Published in Portfolio
Dubai Holdings and Mohammad Abdulla Al Gergawi
Published by Current on 2007-11-30
When Mohammad Abdulla Al Gergawi looks out of his office window on the 44th floor of the Emirates Towers complex in the heart of Dubai, he sees the emirate's economic expansion widening on a daily basis. More office and residential buildings, more highways, more educational campuses, more hospitals, more hotels, more desert being transformed into parks, more recreation facilities - more everything. So extensive is the engineering activity here, in fact, that Dubai reportedly has the world's highest concentration of construction cranes.
This isn't the Dubai of his childhood, less than four decades ago, when Gergawi - who hails from a modest background - would walk two miles to school every day on dusty roads. Today, he's the chairman and chief executive officer of what's arguably the world's biggest conglomerate, Dubai Holdings. The group, owned almost wholly by Gergawi's boss and Dubai's ruler, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, is the main engine of growth in Dubai, one of the seven principalities that constitute the United Arab Emirates.
It has a foothold in more than 20 industries, including technology, real estate, tourism, telecommunications, media, finance, health and education, biotechnology, and energy. Among its properties are the Dubai Group, Dubai Properties, Sama Dubai, Dubiotech, Jumeirah International, Dubai International Capital, Dubai Internet City, Dubai Media City, Dubai Knowledge Village, Dubai Industrial City and Dubailand.
The market value of Dubai Holdings' properties and investments? Easily more than $2 trillion - and growing. In the last few months, for example, Istithmar, a Dubai World entity bought Barneys New York for $942 million; Dubai World said it would invest $5 billion in MGM Mirage in Las Vegas; Borse Dubai took a stake of nearly 20 percent in NASDAQ, and also bought NASDAQ's 28 percent stake in the London Stock Exchange; and Dubai International Capital bought a $1.26 billion stake in an American hedge fund, Och-Ziff Capital Management Group. Earlier this week, Dubai International Capital bought a minority stake in Sony. Gergawi has been personally responsible for and involved in all these decisions.
And yet he is a man that few people get to know, let alone interview. That's not because Gergawi is necessarily secretive. Although he also holds the title of the UAE Minister of State for Cabinet Affairs - which, in effect, makes him the equivalent of the White House chief of staff - the U.S.-educated Gergawi remains in the shadow of the eclectic Sheikh Mohammed, whose office is next door. Indeed, a conversation with Gergawi can sometimes yield unexpected developments - as when Sheikh Mohammed strolls in and cracks a joke or two.
To put it another way, if the 58-year-old Sheikh Mohammed is the CEO of Dubai Inc., then the 40-year-old Gergawi is the COO implementing his boss's vision of an emirate whose global footprint of a dynamic economic entity incorporates such traditional values as emphasis on family life, respect for social diversity, and philanthropy. Little wonder that Gergawi also heads Sheikh Mohammed's newly created $10 billion Maktoum Foundation, intended to spur better education and entrepreneurship, especially in developing countries.
Gergawi recently granted an exclusive interview to Portfolio, his first major Q&A with the media. Following are excerpts:
Portfolio: How do you see your role in the rapid growth of Dubai?
Gergawi: Under the overall guidance of His Highness Sheikh Mohammed, I see myself principally as an agent of change. At Dubai Holdings, I oversee the implementation of our corporate strategy, paying particular attention to the development of our international business portfolio. . I see myself as responsible for motivating a highly diverse, international team. I do my best to empower my team with the resources they need to get their jobs done. That means making quick decisions to remove obstacles, and also reviewing and selecting multiple proposals on a broad range of opportunities that will further develop Dubai.
Portfolio: Some people call you a "serial problem solver." Your response?
Gergawi: I prefer being called a serial decision maker. The speed of decision making - particularly when things are moving so fast in Dubai these days - depends, of course, on having clearly thought-out alternatives. Having practical experience in a number of industry sectors helps to provide perspective when dealing with so many competing issues. You could say that I act as a logjam breaker. I like to think that I'm a no-nonsense straight talker. Having said that, I like to listen to people, and my office door is always open.
