Taiwan Today

There is good reason for Taiwanese expatriates and businesspeople in the United Arab Emirates (UAE) to be optimistic about the future of business and tourism exchanges between Taipei and Abu Dhabi. In late August 2013, Dubai-headquartered airline Emirates announced that direct flights between Taipei and Dubai were to begin February 10th. “I’ve been looking forward to this for a long time,” says Simon Han (韓志華), who oversees a major Chinese restaurant in Dubai, as well as 22 concessions in food courts around the UAE. “I was so excited that I booked a ticket on the first flight back to Taiwan.”

The service, which will operate daily in each direction, is expected to take about eight-and-a-half to nine hours. Previously, the trip between the two cities via Hong Kong took more than 12 hours, including transit time.

Han visits Taiwan to purchase food products every two to three months for his family-owned business, which was established in the 1980s. The restaurateur is not the only one excited about the new route, the sole nonstop air link between Taiwan and the Middle East. “This surely means a huge boost for my business,” says Abdul Rahim Faghihi, an Iranian based in Dubai who started importing mechanical and hand tools, as well as other items, mainly from Taiwan, in 1980. He exports the products throughout the Middle East and, since 1992, to Russia and many of the former Soviet republics. Praising Taiwan-made exports for their high quality and reasonable prices, the businessman is an ardent believer in the country and makes buying trips to Taiwan three to four times a year.

Back in Taiwan, Allen Hai (海英倫), chairman of Pro-Tour Express Inc., a travel agency in Taipei, is equally excited about the new route set to be operated by Emirates. “Absent direct flights, few [in the UAE] would be serious about Taiwan as a tourism destination,” he says. With the announcement of the service, Hai made a trip to the UAE in December last year to bring residents of Dubai and Abu Dhabi up to speed on Taiwan’s tourist attractions while promoting the package tours his company offers. “In general, people over there are quite unfamiliar with Taiwan. We hope to play a role in boosting Taiwan’s visibility in the market,” the entrepreneur says, referring to promotional events co-organized by Taiwan’s Tourism Bureau and the Commercial Office of the Republic of China (Taiwan) to Dubai.

The coming launch of the Taipei-Dubai direct flight is one of the most significant developments in the Taiwan-UAE relationship since 1979, when Taiwan’s commercial office opened in the emirate, eight years after the UAE gained independence from the United Kingdom. Since the milestone opening 35 years ago, Taiwanese businesses and expatriates have forged an ever-growing presence in the Muslim-dominated country by the Arabian Gulf. Shipping companies paved the way in the 1980s, with Evergreen Marine Corp. first basing Taiwanese staff in Dubai in 1986, earlier than other Taiwan-based shippers, according to Azmi Chang (張萬陸), former director general of Taiwan’s commercial office in Dubai.

The development of Taiwanese businesses in the UAE mirrors that country’s growth, which owes much to a great ambition to build world-class aviation and maritime infrastructure, such as the Port of Jebel Ali, located 35 kilometers south of Dubai. Opened in 1979, the facility is the biggest manmade container port in the world.

“The UAE lies at a strategic cusp between Asia, the Middle East, Africa and Europe,” says Dr. Jamal Sanad Al-Suwaidi, director general of The Emirate Center for Strategic Studies and Research, a leading UAE think tank. He adds that it is through a combination of location and transportation infrastructure that his country attracts businesses from abroad.

Another example of this infrastructure is the Jebel Ali Free Zone (JAFZA). Founded in 1985 near the port, it is the first free trade zone in the Middle East and a home away from home since 1992 for ACER Inc., the first Taiwan-based information and communications technology (ICT) company to take root in the UAE. Another infrastructure development is the Dubai Airport Freezone (DAFZA), which was established in 1996 next to Dubai International Airport—the world’s 10th and sixth busiest airport by passenger and cargo volume, respectively, in 2012. Other major Taiwanese ICT companies—AsusTek Computer Inc., BenQ Corp. and HTC Corp.—have similarly set up shop in DAFZA and are developing business opportunities in the UAE and beyond.

Chang notes that the UAE also stands out in the Middle East because of the open attitude of its government to developing the economy. This is evidenced by the creation of more than 20 free trade zones in Dubai alone, where companies are encouraged to establish operations with incentives ranging from zero tariffs on imports to the founding of 100 percent foreign-owned firms. Such initiatives more than justify the No. 4 spot for the UAE in the Trading Across Borders indicator of the World Bank’s most recent Doing Business report released in October 2013.

