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336607
Sun, 07/27/2014 - 19:07
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Non-Oil and Gas Projects Propel GCC's Diversification Plans

Doha, July 27 (QNA) - GCC countries have used sizeable surpluses from oil and gas revenues to finance large non-hydrocarbon projects to diversify their respective economies, says a new report released here Sunday. This has created additional pockets of growth. As a result, the contribution of the non-hydrocarbon sector to growth has increased in recent years. It is currently the main driver of growth in most of these GCC countries, says the QNB Group report. A significant part of investments are going into infrastructure projects. This is partially to accommodate the regions growing populations but mainly to create infrastructure that enables the private sector to play a bigger role in the economy. In the long term, the private sector is expected to drive growth and development with the government focusing on creating the right physical and legal environment to encourage this process, the report says. While this 'horizontal diversification' away from hydrocarbons is the main common theme behind large capital spending in GCC countries, there is also 'vertical diversification' taking place. This represents investments in petrochemicals and other industries to move up the hydrocarbon value chain. Notwithstanding the diversification aim common across all GCC countries, there are important differences in the vision of each country and how they go about executing their visions. For instance, Saudi Arabia's ninth development plan for 2010-14 aimed to diversify the economy away from dependence on hydrocarbons and create jobs. Saudi Arabia's strategy is built around the creation of four new economic cities. Each with its own strategic focus, such as knowledge-based industries and services, metals and food production, automotive products, logistics and agribusiness. To encourage the development of the private sector, the Saudi government has given private companies the leading role as the master developers for the economic cities. In Qatar, the National Vision 2030 focuses on diversifying the economy from hydrocarbons by building a knowledge-based economy, says the QNB report. The vision plans this through investing in human development and education. For example, the US $7.5 Billion Education City project aims to create a regional educational centre of excellence by building schools and attracting branch campuses of renowned global universities. It also hosts Qatar Science and Technology Park, which commissions applied scientific research and turns them into commercialized products. Similarly, Abu Dhabi's Economic Vision 2030 also foresees diversifying from hydrocarbons by building a knowledge-based economy. To this end, Abu Dhabi has established a number of branches of leading universities, such as New York University Abu Dhabi and INSEAD Abu Dhabi. Dubai, with its limited hydrocarbon resources, has diversified its economy into services sectors, such as retail, tourism, exhibitions, events, re-export and finance, says the QNB report. It has invested heavily in infrastructure and logistics, such as large port and warehousing facilities and a range of free trade zones with minimal regulation and taxes. This has helped to create regional business hubs in different industries, such as in manufacturing and services. In Kuwait, the Kuwait Development Plan is a series of five-year plans starting in 2010 and stretching to 2035. The aim is to modernize and expand the country's infrastructure with the strategic goal of turning Kuwait into a financial and trade hub. A few priority projects such as Az-zour power station, water waste management projects and the building of schools and hospitals are already underway. The development of Boubyan Island Port is central towards transforming Kuwait into a regional commercial and trade hub. Overall, capital expenditure will continue to gather momentum throughout the GCC. This should underpin the process of diversification and moving towards a sustainable growth model in accordance with the national visions of each respective country, concludes the QNB report. (QNA)

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