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Cloud Technology at the Heart of the UAE Growth Vision

Cloud Technology UAE

Anyone who follows current affairs in the UAE and the surrounding region will be aware of the lacklustre economic performance of 2017, and the tentative recovery in 2018.

The recovery was driven by a rise in oil revenues, but the non-oil sector also showed a strong performance, in part driven by the preparations for the 2020 Expo.

The forecast for 2019 is a continued strong economic performance, with IMF projecting a 2.8 per cent rise in real GDP – a trend that is set to continue through 2023.

However, the headline numbers don’t tell the whole story in relation to the non-oil sector. The UAE Government has launched a number of investment initiatives under the umbrella Vision 2021 and Vision 2030, which are aimed to make the UAE one of the best countries in the world. And at the heart of it is a vision of a fully digitalised society, underpinned by state-of-the-art communications and cloud infrastructure.

It follows that at the centre of the key national strategies, including the UAE’s strategies for artificial intelligence, the Fourth Industrial Revolution, blockchain, data, the Internet of Things, autonomous transportation and smart cities, is digital transformation. IDC estimates that spending on digital transformation in the region will surpass $40bn by 2022. This shift towards digital, using primarily a cloud-led approach, brings about enormous demands on infrastructure investment, and the cloud sector alone is projected to create nearly 32,000 jobs before 2022.

Some of the recent technology investment initiatives under the umbrella of Vision 2021 are:

Ghadan 21 – a $13.6bn stimulus fund, launched in September 2018, aimed at accelerating economic growth in Abu Dhabi. It features 50 initiatives across four areas; business and investment, society, knowledge and innovation and lifestyle. The knowledge and innovation initiatives will, amongst others, focus on attracting and encouraging technology companies to the emirate, supporting research and development centres, as well as the development of talent and expertise.

Hub 71 – an initiative to set up a technology start-up incubator in Abu Dhabi, endowed with $270m of investment earmarked for the tech sector. The goal is to have 100 companies over the next three to five years. The US Tech-giant Microsoft will be a strategic partner, providing technology and cloud services, and the Japanese conglomerate SoftBank will also be active in the hub and support companies in which they have invested. There are also plans to attract Chinese and Indian companies to take on either active roles, or provide investment.

AI 2031 – The UAE Cabinet recently approved far-reaching plans to put the country at the forefront of global efforts to develop Artificial Intelligence (AI). The AI industry is already attracting some $21bn in foreign investment, primarily from the EU and the United States. AI is set to boost the UAE economy by $182bn by 2035.

There is also a pervasive view across both the AI-industry and the cloud industry, that investment in AI is driving the cloud industry forward. As AI becomes more sophisticated it needs ever more powerful platforms to sit on. Some analysts even envisage an amalgamation of the two industries, as the next natural step.

Along with more specific initiatives that are already underway:

Smart City Dubai – an ambitious transformation of Dubai to a smart city.

Masdar City – a planned city project that will be both smart as well as rely solely on solar and other renewable energy for its electricity supply. It’s designed to house between 45,000-50,000 people, some 1,500 businesses and will be a hub for cleantech companies. It’s planned completion will be some time between 2020 and 2025.

Reforms to boost labour supply and investment

Naturally, the level of investment and growth in the tech sector requires a plentiful supply of highly qualified labour. The population of the UAE is made up of approximately six million people, of which about five million are non-native. It’s easy to see how the UAE is dependent on both being an attractive place to work, and having an immigration policy that supports its demand for labour.  To facilitate the recruitment of foreign nationals, the Government has recently relaxed the policy and introduced a 10-year residency visa, five-year retiree visa, and a short-stay transit visa.

Another reform that is designed to attract and retain expat workers and investors to the country is that foreigners have been afforded the right to own companies to 100 per cent, where previously they had to partner with a UAE national, who were required to own 51 per cent of the company.

Property prices continue to fall

The expat housing market has previously been plagued with high prices and low availability. Recent intensive investment and building have led to the pendulum swing over the other way and both Dubai and Abu Dhabi are now facing an oversupply of properties. This has led to falling prices across the market and allowed expatriate professionals to negotiate preferential terms such as payment plans and absorption of charges, as well as significant savings. In some micro-markets prices towards the end of 2018 were down as much as 18 per cent on the year before, and are set to continue to fall through 2019.

Needless to say, much of the forward-looking investments are based on the vision of the UAE becoming a fully digitalised society, which will drive the technology infrastructure investments, whether it’s the physical network, wireless ditto or storage capacity.

So far in 2019, Microsoft has announced cloud data centres in Abu Dhabi and Dubai and Amazon Web Services will be opening at least three centres in Bahrain to serve customers across the Middle East and Africa. But it’s Oracle who leads the bunch in the region. In addition, Etisalat, the leading local telecoms provider will be in a position to provide 5g service to all of its UAE customers by the end of 2019, ahead of the arrival of the first 5g-equipped smartphones in 2020.

All in all, our view remains that the UAE is becoming increasingly attractive to live and work in for cloud infrastructure technologists. And with the career prospects improving and the housing costs coming down, there’s an even stronger case for bringing the family along as well.

If you would like to discuss career opportunities in the UAE, please get in touch for an informal conversation.

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