en zh es ja ko pt

Volume 43, Number 2March/April 1992

In This Issue

Back to Table of Contents

Jabal ’Ali

Dubai's Gateway to the World

Written by Larry Luxner
Photographed by Joseph Brignolo
Additional photographs by Larry Luxner

Many years ago, when port official Sultan Ahmed Bin Sulayem's grandfather was a pearl diver, the people of Dubai knew nothing about containerized shipping or free zones. But they did know about international trade.

"We are merchants, and we've been trading since the days of our ancestors," Sulayem says. "Our country was on the maritime Silk Route to China, and we moved goods to and from Africa. Our forefathers used to dive for pearls for three months during the summer and then take them to India fo sell. But then the Japanese discovered cultured pearls, the maharajahs were forced out of power in India, and that industry was destroyed."

After that, says Sulayem, "the trade and the port became our business."

Sulayem is today president of both the Jabal 'Ali Free Zone Authority and the Dubai Ports Authority. His spacious office is decorated with large potted plants, black ergonomic chairs and a framed letter of congratulations for making the dean's list at Temple University.

As the up-and-coming young executive will attest, trade is still very much Dubai's business. In 1990, re-exporting activities by this member of the United Arab Emirates (UAE) amounted to 18.5 percent of Dubai's total $11.3 billion in non-oil trade. Of the $2.1 billion in re-exports, Iran - right across the Arabian Gulf from Dubai – was the amirate’s best client, accounting for $527 million. Other big customers were Saudi Arabia ($161.7 million in 1990), Qatar ($145 million), Germany ($133.7 million) and Singapore ($120.5 million).

Before the Gulf War, in fact, Dubai officials were urging Kuwaiti and Saudi businessmen to transfer funds here, promising that their investments would be safe from the impending hostilities. Once the war was over, Dubai's businessmen quickly took another tack - emphasizing how close the commercial capital of the United Arab Emirates was to Kuwait, making it the logical place from which to direct massive reconstruction efforts.

It appears that Dubai and the 10,000-hectare (25,000-acre) Jabal 'Ali Free Zone have benefited from both arguments

"Even during the war, with Dubai being only 1000 kilometers [600 miles] from the front line, there were investors moving in, including those from Kuwait and Bahrain, as well as Europeans," says Patrick McDonald, deputy chief executive of the Dubai Commerce and Tourism Promotion Board.

McDonald said that most of the nearly 160 Kuwaiti-owned companies in Dubai came as a direct consequence of the Gulf conflict, but that some 120 of them have since decided to maintain a local presence. Many are based in Jabal 'Ali, which was built between 1976 and 1979 at a cost of about some $2.5 billion.

Says Sulayem, "We are talking with major companies that want to use our port as a staging area to repair refineries and other infrastructure. Jabal 'Ali is probably the only place that could play a role in the reconstruction of Kuwait, because it's vast, quick and ready for equipment to be shipped as needed."

On a typical day, dockworkers can be seen loading and unloading cargo at the Free Zone's sprawling port, reached from Dubai Municipality via a 28-kilometer (17-mile), four-lane highway, presently being upgraded to eight lanes at a cost of about $165 million.

The dock itself boasts 67 berths, more than 15 kilometers (nine miles) of quay, and a modern container terminal operated by Sea-Land Service Corporation. Companies can also import and export goods through Port Rashid, some 35 kilometers (22 miles) away, or at one of the ports in Sharjah, another amirate up the coast (See page 36).

At the end of 1991, the Dubai Ports Authority (DPA) - whose writ includes both the Port of Jabal 'Ali and Port Rashid - celebrated handling a record 1,200,000 cargo containers in one year. The DPA now ranks as the busiest port in the Middle East, and among the top 20 in the world in container throughput.

Sulayem said the DPA has signed an agreement with Kuwait Petroleum Company to rent 750,000 square meters (8,000,000 square feet) of land for office and warehouse space.

And recently, the director-general of Kuwait's Customs Department, Ibrahim al-Ghanem, announced that most of his country's imports would be transshipped at Jabal 'Ali Port until Kuwait's own ports had been fully restored. Large ships would unload consignments at Jabal 'Ali for transshipment on smaller vessels of up to 20,000 tons to Shu'aybah Port, south of Kuwait City.

