RAK's back

Everyone knows Dubai is booming, and that Abu Dhabi is catching up by planning some impressive mega projects, but what about the rest of the UAE? In a special report James Bennett gains exclusive access to one of the fastest growing corners of the Middle East and its three key players to discover the delights of Ras Al-Khaimah

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By  James Bennett Published  October 8, 2006

|~||~||~|If you haven’t heard of Ras Al-Khaimah (RAK), don’t worry, you soon will do. Things are changing in the once sleepy northern emirate. And fast. The major breakthrough came in June 2003 when the emirate’s Crown Prince and deputy ruler, Sheikh Saud bin Saqr Al-Qasimi came to power and immediately announced RAK’s growth strategy for the next decade. Based mainly on a huge spike in tourism and an influx of foreign investment, the ruler had big plans. In the three years since His Highness’s decree, RAK has made rapid progress planning luxury hotels set in traditional Arabic surroundings, championship potential golf courses, lavish accommodation and numerous other large-scale infrastructure and investment projects that will at last put the area back on the map where it belongs. Bordered by spectacular coastline, surrounded by a splendid rolling mass of golden sand dunes and peppered with rocky mountain peaks, where rain regularly falls in the early months of the year, RAK has traditionally been viewed by the local Arab population as a peaceful and scenic getaway location. And with its stunning natural beauty and historical sites including several unique forts, is viewed by locals as the Middle East’s best-kept secret. But now is the time to reveal to the rest of the region, and to the world, what RAK is all about. Tourism, coupled with RAK’s accessible location 40 minutes drive away from Dubai and its surrounding airports (not to mention its own airline, RAK Airways, that is due to launch in January 2007), is one of the emirate’s main selling points. Among the most exciting expansion projects include: Port Arabia, arguably seen as RAK’s most important development with numerous hotel resorts, luxury real estate, an Arabian adventure theme park and shopping centres; between 30 to 40 hotels that are due to spring up over the next ten years, including the soon to be opened seven-star Al Hamra Palace; the Al Hamra Village, a luxury seaside resort encompassing more than 1350 residential units with a marina, numerous hotels, and an 18-hole golf course; the Al Marjan Island, a 2km land reclamation project that will be developed into a major tourist resort with exclusive beaches, a limited number of luxury villas and seven to eight hotels with the US $800 million La Hoya Bay Residence (being built by the Khoie Group) forming the centrepiece with 725 freehold apartments. But tourism isn’t the only area RAK is using to promote itself. Attracting sustainable top foreign investment in the form of large, successful businesses that are right for RAK is also a priority for the emirate’s ruler and CEOs. Using the example of the ultra-successful RAK Ceramics, that has transformed itself into a global leader in 16 years, Ras Al-Khaimah Investment Authority (RAKIA) has already attracted US $800 million worth of investment in 12 months, registering 86 new companies in its industrial zone and leasing over 70% of its 2.19 million m² of free zone land. RAK is most certainly back.||**||Princely progress|~||~||~|Working from 5am until midnight most days the Crown Prince and deputy ruler of Ras Al-Khaimah is transforming the once sleepy emirate into a regional force to be reckoned with. James Bennett gains exclusive access to HH Sheikh Saud bin Saqr Al-Qasimi and discovers why a blend of forward-thinking and assertive leadership is putting RAK firmly back on the business map: If you think you spend too much time in the office, think again. Better still, try being the ruler of a quiet emirate and transforming it almost single-handedly into a centre for business, tourism, conservation, education and hospitality. It is an enormous challenge, but one man has done just that — and in only three years. His Highness Sheikh Saud bin Saqr Al-Qasimi, Crown Prince and deputy ruler of Ras Al-Khaimah works long hours. From 5am until midnight most days to be precise, he tells me in an exclusive interview within the peaceful surroundings of his beautiful palace that lies high above RAK overseeing the developments taking place around him. But the expansion underway today isn’t enough, he adds, always wanting to do more. “We have a lot to do and I honestly don’t think we have achieved much because we can do a lot more. Every night everyone of us should ask ourselves ‘what did I do