Join us on a captivating journey to the heart of the Middle East as we unravel the extraordinary transformation of Dubai. In this episode, we delve deep into the city's meteoric rise from a regional trading post reliant on oil to a buzzing global hub for investment, tourism, and technology. Discover how Dubai's strategic diversification efforts led to an economy where oil now contributes less than 1% to its GDP, a stark contrast to the 50% it once commanded. We'll explore the pivotal roles of initiatives like the Jebel Ali Free Zone Authority, which revolutionized trade, and examine how Dubai's strategic location and business-friendly policies catapulted it into a major player in global finance. This episode is not just about economic growth; it's a story of vision, innovation, and ambition. Tune in to see how Dubai emerged as the tech hub of the Arab world, setting a new standard for urban transformation and development.
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Join us on a captivating journey to the heart of the Middle East as we unravel the extraordinary transformation of Dubai. In this episode, we delve deep into the city's meteoric rise from a regional trading post reliant on oil to a buzzing global hub for investment, tourism, and technology. Discover how Dubai's strategic diversification efforts led to an economy where oil now contributes less than 1% to its GDP, a stark contrast to the 50% it once commanded. We'll explore the pivotal roles of initiatives like the Jebel Ali Free Zone Authority, which revolutionized trade, and examine how Dubai's strategic location and business-friendly policies catapulted it into a major player in global finance. This episode is not just about economic growth; it's a story of vision, innovation, and ambition. Tune in to see how Dubai emerged as the tech hub of the Arab world, setting a new standard for urban transformation and development.
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Ask a lot of people, have you been to the Middle East? And they'll say, oh yeah, Dubai.
Jed Tabernero:The world's tallest building, the largest man made islands, and the biggest shopping mall, all can be found in this thriving, futuristic desert metropolis. Yeah, we're thinking of Dubai and the United Arab Emirates.
In a bid to encourage entrepreneurs and tech investors to live in the country, The UAE is also offering 100, 000 golden visas that allow entry for 10 years.
Jed Tabernero:In this episode of Things Have Changed Podcast, we dive into the fascinating economic journey of the UAE, once heavily dependent on oil. Which accounted for a staggering 50 percent of Dubai's GDP fast forward to today, and the landscape has shifted dramatically with oil now contributing less than 1 percent to Dubai's GDP.
The UAE is now home to three unicorns, or startups, worth at least a billion dollars. And they are all based in Dubai. The country aims to have at least 20 unicorns by 2031.
Jed Tabernero:So how did an economy in a desert become a hub for trade, transport, finance, tourism, and technology? Tune in as we dive into the meteoric rise of Dubai and the broader UAE.
Are we seriously considering Dubai now as a global tech hub? A global tech hub that could potentially one day rival the likes of London and Paris? A hundred percent.
Shikher Bhandary:okay, so my first international trip ever growing up in Bangalore, the first trip that I'd ever done outside of the country was to Dubai. My parents had already gone there because they were visiting my sister in the US. A lot of transit to the United States from India. passes through the Middle East because it's just such a great like middle strategic location for you to have your transit and we'll get to this later as to as one of the reasons why Dubai is crushing the whole trade and finance aspect of things. But I landed in Dubai and you know, this is a boy who's, who's never been outside the country. And. I got lost in the airport because I was flying solo. I was 14. I guess 14 is is old. Right? Like 9th grade or
Jed Tabernero:Pretty young bro. I don't know that's pretty young.
Shikher Bhandary:Dude, I was,
Jed Tabernero:I left the country at 14
Shikher Bhandary:I was lost, dude. I was lost in the Dubai airport. Also, partly, not because of the airport. It was because of me. I was so starstruck. Just so many things happening. It is humongous, firstly. And there are stores. There are, there are a million people. It was such a startling thing for me. Because, You fly into the Middle East. Now, back then, Dubai was not like the Dubai that we hear and talk about today, right? It was still like, what, 14, 15 years ago? Wow, long time ago. But it was starting to get that reputation and just landing into the airport and you're like, wow, this is insane. So, I got lost. Great thing, I went to a help desk on the verge of tears. They were able to call internationally to my sister. My sister got the number for my parents. My parents were already sitting in a hotel in Dubai. They, I guess, forgot about me.
Jed Tabernero:nice
Shikher Bhandary:Concierge helped me to get to the spot where my parents finally met me. Which was pretty cool. It was a great experience. For a 14 year old kid who got lost in one of the biggest airports in the world. My parents were like freaked out. They were like, what the hell? What is happening? Are we going to see our kid again? Customer experience in many ways is really good.
Jed Tabernero:intense. I mean I would say first of all, you're lucky that the first country you left to from India was UAE. I mean, that's probably for me. It was a freaking, when I first came to the UAE, I already knew all about it. I knew all about Dubai and you all about how nice things were. And Emirates is just a sought after airline. You know what
Shikher Bhandary:Yeah. Yeah.
