Gulf poised for diversification
Manama, June 2, 2010
The GCC is in a perfect position to diversify away from oil and other traditional investments like real estate, according to NBB chief investment officer Alan Durrant.
He told delegates at the Mena Investors Summit that with its booming economies, growing population and hydrocarbon wealth, the region was poised for a successful expansion of its non-oil business.
'Basically we are living in a region that has won the geological lottery and we have the resources to use that wealth to build for the future.
'We have to diversify because eventually the oil will run out but for the moment that is not a problem. If you told Greece it had a problem because it might lose its oil wealth in 100 years then that would be a far happier country than it is today.
'We have seen some diversification across the region but investing in things like real estate is not really diversification because it is not sustainable on its own,' he said.
'What the region has to look at is developing industries that will provide high paid jobs for highly educated locals in the future.
'So far we have seen developments in banking, insurance and fund management but there is already too much of that.
'What the GCC needs to develop are areas like high end engineering and pharmaceuticals.
'At present assets are cheap and the Gulf has wealth and there is no reason we cannot build these industries and compete on a global scale.
'The region also has the benefit of having a large pool of low-cost labour available from the Sub-Continent and Africa.
'That gives the region the ability to take a leaf out of India and China's book and compete with the West by offering cheaper services,' he added.
'We have seen this in India where it competes through cost cutting in areas from accountancy, IT and call centres while China has undercut the West in everything from textiles to televisions.'-TradeArabia News Service