Exclusive

How technology is transforming the UAE-UK trade relationship

May 19, 2022

Clothing, Apparel, Person — Prince William with Crown Prince Sheikh Hamdan bin Mohammed at the Expo 2020

Energy transition to create big opportunities for UK, UAE firms
New 100% ownership rule to boost UK investment in the UAE
$233m ‘export wins’ gained by UK firms associated with Expo 2020

A quick look at the latest UAE-UK trade figures might give the impression that the centuries-old relationship isn’t what it used to be.

But dig a little deeper and the figures – down sharply from close to £18 billion in 2018-2019 to £12.3 billion in the year to last September – can be explained by the impact of the global coronavirus pandemic.

In fact the UAE-UK friendship, which dates back to the 1800s, is emerging from the pandemic in rude health, according to Bradley Jones, executive director of the UAE-UK Business Council, a bilateral trade organisation that provides strategic advice to governments on the interests of its 70 member communities and the wider business society.

In an exclusive wide-ranging interview with AGBI, Jones said the most recently available trade statistics were “absolutely a Covid blip” and will rebound strongly over the next few months.

“When the figures for the year ending September 2022 are available, there will be a big jump,” he predicted with confidence. How big that jump will be may be dependent on oil prices but Jones believes the figure will be at least £15 billion and perhaps up to £18 billion again.

Away from the top line figure, Jones said he is most excited by a new trend he is seeing: the diversification of both UK exports to the UAE and UAE exports to the UK. Previously dominated by fossil fuels, Jones predicted that technology will be at the heart of bilateral trade growth in the future.

“The UAE is investing in skills and technologies and as a result the kind of trade flows we are seeing are starting to look very different. Of course fossil fuels will still play a big part for a decade or so but it’s definitely changing and the likes of AI, 3D printing and anything tech-related is going to play a significant part in this change,” he said.

So what is likely to drive this surge in tech-related trade?

Jones is in no doubt. “Anything to do with energy transition will be big as there are a lot of UK companies working on hydrogen, fusion tech as well as renewables so there will be a lot of interest in that [in the UAE].

“There will also be a lot of interest in converting waste to energy because there is a lot of UK expertise in that.”

He highlighted a recent deal between Sharjah-based environmental management company Bee’ah and UK-based Chinook to explore the conversion of waste into hydrogen.

Jones also pointed to future collaboration between the UK and the UAE on sustainable aviation fuels and the decarbonisation of the industry.

He strongly believes that UAE flag carriers Emirates and Etihad – previously at the forefront of improving customer service – will now become pioneers in decarbonising the aviation industry.

The UAE is investing in skills and technologies and as a result the kind of trade flows we are seeing are starting to look very different
Bradley Jones

“As we move to commercialising sustainable aviation fuels, I would imagine Emirates and Etihad will be leading the development of those fuels,” he said, adding that there will be potential for UK companies to work with them including Rolls-Royce. “There is a very interesting story to tell here and we are just at the beginning of that journey,” he added.

This new tech relationship is already underway with Abu Dhabi-based wealth fund Mubadala investing £800 million in CityFibre, the firm tasked with the rollout of 5G in the UK.

According to Jones, this investment alone is likely to create up to 16,000 jobs across the supply chain. It was first announced last September as part of plans for the UAE announced it would invest £10 billion in priority sectors like technology and infrastructure in the UK over a five-year period.

“Money is already going out of the door. A lot of those funds have already been committed. It’s real money going into real companies in the UK,” he said.

“What does Mubadala get out of it? They are investing in critical projects that will transform the UK economy but then they get the knowledge transfer back to the UAE so it’s a win-win really.”

But it’s not all one-way traffic and the UAE remains an attractive option for UK investment, he said.

Jones, who first visited the UAE 30 years ago, revealed that there are currently 12,400 British companies that export to the UAE and 3,100 British companies that import from the UAE.

He added that last year’s announcement by the UAE government to allow 100 percent foreign ownership of onshore companies would be a fillip to new investment from British firms.

“This definitely gives UK companies more options on top of the near-50 free zones in the UAE,” Jones said. “If you are a British company looking to establish in the UAE you have a range of free zones to meet your needs but the new rule means that companies can shop around a bit more.”

The UAE-UK Business Council chief also highlighted the largest legislative transformation in the history of the UAE, with over 50 laws in all fields updated and reformed in 2021, paving the way for the adoption of new policies and regulations that aim to further enable the economy in Dubai to keep pace with global developments.

Burj Al Arab — Dubai continues to be attractive for British companies and expats.

“The UAE now ranks high on ease of doing business which is key for UK investors. Visa rule changes are also really important,” he said. “There is so much more choice and that’s crucial because the UAE needs to attract talent. The country is in a war for talent and they are competing against Saudi Arabia and all the other countries in the region to get the best people.”

Jones also thinks the UAE’s recent move to a Monday-Friday working week will likely lead to an economic benefit, adding: “It makes it easier for Western companies to establish in Dubai because it means their UAE executives are working the same days as their colleagues in, say, the UK and US.”

But there’s another reason why UK companies might look at the UAE for expansion, especially after Brexit, according to Jones.

“The other thing that makes the UAE really attractive to UK investors is that it has a lot of trade agreements with other countries in the region such as India and Israel as well as being part of the GCC. For British companies looking to set up in the UAE, it’s a hub for expanding into the wider region.”

He explained that the recent India-UAE trade deal means that a British firm wanting to ship goods to India can export them to Jebel Ali Free Zone in Dubai, add 40 percent to the value of that shipment and then export to India where tariff free benefits are available because of the UAE-India trade partnership.

On Brexit, he said: “What it has taught companies in the UK is that you have to be more agile and look around the world for your markets. It was easy previously to be a bit lazy and just look at the single market of the EU and maybe it discouraged firms from being more adventurous and looking further afield.”

Talking of trade deals, Jones believes negotiations on an agreement between the UK and the wider GCC will begin soon but may take some time to conclude due to the complexities of the individual Gulf countries involved.

“It won’t be straightforward dealing with six countries and that will slow things down,” he said. “All have different interests and the UAE will want the most ambitious trade deal.

“However there should be nothing stopping the UK and the UAE negotiating a separate deal in parallel so that might be an option to add value. Once in place I think that will give more confidence to UK companies to look at the UAE.

“There are already many attractive reasons to choose the UAE but a trade agreement will be an additional reason.”

Jones saved his final comments for Expo 2020, in which the UK hosted a dedicated day which featured a flying visit from Prince William, Duke of Cambridge. The mega event came to an end in March, a year later than planned due to the pandemic.

According to the UK’s Department for International Trade, £188 million ($233.5 million) of ‘export wins’ have been gained by UK companies associated with Expo 2020 Dubai between April 2015 and November 2021, a month after the event started. Export wins include a deal, a contract, a sale or an outward direct investment.

“Expo was fantastic. It was dazzling. Superbly organised, it was a melting pot of cultures and it was a huge success,” he said.

“It told an important message about the UAE. There are still a lot of misunderstandings about the UAE in the UK. Expo showed that the UAE is different to what you think it is. It is a very multicultural and tolerant nation.

“It embraces diversity, it embraces technology, it embraces the future so I think it was all about challenging assumptions and maybe that’s Expo’s most important legacy.”