Jed Tabernero:coincidentally, my first time coming into Bangalore, I also went through Dubai. And that was kind of dude, riding Emirates for me was. Tip top. I was like, damn, I made it. I was in economy, you know what I mean? But it just felt so good. It felt so good. If you haven't written Emirates before, first of all, you should try it. If you get a chance, Emirates economy class is just up there. A lot more space. It's got a world leading media system. It's, it's beautiful. I would love to be part of the Emirates infrastructure someday instead of being Delta.
Shikher Bhandary:incredible is how that whole section, at least UAE, has transformed over the last 30 years. Now you walk into a New York City hotel, a top hotel, you know, a bunch of clocks behind the receptionist. And it's basically, what are the names, right? You'll have New York, you're going to have Sydney, you're going to have Paris, you're going to have London, and now you have Dubai on it. It's gotten onto that slate of large metropolises in the world.
Jed Tabernero:Yeah. I mean, how did UAE become even an economic powerhouse right in the very beginning and doing our research to how this evolved was really, was really dope because we learned a lot about the Middle East in general. So Dubai and UAE just generally are divided into Emirates, right? Just for everybody's education. And Emirates is a land that's ruled by an Emirate, an Emirati. And the economies were kind of All over the place. You know, there's some areas, some Emirates who ruled by lots of fishing villages who were searching for like really rare Japanese pearls.
Shikher Bhandary:That's how it kind of came about, right?
Jed Tabernero:That's the crazy thing. Yeah. And it's not something you think about today, but if you've been there, right. There's like these museums about these pearls that they used to collect and stuff. So
Shikher Bhandary:too long ago to this. We are talking about like 1960, like before the oil, Middle East oil stuff that started happening with the US and stuff. This is not we are talking 1960s, early 1970s, where Dubai was Like a fishing settlement. That's insane. It's 60 years ago, dude.
Jed Tabernero:you wouldn't have guessed right? You wouldn't have
Shikher Bhandary:One lifetime in one lifetime.
Jed Tabernero:exactly. Exactly. There's still folks who are probably, you know, familiar with that view of Dubai and all of a sudden this, you know, massive construction buildings, you know, new islands, holy crap. There's just so much going on in Dubai. And one of the other things, of course, you know, the rest of the middle East, when oil started becoming a really important resource for everybody. UAE also found oil, but compared to the rest of the Emirates, Dubai didn't have much, right? A lot of that oil was sitting in Abu Dhabi. So Abu Dhabi is the capital of UAE. That's where most of the oil is now. You got to think about it from the perspective of the Emiratis, right? They have a certain structure for leading. There's, they have a president, they have a PM A specific person will come from a specific Emirati in terms of the functions of the government. You know, the president will always come from Abu Dhabi. PM will always come from Dubai kind of thing. So they had cultural, you know, things that put them together as Emiratis of these seven states. Right. anD one of the interesting things was Dubai, because it had such a little share. Of the oil of the entire UAE had to think of creative ways to stand out for the rest of the Emiratis, right? They were running out of, of oil. I mean, they still have it today, but it's not so much that, you know, it could build them into the powerhouse that they are today. So they had to get really creative with that. We mentioned the intro Dubai's GDP. At some point it was about 50 percent oil, right? And now it's only one. So that's kind of the stat that we're, we're focusing on. How did they become from 50 percent oil to just one? What, what is the other now? What is the other parts of the pie that's producing all of this stuff, you know, for Dubai?
Shikher Bhandary:And I think this is like a, like the template, the example of how you diversify out of oil. And they figured it out. They are like the template that now, you know, we spoke about Nigeria, all of these other countries dependent on oil are now looking at the Dubai model too. To wean themselves off precious resources like oil. Throughout this series, we've talked about what are the pillars that actually support a global economy, right? And we'll go through them one by one trade, transport, tourism and technology. Because Dubai literally goes in and checks all these boxes as a way to now become like an international hub for trade and business. It's incredible. So on the trade front, Jed, the JAFSA, how did that revolutionize things?