wrong, what did I waste, and what can I do better’? “And I tell you, if you ask yourself these questions in the morning and the evening, you will discover how much you can develop and how much you have wasted.” Ever since he was sworn in to lead the emirate on 13 June 2003, Sheikh Saud has gone out of his way to push the progress and secure the future of his homeland. And in his own words, he firmly believes that RAK is now on the “tipping point of growth”, with a flurry of proposed developments planned and already underway. These include the RAK Free Zone, host to hundreds of future businesses; the seven-star Al Hamra Palace hotel; Al Marjan Island, the major man-made tourist resort that will include eight hotels, luxury villas, a marina and a beautifully crafted central lagoon; as well as the Jebel Jais mountain resort, where, believe it or not, you will soon be able to clip on your skis and slide down the slopes at top speed surrounded by spectacular rocky scenery. THE ‘RIGHT PACKAGE’ Not only has Sheikh Saud initiated a series of huge building projects, he has also created and formed several sector-based entities in order to lead the way in developing a land that used to only be the preserve of rich holidaying Emiratis. These include the Ras Al-Khaimah Investment Authority (RAKIA) lead by Sheikh Saud’s advisor and CEO of RAK Ceramics, Dr Khater Massaad, charged with seeking out investment opportunities for foreign and Middle Eastern companies to set up in the emirate; RAKIN and RAK Properties, the master developers for the majority of the emirate’s construction projects; RAK Petroleum, a US $3 billion company, RAK Free Zone; RAK Tourism, and RAK airways, the emirate’s national carrier. One area in which the emirate excels is manufacturing with the incredible success of RAK Ceramics forming the stepping-stone, as well as the lure, for other businesses to make RAK their permanent home. Since RAKIA was set up in March 2005, for example, it has shown spectacular results — attracting over US $800 million worth of overseas investment from steel to glass producing factories — all because RAK offers the “right package”, according to Sheikh Saud. “We have initiated a masterplan to relocate some of our light industry in a much more organised way. We are constantly carrying out studies on how we can position various industries and have created three major industrial areas. These will become centres of achievement and later become production sites for the whole globe.” NATURAL BEAUTY Perfectly located 40 minutes drive away from the hustle and bustle of Dubai and set on stunning coastline, the emirate offers not only great build potential, but also natural beauty and the preservation of ancient forts and sites of historic value. One of His Highness’s personal priorities and passions is conservation and he says this is an aspect of RAK life that is both vital to maintain, but also crucial to show to visitors. “RAK has beautiful beaches, mountains and sand dunes, a unique and rich archaeology and history and we are trying to blend all of these to give a special position for Ras Al-Khaimah. “We are also developing the old town to create a unique architectural centre. The past has to be preserved and we are doing that with the emirate’s settlements, while in the mountains we are developing the infrastructure to bring the mountains back to RAK.” NEW WAVE OF LEADERSHIP Sheikh Saud is part of a modern breed of leaders. For him and others like him, change is part the process and will happen no matter what. But he says that in today’s world — that he describes as a “global village” — you can either choose to ignore change or embrace it. He rightly chose the latter. “Change is part of life and society. We will change, but for the better. Change is knowledge and learning how to live with oneself and understanding and living with others. We can’t close doors around us. All our lives and all our history in Ras Al-Khaimah is based on travel and trade with others.” His openness to foreign investment is only the beginning, he says. He explains that since he came to power, he has tried to set the emirate on its way in order to create a “vehicle for investment”, so that both companies and their employees, and visiting tourists can profit, both financially and visually, from what RAK has to offer. However, you can sense that despite achieving a great deal in a limited space of time, Sheikh Saud will never truly be satisfied with the emirate’s progress. “Anything we do will feel insignificant compared to the things we want to do because we only have 24 hours. We have a limited time, so we have to do what we believe in and what we love doing. I hope I have created what I call a ‘vehicle for development’. Sheikh