Water Solutions to the United Arab Emirates
Trends and opportunities
The Middle East is the world’s driest region, as a result of high temperatures and low precipitation levels. The United Nations Food and Agriculture Organisation (FAO) have determined that long-term average precipitation rates in the United Arab Emirates (UAE) are just 78 mm yearly (Source: FAO Aquastat Survey 2013).
Minimal rainfall coupled with high levels of water usage and waste present a challenge for water sustainability effort and results in water stress. Which occurs when a region suffers an imbalance between water demand and need, known as the Water Stress Index (WSI), it has been widely used by research organisations such as the United Nations. The region has approximately 6.3 per cent of the world’s population, but only has access to approximately 1.4 per cent of the total global available drinking water (Source: World Bank, MENA Regional Water Outlook 2012).
Although the WSI fails to take into account unconventional sources such as desalination and reuse, it is evidence of the challenges facing the UAE in relation to water scarcity.
The UAE government are increasing the development of water infrastructure projects and alternative water technologies in order to curb demand. Most Gulf Cooperation Council (GCC) states, including the UAE, prioritise infrastructure projects and capacity building over encouraging behavioural change to reduce consumption. However, the UAE Government is taking some measures to ensure that future projects will encourage a more ‘resource-conscious and resource-efficient government and society’.
Local businesses and households continue to be exposed to modern technologies, resulting in the upgrading of both the initial planning and installation of more efficient irrigation mechanisms including water efficient plumbing, piping and water sourcing. Legal mechanisms have also been implemented to improve water use management.
Desalination supplies as much as 99 per cent of potable water needs and 57 per cent of global desalination production. (Source: Omar Saif, The Future Outlook of Desalination in the Gulf, December 2012). The desalination process is resource expensive, both in its impact on the environment and the financial costs. The Global Water authority has revealed that the UAE Government spends annually in excess of US$800 million on maintaining desalination plants with estimates suggesting this will continue to grow to over US$3.22 billion by 2016, reflecting a 300 per cent increase. (Source: Omar Saif, The Future Outlook of Desalination in the Gulf, December 2012).
Due to the lack of fresh water available in the region, the UAE is the world’s largest consumer of bottled water. Abu Dhabi has developed a project to establish a large underground reservoir, containing 26 million cubic meters of desalinated water to be used for emergency purposes. With a population growth rate of approximately two per cent per year, it is evident that significant attention is required to further develop the water sector. (Source: World Bank, Development Indicators 2014).
According to the Chairman of the Emirates Energy Awards, the UAE water sector requires in excess of US$12 billion worth of investment from 2009 to 2019 to sustain projected growth rates. The Masdar Institute of Science and Technology in Abu Dhabi has determined that water demand in the country is set to increase by 43 per cent between 2011 and 2016 (Source: Tuxford Report, 2013). With the expected increase in demand for water, mechanisms must be developed to ensure that the UAE has the expected capacity required.
The waste and water treatment chemicals market in the GCC region is set to increase to over US$568.2 million by 2017 according to Frost & Sullivan’s 2013 forecast. It is estimated that the current water capacity in the UAE would last for approximately two days if desalination plants were to stop operating. The UAE and various other GCC states are undertaking measures to research and invest in water storage technologies including manmade reservoirs and aquifer storage and recovery.
The undersecretary of the Ministry of Environment and Water announced that the UAE will be investing US$13.89 billion in new desalination plants and distribution networks from 2012 to 2016 (Source: Omar Saif, The Future Outlook of Desalination in the Gulf, December 2012). The high capital and operating costs of desalination infrastructure means that any water lost in distribution networks represents a significant cost to utilities. The necessity of keeping these losses low has created a market for smart network solutions worth US$198 million in 2013, growing at 15 per cent a year. There is considerable scope to develop new desalination technology in the entire gulf region due to the abundance of solar energy and seawater.
To date, the region lacks storage facilities, as plants operate at the same capacity 24 hours a day due to the minimisation of operational costs with much of the processed water being dumped back into the sea unused.
Following the success of various water infrastructure projects throughout Australia, Austrade has identified numerous possibilities for companies to effectively enter the water sector in the UAE.
Potential areas identified with significant opportunities include:
- water management
- green building expertise
- facility management
- project management
- building materials and products.
The UAE is strategically located between India and Europe and not far from South East Asia. It has typically been a trading hub, so competitors from Europe and Asia are numerous. Australian companies comment that there is a general preference for cost effectiveness over quality.
In order to encourage local manufacture, the government provides a 10 per cent price advantage to local manufacturers over the equivalent imported product for local government purchases.
Tariffs, regulations and customs
The UAE and broader GCC region has in place an external tariff rate of 5 per cent for the majority of imported products.
All government purchases are carried out through tenders, which only UAE owned agents can bid for, a foreign company usually requires local representation.
Marketing your products and services
Relationships are essential to doing business and emphasis weighs heavily on mutual respect and building trust. Regular visits, stopovers and attendance at exhibitions would reinforce to customers interest in their market and commitment to a strong partnership.
Austrade experienced Business Development Managers are members of key service business groups and provide input into a number of industry directories and can arrange activities which bring local and Australian business people together. They are well connected with key business people in addition to government officials and are able to open doors on behalf of Australian companies. Austrade arranges frequent business delegations to the UAE and appointment programs for companies making individual visits.
There is a big difference between the commercial laws in the UAE and Australia, which if not understood by Australian companies, can result in decisions that impede the growth of business. It is very important to understand the legal context. Austrade provides information about agency/distribution and franchise regulations and the different types of commercial entities open to Australian companies.
The UAE, with its aggressive spending and high import propensity, presents vast opportunities for Australian businesses. The large number of players, lack of online information and different business culture makes it difficult for Australian companies to identify the most important contacts and secure appointments.
Links and industry contacts
Government, business and trade resources
Abu Dhabi Chamber of Commerce and Industry
Abu Dhabi Municipality
Australian Business Council in Dubai
Australian Business Group in Abu Dhabi
Dubai Chamber of Commerce and Industry
Dubai Water and Electricity Authority
Government of United Arab Emirates
Sharjah Chamber of Commerce and Industry
Middle East Economic Digest
The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:
- develop international markets
- win productive foreign direct investment
- promote international education
- strengthen Australia's tourism industry
- seek consular and passport services.
Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: firstname.lastname@example.org
A list of Austrade offices (in alphabetical order of country) is also available.