Swiss firms have been urged to take advantage of a growing shift to green energy in the Middle East as Arab countries seek to scale down their dependency on oil.
The time is ripe for advanced Swiss technology to reap windfall rewards from a drive to construct more energy efficient buildings, according to experts based in the United Arab Emirates (UAE).
The oil and gas rich states have already been identified as lucrative business partners by a host of well known Swiss firms in the banking, construction, watch and luxury goods, chemical, healthcare and pharmaceutical industries.
But a relatively new market in energy conservation and alternative energy promises enhanced opportunities for other companies, swissinfo.ch was told by Dubai-based businessman Sheikh Samir Mirdad at the Alpine Symposium in Interlaken this week.
“Nothing will replace oil, but energy is our top priority right now. We are focusing on energy generation because in two years we will be consuming more than we can make,” Mirdad said. “We want to build more environmentally friendly buildings and improve energy efficiency.”
Mirdad added that the pace of this strategy shift has been swift thanks to massive cash reserves and the streamlined decision making process of the monarchies that control the region.
Turn to quality
Abu Dhabi, for instance, plans to build an entire eco-city (Masdar) from scratch in the desert by 2018 – a project involving several Swiss firms and educational institutions.
However, the time to leap on the bandwagon is now, rather than watching and waiting for the prime moment to enter the race. Winning contracts in the region is a costly and time consuming business and can easily stretch out to five years of face-to-face meetings with potential customers.
Peter Harradine, President of the Swiss Business Council Dubai, told swissinfo.ch that the region’s burgeoning construction programme is now crying out for advanced know-how to improve environmental standards.
“In the past, many buildings were made with cheaper materials from China because people did not get the message that if you pay more for quality then it lasts longer,” he said. “Many of these buildings are not properly insulated and are wasting energy.”
“Switzerland is a world leader in cleantech technology and there is a real niche here for Swiss firms. People here are now ready to start joint ventures with outside parties, but Swiss companies need to display some courage and invest their time here for five years at least before they can start making profits.”
Billions to spend
And the potential profits are huge. Sheikh Mirdad told the Alpine Symposium that Qatar currently has $500 billion (SFr520 billion) in cash reserves burning a hole in its pocket. Two other Gulf states, Abu Dhabi and Saudi Arabia, each have $120 billion to spend in the next few years, with energy a priority.
Both Harradine and Sheikh Mirdad both sent a message that Swiss firms should not be put off by recent turbulent events both in Switzerland and Dubai.
The recent cash flow problems of the state-owned investment company Dubai World, brought about by global property collapses, was plugged by neighbouring Abu Dhabi last year. The much publicised event has brought about a correction, but not a catastrophe in the construction boom, according to Harradine.
“There were projects being planned in areas without water and electricity supplies, but infrastructure has now been given the chance to catch up,” he said. “The construction boom is still here, but it is not as crazy as before.”
Minarets no hurdle
One shining example of construction still being alive and well in Dubai was the unveiling of the Burj Khalifa tower earlier this month. Swiss-Swedish technology firm ABB had a hand in providing power to the newly installed tallest building in the world.
Swiss construction giant Implenia is involved in the Masdar eco city project and opened a representative office in Dubai two years ago.
Sheikh Mirdad dismissed the feared negative impact on Swiss businesses of last year’s referendum in Switzerland banning the construction of minarets.
“There is zero probability of Swiss business interests being hurt as a result,” he told swissinfo.ch. “Some people are not happy with it, but it will not stop their relationship with Switzerland... If we openly criticise the ban we would only be giving publicity to the people behind it.”
“There is a lot of affinity to Switzerland, we vacation in Geneva and the Alps. Almost every senior person in the region has a house there and we want to do business with the Swiss,” he added.
Matthew Allen, swissinfo.ch
Swiss-UAE business links
Exports to the UAE soared 44% in 2008 to SFr2.8 billion, but fell nearly 20% in the first 10 months of 2009 to SFr1.85 billion.
Imports from the UAE to Switzerland followed the same trend, rising 37% in 2008 to SFr2.4 billion only to fall 4.2% in the first three quarters of 2009 to SFr1.52 billion.
Most of the major Swiss companies are present in the region: UBS, Credit Suisse and several private banks, Nestlé, ABB, Holcim, Novartis, Roche and many more names.
The UAE’s financial sector has developed rapidly in recent years, and the oil rich region is home to a large proportion of the world’s wealthiest individuals – making it an attractive venue for Swiss banking.
Construction has also taken off, providing lucrative contracts for a number of global companies in this field.
For example, Swiss power technology specialists ABB provided equipment for the recently opened Burj Khalifa tower in Dubai – that took over the mantle of the world’s tallest building this year at 828 metres high.
Several Swiss companies are also involved in the construction of the ambitious Masdar environmentally friendly city in Abu Dhabi.
Healthcare is another niche sector attracting Swiss companies to the UAE. Several Swiss firms will promote their services at the Arab Health 2010 exhibition in Dubai this month.
Three years ago, the Swiss private healthcare group Sonnenhof was awarded the contract to manage the exclusive RAK hospital in the emirate of Ras al-Khaimah.