14 Jul 2010
Misguided perceptions, and not a lack of opportunities, are what prevent Emiratis from venturing into small industrial businesses in a big way. An almost ingrained sentiment that anything to do with industry is not a ‘glamourous’ calling prevents young Emiratis from making the most of the available opportunities. On the skill development side, the UAE has multiple technical institutions and colleges. But Emirati participation in industrial projects is limited to ownership while the actual management and day-to-day operations are handled by expatriates. A case in point is small industrial companies in Sharjah employing 69,000 workers of whom only 1,555 are Emiratis. Small businesses traditionally play a major role in lowering unemployment in countries. In countries such as the UK and Thailand, 27 and 71 per cent of the wor force is employed in small and medium enterprises.
So why are Emirati entrepreneurs shying away from small to mid-sized industrial projects? “The reason is it’s not lucrative enough, it’s too much hassle, and too much risk which may or may not make it viable,” said Prashant Gulati, president of The Indus Entrepreneurs Dubai, an entity supporting aspiring business start-ups. Moreover, the overwhelming mentality of the UAE entrepreneur is geared towards the trade and services industries. “They are thinking of a quick profit, buy it today, sell it tomorrow,” said Abdul Sahib Al Sajwani, treasurer of the Entrepreneurs Forum. “The idea of setting up a factory just scares them.” Khalid Makled, business development manager at Ruwad, agrees. The problem, according to him, is that the “cultural heritage” in the UAE has ensured successive generations of Emiratis inherit commercial family businesses rather than industrial ones. This reduces the number of Emirati entrepreneurs who can potentially start industrial ventures.
But the problem may be far more deep-rooted than entrenched mindsets or societal considerations. There is little encouragement for Emirati entrepreneurs to set up small industrial projects, according to Abdul Baset Al Janahi, the CEO of the Mohammad Bin Rashid Establishment for the Development for SMEs. Lack of technology and high start-up costs, including buying suitable land, are major obstacles, while it is also difficult to compete with cost-efficient imports from China that pour into the UAE, Al Janahi said. There are problems on the skills side as well. Industrial businesses depend on “technical efforts” that do not attract Emiratis as they prefer managerial or administrative jobs, said Makled. “They have a certain level of job expectations and lack the skills, knowledge, and experience in manual labour.”
Additionally, far higher numbers of Emirati university graduates find employment in the government or banking sectors, leaving fewer of them to consider self-employment. This, according to Makled, suggests there is no co-relation between improving the education institutions and the graduates’ initiative to set up a small business. But Al Janahi disagrees on this point. “The mentality of the Emirati as a manager or administrator is a stereotype created by expats about the job market and Emiratis. Dubai While the UAE has dedicated clusters for larger industrial ventures, such locations are limited when it comes to small and mid-sized industries. A focused government policy will help. Abdul Baset Al Janahi of the Mohammad Bin Rashid Establishment for the Development for SMEs, says this could be through granting industrial land, lower costs for a start-up, provide cheap energy, have trained labour, and protection from foreign competition. “There has to be clear policy and commitment to develop the industry,” said Khalid Makled of Ruwad.
Prashant Gulati of The Indus Entrepreneurs Dubai believes many prospective Emirati entrepreneurs consider the industrial sector as being too technical for them. Government agencies can change these perceptions by focusing less on technology. “That it requires a tech guy to manufacture goes against the business model,” said Gulati. “The idea that it requires technology is a restricting factor.” Traditionally, Dubai has focused on larger industries and missed out on the benefits of ancillary units, he said.
This article originally appeared on Gulf News