The Rise of the Falcon Economy

[Music] uh welcome uh everyone to this uh riveting discussion uh about the Falcon economy and the rise of the cul economy on the global stage uh I'm thrilled to moderate this session of outstanding experts and Business Leaders and I promise you that you would not need coffee for the next half an hour or so uh we will focus on how the gulf economies uh how the gulf economies are positioning uh to become a global hub for trade for logistics for sustainability for talents uh and this is happening uh in an Ever Changing and increasingly challenging Global landscape and in the middle of heightened geopolitical economic trade and technological frictions uh we will try to unveil the forces behind uh the transformation of the gulf into a Global Hub uh and our panelist they are ready to offer their insight and discourse into this important theme I will start with uh Dr Naser Dr Nasser you've been at the heart of the gulf economies and I remember like we spoke many years ago about the decoupling and about uh the fundamental changes that are taking place uh in the region what do you think are the key drivers of this transformation and uh how it can be sustainable thank thank you let me start by saying that um this is a moment of transformation for this part of the world for the GCC in particular that's why I think the theme of the falcon econom is a very important one we don't have a lot of time the organizers gave us just 25 minutes so I just have a few minutes there are four points I want to make let me be very clear about them the first one is about the multi-polar world and increased fragmentation of the global economy that is a big opportunity for the GCC countries why because they can now open the external sector and they started to do that through trade agreements comprehensive economic partnership agreements which are opening up the GCC countries in particular UAE Saudi to trade investment and portfolio flows that will continue very rapidly I expect that by 2024 there might very well be a GCC China Free Trade Agreement in place that follows president X's visit to Saudi Arabia last December so you'll have a new strategic opening with China happening the second thing that the GCC countries are doing is what I call regionalized globalization by that I mean that the GCC countries are increasingly integrating countries that surround them into their Logistics into their infrastructure and opening them up and they're investing in them and it's not just Egypt it's also countries in Africa other countries in the Middle East and also now into Central Asia India and the like so regionalized globalization is I think going to be a big heading as we move along number three um there are new economic partners that that are beginning to be integrated through the global supply chain so many countries in our region are not globalized the GCC countries are already glob gled through their supply chains as they integrate those economies which are around us they will become globalized through the GCC that's theme number one theme number two is the emergence of a new Global energy map we already we're sitting here in Abu Dhabi and this part of the world of course has a large part of international reserves oil and gas Etc so that is let's call that old fossil fuel economy they are already at the center of that but the new Global energy map is going to be looking very different because there are massive Investments happening right now particularly in the UAE Saudi and the others into renewable energy what that will do it will mean that not only will they Remain the center of oil and gas and fossil fuels globally but they're going to become eventually the center for renewable energy and in particular I want to point to two things a lot of people talk about the energy transition and we're all making massive investments in solar power wind Etc and increased Energy Efficiency and everybody has net zero emissions targets but Humanity in my view will fail we already gone in this part of the world be one Beyond one and a half degrees no country very few countries will be able to keep their commitments so what we need to focus on is climate adaptation as opposed to climate risk mitigation climate adaptation means making massive investments into our infrastructure to make it climate resilient and to have infrastructure Services which are climate resilient I just want to remind you what happened in Libya what happened in Europe during the summer what happened in Pakistan where 30 million people were totally displaced by extreme weather events those are going to continue the amounts we're talking about for developing countries excluding China is over $2 trillion per year what you're going to require is a lot massive investments in climate Tech and I just want to leave you with this thought this part of the world has three Technologies it can export to the rest of the world one of them is desalination 50% of the world's desalination capacity is in the GCC countries it's been tried and tested it can be exported the second one is District cooling you don't need inefficient air conditioning units you have cooling power plants that provide cooling for buildings in any District the third one is Desert agriculture increasingly you're going to have to go for vertical farming for controlled environment farming so those three Technologies are what this part of the world can export successfully third theme digital economy when Co happened this part of the world was already trying to diversify away from fossil fuels from oil and gas oil and gas so they were into trade tourism opening up transport Logistics but