Hydrocarbon sector’s share in Abu Dhabi GDP diminishing

Hydrocarbon sector’s share in Abu Dhabi GDP diminishing
By Haseeb Haider KHALEEJ TIMES 27 April 2008

ABU DHABI — With the diversification of Abu Dhabi’s economy, the dominant role of oil and gas sector is being diminished as in 2007 it contributed 65 per cent to the GDP from 66.3 per cent in 2006 and 66 per cent in 2005.

According to an Abu Dhabi Planning and Economy Department weekly status report on the emirate’s economy, share of the government sector to the GDP was estimated at 18.5, 16.7 and 16.1 per cent in 2005, 2006 and 2007 respectively.

Restructuring: The government is currently undertaking a wide-ranging restructuring programme to arrive at the best formula of governance which envisages sustainable constructive public-private partnership.

The restructuring programme has produced new public entities like the Abu Dhabi Tourism Authority and Abu Dhabi Council for Economic Development that have specific and clear-cut targets and in which the private sector has a major role to play.

Other entities like Abu Dhabi Education Council and Abu Dhabi Health Authority were also created to upgrade health and educational services.

Private sector: The private sector’s contribution to GDP rose from 15.5 per cent in 2005 to 17 per cent in 2006 and 18.2 per cent in 2007.

The situation needs restructuring of the sector and creating a favourable working environment and removing obstacles hindering its progress and the development of its potential.

The public and private sectors should come together to adopt private-sector oriented economic policies given the strategic operational options under the economic openness adopted by the government.

Other goals include optimum utilisation of competitive edges of the private sector and forging strategic alliances based on mutual interests.

The future of economic development in Abu Dhabi hangs to a large extent on the nature of partnership between the public and private sectors.

Broadening the scope of this partnership and boosting its ability to act as the key driver in the emirate’s economy is the only option to address and tackle the economic challenge ahead, the report said.

However, the private sector is still suffering from drastic deficiencies and defects which invite formulation of proactive, effective restructuring policies from its foundation and motivate it to develop its own capabilities so as to compete in regional and international markets.

Policies seeking to enhance the efficiency of the private sector should based on the following factors :

* Giving the private sector a greater role in carrying out development projects and achieve socio-economic development which is based on diversification of income and economic base.

* Outsourcing more public utilities

* Stimulating research and development of competitive national products
Motivating economic cooperation to merge and create major private sector firms that focus on high value added capital-oriented sectors.
* Providing favourable business and regulatory environment conducive to increasing of productivity.
* Building more modern infrastructure and introducing incentive regimes.
* Offering financial and moral support and incentives to spur national plans to recruit Emiratis and transfer technology to the emirate.
* Facilitating adoption of modern efficient administrative systems at bar with those adopted in advanced economic nations.
* Streamlining issuance of commercial, industrial and professional licences as per economic feasibility studies and actual needs,
* Drawing industrial investment plan to encourage the private sector to play its role in industrial development.