UAE consumer spending to top $261 billion by 2021

UAE consumer expenditure per household in 2016 amounted to around $103,000, the highest compared with neighboring Gulf countries. (Reuters)
Updated 13 August 2017
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UAE consumer spending to top $261 billion by 2021

DUBAI: Consumer spending in the UAE is forecast to top $261 billion (SR978.75 billion) by 2021, expanding at a compound annual growth rate (CAGR) of 7.5 percent over the next five years, the Dubai Chamber said in a report.
“The UAE’s consumer market is largely being driven by a fast-growing population with relatively high incomes, which are key economic fundamentals that support a robust long-term outlook for spending growth in the country,” said Hamad Buamim, the president and chief executive of Dubai Chamber, said in a statement on Sunday.
Dubai Chamber’s projection was based on a Euromonitor International report, which showed that the UAE consumer expenditure per household in 2016 amounted to around $103,000, the highest compared with neighboring Gulf countries.
Bahrain was second highest with $96,000 in household spending.
Buamim also pointed out a growing number of global brands and online retailers are taking advantage of the UAE’s predominantly young and diverse population, which are considered tech-savvy consumers.
The country’s booming tourism market continues to drive consumer spending, especially within the retail, tourism, hospitality and transport sectors, he added.
Housing expenditure for UAE consumers was pegged at $75.7 billion, or about 41 percent of total expenditure, last year while spending for food and non-alcoholic beverages reached $24.8 billion and transport expenditure at $16.7 billion.
Communication spending is expected to have the fastest growth by 2021, with a CAGR of 10.2 percent, thanks to a high penetration rate of smartphones and other digital devices in the country.
The growing popularity of mobile applications, and the emirate’s adoption of smart city solutions are also expected to boost spending in this area, Dubai Chamber said.
Health goods and medical services would be the second-fastest growing sector at an expected CAGR of 8.2 percent, followed by hotels and catering at 8.1 percent.
“High incomes, changing lifestyles, and increased health consciousness are expected to fuel consumer demand for goods and services in family-focused spending categories, such as education, and transport, as well as premium household products and services,” Dubai Chamber said.


Malaysia reviews China infrastructure plans

Malaysia’s former PM Najib Razak (AFP)
Updated 18 June 2018
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Malaysia reviews China infrastructure plans

  • Malaysia's scandal-mired former PM Najib Razak signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.
  • New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

KUALA LUMPUR: Malaysia has been a loyal partner in China’s globe-spanning infrastructure drive, but its new government is to review Beijing-backed projects, threatening key links in the much-vaunted initiative.

Kuala Lumpur’s previous regime, led by scandal-mired Najib Razak, had warm ties with China, and signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.

But the long-ruling coalition was unexpectedly voted out last month by an electorate alienated by allegations of corruption and rising living costs.

Critics have said that many agreements lacked transparency, fueling suspicions they were struck in exchange for help to pay off debts from the financial scandal which ultimately helped bring down Najib’s regime.

The new government, led by political heavyweight Mahathir Mohammed, has pledged to review Chinese deals seen as dubious, calling into question Malaysia’s status as one of Beijing’s most cooperative partners in its infrastructure push.

China launched its initiative to revive ancient Silk Road trading routes with a global network of ports, roads and railways — dubbed “One Belt, One Road” —  in 2013.

Malaysia and Beijing ally Cambodia were seen as bright spots in Southeast Asia, with projects in other countries often facing problems, from land acquisition to drawn-out negotiations with governments.

“Malaysia under Najib moved quickly to approve and implement projects,” Murray Hiebert, a senior associate from think-tank the Center for Strategic and International Studies, told AFP.

Chinese foreign direct investment into Malaysia stood at just 0.8 percent of total net FDI inflows in 2008, but that figure had risen to 14.4 percent by 2016, according to a study from Singapore’s ISEAS-Yusof Ishak Institute.

However, Hiebert said it was “widely assumed” that Malaysia was striking quick deals with China in the hope of getting help to cover debts from sovereign wealth fund 1MDB.

Najib and his associates were accused of stealing huge sums of public money from the investment vehicle in a massive fraud. Public disgust at the allegations — denied by Najib and 1MDB — helped topple his government.

Malaysia’s first change of government in six decades has left Najib facing a potential jail term.

New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

The project was in its early stages and had not yet received any Chinese funding as part of “One Belt, One Road.” But Chinese companies were favorites to build part of the line, which would have constituted a link in a high-speed route from China’s Yunnan province to trading hub Singapore, along which Chinese goods could have been transported for export.

Work has already started in Malaysia on another line seen as part of that route, with Chinese funding — the $14-billion East Coast Rail Link, running from close to the Thai border to a port near Kuala Lumpur.

Mahathir has said that agreement is now being renegotiated.

Other Chinese-funded initiatives include a deep-sea port in Malacca, near important shipping routes, and an enormous industrial park.

It is not clear yet which projects will be amended but experts believe axing some will be positive.

Alex Holmes, Asia economist for Capital Economics, backed canceling some initiatives, citing “Malaysia’s weak fiscal position and that some of the projects are of dubious economic value.”

The Chinese foreign ministry did not respond to request for comment.

Decoder

What is the "One Belt, One Road" initiative?

The “One Belt, One Road” initiative, started in 2013, has come to define the economic agenda of President Xi Jinping. It aims to revive ancient Silk Road trading routes with a network of ports, roads and railways.