those are precisely those sectors which got hit the most in covid no more tourism cut down trade and transport and Logistics so what did the countries do of this region going massively into the digital economy into AI which was by being discussed a bit a bit earlier now UAE is the fourth biggest AI driven economy in the world I don't know how many people know but you've got a generative language called Falcon 40b developed here so UAE is joining China USA and India into digital and digital will also transform the energy sector so you can use AI to manage your fossil fuel assets and all all your other assets and of course Digital Services will be the main driver of the digital economy fourth theme fourth theme is the financial sector let's call it the Falcon financial sector this part of the world is sitting on something like $3 trillion worth of assets which they've been deploying elsewhere they're now starting to deploy more and more in this part of the world in the GCC and surrounding I want just to make two statements I mentioned energy and the need to invest more so this part of the world I think should be at the Forefront of creating an international climate Bank forget all the discussions about various funds and all the rest there's just too much politics you need an independent climate bank and my view is that it should be in this part of the world in the UAE the second there's been enormous destruction in our part of the world we've been living 30 years or 50 years in my case of nothing but war and violence we going to have to set up an Arab bank for reconstruction and development to redevelop the countries of the region that have been destroyed by war and violence again I think this should be a GCC initiative a falcon economy initiative so those are the them thank you Dr no uh let's just uh move into continue with the energy transition I mean Dr Naser has set the stage for this with uh such innovative ideas uh Monica I mean can we I mean we're a whisker away from the cop 28 and it's taking place in the UAE uh can you talk about the energy transition and what is I mean we're seeing huge investment in renewable in the region by the investor in the region at home and abroad investment in new technologies hydrogen carbon capture and so on what's your take on the energy transition in the region absolutely thank you very much well I think the GCC economies of course are in the Forefront of the hydrocarbon economy but they're also investing significantly and wanting to become the Forefront of new renewable and clean sources of energy I also want to concur with what Dr NASA said that we are already in the midst of a climate crisis so this is something that's very urgent and for the GCC countries they have to move ahead of the cycle again because of their role in in the traditional energy sources on the positive side we are seeing a very proactive approach and we're starting to see the benefits of that already as as a whole as the GCC as a whole we actually reached Peak um emissions in 2013 the process actually started with a lot of the subsidy reforms that you started seeing from 2014 2015 which meant bringing prices up more to the actual level but we've also seen the impact of the earlier Investments that have happened in the case of the UAE in 2017 clean and renewable sources of energy accounted for about 1% of power generation capacity 2021 it stood at around 11% and based on our research we believe that the UAE clean and renewable energy will account for over 20% this year in Abu Dhabi with the latest solar projects coming online this uh just this month we believe it'll be over 30% and that's mostly nuclear here and solar what we've also seen ahead of of the cop announcements are of cop are announcements to bring forward and accelerate the the energy transition to these include areas such as tripling uh clean and renewable energy uh by 2030 rather than doubling by 2050 on on the um carbon emissions it's to reduce it by 40% on Business by usual terms but in absolute terms from 2019 that's down about um 19% in absolute terms and we've also seen announcements in areas such as increasing the car carbon capture so the first area is dealing with reducing the carbon footprint of the region and this is through cleaner power generation that'll go into areas such as industry and you're seeing places like Europe coming out with new and wind power and also gas for the development of blue hydrogen and you know again UAE has is looking to to very much frontload that um the the strategy for Abu Dhabi is to provide 25% of hydrogen to some of the key um energy importers in Asia but we also have the largest green um ammonium plant being built in in Saudi Arabia at neom and green um hydrogen is also Central to to Abu Dhabi we believe that this is going to provide a significant amount of financial um requirements as well as investment requirements and this is going to be also Central to The Wider diversification and growth story that we see over the next decade I'm cognizant of time so I'll end it there thank you uh I mean all of this uh at the end will require uh more capital I mean we've seen significant Capital mobilization into the region in the past you know few years uh why I mean uh Atif I think you you're you run an investment house why do you think the region is attractive to investors and are there any notable uh investment Trends or sectors that are particularly interesting at the moment yes thank you very much for having me today and uh want to thank the organizers for a great event today uh I'm sitting in between two economists so they cover the macro uh uh side of it I'll try to shed some