Last spring, Union Carbide Chemicals and Plastics Company announced it would construct a latex manufacturing plant in the Jabal 'Ali Free Zone, capable of making 10,000 tons a year of latex polymers for use in paints, coatings and adhesives, which will be exported throughout the Gulf Cooperation Council (GCC) countries as well as to Iran, Yemen, Jordan, Egypt, India, Pakistan and Sri Lanka. Also, Danish industrial pump manufacturer Grundfos said it would open a 2000-square-meter (21,500-square-foot) factory in the zone to produce water pumps for distribution throughout the Middle East. And International Bechtel Inc. has already established a procurement office at Jabal 'Ali to supply materials needed to reconstruct Kuwait's devastated oil facilities.

Meanwhile, electronics distributor Aiwa Gulf Company will double its Jabal 'Ali warehouse space to 6000 square meters (65,000 square feet), and French Gulf Air Conditioning, maker of Airwell air conditioners, plans to triple the size of its production plant in Jabal 'Ali during 1992. And last November, the Mitropa Institute, a Vienna-based consulting firm specializing in projects in the formerly communist countries of Eastern Europe, chose Jabal 'Ali as the site of its new regional office in the Middle East.

Among the many advantages offered by Jabal 'Ali to companies considering basing themselves there are various forms of exemption from taxes and duties, and laws permitting investors to repatriate both their profits and their capital. All told, more than 350 companies - 80 of them arriving in 1991 alone - operate in the zone; together, they represent more than $600 million in investment. About a quarter of the companies are headquartered in India. Another 25 percent are companies based in the six GCC countries - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE - and the rest are from the United States, Western Europe and the Far East, Sulayem says.

Among the American firms are Johnson & Johnson, Union Carbide, Cleveland Bridge & Engineering and air conditioner manufacturer York International.

One man who knows about investing here is Jaguish N. Patel, finance manager of TG Industries, which makes some 150 leather jackets a day for export to Germany, France and Spain.

"About 90 percent of our 120 employees are Pakistani," Patel says. "We provide food and accommodations. Our factory employs professional people. If they make one mistake, we have to start over."

Patel, who's been at Jabal 'Ali since February of last year, says the plant's raw materials - like its employees - come from Pakistan, and that his is one of 10 garment manufacturing plants that enjoy tax-free operations in the zone.

Yoshio Kubo, managing director of Sony Gulf, says his company's sprawling Jabal 'Ali operation supplies televisions to clients all over the globe. In fact, he says, "during the World Cup [soccer tournament], Eastern Europeans desperately wanted color TV's. So thousands of TV sets were exported from Japan to Dubai, and sent by jet from Dubai to Moscow.

"At the same time," Kubo adds, "we sell from this warehouse to Iran. That's our biggest market."

Indeed, Iran's Kish Island is emerging as a major customer of the Jabal 'Ali Free Zone. Located right across the Gulf, the 90-square-kilometer (35-square-mile) island is becoming a magnet for Iranians eager to buy electronic and consumer goods made in Japan and South Korea. "Most of the goods in Kish come from the Free Zone," says Sulayem, adding that "Iran used to be our number-one re-export market before the war. Now they're coming back."

Less than an hour's drive from Jabal 'Ali is Dubai International Airport, which opened a $75 million air-cargo complex last July that effectively doubled the airport's cargo capacity to 250,000 metric tons a year (See page 38). Much of that cargo will be destined for Kuwait, in addition to seasonal apparel and other high-value goods produced at Jabal 'Ali for export to Western Europe and the United States.

Lawrence Mills, president and chief executive of Dubai's promotion board, calls Dubai a "sensible place" from which to rebuild Kuwait, adding that other locations along the Arabian Gulf "don't have the same level of facilities we have." His office has collected its arguments in a special report called "The Case for Dubai as a Logistics Base For All Matters Connected With the Reconstruction of Kuwait," which is selling well to interested businessmen at 300 dirhams ($83) a copy.

"Jabal Ali is very much geared to providing a hub for the work and goods needed for Kuwait's reconstruction," Mills says. "It's nothing more than an expansion of our normal business. A number of companies in Europe and the US, though they'd like to be involved, aren't sure how to go about it or where to do it from."

