The vision of the Sheikh

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					 THEME »» the vision of the sheikh »» the hyperconnected city




26 • EBR #3 2008
                                                         the hyperconnected city «« the vision of the sheikh «« THEME




                               Dubai
 The vision
of the Sheikh
On the surface, Dubai does not have much – no territory to speak of, no big
harbor, no strategic trade route location, and not much manufacturing power. But
it does have a vision, created by its ruler, the Sheikh.



I
    f you have even a small amount of oil money,    ral water in Los Angeles. However, you cannot
    you can build a city in the desert, turn your   surf in the Gulf.
    coastline into palm-shaped islands, and con-       Wherever you go in the world, other hyper-
vert what was once a small trading city between     connected cities want to be like Dubai. It
the desert and the Persian Gulf into one of the     actualizes the dream of all property developers:
great luxury destinations of the world, where       an empty stretch of land turned into valuable
the economy runs on services, and the currency      real estate. But a building, like a network, is
is knowledge and ideas.                             nothing in itself. It only matters when you start
   Dubai has the world’s only seven-star hotel      using it for something. And this is where the
and soon the tallest building in the world. It      vision of Dubai starts to matter. How do you
also has countless golf courses and luxury villas   use an empty stretch of desert? Or an empty
and apartments, most of which have sprung           network?
from the desert during the past decade. The            Dubai does not have the oil wealth of, for
incredible growth of the economy seems to be        instance, Saudi Arabia or Kuwait. In oil terms,
sustained, and this member of the United Arab       it is poor. (The main oil revenues in the uae go
Emirates (uae) is developing into the financial      to Abu Dhabi, the capital and biggest emirate.)
and trading center of the Middle East – as well     Dubai does not have a large hinterland, other
as becoming one of the world’s hyperconnected       than a slice of the desert in the “empty quarter”
cities.                                             of the Arabian peninsula. Nor does it have a
   Dubai is Los Angeles on the Persian Gulf.        country to be capital of, like Seoul. It does not
The parallels are striking. Both are in a desert,   have one of the biggest harbors in the world, or
short on water yet creating a verdant landscape     a location in the middle of the busiest trading
around tall office buildings. Both are pleasure       lanes in the world, like Singapore. It does not
destinations as well as industrial cities           have the manufacturing skills of Taipei. But it
(although the Long Beach of Dubai, Jebel Ali, is    does have a vision.
well away from the city proper). Both were             In terms of audacity, nobody beats Dubai. It
founded on sun, sand, and oil (Los Angeles          has the feel of a garden suburb of an American
actually has more active oil wells than Dubai).     city rather than a desert city on the Persian
Both are world-class theme park destina-            Gulf. New high-rises sprout from the ground in
tions – Los Angeles will soon have fewer active     the newly developed areas between Dubai pro-
theme parks than Dubai. And both suffer from         per and the harbor city of Jebel Ali (where the
a water shortage, although there is more natu-      few factories in the emirate are located). Then
                                                                                                                   ▶
                                                                                                             EBR #3 2008 • 27
 THEME »» the vision of the sheikh »» the hyperconnected city
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                                            there are the world-famous palm islands:      tourism, transportation, and financial services.
                                      Not only the one almost completed, but two          The emirate’s airline, winner of several awards
                                      more in process, one much larger and surroun-       for good service (in keeping with Arabian tradi-
                                      ded by a chain of islands in the shape of the       tion), is a major cargo transporter as well.
                                      favorite poetry of Sheikh Mohammed bin                 Trade is again the major industry of Dubai.
                                      Rashid Al Maktoum – the ruler of the country,       Oil has fallen to under  percent of the eco-
                                      vice president and prime minister of the United     nomy and is shrinking; the second and third
                                      Arab Emirates, and head of one of the world’s       largest sectors are construction and real estate,
                                      richest royal families.                             with financial services representing  to 
                                         A horse and camel racing enthusiast (the         percent (although with the audacious purchase
                                      main high-tech contribution of Dubai to the         of part of nasdaq, the financial services sector
                                      world so far is the use of robots instead of        is due to grow).
