By Asa Fitch www.thenational.ae
Late payments to Japanese contractors in Dubai have caused concern about how the country’s businesses should operate in the Middle East, Tatsuo Watanabe, Japan’s ambassador to the UAE, said yesterday.
“There have been a great amount of delinquencies,” Mr Watanabe said at the beginning of a business forum in Abu Dhabi. That, he said, “raises questions about how Japanese businesses should operate in the Middle East”.
Japanese builders on the Dubai Metro were among companies that encountered payment problems on local projects, The National reported in November.
But Mr Watanabe said Japanese companies were still looking to gain a stronger foothold in the UAE after losing out to a South Korean consortium on US$20.4 billion (Dh74.93bn) of contracts for four nuclear plants last December. Abu Dhabi Government officials, meanwhile, said at yesterday’s Japan Co-operation Forum for the Middle East that they wanted Japanese businesses to participate in the emirate’s long-term industrial and infrastructure development plan, which aimed to diversify the emirate’s economy significantly away from oil by 2030.
Abu Dhabi has about 7 per cent of the world’s proven oil reserves and about 95 per cent of the UAE’s total reserves.
“We are wishing to strengthen our investment ties with Japan and the diversification strategy outlined in the Economic Vision 2030 offers many opportunities to the discerning investor,” said Mohammed Omar Abdullah, the undersecretary of the Abu Dhabi Department of Economic Development. “To support this economic diversification strategy, the emirate is making significant investments in infrastructure, including a major new port and industrial zone at Taweelah, the expansion of Abu Dhabi International Airport, and the establishment of industrial cities and special economic zones to attract manufacturing operations.”
A government source said late payments to Japanese companies in Dubai was not a major concern for business leaders attending the forum, where Abu Dhabi promoted itself as a tax-free haven with cheap labour and strategically located between Asia and Europe. Participants at the two-day event included representatives of some of Japan’s most powerful companies, such as Toyota, Tokyo Electric Power Company and the Bank of Tokyo-Mitsubishi.
“Abu Dhabi has a good value proposition for international investors: it is strategically located between Asia and Europe; has a welcoming fiscal policy; flexible labour laws; and offers a very good quality of life, health care and education,” said Hamad al Mass, the executive director for international economic relations at the Abu Dhabi Department of Economic Development.
“Furthermore, the clear vision of the leadership laid out in the Economic Vision 2030 combined with the financial capacity of the emirate offers a long-term visibility in the emirate’s plans for economic diversification.”
Government officials said at the forum that tighter economic links between Japan and Abu Dhabi made sense because of the high volume of trade between the two countries, primarily in the form of oil exports from Abu Dhabi. According to the Japan External Trade Organisation, Japan’s imports from the UAE were worth $22.7bn last year. Crude oil last year comprised 77.5 per cent of Japan’s imports from the UAE.