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GCC economic cities 'major growth drivers'

Dubai, April 23, 2008

Gulf Co-operation Council (GCC) members have recognised the need to develop their national economies beyond dependency on the oil sector. As a result, new economic zones are being introduced.

The economic zones - designated areas in which residents and companies are exempt from certain laws and taxes - are being launched centered on ICT, financial and other service sectors, according to a new report by Booz Allen Hamilton. 

These help build new national economic platforms based on specific concepts or industries for promoting growth, attracting new types of visitors and residents, and enabling employment opportunities.

Some countries are developing grand plans that extend zones to economic cities – which will be economic drivers for the telecom sector in the Mena region - over the next ten years.

“Developers of many of these new zones want to provide advanced information and communications technology (ICT) infrastructure and services to attract leading tenants, and some developers are considering taking a hands-on role in this regard,” said Bahjat El-Darwiche, a principal with Booz Allen Hamilton based in the Middle East.

Telecommunications in all Mena countries are subject to laws and regulations and developers in liberalised markets can no longer expect exclusivity for ICT provision in selected geographical areas.

“Regulatory exemptions or special treatments for zones would be counterproductive and inverse to the purpose of the zone,” explains El-Darwiche. Zones should be vehicles to support greater competition and advancement in liberalizing markets.

While economic zones have existed for many years in the Mena, recently some GCC member governments have developed zones that are advanced economic tools.

Some developers are considering taking control of the construction as well as service provision to tenants in these zones - facilitating advanced ICT infrastructure.

The developers however, run the risk of coming up against regulatory barriers in implementing this approach.

“To overcome barriers, such as lack of authorization or clarity for non-telecommunication operators to provide services, it is necessary that national telecom authorities consider reassessing existing regulatory frameworks and obligations,” pointed out Jonathan Fiske, a senior associate with Booz Allen Hamilton.

Authorities may conclude either that the authorisation regime could be further liberalised or that current practices are sufficient enablers, and they should be cautious in exempting telecommunication provision in the zones from the laws outside.

Instead, they should focus on whether liberalization is necessary across the sector, to benefit the zones.

To date, more than 55 economic cities or economic zones have been established or are under development in the GCC region.

The UAE was an early adopter of economic zones. It has established, or is in the process of building, at least 31 economic zones, ranging from media and entertainment, industrial to IT, to research and development.

The Kingdom of Saudi Arabia is another example of a country with plans to develop economic zones and cities - approximately 2 million people will live and work in King Abdullah Economic City by 2020.

Other Middle Eastern countries have increasingly been adopting zones to promote diversification of the region’s economies and boost employment opportunities:

Bahrain is developing the Bahrain Investment Wharf (BIW), in addition to its current two ports and industrial zones (Mina Sulman and North Sitra Industrial Estate).

Oman has a zone called the Knowledge Oasis Muscat (KOM) and plans to build a multidisciplinary city called Blue City, focusing on residential and tourism facilities.

Qatar plans to construct a development called Energy City Qatar (ECQ), which will aim to attract leaders in oil and gas product


Tags: GCC | growth | Economic City |

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