                                                 children as camel jockeys), Sheikh          Turning itself into a logistics hub, Dubai is
                                                  Mohammed owns Dubai Holding             exploiting its strategic location halfway bet-
                                                 and runs the emirate as if it were a     ween Southeast Asia and Europe, creating not
                                            company. Dubai Holding, its subsidiaries,     just one but two of the largest airports in the
                                          and its business partners are behind many of    world (while neighboring emirate Abu Dhabi is
                                        the emirate’s innovative development projects,    building a third). Recognizing that the indu-
                                      ranging from the palm-shaped and world-sha-         stries of the future will all run on information,
                                      ped archipelagos (selling reclaimed land for bil-   and that the oil will run out in  years, Dubai
                                      lions of dollars) to forward-looking projects       is shaping itself into a hub for knowledge indu-
                                      such as the International Village, Knowledge        stries as well.
                                      Village, Academic Village, and Media Village           The financial industry is one of the most
                                      (home to the best-known Arab-language media         electronically connected industries in the
                                      outlet, the Al Jazeera tv channel).                 world. Stock and commodities exchanges all
                                         Profit is not the Sheikh’s only motive. On        make their trades on networks, increasingly
                                      May , , at the World Economic Forum in        based on the internet. As in Singapore, but
                                      Jordan, he announced plans to establish an          unlike in other countries, such as South Korea,
                                      educational foundation in the Middle East. The      the internet industry in Dubai is regulated. The
                                      usd  billion he contributed is one of the lar-    incumbent operator, Etisalat, is rapidly expan-
                                      gest charitable donations in history. (By compa-    ding the network capacity: Fiber to the home is
                                      rison, the Gates Foundation had original fun-       now the norm in new developments; Wi-Fi
                                      ding of usd  billion.) The Sheikh has stated       access points are available in many shopping
                                      that the money is meant to bridge the know-         centers; and high-speed packet access is a
                                      ledge gap between the Arab region and the           recent mobile network addition. But all traffic
                                      developed world, and will improve the region’s      must pass through a proxy server that filters
                                      standard of education and research, develop         out un-Islamic content, which has met with cri-
                                      leadership programs for youth, and stimulate        ticism because it increases business rates.
                                      job creation.                                          To support Dubai’s growth, investments are
                                         Sheikh Mohammed’s vision document for            being made in human capital, productivity, “sci-
                                      Dubai makes for interesting reading. He out-        ence, technology, and innovation,” and intan-
                                      lines how the country should develop through        gible structural factors such as quality of life
                                      , including an annual growth of  percent.     (Dubai is already known as a golf destination).
                                      This may seem unrealistic until you visit the       In this light the Sheikh’s donation makes good
                                      country and see how it is managed – and rea-        sense. Education and innovation, although not
                                      lize that for the past eight years, the average     profit drivers in themselves, are vital drivers of
                                      annual gdp growth has been  percent. That is      economic growth. No wonder that US universi-
                                      a much faster rate than other countries in the      ties are eager to open campuses in Dubai and
                                      Gulf Cooperation Council (Bahrain, Qatar,           other Gulf countries (see separate article). ●
                                      Kuwait, Oman, Saudi Arabia, plus the uae),
                                      and it is faster than the still-growing economies
                                      of Ireland and Singapore. Establishing and
                                      keeping an economic environment conducive           A state run electronically
     Global brands                    to business and the creation of a strong legal
     ▶ Dubai Internet City and        and governmental services framework are two         Dubai is a major user of the internet, in spite of
     Dubai Media City form part of    of the foundations upon which he bases Dubai’s      frequent “Opening Soon” signs. The government
     TECOM (Dubai Technology,         growth.                                             uses it – and mobile services – heavily. The
     Electronic Commerce and             Trade, the original mainstay of the Dubai        government even enables complaints about its
     Media Free Zone Authority),      economy, was the fastest-growing industry bet-      services online, and is itself one of the biggest
     an enclave housing IT firms      ween  and , despite strong showing by       customers for its services.