Over the next 15 years, Mills predicts, reconstruction costs in Kuwait and other nearby countries will run into the hundreds of billions of dollars, and he hopes that Dubai and the Jabal Ali Free Zone will benefit from a portion of that business.

If they do, as Sultan Ahmed Bin Sulayem can attest, it will be the continuation of a millennial tradition of merchant activity that still joins nations and cultures with ties of trade.

Larry Luxner, who recently visited the United Arab Emirates, writes regularly for Aramco World from his base in San ]uan, Puerto Rico.

The Air-Cargo Connection
Written by Larry Luxner

The amirate of Dubai has opened a $75-million air-cargo complex that doubles the capacity of Dubai International Airport, already one of the world's busiest transshipment centers.

The new 26,000-square-meter (280,000-square-foot) operations building, inaugurated last July, comes in response to a booming air-sea freight business unexpectedly augmented by the postwar reconstruction of Kuwait, which lies only 90 minutes away by air.

"We import a lot of goods and re-export 70 percent of them," says Ahmed Sa'eed al-Maktoum, president of both the Dubai Department of Civil Aviation and Emirates Airlines, the facility's biggest potential customer. 'That business will be booming."

Willie Fromm is the cargo manager of Lufthansa German Airlines, the second-largest cargo-handler at the airport after Emirates Airlines.

Now that Kuwait has opened its borders for business, Fromm says, most air shipments of fruit, vegetables, medicines and other perishable goods are being flown there via Dubai.

"In a very short time, everything will be back to normal, and all the airlines are hoping they can participate," he says.

Though many of the 53 airlines that served Dubai before the war canceled flights altogether when hostilities began, or rerouted them through nearby Karachi, all have returned since the war - joined by three new ones - and Dubai International's 1991 volume figure of 140,283 metric tons make it the number one air transshipment center in the Middle East. In November, the airport handled its heaviest single item of air freight ever: a 50-ton ship's gearwheel delivered by a chartered Antonov-124.

Al-Maktoum, in his office overlooking the airport's comfortable arrivals terminal, says the new cargo building, built by San Francisco-based Bechtel Corporation, will be able to handle 300,000 tons of airfreight a year.

"We have been planning this project for three years," he says, adding that - because of its position at the midpoint of major air routes between Europe and the Far East- Dubai has become the second-busiest sea-air transit point in the world, after Washington state's Seattle-Tacoma International Airport. That enviable location also recently persuaded Federal Express Corporation to designate Dubai International as the hub for its new Express Freighter service, launched in January. Dubai already serves as the courier service's regional headquarters, covering 22 countries from Egypt to Sri Lanka.

Dubai International's new warehouse is to feature separate sections for shipments of various sizes, as well as special storage areas for exceptional cargoes like radioactive materials or live animals.

The complex will be able to accommodate four Boeing 747's or two 747's and three narrow-bodied freighters. It also features an 8500-square-meter (91,500-square-foot) agents' free zone for incoming sea shipments.

Emirates Airlines, flag carrier of the United Arab Emirates, transports everything from locally produced strawberries, bound for European supermarket shelves, to German cars ordered by Gulf residents. The airline claims it can have a planeload of cargo on its way to Europe just five hours after that cargo's arrival by ship in Dubai's Port Rashid.

After Emirates and Lufthansa, according to Dubai government statistics, the airport's biggest cargo handlers are Hong Kong's Cathay Pacific, Luxembourg's Cargolux and Pakistan International Airlines.

Roque Monteiro, cargo manager for British Airways, says the majority of air cargo business consists of textiles, electronics and other sea-airfreight.

Cargoes typically are shipped to the United Arab Emirates from the Far East, and are destined for ultimate markets in the United States and Western Europe. Another important source of cargo is finished garments manufactured by expatriate workers in the nearby Jabal 'Ali Free Zone, which employs some 12,000 people.

Growing Importance
Written by Larry Luxner

An aging oil rig that for years drilled wells into the seabed of the Arabian Gulf has found new life as a 167-bed floating hotel for oil workers in the West African nation of Angola.

Lamprell Jumairah, a shipping firm based at Port Khalid in Sharjah, one of the United Arab Emirates (UAE), won the $18-million contract last year to refit the 60-by-60-meter (200-by-200-foot) Saudi Aramco Mobile Drilling Platform 2 and hook it up at its new location more than 10,500 kilometers (6500 miles) away.