Saud says he is proud of all the emirate’s achievements and ongoing projects. Like in any successful business plan, he explains, he wants to create a “total solution” and add “total value” to make RAK the ideal place for both business and pleasure. “I always ask myself what are the things that matter to man and where do you want to stay? We want to be a solver of problems in the future such as traffic and pollution. And we want to create a place that is the most entrepreneurial and most educated that defines Ras Al-Khaimah as the place to be. People make change and people make value. We want them to come here. “I want to develop industry, develop a centre for education and healthcare, make Ras Al-Khaimah a lifestyle place to go so it becomes attractive to everyone. What really matters is to create competitive edge. And we do this is by becoming a magnet for people.” As he says, if everyone, before they went to sleep each night, asked themselves what they had achieved and wasted, a lot more would be accomplished. With that in mind, and as his mobile starts to ring, he busily cuts the conversation short. “I have to answer that”. There is clearly no time to waste when building an emirate. ||**||Doctor development|~||~||~|Over a decade and a half Dr Khater Massaad has dedicated his working life to Ras Al-Khaimah, and now it is starting to pay off. James Bennett meets the man everyone calls ‘Doctor’ and discovers why a Swiss national is so committed to the future of the blossoming emirate: Doctor, as he’s familiarly known to friends and colleagues, is worked off his feet and has been for 16 years. Surely he must be tired? “Not a bit,” he says, bouncing up halfway through our interview, rattling through the long list of projects that are due to come up in Ras Al-Khaimah over the next decade. First thing’s first, let’s talk about his day job. Ever since landing the role of chief executive of RAK Ceramics, Dr Khater Maassad has grown the business from literally a mound of sand in the then empty emirate of Ras Al-Khaimah (RAK), to a global giant that produces 17 million square metres (m²) of ceramic products a year. “To give you some perspective, this is the total consumption of the UK, 70% of the consumption of Germany and three times the consumption of Australia,” he says boastfully reeling off a few facts. But boast he may. From a pile of tiles to a tiling empire recognised all over the world for its quality, he’s done an remarkable job. And it is RAK Ceramics that Doctor uses as the perfect example of how successfully a business in a developing area can be built from scratch to a flourishing, multi-million dollar empire. “We export to 126 countries worldwide and produce 200,000m² a day here in the emirate and 100,000m² a day in our plant in India. We produce three million pieces of sanitary ware and we are bigger than the biggest UK factory of ArmitageShanks”, he says. “If we can produce such a success story in the emirate then any other product should be able to produce the same success story by setting up in RAK.” CO-WORKER NOT LEADER But the Doctor shies away from taking any personal glory, instead calling himself “simple” and a mere “co-worker” rather than a business leader. Above all, he says that if it wasn’t for Sheikh Saud, the emirate’s Crown Prince and deputy ruler, and his “only friend”, none of this would have been possible, and nor would his personal development. “The success is due first of all due to His Highness’s dynamic decision. He is the company’s chairman and is extremely encouraging. If I want start a plant he asks me, ‘is it enough, why don’t you put in two plants?’ So if I want to buy one furnace he says to me ‘why not aren’t you buying two?’ “I am very simple. I am not a leader, but a co-worker. I don’t go for strategies, policies and management theories,” he says humbly. “It is very simple, I produce ceramics, I have to sell them. My job is to produce the best quality at the cheapest cost and to sell it at the best price. What is happiness? It is achievement.” Thanks to the ruling family’s investment Doctor says he has been able to makes decisions at lightening speed, but more importantly, he has always had the ability to buy the “best optimum technology and the biggest size production line possible”, minimising costs and maximising efficiency. “In 1990 the first production line produced 5500m² per day. Today, the latest kiln that we have implemented is producing 16,000m² per kiln, per day, all with the same number of people. MAN OF MANY HATS Despite his modesty and his wariness to take the limelight away from others, achievement has been central to Dr Massaad’s career — whether he likes it or not. With achievement has come extra responsibility, including