A few weeks ago I returned from nearly a week in the United Arab Emirates – both Abu Dhabi and Dubai. I held off writing this as I watched the escalation of compounding tragedies in Israel, Iraq and Syria with foreboding and yet morbid fascination. As I continue to reflect on that trip I am struck by the profound sense of optimism the Emiratis projected in spite of their surroundings. As the US Ambassador to the UAE, Ambassador Michael Corbin – a spectacular gentleman – shared over breakfast the UAE is a “beacon of hope in the middle of a region in transition.”
By far the most striking elements of the trip (not including the massive Sheikh Zayed Grand Mosque – below) were the series of initiatives across the economies of the UAE to recycle petrodollars into critical infrastructure – and not just roads and airports but healthcare and education. And it is this opportunity where some of the greatest intellectual centers of the US can most effectively “export” their assets; while India and Pakistan and other developing countries provide much of the labor to build this infrastructure, it is the doctors from Cleveland who staff the new Cleveland Clinic hospital in Abu Dhabi, the faculty from NYU who teach at the new (controversial) campus in Abu Dhabi, the curators from New York City who run the new Guggenheim Museum who bring these institutions to life.
This investment of petro-wealth has had a dramatic and obvious impact on society in the UAE…
- Notwithstanding that there are less than one million Emiratis, supported by nearly 8 million foreigners, the UAE is home to two global airlines – Emirates and Etihad – and the most spectacular airports – all contained in 1,600 square miles
- Life expectancy was 45 years in 1960 yet is now over 75 years as a result of significant investment in healthcare; literacy rates over that same period rose from 10% to virtually 100%
- The UAE ranks as the 30th largest economy (with only 9 million people) and has a GDP per capita of around $49,000
- There are thought to be 25,000 UAE students in the US, which is now back to pre-9/11 levels
- UAE has the only peaceful nuclear energy facility in the region as well as the largest solar power plant in the world and with oil production of 2.8 million daily barrels which is forecasted to be 3.5 million in five years (for Emiratis the cost of oil is less than $5/barrel while the US is now paying well over $100/barrel, and so long as oil stays above $80/barrel, Emiratis will not pay taxes, get free healthcare and education – pretty good deal)
- And to secure all of that the US has around 3,000 troops deployed in region
In addition to meeting executives from the technology and defense sectors, I spent most of my time meeting with investors and visiting leading healthcare centers. There are nearly 20 significant investment funds in the UAE with accumulated capital anywhere from $2.5 – $4 trillion depending on which analyst you believe. Many of these funds have identified healthcare as an important and emerging area of focus. Often partnering with the best global healthcare brands, the UAE aspires to be a leading regional healthcare provider given it is no more than a six hour plane flight from 2.4 billion people (the Arab World alone has 350 million people). Although much of the public health focus is on preventive diseases, there is now a goal to provide genetic screening for all newborns which is consistent with a significant regional genomics initiative. The developed world has exquisitely exported its bad health to this region as diabetes and heart disease are near-epidemic. A small sampling of how topical health issues have become were reflected in the lead stories in Gulf News on June 4, 2014:
- “Draft Law on Contagious Diseases Passed” – authorities have new powers to quarantine people
- “Call to Reform Health Care in Northern Emirates” – senior government official blasted Ministry of Health for lack of healthcare standards and shortage of doctors
- “Dubai Health Care Sector to Grow Further” – notwithstanding 56% hospital bed occupancy rates, rising demand increased number of beds 9.2% in 2012
- “MERS has Infected 68 and Killed 10 Since March 2013” – pretty self-explanatory
And that was just on June 4. The day before readers were treated to articles on the lack of adequate food safety and learned that the cold storage infrastructure is 40 years out of date, as well as provided coverage of improved cancer screening techniques. That day we also learned that women’s labor participation rate stood at 26% of those women who wanted to work (unemployment is ~40% across Middle East) although the headlines on June 2 screamed “No Limits to What UAE Women Can Achieve.”
The most extraordinary healthcare facility in Abu Dhabi has to be the new Cleveland Clinic facility which is slated to open March 2015 – an absolute marvel which will profoundly change care delivery throughout the region. While there I also met with a senior executive from Al Noor Hospitals Group, a small portfolio of hospitals in Abu Dhabi, which is now a public company with a market capitalization approaching $2 billion (2013 revenues ~$375 million). And a fascinating juxtaposition is the New England Center for Children – Abu Dhabi, which is equally extraordinary but for very different reasons. Opened in 2007, the Center leverages the nearly 40 years of expert autism research and education conducted outside of Boston to provide tremendous behavioral care for over 110 autistic children in the UAE.
And on the heels of those visits, I visited DuBioTech which is building the premier life science cluster in the Middle East. Founded in 2005, and modeled on important elements of the Singapore success story, there are now 154 life science companies partnered across 250,000 square feet of lab space operating in this tax free zone. And if that was not enough, an impressive educational center called Masdar Institute of Science and Technology, which opened in 2010, houses a microscopy suite (among many many other things) which rivals what one might see at MIT or Stanford and is now being leveraged across a series of commercial partnerships in region.
My friends at The Abraaj Group, a very successful private equity investor managing $7.5 billion focused on UAE, Africa and Southeast Asia, have made a number of healthcare investments – almost 20% of their diversified funds. And some of their most notable transactions involve novel healthcare delivery models, and in fact this past week announced an investment in Polyclinique Taoufik, a state-of-the-art hospital in Tunisia. As they shared with me, healthcare in the region is incredibly resilient with massive pent-up demand for quality services.
Coincidentally while in Dubai, which was wildly over-leveraged in 2008 and suffered significant losses during the Great Recession and has since been quite inwardly focused, the Arabnet Digital Summit was being held which brought together tech start-up’s from across the region. Much of the lamenting centered on the ever-present “funding gap” – not unlike what entrepreneurs suffer from in other parts of the world. But what is particularly unique to the UAE now is the dramatic volatility of the local stock exchanges – in part due the obvious geo-political issues but also the concerns around an imminent correction in the real-estate and construction industries; the Dubai Financial Market Index is off nearly 20% since highs reached just a few months ago, but is nonetheless up 39% year-to-date. Interestingly, according to A.T. Kearney, the UAE was ranked 11th globally in the Foreign Direct Investment Confidence Index, up from 15th in 2012 due to and I quote “developed investment opportunities, diversifying the industrial base and attracting innovative SME industries to the region.”
A job very well done – certainly given the neighborhood.