Portfolio: With all these billions being spent by Dubai on overseas acquisitions, what's the next stage of development for the emirate domestically?
Gergawi: We're making a huge investment in local physical infrastructure to support the growth, while we undertake strong regional and international expansion. There may be consolidation of some of the operating entities within some of the large Dubai holding companies . For example, Dubai World's Istithmar and Nakheel, both large real-estate organizations, will be merging soon. Nakheel alone has more than $60 billion of construction projects in the works. We're also looking carefully at alignment of the overall investment strategy to take advantage of emerging long-term economic and social trends globally as well as in our region. And, of course, we're making massive investment in human capital and knowledge development for our own people. That means more colleges and specialized institutions of higher learning. I personally take a great deal of interest in our investment in people by being directly involved in identifying, training and empowering good young managers with lots of potential.
Portfolio: What are Dubai's plans for regional and international business expansion?
Gergawi: While Dubai entities are actively investing across the globe, I should point out that some investments are passive, others are active. We strive to transfer the appropriate elements of our successful business and administrative models into those areas where we are active investors. For example, in terms of our regional expansion, we hope that wherever Dubai establishes a presence, it will serve as a catalyst for local businesses to see what can be done if there is drive, determination, and good business sense. We believe that helping to build a strong regional economy is our best opportunity for lasting social stability.
Portfolio: What does that mean? What business or administrative models developed in Dubai are being exported to the region?
Gergawi: We have a very rigorous approach to business planning and implementation. If you want, you could think of Dubai as Dubai Inc. Where we are different is in the speed at which we do this. Most corporations have five-year plans - we have three-year plans, and we normally achieve our targets within this time frame. There are some challenges with this approach - strategies which are seen to failing have to be reviewed or discarded on an ongoing basis, and then new strategies have to be reintegrated into the overall approach.
Portfolio: And you see such an approach as benefiting the region?
Gergawi: Absolutely. You just have to look around and see how many other business centers in the region are becoming energized. Nearly all of the cities we have invested in the region have seen a marked increase in development and commercial activity. The catalyst model is yielding visible results.
Portfolio: But you've also encountered some resistance to your venture. What are you doing to manage difficulties in the markets you are entering?
Gergawi: We have had some object lessons. Dubai Ports in the United States was one example. We have shared our collective experiences, and we now approach our international investments in a much more holistic manner. We take the time to analyze the social, political and economic landscape, identify the stakeholders, and then carefully prepare the way by ensuring that the concerns of all parties are properly addressed. When issues occur, we generally find a way to work through them.
Portfolio: What is Dubai hoping to accomplish through the Maktoum Foundation that Sheikh Mohammed recently established? And how does this fit into Dubai's overall development strategy?
Gergawi: The foundation aims at creating a positive environment that offers equal opportunities for nurturing regional youth and developing future leaders. It focuses on knowledge and education as the key pillars for regional development towards the well being of its people. The foundation's mission is to invest in knowledge and human capital development, focusing on research, education and promoting equal opportunities for personal growth and success for our youths. We know that it is vital for both Dubai and the region to have a population that is collectively capable of creatively dealing with the challenges we all face. I certainly hope that one of the primary benefits of the Foundation will be an increase in entrepreneurship in the region.
Portfolio: Can you explain the link between knowledge creation and entrepreneurship, and how the Foundation will actively pursue the objective of fostering entrepreneurship in the region?
Gergawi: I'm a great believer in the benefits of smart capitalism. There are many factors that drive entrepreneurship. We realize that the socio-political environment in each country is different, so a prescriptive or formulaic approach will not work. We have to go back to the source - the individual person - and create an environment that will equip him or her with the right attitude, tools and capabilities to become an entrepreneur. Not all people are well-suited for this. But if we can create a critical mass of entrepreneurs, they will provide the tide upon which the rest of society can rise.