becoming Sheikh Saud’s chief advisor in August 2003 and, more recently, the CEO of RAK Investment Authority (RAKIA), a government led body set up to promote and attract the right businesses to the blossoming emirate. Right up Doctor’s street. “We have to work very fast and cope very quickly. It’s very important to work in a very intelligent and organised way. Sheikh Saud established RAKIA and its purpose is to market RAK, to make studies and give land and licences. It’s a one-stop-shop for any investor who wants to come to RAK,” he says convincing me immediately that there seems to be no limits to what is possible in the emirate. “I have employed a team of experts working in marketing, checking what other markets and what products we can produce in RAK. If there is a market then we do a feasibility study. If it is feasible we will call on international companies who are specialised in those fields.” In its first year RAKIA experienced spectacular results of over US $800 million worth of investment, and, as you read this, is heading for more, says Dr Massaad. “ For example, we conducted a study for a faucet factory and discovered there is a huge market in the Gulf. So we contacted the main players and it’s going to create a great business here.” The welcome and ease of set up in RAK is undisputable and from talking to Doctor, there does not seem to be any limits to what RAK can achieve. He is, in his own words, “clear and simple”, and so is his message. “We are ahead of everyone, because if you decide to put your plant here today, you can start production tomorrow morning. No problem. “If you are interested in working alone, then welcome, if you are interested in having a partner, then we can be partners with you.” And the encouraging thing is that the top RAK executives not only want to draw in large investment from any source they can, they want to do it feasibly and sustainably. Anything unrealistic just won’t do. “If an industrialist wants to start a factory, comes to RAKIA and gives us a study of his project, our experts will study it within the afternoon. We are here to make sure that whoever comes to RAK makes money. We don’t want people to lose money here. We are only interested in putting in place good projects.” Over the next decade RAK will see enormous change from heavy industry and manufacturing and 30 hotels to man made islands and mind blowing natural tourism and eco-development projects. But under the leadership, sorry co-workership, of Doctor and Sheikh Saud, the emirate is in safe hands. ||**||Risky business|~||~||~|Aviation is a tough industry and Jack Romero knows it all too well. The cautious CEO of RAK Airlines tells James Bennett why despite rising fuel costs and potential uncontrollable loses, the UAE’s fourth carrier will succeed no matter what: Jack Romero has his head firmly screwed on. He assures me, on numerous occasions during our chat, that if he didn’t think RAK Airways would work, he wouldn’t have a) accepted the job as its CEO and b) be sitting in a small start-up office frantically getting every minute detail spot-on in preparation for the business’s launch in January 2007. And I believe him. Let’s face it, launching an airline in the next few months in a climate of lowering aviation profits and escalating fuel costs thanks to the rising price of oil, the increasing threat of global terrorism and security concerns, as well as the mounting regional and global competition, is a very brave move. But he’s assessed, withdrawn from and taken risks all his working life. This shouldn’t be a problem then? “It is a challenge that I am well used to. I’ve set up a number of airlines in Europe and I’ve faced worse challenges. One of them was British Mediterranean Airways. We launched the airline from Heathrow with a single aircraft and 65 staff and I took on British Airways from day one. They had huge resources and their aim was to put us out of business, but I had a clear-cut strategy and unwavering support from shareholders. “My response was ‘I will deliver what I promise in the business plan. And I achieved that on time. However, during those two years we went through a lot of problems, which if you translate to RAK Airways, we will never experience. We are in a far safer environment in terms of keeping control of our market than it was in London.” PLAN TO SUCCEED Getting it right first time through careful analysis and expert planning is Romero’s forté, and one of the main reasons he was brought in to do the job in June of this year. And as soon as he was settled at his desk, he immediately set in motion a thorough market investigation, conducting an intense feasibility study over six weeks. Not only was the plan going to reveal positive answers, according