     such as EMC Corporation, Ora-
     cle Corporation, Microsoft and
                                      construction and real estate. Oil and gas were
     IBM, alongside media organi-     shrinking during the same period. The sectors       ▶ THE VISION of Sheikh Mohammed bin Rashid
     zations such as CNN, the BBC,    targeted for growth are the same that show          Al Maktoum, ruler of Dubai, is summarized in
     MBC, Reuters and AP.             strong growth in the world economy: trade,          a document calling for  percent growth per


28 • EBR #3 2008
                                                          the hyperconnected city «« the vision of the sheikh «« THEME


annum through . How businesses will be           intended to measure the quality of the services.”     Oil isn’t everything
able to do this is spelled out at a high level,         Last year was “year zero” in measurement           ▶ Dubai is distinct from other
whereas the most detailed part deals with how        terms, as it was the first year the model was          members of the UAE in that
the government will change to support the pro-       applied. Apart from the  criteria, each web-       revenues from oil account for
                                                                                                           only 6 percent of its gross do-
gram. Government departments will work               site is evaluated according to usability criteria,
                                                                                                           mestic product. A majority of
together and have a common look and feel;            along with a periodic survey to gauge customer        the emirate’s revenues are
also, the government will create mechanisms          satisfaction.                                         from trade, real estate, finan-
for risk identification and management, and              Apart from the service evaluation, the             cial services and tourism.
evaluation of policies. It must be accountable       government departments are measured on
and transparent – something that countries in        their compliance with the shared service Al
the Gulf region are not famous for. In Dubai,        Shaer’s department has developed. All depart-         Universities
however, the transparency is reaching levels         ments must use some common service ena-               and colleges
that would make a western European country           blers – primarily the call center and the e-pay-      ▶ Dubai has attracted a number
                                                                                                           of international partners within
proud.                                               ment gateway. Payments are the focus area for         higher education:
   Government efficiency, in line with the over-       the e-government in Dubai. In , Dubai             ▶ Zayed University
all productivity increases, is also on the agenda,   enacted an Electronic Transactions and Com-           ▶ Dubai Medical College for
as is empowering and motivating public service       merce Law which deals with digital signatures           Girls
employees. The vision includes financial mana-        and electronic registers. “The objective is           ▶ Michigan State University in
gement and using partnerships with the private                                                               Dubai
                                                     simple,” says Al Shaer. “We want one point of
                                                                                                           ▶ University of Atlanta
sector to deliver selected services and “non-        contact between the government and the
                                                                                                           ▶ RIT Dubai
core operations.” Sheikh Mohammed looks to           customer.”
                                                                                                           ▶ Cass Business School
be running his emirate like a business, applying        So well has the government done this, in fact,     ▶ Heriot Watt University
the latest management philosophies.                  that it is selling its competence to private insti-   ▶ Al Ghurair University
   In light of that, it is not surprising to find a   tutions, such as banks. The sms gateway used          ▶ Dubai School of Govern-
section in the vision document stating that          both to pull and push information via sms to            ment
government must enhance its responsiveness           the mobile phones (which are as ubiquitous in         ▶ American College of Dubai
and customer service. This includes use of the       Dubai as anywhere) is used by private industry;       ▶ American University in
latest interactive technologies, as well as a        and, in a breakthrough deal, Noor Islamic Bank          Dubai
customer care program (yes, the document             signed an agreement to license educational            ▶ British University in Dubai
actually says “customer care”).                      material from the government – in the area of         ▶ Canadian University of
                                                                                                             Dubai
   “In many places, the private sector leads and     customer service, no less.