light in terms of the micro environment here in and in the GCC I think one one uh one Trend that is going uh very well for this area is the availability of capital A couple of my colleagues here mentioned cap capital a couple of times so this area is blessed with substantial amount of capital to invest I've been in this business in the private Equity business in terms of investing for the last 30 years and uh this uh part of the world has been net exporter in terms of capital where at the beginning of our uh firm we were investing in the US and Europe for the last uh 30 years uh 5 years ago I think we saw a big shift uh in the investment Trends uh when we visit companies now uh in the US in Europe uh most of the time it's about us investing in in those companies it's a reverse psychology now we sit with a lot of uh uh companies and a lot of uh uh private Equity providers and they are looking to the area to invest in uh one area of focus that we have here is uh actually two areas uh business services and Logistics uh and the logistics we see huge opportunities in the area uh of not only physical Logistics andani here is is is a master in that field but also in the AI and Technology side of those Logistics so that's a big field data centers is a Big Field uh that we are looking at uh and again the business services side of of of uh of that you know so so there is no lack of capital I think here is it's a matter of prioritization of where do you cover uh uh your resources and effort into and uh we see great great inshallah uh future for the gulf Saudi of course and UAE are the biggest two economies and the best opportunities are available on those two economies thank you uh I think the gulf has been embracing technology and Innovation and skills development in a big way and we know all of these are uh key drivers of economic uh growth uh faty I mean you've been an entrepreneur a Serial entrepreneur you've been inventure Capital uh what do you think I mean where the Innovation and Technology are making uh impact most impact and why I mean the region is becoming attractive to Global talents to creative minds to innovators uh thank you Fel um important question this is at the core of the transformation of the economies of of the gulf and the region and and the global uh economy so the digitization uh of the regional economies uh has been part of and pro uh of the decision making of the leaders of the GCC to move away uh uh from the oilbased economies it's at the core of it uh but the private sector has been the initial investor in the digital economy there was uh when the internet happened it is the private sector that set up a few uh Venture funds two or three of us that came out about 10 or 15 years ago believing that the internet economy is going to be the economy of the future but the critical element that is that is today is that uh the finally uh governments and uh its institutions have decided that this is uh the the space that they need to invest in they need to create the entrepreneurship ecosystem they need to build on it soft and hard so the hard infrastructure is here here I don't need to talk about it but I'll tell you what's been happening in the soft infrastructure uh the most important element in enabling the digital ecosystem in the region is to get The Regulators to understand that this is the future they're the slowest people to move I'm sorry to say that but I need to be honest the slowest people to move and they need to catch up to the entrepreneurs the entrepreneurs are moving so fast that they are in the business of committing committing to build their business without being licensed and then having the regulator run after them to regulate them so every innovator in the region went out and said do I do it or do I wait for a regulator that's going to take a long time to understand even what I'm doing they're catching up now they're catching up and this is a regional story that is at the core of it the UAE and Saudi Arabia they're both opening up they're changing and they've decided finally to make sure that uh the uh normally conservative uh Regulators across the board I'm not talking only about the financial Regulators I'm talking about every sector that gets regulated is being opening is opening up and it's fueling the number of entrepreneurs that are coming up from the region so Saudi Arabians emiratis and the expatriates that are coming to the region and so there is an amazing amount of opening up to allowing Talent OR attract wanting talent to come and not only be visitors and not only be temporary visitors but thinking of themselves as permanent residents of this country of this region and these are the people who are going to be investing along with uh uh with with the local investors and make sure that uh the economies become 21st century econ economies per excellence and uh I'm not going to uh elaborate more Dr uh sahi did mention earlier about some of the things that are saying but I'll tell you what happened is uh because entrepreneurs need access to Capital Access to markets access to Talent uh uh and the ability to build businesses that are getting licensed uh what is fueling today the entrepreneurs that are coming to the region and popping up from the region is finally The Sovereign wealth funds decided that this is a region their own region right right it's our own region it's their own region and finally they say okay we're going to invest in entrepreneurs that are from here or entrepreneurs that are coming here and so you have mubadala uh adq uh PF in Saudi Arabia uh I'll give you a final statistic on this to to just mul on when when I built the first practically