Taiwanese enterprises continue to look for new business opportunities in the UAE as the country enters an era of prosperity symbolized by projects like the Burj Al Arab, a luxury hotel and major landmark that opened in December 1999. International Monetary Fund data also confirms this healthy economic state of affairs, with the UAE’s gross domestic product per capita increasing to US$43,700 in 2012, up from US$27,300 in 1999.

“In little more than a decade, Dubai has positioned itself on the growth fast track,” says restaurateur Han, who left the UAE in 1999 to study in the United States and returned in 2010 to take over the family business. Echoing Han’s remarks, Arthur Kuo (郭清壽), general manager of the Dubai office of Taiwan-based Princo Corp., a leading global optical disc manufacturer, says his company is turning to emerging markets like the UAE with high potential for growth as profits from mature markets in the West are relatively low these days. Opening in JAFZA 12 years ago, the Princo office in Dubai is responsible for the company’s sales and marketing activities in the Middle East. According to Kuo, more than 70 percent of the firm’s revenue now comes from the region and other emerging markets.

Growth Opportunities

Aside from the UAE, Kenneth Chen (陳建亨), product manager for AsusTek’s Middle East office in DAFZA, identifies Qatar and Iraq as growth opportunities for his firm in the region. The former is working hard to facilitate free trade and develop infrastructure, and the latter has great demand for a wide range of products and services, including information technology products, as it emerges from nearly a decade of war. Despite setting up its office relatively recently in 2008, AsusTek has gained a firm foothold in the region. According to Chen, during the five-day Dubai-hosted Gulf Information Technology Exposition, the largest electronics trade show in the Middle East, in October 2013, AsusTek was ranked third in tablet sales. “And by launching various types of smartphones this year, the company hopes to make an even more impressive mark [in the Middle East and globally].”

As sleek skyscrapers and gargantuan shopping malls mushroom in step with the economic boom in Dubai and Abu Dhabi, the two most prosperous of the UAE’s seven emirates, Taiwanese companies are pursuing construction projects in the country. For now, their focus is on Abu Dhabi. Farglory Group, which lays claim to being Taiwan’s largest real estate conglomerate, established its Middle East office in the emirate in 2010. At present the office is pushing for the realization of Maryah Plaza, a development featuring luxury apartments marked by four separate towers designed by a British architectural firm. Farglory promotes the development by emphasizing a high return on investment, a point highlighted on the firm’s website with the mentioning of Abu Dhabi as the most expensive rental market in the UAE. The product of a partnership between Farglory and Mubadala Development Co., which is owned by the Abu Dhabi government, the US$1 billion development is a major example of “ample potential for a more meaningful and diversified association” between Taiwan and the UAE, says think tank head Al Suwaidi.

Another Taiwanese company carving out a toehold in the UAE is CTCI Corp., which specializes in industrial facilities such as petrochemical plants. CTCI has set up an office in Abu Dhabi to cater to the needs of major potential clients based in the oil-rich emirate. Having implemented projects in the Middle East more than 20 years ago, the largest engineering, construction and procurement service provider in Taiwan came back to the region in mid-2000. It has already completed projects in neighboring countries such as Saudi Arabia and Qatar since the comeback, and continues searching for opportunities in the UAE, going head-to-head with hard-nosed competitors from South Korea.

Meanwhile, Taiwan’s solar energy sector is increasingly looking to the UAE and the Middle East. “Because of its climate, the region is the best place to develop solar energy in the world,” says Jesse Chen (陳振興), senior sales manager for the Middle East and North Africa with Taiwan-based Solartech Energy Corp. However, until recently the sector received little attention in the region, where the price of electricity remains low. “The governments began to reflect on the high consumption of oil by their residents and attempted to diversify energy sources. By reducing reliance on oil and cutting emissions into the bargain, they can improve the international images of their countries as well,” he says.

