and steps to overcome them. Mohammed Al Muallem, Senior Vice President and Managing Director, DP World, UAE Region, highlighted the role of DP World in developing and maintaining Dubai’s status as a logistics hub. He also spoke about current and future projects of DP World, including latest developments, also highlighting the shift in focus to emerging market economies.

Mohammed Al Muallem said: “DP World is at the frontline of connecting Dubai, the UAE and the region to the rest of the world with our flagship Jebel Ali Port serving as the largest and busiest logistics hub between Europe and Asia. Emerging markets account for more than 75% of our business and are the focus of our growth strategy. Our recent decision to increase the container handling capacity at Jebel Ali by 5 million TEU (twenty-foot equivalent container units) is in line with the growing trade flow between this region and the developing economies.”

The second session titled ‘New Financing Options During Changing Times for the MENA Region’,highlighted the alternative options for financing infrastructure in the MENA region, the role of Islamic Finance and the role for private participation. Transformational investment in infrastructure and logistics with new financing options can not only improve interconnectedness and facilitate trade, but also enable businesses to integrate into the global supply chain. In particular, the GCC and MENA countries need to be integrated into the emerging New Silk Road global supply chain.

The changes in financing options for the MENA region’s businesses was among the points of discussion, with the sectors of focus highlighted. In addition, the session identified the changing trends in the post- financial crisis world, and the changes post Eurozone sovereign debt crisis. The speakers also touched upon the role of Islamic finance as an additional source of financing, including current growth and its ability to provide access to untapped funds. An overview of the potential benefits of regional infrastructure integration, alternative sources of project finance, and innovative instruments used in other regions and their suitability for the MENA region were all points identified in the session.

Speakers also discussed the issues involved in financing, from a financial institution’s perspective, and the main challenges faced when financing infrastructure projects in the region. The discussion also aimed to identify how an integrated MENA region can play a central role in the larger global network, and the possible avenues for integration with emerging markets such as China and India.
This session was followed by another one titled ‘Infrastructure: Expanding horizons through Regional Integration’. This topic focused on the regional economic integration and how it can benefit from integrated infrastructure. Similarly, integrated infrastructure projects can enable and drive regional economic integration.

During this session, key elements required to facilitate such integration were identified, including finance, key players, authorisations and permits, and resources such as raw material and human capital), while region-specific requirements were touched upon.

The overall benefits of economic regional integration were discussed, specifically on infrastructure integration across different types of regional integration including rail and road networks, airports and sea ports, gas pipelines, and telecommunications. 

The Workshop concluded with one final panel discussion titled ‘MENA Infrastructure – Opportunities for Reconstruction & Role of Emerging Market Economies’. It mainly focused on the fact that the Arab Spring and reconstruction requirements are a major opportunity for massive infrastructure investments that would foster economic growth and integration of Arab countries into new, emerging global supply chains.

Panellists discussed potential opportunities for collaboration in the reconstruction efforts following the Arab Spring in the region, the challenges that may be encountered in MENA reconstruction and the way forward. They also identified the role of an Infrastructure Fund in facilitating construction projects in the MENA region, in light of the critical need for infrastructure.

Other speakers at the event included Adil Marghub, Manager, Infrastructure Cluster, MENA Region, IFC; Aaron Bielenberg, Associate, Latham & Watkins; Hajir Naghdy, Head of Macquarie Capital, UAE; Aleem Khan, Regional Head of Structured Trade Finance, Standard Chartered; Farouk Soussa, Chief Economist, Citibank; Mark McFarland, Emerging Markets Strategist, Emirates NBD Private Banking; Hemant Kanoria, Chairman & Managing Director, SREI Infrastructure Finance;Yang Seung-Ho, Regional Marketing Director, Middle East & Africa, SK Engineering & Construction; and Mark Lemmon, Chief Executive Officer, MENA Infrastructure Fund.