Challenges Facing from Economic Point of View The global maritime industry has presently been reeling under the impact of the ongoing economic crisis. It is expected to experience a few years of decline due to the overcapacity of ships, and a substantial reduction of shipment, resulting in a drop in tariffs. Overall, the shipping industry is witnessing a new trend of consolidation. Smaller companies, which are asset heavy, are merging with larger organizations in order to survive these difficult times. Observations indicate that the prospect of considerable improvements in trade volumes before the end of 2010 is unlikely. “It can be safely assumed that the shipping industry will learn its lessons and emerge stronger from the current economic crisis. However, there is still a long way to go, at least three years, before the shipping industry bounces back to its earlier prosperous times and freight rates are rationally stabilized.” (Frost
Foreign Direct Investment In The United Arab Emirates Economics Essay
The purpose of this study is to examine and critically evaluate the economic environment for FDI (Foreign Direct Investment) in the United Arab Emirates. We elaborated this by examining the growth and direction of FDI in the UAE, by defining different forms of FDI’s and the industries and sectors that they have invested in the UAE. We also look into the theoretical implication and government policies and restrictions that apply towards FDI in UAE. Also furthermore we have analyzed and examined a successful FDI form; in our case this would be the vast investment made by SIEMENS in the UAE in various sectors, and discuss on benefits and issues faced by SIEMENS in the United Arab Emirates. This report not only reviews the latest developments in the institutional framework governing the activities of FDI enterprises, but also provides a general overview on the recent activities of SIEMENS in the UAE.
The UAE is a federation of seven emirates, each having its own ruler. The UAE constitution established a government which includes a President, Vice President, Council of Ministers, Supreme Council and a 40 member Federal National Council. The Supreme Council is the highest constitutional authority and is composed of the seven emirate rulers. The UAE is considered as one of the most open economies in the Middle East and a pioneer at being the first cosmopolitan hub for business in the Middle East. The current population of the UAE is at approximately 6.2 million residents, out of which only 15 to 20 percent are UAE citizens. According to a special report on Al Jazeera Network program – Middle East in Focus – over 90 percent of private sector output comes from non-UAE residents.
In 2005, foreign investment in the UAE was approximately $10 billion, accounting for nearly 40 percent of total foreign capital in the Arab world that year. Oil and natural gas production generated approximately 36 percent of the country’s GDP in 2005, in addition – the UAE controls almost 10 percent of the world’s oil reserves – most of the reserves are located in Abu Dhabi. (IMF Annual review, 2006).
FDI in Focus: SIEMENS Siemens has a long-standing presence in the Lower Gulf region. It is currently represented by four regional companies that are based in United Arab Emirates (UAE), Bahrain, Qatar, and Oman. The company is also active in neighbouring Yemen, which completes the Lower Gulf territory. Although the company had a presence in the UAE for decades as a representative office; Siemens AG and a local partner established Siemens LLC in the late 1999 as a merger-acquisition.
Siemens has specialized in a wide array of industries and sectors in the UAE including:
Energy Communications Automation Medical Solutions Siemens is one of the largest employers in the region, their workforce consist 1,700 employees from 60 different countries across the globe and in the fiscal year 2008, the sales of all consolidated Siemens companies in the region amounted to EUR 1.714 billion (Siemens Corporate Website, accessed 2011). Siemens objective is to bring the world of innovation to the region (especially the UAE) in array of business areas and focused industries and would like to hold a position as an active partner in building infrastructure of the UAE.
Foreign Direct Investment in the UAE. Before we discuss FDI in the UAE, I would like to define FDI. Foreign Direct Investment can be defined as the investment made by transnational corporations or multinational enterprises (MNE’s) in foreign countries in order to control assets and manage production activities in those countries (Padma Mallampally