Jed Tabernero:Yeah, it's, it's interesting doing this research. We read about this policy that was pretty similar actually to other countries that we've studied before in the show, like China. And other places that had kind of a different government set up that didn't allow for things like free trade wasn't always so easy for all countries, right? We forget that that some countries actually don't have free trade, and it's very restricted. And, and UAE was one of these places where, you know, the culture is very strong. And, you know, they want to prevent that from being influenced by outside sources. Therefore there was, it was a little harder to do trade like you would in the U S for example. So JAFSA or Jebel Ali free zone authority is one of those policies that allowed for kind of do whatever you want businesses. You know, you could trade however you wanted. There were no taxes in the zone. It was super business friendly, you know, for example, in the Philippines, right? You cannot start a business in the Philippines without a Filipino citizen. You cannot own a business completely without having employed a certain amount of Filipinos, right? There's some policy around that in most countries and in UAE was the same, you know, like it's very hard to become a citizen of Dubai. I've been watching a ton of things about moving to Dubai recently. So I know a lot about the immigration process coming over. But the JAFSA allows for businesses to come in. For people to come in and start businesses, entrepreneurs to come in and start building, right? Without all of these taxes, tariffs, and these things that make it hard for a business to thrive, right? And so because they've opened these Jeff says, these areas where you could just do basically whatever you want is as a business, business started coming in, dude, you know, what's crazy? Something I learned about Dubai is that It's, I don't know if it's the top in the world, but the ratio of expats to actually UAE citizens is off the charts. I think there's more, there's more expats over there than there are locals, which is crazy. That's crazy to think for me. Because that used to be Qatar, which is not so far away the top in the world. Now it's, now it's UAE. And that just shows you, right? Expats are coming in because they're welcome and they're coming in and starting crazy businesses. There's a ton of money in Dubai, dude.
Shikher Bhandary:They allow free patriation of your capital, of your investments, of your of all your belongings. So you're not paying. So say you own X amount of dollars in the U S you will have X amount of dollars in Dubai and not say 30%. off of those dollars because you're paying taxes to this new government, you know, that's the case almost all across the world. And they were the first one to offer, Hey, you come here. We are not going to levy any withholding tax on your repatriation of profits, dividends. And so businesses suddenly were like, Hey, you know, we can freely transfer our funds. Internationally without incurring taxes. It just became such a great destination for international trade. Think about like duty free. Remember Dubai duty free was like the single biggest driver of like people live in flying there. Like I remember even when I had gone there, like my friends at
Jed Tabernero:I mean, something,
Shikher Bhandary:yeah. Buy me something. It's duty free, dude.
Jed Tabernero:exactly. And you know, one of the things that was coming out of this was. Because there's a ton of expats there, right? By the way, huge population of Filipinos out there. Shout out. There's a ton of Filipinos in Dubai, but one of the things that happened as a result of this, because of all of these expats coming on all of these businesses, starting businesses, um, it became a place for people to throw in money. Right. Beyond the whole duty free thing finance had developed as an industry in Dubai for the entirety of the Middle East. Ton of funds started coming in because all these businesses were there, right? Like similar story to New York. You had all these entrepreneurs coming and starting businesses. Wall Street came, right? And then it popped off and Wall Street State, even if the other industries had left already, the money stayed, the capital state. So in these JAFSA zones, you have these areas where financial companies are just pouring in money. There's professionals over there. Even I work with somebody from Dubai. And Amazon, which is kind of, you know, that's kind of crazy to think we don't have a large presence over there, but we have somebody over there that deals with accounting and finance. Like that's, that's a pretty big deal. So it started becoming, you know, this place where the middle East would funnel their money into to fund certain businesses or to spend their money. Not just on finance. It's also, we were talking about tourism, a ton of people come there and it's known for having those Lamborghinis that chase you around police cars. Right. Which is a crazy thing to think about.
Shikher Bhandary:They just nailed those vibes, you know, those vibes. Oh, you're going to see Lamborghinis. It's going to be. Awesome, biggest tower in the world. You can come in and as a foreigner, you could own a hundred percent of your business. You drop down the regulations. And so the city kind of developed this high skilled workforce and like world class infrastructure.
Jed Tabernero:Dubai has become. The center of Islamic finance, right? There's this entire region that has a ton of money, but typically Western institutions aren't super present in these areas, right? It's considered, you know, not good to do business in these areas. And so Dubai has become one of those places where, well, if you're not going to the U S to London. If you're not going to New York and London, you're coming to Dubai to put your money into. We're reading this report on Islamic finance development. And it pointed out that this global Islamic finance industry is worth about 4 trillion USD dude. That is a ton of money. And Dubai is the place that's attracting all of this investment. The government is willing to try a ton of new things here. And I feel you know, that's a big plus for people to start moving in.
Shikher Bhandary:Yeah. On that, on just on the technology front You know, they're, they're home to now some serious startups. At least three of them, I think in the tech side are worth more than a billion dollars. So Ketopi, Vista Global, and you know, a real estate technology company, Emerging Markets Property Group. It's showing up as, as a possible destination where it's not just the the tourism that, that takes the, the economy further, but it's also like tech from within, right? Uber acquired, uh, Kareem, the Dubai rival for like 3. 1 billion. Now that is a massive exit. And the founders, the early employees are now flush with cash. And now they are excited to start building other things.
Jed Tabernero:that's cool because I mean, people don't realize, but these billion dollar exits, they happen in like Europe and U S like almost exclusively. That, that doesn't really happen. And especially in the venture world, like it's just not developed all across the world yet for, for those big exits.
