UAE strengthens economic partnership with Saudi Arabia, Egypt
DUBAI - The United Arab Emirates is strengthening economic partnership with Saudi Arabia and Egypt, the region’s largest and third-largest economies, respectively, as it aims to enhance ties, diversify growth and unlock economic potential.
Saudi Arabia has a GDP expected to soon surpass $800 billion and Saudi Vision 2030 is a game changer that will lead to rapid growth in the years ahead.
Already one of the world’s top 20 economies, Saudi Arabia has assumed the presidency of the G20, the first Arab nation to do so. The G20 members represent more than 80% of the global economy.
Riyadh will host the next G20 meeting and Saudi Crown Prince Mohammed bin Salman bin Abdulaziz formally invited the United Arab Emirates as guest of honour when he visited Abu Dhabi recently to preside over a meeting of the Saudi-Emirati Coordination Council with Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan.
The Saudi-Emirati Coordination Council, a high-level bilateral mechanism established to synergise Saudi Vision 2030 and UAE Vision 2021, signed four agreements on health, culture, space and food security.
Developments with seven strategic initiatives under progress were reviewed, including a tourism visa system for the United Arab Emirates and Saudi Arabia to facilitate movement between the two countries for foreigners, the construction of a mega oil refinery between the Gulf’s two largest oil producers and the development of a cryptocurrency to be called “Aber.”
Aber, confirmed last January by the Saudi Arabian Monetary Authority and the UAE Central Bank (UAECB), will streamline growing trade between the two countries. Non-oil exchange between the United Arab Emirates and Saudi Arabia was more than $29.2 billion in 2018, surging around 35% from the year before.
The United Arab Emirates has direct investments amounting to more than $9.2 billion in Saudi Arabia across 122 investment projects and Emirati visitors to the kingdom in 2018 year spent more than $750 million there.
Saudi Arabia has direct investments of more than $4.3 billion in the United Arab Emirates and its nationals represent one of the most important sources of tourism income for the emirates, particularly Dubai.
Saudi Crown Prince Mohammed billed 2020 as “the year of international achievements” as Riyadh takes over the G20 presidency and Dubai hosts the hotly anticipated Expo 2020.
With financial markets of more than $720 billion, overseas investments exceeding $250 billion and two of the world’s largest sovereign wealth funds, there are huge gains for both sides to be made with deeper economic ties as Saudi Arabia bids to become one of the world’s ten largest economies and the United Arab Emirates aims to break into the top 20.
Egypt is home to the Arab world’s largest non-oil economy and, with its population projected to pass 125 million by 2030, it represents a market with long-term opportunities and growth potential.
It is little surprise that investments of UAE banks in Saudi Arabia and Egypt account for nearly one-fifth of their total overseas investments. In the first nine months of 2019, investments by UAE banks in Saudi Arabia and Egypt surged 27.5% to more than $30 billion, data released by the UAECB stated.
The United Arab Emirates, together with Saudi Arabia and Kuwait, has provided crucial financial assistance for Egypt as Cairo bids to stabilise its economy and return to a faster growth track.
Trade between the United Arab Emirates and Egypt is forecast to hit $8 billion this year, representing year-on-year growth of 10%. With its strong purchasing parity, the United Arab Emirates accounts for around one-fifth of total Egyptian exports with potential for growth in the years ahead.
The United Arab Emirates has investments estimated at about $15 billion in Egypt, across various sectors but notably in agriculture, telecommunications and banking, making it one of the biggest sources of foreign direct investments for Cairo.
Building on that, Abu Dhabi Crown Prince Mohammed announced a $20 billion joint investment fund with Egypt in November when Egyptian President Abdel Fattah al-Sisi visited the United Arab Emirates on an official 2-day trip accompanied by a high-powered delegation.
Abu Dhabi Development Holding Company and Egypt’s newly created sovereign wealth fund will build economic and social projects on a 50-50 partnership basis, initially focusing on companies in the banking and non-banking financial sectors, agriculture, petrochemicals and on greenfield projects.
Emirati companies are growing their footprint in Egypt. Dubai’s largest developer, Emaar, and lifestyle giant Majid Al Futtaim are finalising multibillion-dollar investments and Abu Dhabi-based LuLu Group and Al Khaleej Sugar Coal plan to invest $500 million and $1 billion, respectively, over the next two years.
UAE-based AMEA Power has concluded a deal worth $1 billion with the Egyptian Electricity Transmission Company to build a 500-megawatt wind farm and 200-megawatt solar plant to produce nearly 2.9 gigawatt-hours of electricity annually from 2021.
The United Arab Emirates, home to an estimated 400,000 Egyptians, conferred the Order of Zayed, the country’s highest civilian honour, on Sisi in recognition of his work in solidifying ties between the two strategic partners. The United Arab Emirates regards Egypt as one of the cornerstones of Arab security and attaches great importance to its economic progress and development.