                                                                                                           ▶ Manchester University Busi-
the government follows. Here in Dubai, we are           Because in Dubai, you can complain – online.         ness School
            trying to do it the other way,” says     The government has set up a complaints recep-         ▶ Dubai University College
            Salem Al Shaer, the director of e-ser-   tion service, which not only lets people register     ▶ European University Col-
            vices in the Dubai government.           complaints, but actually increases government           lege Brussels
               Al Shaer’s performance is measu-      transparency – a lot.                                 ▶ Mahatma Gandhi University
Salem Al    red by the implementation of e-servi-       “When you register a complaint, you get a
Shaer       ces in government departments – a        registration number,” says Al Shaer. “And then
measure that was quantitative in , when          you get messages about what has happened
the key performance indicator of  percent of       with your complaint, as it is followed up.”
all government services being online was                Along with being measured on how it resol-
reached – but now the indicator is qualitative:      ves complaints, the government has implemen-
How good are the services?                           ted another, very direct measure of how much
   “We found that many of the government             people pay. In a country without income tax,
departments only had part of their service           where government services are not free, this
online, or they had created a website describing     quickly becomes evident, especially since the
the service,” he says. “So we had to change the      system can be used to pay road toll – some-
measurement.”                                        thing that has seen mobile payments take off as
   Even so, the development plan for the             people fill up their accounts on the way to the
government sounds as aggressive as that for the      road toll stations.
entire emirate, suggesting that the Sheikh is a         The way the payment gateway is used also
very tough boss.                                     helps measure the usage of the service. It is an
   “Yes, he is a tough boss,” says Al Shaer. “That   effective measure, because you usually pay just
is what keeps us on our toes.”                       before you receive your certificate, or whatever
   Now, the measurement relates to how com-          you are getting from the service. And usage has
plete the government service is. “The services       increased dramatically.
were not up to customer expectations – or our           “Year before last, we had some  million dir-
own,” he says. “For instance, a customer could       hams in transactions,” says Al Shaer. “Last year,
get into the service, but not have a clue about      we were up to  million. This year, it will be
how long it would take to complete it, nor what      at least  million” (one dirham being about
would happen when he was done. And there             usd .).
were no help lines, things like that. So we came        That transaction figure includes the govern-
up with  criteria for how to evaluate the         ment credit card. Unusually, Dubai residents
e-services. It is our own model, and it is really    can obtain a Visa card that the government has
                                                                                                                                         ▶
                                                                                                                                   EBR #3 2008 • 29
 THEME »» the vision of the sheikh »» the hyperconnected city
▶
                                        »Other countries talk about a ‘digital divide,’ but that is
                                        not an issue for us. The rates for access are reasonable
                                        and the income level sufficient. And there are many
                                        ways of learning, so nobody will be left out.«
                                                                              SALEM AL SHAER, DIRECTOR OF E-SERVICES IN THE DUBAI GOVERNMENT.



                                              created. The goal is to facilitate pay-         ministry has been reorganized, so we really
                                        ment – to increase services, of course.               hope the new minister will be interested in this
                                           Al Shaer explains: “We wanted to make sure         work,” Al Shaer says with a small sigh. “Because
                                        people had as many ways as possible to pay.           we really want to do something on the gcc
                                        You can pay for the service with sms, and via         level. We it would make our people’s lives a lot
                                        the credit card. What we were really eager to do      easier.”
                                        was direct bank transfer, since that would result        With a continued growth of  percent, that
                                        in the fewest problems and the lowest cost for        is certainly going to be tough. Following the
                                        the customers.”                                       vision document will not make it easier, especi-
                                           The latest government service is also pay-         ally if the key performance indicators are tigh-
                                        ment-related, enabling anyone with a mobile           tened. The guidelines are well spelled out, and
                                        phone to register and pay with it. And mobile is      the performance could hardly be more transpa-
                                        where Al Shaer sees the next level of develop-        rent if the government was a company.
     Expatriates make up                ment. “There are many more services which                As yet, the household penetration of Dubai is
     more than 80 percent               could use the sms portal. And there are other         nowhere near that of Seoul or Singapore. But
     ▶ Dubai is now attracting          ways sms can be used; for instance, reminders         once the “Opening Soon” signs come off the
     expatriates to its financial and   for doctor’s appointments, and communica-             major new construction projects (the Palm
     other industries, just as Singa-
     pore did in the 1980s and ’90s.