Shikher Bhandary:The government has big, big ambitions to acquire talent. And they have like a stated goal. I don't know how many governments have this, but they have a stated aim of becoming home to 20 tech companies worth a billion dollars or more by 2030. Like they have a stated aim, right? And to actually achieve this, what they're doing is, and this is kind of close to home where I've seen quite a few founders move from India to, to Dubai, just because they're starting to offer these hundred thousand golden visas that allow entrepreneurs and tech 10 years. So that is way longer than any regular visa.
Jed Tabernero:It is. And, you know, beyond the goals that they're, they're doing something about it. You know, they're, I think they're the only place that has a minister AI dude. That's kind of crazy. They have a minister of AI who's supporting, you know, development and adoption of, of AI in the city. And I have to shout out like Dubai's government, just regionally that region has done a lot of things to, to grow. The tech infrastructure there, and I can't just point out the entirety of the UAE, like Dubai has done a good job itself as a city to attract a lot of, a lot of talent and these billion dollar tech startups are there because actively they've been working to get these, these folks over. So huge, huge kudos to them for getting into a, a future based economy here. And like we said, in the beginning. Crazy example for shifting from a resource dependent city to now this diversified set of things that can help them, you know, they can double down in which areas work. And it sounds like tech tech is working.
Shikher Bhandary:It's working, but what's the sector that has worked the most and is crushing it for them? Well, I'll, I'll bring two, two aspects into this. It's the travel transport and tourism, the big T tourism. Yeah. The two T's. Dubai and the UAE and the Middle East in general is a landing spot for me to travel from the US to India, right? Split my flight into two, two long haul trips, right? Some of the biggest empires in the world started in this region because of its close proximity to trade with different partners either in Europe or in Asia. So that transportation infrastructure has played a huge role in connecting the country UAE to the global market. And what has that resulted in? Well, they've become a tourism behemoth. I didn't know there are more travelers visiting Dubai. But then New York City, I didn't know that, that sounds, that seems so incredible. Dubai is like the fourth most visited city in the world by international tourists. Actually surpassing New York or Tokyo. So the only destinations that are above it are London, Paris, Bangkok, which is insane.
Jed Tabernero:if you think about it, this, this stat came out in 2018, dude, it's 2023 right now. Can you imagine how much far ago Dubai has developed into a tourism behemoth? And we just
Shikher Bhandary:just in the five years. Yeah.
Jed Tabernero:so ridiculous. But no, it's a great point. Things to point out about the airport, if you're considering this, because I was playing a trip to the Philippines just last night. anD I booked my tickets to go to the Philippines. If I wasn't with Delta SkyMiles, I would have done it with, with Emirates. And what's crazy is, I'm talking about a route to Southeast Asia from New York. So, if you're thinking about it, like, how the heck is there a route from JFK to Dubai and then to Southeast Asia? Well, they have it right. It's almost like one of those things where there's always going to be a ride for Emirates in the places that we'd like to go. So it's always a consideration for us. I get it now.
Shikher Bhandary:Yeah, there's a really interesting saying that the Romans built roads and when they built roads, you know People came and trade prospered. So Dubai what they have done is they've connected themselves to different parts of the world so people just come and use it and use it as a hub and Trade prospers because it's such an easy destination to to travel to to conduct your business
Jed Tabernero:Right. And you know, it's not just roses and great stories for Dubai. I'd like to end on a note and say. It's been such a successful model that the region is now replicating this same model in other parts of the Middle East. We're gonna have some competition soon Dubai so they have to figure out their way around that. Of course, they have first movers advantage, but Saudi Arabia is trying to do the same thing. They're launching so many initiatives that are very, very similar to Dubai's attracting tech in town.
Shikher Bhandary:Riyadh, Qatar Like the Qatar FIFA World Cup was there. Saudi just won the 2030 World Cup as well. Like they are leaning into this model.
Jed Tabernero:that's something they need to navigate around. It's really exciting for the region to be, you know, welcoming in more folks to start building stuff, especially in the tech space. We're really excited about that. But this change that Dubai has, has undergone, we'll see that get replicated in more places than just the Middle East and we're super excited to see what that, that brings about.
Shikher Bhandary:Yeah. It's going to be interesting how this all unfolds, right? Dubai has really ambitious 10, 20 year old plans. So does Saudi. So does Qatar. So does Kuwait, you know, all of these countries in the Middle East are now thinking, Hey, you know what, they found so much success. They have become a very important cog in the global economy wheel. We can do that as well. So it's just going to be increased competition and we're going to see how, how that plays out. But yeah, that's us signing off. We loved. Deep diving into this region, this fascinating story of how a fishing settlement 60 years ago becomes one of the world's largest metropolises. And I don't think it's heard of before. 60 years is one lifetime. But yeah, stay curious.
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