'This is our sixth oil-rig conversion," said Steven D. Lamprell, one of the companys two partners. "We have become specialists in converting ex-oil rigs into accommodation jack-ups, but this is the first time we've competed in the international market against Singapore, the United Kingdom and the United States."

Oil-rig conversions are only the latest wrinkle at Port Khalid, Sharjah's main ocean terminal and one of the fastest-growing ports on the Arabian Gulf.

The Sharjah Ports Authority, which runs Port Khalid, Khor Fakkan and Hamriya ports, handled more than 245,000 twenty-foot equivalents (TEU's) in 1990 - up from 162,000 TEU's in 1990. That puts Port Khalid and its two sister ports among the ranks of other large shipping terminals in the UAE, such as Jabal 'Ali and Port Rashid, both in Dubai, and Port Fujairah, in the amirate of the same name.

"We're a smaller port but, as a result, we can offer customers a little more flexibility," said Simon Keen, marketing manager of the Sharjah Department of Ports and Customs,

Keen, whose agency describes Port Khalid's Sharjah Container Terminal as "unquestionably one of the Middle East's finest deepwater box-handling facilities," said the terminal opened its first two berths in 1976. The port gradually grew to its current size: 12 berths, plus an oil jetty and one kilometer (3300 feet) of lay-up wharf.

Today, he said, Port Khalid handles more than 2,000,000 metric tons of general cargo a year and has 633 employees, most of them from India, Pakistan and Bangladesh. Keen himself is British, and the port's specially trained security force is entirely Gurkha Nepalese.

"Some of our largest imports are frozen fruit, meats and chilled fruit," he said. "We're the largest importer of fruit in the Emirates, and we were the first to develop berth-side cold storage."

A leisurely stroll around Port Khalid recently revealed a wide range of vessels, from an Iranian ship discharging fresh fruit, to an Argentine Navy destroyer about to return home after completing its Arabian Gulf tour of duty, to an Iranian passenger ferry. Sharjah's proximity to Bandar Abbas, across the Arabian Gulf, persuaded Iran's national shipping line to begin offering regular passenger ferry service between the two ports.

The amirate's enviable location has also led to creation of a free-trade zone at Port Khalid, within whose boundaries companies may import raw materials and assemble or process them into manufactured goods without paying any customs duties. Firms already renting space in the zone include NCR Corporation and a number of local companies. One of the most unusual things about the United Arab Emirates is that each amirate has its own transport system. Nine seaports and five international airports may seem lavish for a nation of only 1,900,000 people, but Keen says there's a reason for it.

"This is a federation made up of obviously separate stales," he said. "In the 1970's, every amirate desperately needed ports for Hs own modernization programs. Once the infrastructure was built, they found they could be useful sources of income as international transshipment points."

In addition to Port Khalid, Sharjah - headquarters of the Arab Maritime Transport Academy - operates Khor Fakkan, a two-berth terminal on the Gulf of Oman, as well as the port of Hamriya, 20 kilometers (12 miles) up the road from Port Khalid.

Part of Khor Fakkan's appeal is its position on the Indian Ocean, rather than the Arabian Gulf, which allows shipping lines to cut transit times, reduce fuel consumption and save on insurance by avoiding the Strait of Hormuz altogether.

Back on the Arabian Gulf coast, Hamriya, built in the mid-1980's, features a $180-million liquified petroleum gas (IPG) plant for refining propane and butane for export to Japan, and an offshore crude-oil loading facility that can accommodate tankers of up to 80,000 deadweight tons.

Petroleum condensate is, in fact, the main source of income for Sharjah's estimated 300,000 people. Production from the onshore Sajaa Field alone comes to 45,000 barrels a day. In addition, the Amoco Sharjah Oil Company, a Sharjah-US joint venture, sells 7,000,000 cubic meters (250,000,000 cubic feet) per day of natural gas to the federally-owned Emirates General Petroleum Corporation.

This article appeared on pages 32-39 of the March/April 1992 print edition of Saudi Aramco World.


Check the Public Affairs Digital Image Archive for March/April 1992 images.