The UAE is ambitious about developing green energy sources. “The nation is diversifying its expertise in the energy sector and has become a pioneer in the field of renewable energy in terms of research, investment and industrial development,” says Al Suwaidi, explaining why the global headquarters of the International Renewable Energy Agency is located in Abu Dhabi. “Our country is also proud to develop Masdar as a completely green city,” he says, referring to the new town in the emirate known for its lofty goal of operating with zero emissions. Masdar started with the founding of the Masdar Institute of Science and Technology (MIST), which encourages research related to environmental sustainability. In 2010, the graduate-level school began recruiting local and international students, whose number stands at more than 300 today, including 15 Taiwanese students studying on full scholarships. In addition, two academics from Taiwan are teaching at the school.

Noticing the shift in the energy policies of Middle East countries, the Republic of China’s economic and foreign affairs ministries organized the first-ever trade group of solar energy business representatives to travel to the region in the middle of 2013. Consisting of 21 members from Taiwan’s major businesses in the sector, including Solartech, which began exploring the Middle East market in 2010, the group visited Kuwait, Oman and Qatar as well as the UAE. “The government played an important role in the success of the trip as it helped set up meetings with key public sector officials responsible for industry development,” says Jesse Chen, who has since traveled to the UAE and other countries in the region on a monthly basis. “Previously, we only filled small orders in the Middle East, but now we have a good chance to take part in big projects.” In the near future, he said, his company plans to base Taiwanese staff in Kuwait and the UAE.

Globally Competitive

As the UAE changes tack in development policy, the country is becoming more powerful and attractive economically, despite the effects of the global financial crisis that began in mid-2008. In the latest global competitiveness report released by the World Economic Forum, the UAE ranked 19th, an all-time high for the country. The crisis impacted the economy, but “my concern is how fast we have recovered and how much we have learned from it,” says Atiq Juma Faraj Nasib, senior director of the Commercial Services Sector of the Dubai Chamber of Commerce and Industry.

In late November 2013, a new engine of economic growth came on line in the UAE when the country announced it had won the bid to host the 2020 World Expo, a six-month event taking place every five years. “The 2020 Expo doesn’t mean a lot to just the UAE. It also means a lot to our partners like Taiwan,” says the Dubai Chamber official, noting that the event could create opportunities for Taiwan businesses in services and construction. Such a development would be in line with the nation’s shift toward diversifying sources of revenue away from oil. “Dubai is like a big pie and there’s always a slice of it for everyone,” he adds.

But not all Taiwanese businesses are as ambitious and patient as Solartech when exploring the UAE and rest of the region, which differs culturally from East Asia and remains quite unfamiliar to Taiwanese people. “You need to spend time building connections and winning trust,” Han says. “You could find it difficult to sell your products to locals by just setting up a booth at a trade show for a couple of days. You need to stay longer, visit your prospective buyers and let them actually use your products and closely communicate with them.”

In addition, much more has to be done in Taiwan to boost the country’s allure as a destination for UAE nationals. There are only 38 restaurants around Taiwan, mostly in Taipei, that are licensed by local Muslim organizations as halal-certified establishments, says Pro-Tour’s Hai. As a Muslim, Hai has been pushing for the creation of a friendlier environment in Taiwan for Muslim tourists, while journeying overseas to drum up tourism business in Muslim-majority countries like Brunei, Malaysia and the UAE.

Mike Huang (黃柏徐), a Taiwanese who decided to stay on at MIST as a research engineer after graduating last year, believes that greater interaction is the key to mutual understanding, which in turn leads to closer relationships. “I had little idea and even misunderstandings about Islamic culture and society before studying [at MIST] in 2011. But now I’ve learned to respect the culture and look at it more objectively,” he says. To date, five Taiwanese students have graduated from MIST, with one of their number starting a company in Taipei that trades with businesses in the UAE.

Looking to the future, Ma Chao-yuan (馬超遠), newly appointed director-general of Taiwan’s commercial office in Dubai, has high hopes for the establishment of more economic ties between Taiwan and the UAE. “The UAE is a major Muslim market and Dubai hosts numerous international trade shows and events throughout the year. That means providing the most recent information to Taiwan’s businesses is my priority job. Pushing for easy acquisition of the UAE visa for ROC nationals is another major task,” the official says.

Given the UAE’s growing presence on the world stage and the international reach of Taiwanese companies, the future is likely to bring many more opportunities for cooperation.

Write to Oscar Chung at mhchung@mofa.gov.tw