                                        tions in emergencies.”                                Island opens in , as does the subway and
     Expatriates are a mainstay of         But the Bank of Dubai ended up changing its        the Burj Dubai – the tallest building in the
     the economy in Singapore,          system several times during the period the            world – and many of the big, prestigious hou-
     where they have helped build       direct debit was to be implemented. “So we had        sing projects), the broadband penetration will
     the financial industry and run     to go directly to the banks. And we bear all the      rival that of Singapore. Then Dubai will be a
     the large harbor, as well as       transaction costs for the credit card charges.        hyperconnected city. There will be gigabit con-
     several other industries.
                                        We do not want our customers to feel that they        nections in all the apartment buildings, but
        Expatriates were once a
     separate class of workers, on      are paying a premium for using one type of            adsl may still not be on the priority list in the
     par in status with stewardess-     payment over another.”                                old city.
     es and pilots a few years earli-      And that is only for payments to Dubai insti-         That does not worry Al Shaer. “Other
     er. Today, being an expatriate     tutions. The federal uae ministries are not part      countries talk about a ‘digital divide,’ but that is
     worker is far less exalted, al-    of the Dubai local government remit. Nor are          not an issue for us. The rates for access are rea-
     though those on temporary
                                        the Gulf Cooperation Council institutions, in         sonable and the income level sufficient. And
     work contracts for their com-
     panies are often exempt from       which all countries around the Persian Gulf           there are many ways of learning, so nobody will
     tax both in their home country     cooperate. Last year they agreed to implement         be left out.” ●
     and the country they are            different services. But this is not as easy as it
     working in – and are thus an       sounds, Al Shaer indicates with a sad smile.
     attractive target for the finan-      “The federal work is hard work. You have
     cial industry.
        In Dubai the main expatri-
                                        bureaucracy at many levels in the government.         Build campuses and they
                                        We are trying to create good cooperation with
     ate communities are Indian,
     Pakistani, and Bangladeshi,        the federal government ministries, so we can          will stay
     and their main work is in the      deliver better services to our customers. But it      Once you have built office complexes and luxury
     construction industry. Chinese     becomes very complex, doing online permits,           housing in the desert, how do you get anyone to
     and Europeans are other            for instance. We have some projects we are            live there? Enter the next wave: the global uni-
     strong groups, driving the         working on now, such as food import permits,          versities. The Gulf states have invested USD 22
     trade, financial, and property
                                        and permits for livestock, but this is a lot of       billion over the past five years to create opportu-
     management industries. In
     Dubai, expatriates make up         work. We really hope the customer benefits will        nities for university study. And they are aiming
     more than 80 percent of the        be worth it, because they will definitely be the       for high quality.
     population but find that be-       winners in the end.”
     coming citizens is much hard-         With eight years of experience you would           ▶ ONE REASON for the heavy push in university
     er than putting in hard work.      expect the federal institutions (and those in the     development is simple: To keep graduates at
     The UAE is not keen on grant-
                                        other emirates) to be beating down Al Shaer’s         home. The “brain drain” of Arab graduates is
     ing anyone citizenship. Resi-
     dency is another matter: Buy a     door. That, however, has not happened yet.            taking a tremendous toll on the economy,
     piece of land in Dubai, and           “At the Gulf Cooperation Council level, we           Dubai has created a sustained boom in its
     you automatically get residen-     are not even represented most of the time,            property industry. Since the construction of the
     cy.                                since that is a federal matter. But now the           Dubai World Trade Center in , the emirate


30 • EBR #3 2008
                                                           the hyperconnected city «« the vision of the sheikh «« THEME


has been a haven for property developers. New         most famous universities in the world are pri-
office and residential buildings are rising from        vate, and while they are nonprofit organiza-
the desert dunes. Creations such as the world’s       tions, they recognize that a global presence
tallest building, the only seven-star hotel in the    adds value to the brand. But in recent years,
world, and the manmade palm-shaped island             there has been a massive shift – from satellite
(soon to be followed by two more similar con-         campuses, offering a downscaled version of the
structions) hide the fact that behind the pre-        mother campus curriculum, to distributed uni-
stige projects and shopping malls are people          versities.