to Romero it was also assessed by Boeing among others, that found it to be one of the best plans they had come across. “The research followed the same principles as the McKinsey business plan whereby there is no gut feel taken into account and no qualitative arguments. We stuck purely to data and statistics,” he says mathematically. “The plan was to answer three fundamental questions. Is there a demand for an airline in RAK? If so, what type of airline? And is it going to be profitable? We found that there was definitely demand for a national carrier, it will definitely be a network airline operating on the same principles as Etihad and Emirates, but naturally not on their scale, and that the airline will definitely and eventually turn a profit to its investors in three and a half to four years.” The airline was established by an Emiri decree in February of this year with well over AED 500 million in the plane pot. Not a bad start. Romero had the positive data but he also had the backing of the ruler and the development of the emirate itself. “That was another sign of confidence in the development of Ras Al-Khaimah. We, as management, wanted to be comforted that there was an existing market. Before I arrived in the UAE as a consultant, I thought ‘another airline in the UAE, where is it going to fly to, what’s the matter with these people, can’t they see it’s not going to work?’ “I had no intention of working in the area, but having met the Sheikh, he has a clear vision of where he wants to go and how he wants to achieve that. That was music to my ears.” NICHE AND THAT’S IT Initially the airline’s fleet will consist of two aircraft flying mainly short-haul to the Indian sub-continent. This will include a 16-year old Boeing 737-300 (purchased from the US for US $8 million) and a six-year old Boeing 757-200 (a US $33 million plane leased from Spanish carrier Iberia), with plans to increase the fleet size by one to two aircraft a year. Within a five-year period, says Romero, “depending on the performance of our aircraft”, between seven and ten planes will operate under RAK Airways. If the company gets to that level Romero says he will be “over the moon”, but he is all too aware that the airline must stick to its original gameplan — to grow cautiously, but positively. “That’s it, we are simply a niche carrier, we don’t want to be an Etihad or an Emirates. We have the choice to launch additional scheduled services to destinations that everyone believed could work, like Lebanon, for example. However, when we looked at the strengths and weaknesses of this market and we studied travel and loyalty patterns. We realised we could launch services in Lebanon but we couldn’t quantify the percentage of traffic we would be able to carry. “So I said the safest way possible was to look at the existing market and service it, because whatever happens, the same amount of factories will remain here, so the same amount of labour force will remain and the same labour force will have to fly back every year. No matter what happens, we will fly and that’s our job.” EYE UP THE EVENTUALITIES Romero’s risk averseness is the right approach in such dangerous times, but he does also have ambitions to grow if and when the airline begins to turn a profit. The charter and cargo markets, for example, could be avenues for RAK Airways in future years. “If we do anything more than what we have projected that will be overdoing it, unless we diversify our focus to different markets such as cargo and increase our reliance to charter services rather than check-in. We won’t have cargo for the first three years. But it is a definite possibility in the future.” The CEO has projected a load factor of 42 % in the airline’s first year. He says this is “exceptionally low” for any start-up carrier but that if you look at the geopolitical world and regional economic development that it is safe to assume there will be “eventualities”. “Rather than have our heads in the clouds and say this is what we are likely to achieve, if things did not materialise we would be safe,” he explains sensibly. “If we can operate with the safest possible margins at a higher cost then the airline could withstand any, what I would term, ‘market traumas’. For example, there has been a lot of speculation that the oil price could hit US $100 a barrel. This will spell death to several airlines unless they were sufficiently backed by their local authorities. We have built sufficient reserves that allow the airline to withstand this.” Romero, can’t resist injecting a small slice of humour as I leave his office. “We’re in it for the long haul.” Let’s hope the first flight is smoother than his jokes. ||**||

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