first Venture Fund in the region about 12 years ago uh we were two or three of us you know just early on around 20 [Music] 14 um today there are more my last count more than 70 Venture funds in the region 42 of them are in Saudi Arabia and they've only been created in the past 3 years post pandemic because the pandemic finally got government officials to understand that the physical world is not enough if you're not digitally enabled you can't do comp Comm and you if you want to do Commerce uh on the digital landscape then you need to make sure that you are fueling uh the ecosystem with capital because no matter what you do in terms of hard and soft infrastructure if you're not going to provide Capital it's not going to happen and in today's world our capital is the most essential capital I don't want to wait for Silicon Valley to think that we are investable because we are investable and we know our markets well and we want our regional funds and our region family offices and our regional High netw worth individual to believe that you don't only invest in Silicon Valley you don't only invest in the west but your home markets are a priority thank uh and I think we're out of time F I think uh I'll take the Liberty to borrow few minutes from Abu Dhabi Finance week uh although interest rate are very high at this uh times uh these are very good uh final thoughts to to to close the session but I want to just uh have uh closing thoughts just one minute for each panelist uh about the challenges and about how to deal with them how what are you I mean how would we look 5 years from now uh uh maybe we'll start with f so so I I would say and I I'll be optimistic in in my last statement is that there is a very serious dialogue amongst the people of the region that are building the economies of the region this is very very encouraging during my days when I started building my business in the ' 80s nobody would talk to me on any on any side other other than other entrepreneurs so there is a serious dialogue and there is a seriousness about understanding the challenges that we are facing today Monica thank you you um as well I'm very optimistic on the region I've been looking at the gulf economies for over 30 years and I think the pace the breadth the depth of the reforms are very notable the fact that it's also on the fiscal side um you know we've talked about the energy transition we've talked about attracting Capital businesses this is a time where we're seeing population growth more professionals more more skilled labor coming into into the region and we're seeing investments in various areas for the challenges I think it's different versus different countries you've seen again a lot of focus on Saudi Arabia and UAE which is leading a lot of the reforms but the other countries need to to also pick up reforms given the the energy transition that's going to be very important Skilling up the labor force to meet the requirements of the economy that's very important as well and I think for some somewhere like Saudi Arabia the breadth of the reform is is um and the investment requirements is huge so I think managing that in a efficient manner will be critical as well AR yes I think I would add to Han's point on the regulatory uh challenges that we we Face here in the in the market there's also the banks need to step up uh a lot of the financing taking place here is your typical project Finance long-term financing I think the uh the banking industry here need to be retooled uh uh to uh understand how leverage lending how Venture Capital financing is done elsewhere uh we still I think we're way away from uh having the proper uh financing tools uh to execute private Equity to execute venture capital and we hope the banking industry steps up uh for that challenge as well uh Dr Nasir please the question was where would we see ourselves in five years time um I'm extremely optimistic as to where we're heading because I think we've got the capital we now have access to technology we're now investing more in ourselves I think a major challenge will be the human capital F you mentioned entrepreneurs we're going into new technologies but we need our people also so I think there needs to be a massive investment in technology and our people so that they are adapt to harness harness new technologies so when I look ahead in the next 5 years I see us very much as a global economic Center between Africa on one side Asia on the other those are our main economic Partners the world has changed there's been a radical shift in the global economic geography towards Asia and we've got Africa next door to us at proximity we need to think of those as opportunities for us and we are able to do so so when I mentioned regionalized globalization I truly believe in that that means going into Africa going into India and Asia on the other and developing our own economies so I think when you look ahead um you brought the resources you've got policy makers that have the vision yeah and are happy to implement it and I think for young people particularly any and all of you are here um I think we're very lucky to be at this point in time in the UAE in the GCC because this again is a moment of transformation and you need to take that opportunity and I think there won't be many other occasions like this one where you've got Global dislocation but you can benefit from that uh thank you I think think uh we run out of time and uh I think this uh panel came up with a lot of idea that will provide you know uh thoughts for next year uh events uh but I think we're ending uh we're ending this session on a high note and thank you very much for your time