Dubai World: An International "Dubai-ification"

Dubai World. When I was first introduced to this company by professor Nik Dholakia, I imagined something along the lines of Disney World, or simply another out-of-this-world, multi-billion dollar tourist attraction in the heart of the U.A.E. that would take me a few minutes to truly grasp and visualize. To my astonishment, Dubai World is just the opposite. It is an investment firm that manages and supervises a portfolio of businesses and projects for the Dubai Government across a wide range of industrial segments and projects that promote Dubai "Free Trade Zone" as a hub for commerce and trading. It was established by the Vice President & Prime Minister of UAE and Ruler of Dubai himself, his highness, Sheikh Mohammed bin Rashid Al Maktoum in March, 2006. Just a few months later in July, it was officially launched as a holding company with more than 50,000 employees in over 100 cities around the globe. The companies managed by Dubai World include DP World, the world's third largest port operator, Jafza, Nakheel, Dubai Drydocks, Limitless, among many others international firms. It also has extensive real estate investments in the US, the UK and South Africa.

Dubai World has now entered a new and very challenging market: Djibouti, a small East African country that boasts high rates of poverty, unemployment and a tortured and scared countryside. The nation has witnessed horrific suppression from cutthroat Somali military dictators from the neighboring war-torn nation of Somalia. It sits directly on the Southern tip of the Red Sea, with Yemen just a few miles across the busy straight separating Africa from the Middle Eastern peninsula. Not many individuals have ever heard of this small nation of under half a million inhabitants, but when Sultan Ahmed bin Sulayem, co-founder and chairman of Dubai World came witnessed its prime location and great economic potential, he made a move. Not many investors would make the plunge into a nation plagued with poverty and military and political uncertainty, but Dubaians see the greatest challenges and risks offering the largest potential economic return.

Sulayem looks at a large prehistoric, desolate salt lake over an hours drive from electricity and fresh water and envisions a luxury resort, complete with hotels and a golf course. He relates Djibouti to Dubai just 30 years ago; a city of sand, poverty and uncertainty. Many look to Sulayem as a genius venture capitalist, heading the operations of one of the fastest growing and most successful holding companies the world has ever witnessed. Others see him as a genuine bringer of good-will, and certainly good fortune, transforming cities once considered doomed and untouchable by the outside world into high class luxury centers of bustling commerce and tourism. His vision is unique, so say the least, and his ventures even more unprecedented, but the reality is that Dubai World has hit more than enough goldmines. He imagines that virtually any city, under any circumstances, has the potential for greatness, with a few billion dollars of investment capital of course.

Djibouti is just one of the latest examples of his venture and vision for rebuilding an entire city and transforming a nation's economy. This is just a snapshot of the current holdings and major investment projects underway by Dubai World:

New York

Three hotels, including the Mandarin Oriental

Rwanda

Two national parks, a golf course, and a tea factory

Britain

Three ports and the Metropole hotel (purchased from the Queen of England)

Dubai

Two ports, three palm-shaped islands, and a 75-kilometer canal for new "waterfront" condos

South Africa

A Capetown mall, three wildlife reserves, and a golf estate

Djibouti

Some $800 million worth of ports, free-trade zones, and 5-star luxury hotels

China

Six ports, including two in Hong Kong
(source: Fortune Online)

One can say that Sulayem simply traverses the globe, scouring for more unique locals with "Dubai-ification" potential. Sulayem has paved roads in this destitute land, and even bought an airline to serve as the nation's national carrier. Dubai World's developers are building a $27 billion city in Saudi Arabia, $20 billion worth of luxury projects in Algeria, resorts in Morocco, housing in Vietnam, ports in Indonesia, free-trade zones in Senegal, and game parks in South Africa, and the list goes on. Dubai World has created such a prestigious international image in less than two years that certain countries are simply giving them land to develop on, or at least large portions of land leased or sold at ridiculously cheap prices. Dubai World works with this formula: run a country's port, establish free-trade zones, and build luxury hotels and housing nearby. All of this backed by a portfolio of the world's most impressive architectural feats and economic triumph, and ultimately guaranteed with Dubai-like success.

How could a nation turn down an offer like this?

Like I mentioned previously, entire governments are flocking to Dubai World for investment, and throwing open property at them. One nation has, however, turned down a potentially successful venture: the United States. Dubai World had control of six major U.S. ports until Congress objected to handing the keys to a Middle Eastern company. This reinforces the statements in the previous posting on the SWF, and the "Strapped Western Multinationals," namely U.S. firms and individuals who need a lesson or two in moving global and foreign culture appreciation. This surely hurt the U.S.-U.A.E. economic relations, but worse even, the image of the U.S. in the Muslim world. They may have lost out on a significant opportunity, and by the looks of DW's recent successes, I would say they did. But then again, who would want a Dubai City in the place of a boring New York, or Houston, or Seattle seaport?