working in ordinary offices, creating value and            It started inside the United States, where the
driving the emirate’s economy. Property deve-         most famous universities in the world are loca-
lopment, after all, is the fastest route to value     ted. Carnegie-Mellon opened its campus in
creation anywhere in the world. And anywhere          Silicon Valley ; and, far from being a farm-
you go in Dubai, someone is trying to sell you        ing camp for the Pittsburgh main campus, this
either an Iranian carpet, fake Rolex watches, or      is where new research is expected, and new
apartments. Trade and property development,           students will be enrolled. Harvard has been
hand in hand, are indeed the mainstays of the         reluctant but recently opened in the uae.
Dubai economy.                                        Management schools such as London Business
   Dubai may be the first example of a service         School and insead have aggressively pursued
economy. Build it, and they will come, seems to       such plans for several years (with campuses in
be the mantra of the country when observed            Singapore long established). Now, the US state
from the air (or via Google Earth). But while         universities are getting into the act, with Michi-
everything is under construction, and most of         gan State University being given its own cam-
the buildings are due to open next year, there is     pus in the new Academic City of Dubai.
a plan for how to use the buildings once they            The pioneer in academic cities was Qatar,
are finished. After all, a high-rise tower lasts       which built an “education city” in the capital,
forever in internet time, and the property deve-      Doha. Bahrain has brought in Britain’s Brunel
loper wants his money back over a sustained           University to provide engineering know-how,
period of years.                                      and Abu Dhabi has convinced the Sorbonne
   But once you have built office complexes in          and the insead business school to open cam-
the desert for millions of dirhams, how do you        puses. In Saudi Arabia, the King Abdullah Uni-
get anyone to live there? One way is to create        versity of Science and Technology has
luxury villas and apartments on a palm-shaped         established partnerships with the University of
island. But the super-rich are fickle and cannot       California at Berkeley, Stanford University, and
sustain any economic expansion.                       University of Texas, Austin.
   As part of the brain drain,  percent of all         The usd  billion grant of Sheik Moham-
doctors in the Arab league go to Europe, the          med bin Rashid Al Makhtoum, the ruler of
US, and Canada. In Britain, as many as  per-        Dubai, and vice president and prime minister of
cent of all doctors are Arabs. Fifty-four percent     the uae, is aimed specifically at driving studies
of all Arab graduates from universities outside       in the Arabic language – not to fund libraries
the Arab world do not return home after gra-          where scholars review old manuscripts. The
duating.                                              grant funds enterprises where Arabs learn and
   The gap, long filled by recruiting from India,      work in their own language, in disciplines such
is starting to widen. Indians are staying at home     as engineering, medicine, and social sciences.
as the economy on the subcontinent starts to             Like most other ventures in Dubai, the
expand, as are Southeast Asians. The construc-        “knowledge city” and “academic city” are still
tion sector (where the majority of workers            under construction. But the Michigan State
come from India, Bangladesh, or Pakistan) is          University campus has already started accep-
going to be severely hit. But it is in the enginee-   ting students. Some of those doctors and engi-
ring and financial sectors that the problems will      neers will likely stay at home, to drive the next
be felt first, as graduates return to find jobs in      boom in Dubai. ●
their home countries, where the economy is
still booming, despite a looming global reces-
sion.
   The Gulf countries urgently need new jobs
themselves. According to the management con-
sultancy McKinsey, there is a need to create 
million jobs in the Gulf countries during the
next  years. Today,  percent of the popula-
tion in those countries is under , so if the
governments want to avoid mass migration,
new jobs for doctors and engineers will have to
be created.
   Universities setting up campuses in expan-
ding economies is nothing new. After all, the
                                                                                                                     ▶
                                                                                                               EBR #3 2008 • 31