Portfolio: And how will you create such a critical mass?
Gergawi: Directly, by funding educational and research opportunities, and creating institutions to perpetuate this work. Indirectly, by helping to nurture other components of the social infrastructure - good corporate governance, for example - which will provide a healthy environment in which a culture of entrepreneurship can take seed and flourish.
Portfolio: What causes you concern about the future?
Gergawi: We have internal and external challenges. Our internal challenges are largely a consequence of legacy systems and our fast pace of growth.. We are dealing with all of these aggressively, and cooperating with all the appropriate international stakeholders. [The U.A.E., made up of Abu Dhabi, the largest emirate; Dubai, the second-largest; and Ajman, Al Fujairah, Ras al Khaimah, Sharjah and Umm al Qaywayn, has some 750,000 migrant construction workers, many of them from India. Out of a total population of 4 million, expatriates make up more than 80 percent in the U.A.E.]
Portfolio: Dubai has come under considerable criticism for its allegedly poor treatment of migrant labor. What are you doing about that?
Gergawi: Let me cite some examples. We are currently redrafting the labor law to take into account the changes we feel need to take place, and we are openly consulting with all stakeholders in this respect. We have appointed 2,000 labor inspectors, and carried out a full survey of labor accommodation. More than 100 labor accommodation facilities have already been condemned, and a large number have been put on the watch list. There are many more other initiatives currently underway, most of which are aimed at ensuring prompt payment of salaries, and improvements in working conditions.
Portfolio: And your external challenges?
Gergawi: Our external challenges are both commercial and political. We have already addressed some of the challenges we face when investing in foreign countries. However, our location here in the Middle East puts us in an interesting situation. We live in a very tough neighborhood, and we have to act in an appropriate manner to ensure that we survive.
Portfolio: Some observers say that Dubai is only all about infrastructure and buildings. What are you doing to nurture the heart and soul of Dubai?
Gergawi: His Highness Sheikh Mohammed recently launched Dubai Cares, a foundation that specifically involves the direct participation of Dubai's citizens in programs to benefit people across the world. This year we collected sufficient funds to pay for basic education for over a million school children in the developing world. Next year we anticipate that our goals will be more ambitious.
Portfolio: But the well-being of everyday laborers should also contribute to your nation building, isn't it?
Gergawi: Of course. In our own communities, proper treatment of labor and domestic servants, and taking care of trafficked persons, is one thing that I can cite. We have just established a shelter for battered woman and children, and for victims of human trafficking. We even provided a permanent home and funding for one of Dubai's volunteer-operated animal shelters. We are an emirate of great diversity - we have more than 200 nationalities here, and I like to think that they live harmoniously. We are busy building a large number of sports and cultural facilities. But the government cannot do everything - people have a responsibility to take advantage of what is on offer - and there is a lot!
Portfolio: And what would you say that Dubai ultimately really offers to those who wish to live and work here?
Gargawi: We are blessed with such a wonderful mix here - every religion, and everyone coexisting in peace. Visit any public space, and you will see people from all walks of life, and all countries, mixing freely. People are remarkably tolerant and open to one another's cultures, and this has had some extraordinary consequences. We are already starting to see some very interesting examples of fusion art and cuisine appearing, and it is our hope that this trend will gather pace. We will provide whatever support we can to encourage this. For Dubai, the future is already here. Now we're looking beyond the future - way beyond.
Portfolio: How does a young CEO like yourself relax?
Gergawi: I love horses. I'm blessed with three children, with whom I spend as much time as I can. I'm almost as old as our country, which was founded in 1971 - which means, like the U.A.E and Dubai, I'm actually quite young. That's a great blessing to have -- because there's so much more work ahead of us.
Portfolio: Not the indoor ski resort in Dubai?
Gergawi: You should try it sometime.
Senior Writer and Global-Affairs Columnist