Fujairah is the only one of the UAE’s seven emirates located on the Gulf of Oman. Its location on the Indian Ocean is behind the success of its port, which opened in 1983. It also means the emirate’s climate is more temperate than elsewhere in the country.

All administrative powers in Fujairah are held by the ruler, Sheikh Hamad bin Mohammed al-Sharqi, who has been in power since the death of his father in 1974. He is supported and advised by his family and senior members of respected local families, but ultimately any decisions made by the cabinet must be ratified by Sheikh Hamad. These are then enacted into law as Emiri decrees.

There are 11 major departments relevant to conducting business in Fujairah. The most important of these is Fujairah Municipality, which was established in April 1969 and is headed by Mohammed Salif al-Afkhan. It regulates all business licensing procedures as well as being responsible for public services and infrastructure. At a strategic level, control lies with the Department for Industry & Economy.

Economy

Despite having 3 per cent of the UAE’s population, Fujairah generated less than 1 per cent ($2.54bn) of the country’s gross domestic product (GDP) in 2009. Subsidies from the federal government provide a large portion of Fujairah’s state budget.

The biggest contributor to the economy is manufacturing. The emirate’s economy expanded rapidly throughout the first part of the century, peaking at 21 per cent growth between 2005 and 2006. This was brought to a halt by the global financial crisis and, in 2009, GDP fell for the first time in more than a decade.

Fujairah has long lived in the shadows of oil-rich Abu Dhabi and glitzy Dubai. While their economies grew exponentially during the boom years of 2003-08 on the back of higher oil prices and, in the case of Dubai, a speculative real estate bubble, Fujairah saw more modest growth. It was seen as something of an underachiever within the federal union.

Despite this, there is growing speculation that Fujairah could become the UAE’s new growth centre, as a hub for oil exports. The emirate is the only one that does not border the Arabian Gulf, from which ships have to pass through the heavily congested Strait of Hormuz.

At its narrowest point, the strait, which ferries 40 per cent of the world’s seaborne crude oil through its waters, is a mere 21 miles wide. Fujairah, on the Gulf of Oman, provides easy access to the Indian Ocean, one of the most widely used trade routes in the world, bridging Europe and Africa on one side and Asia on the other.

The Port of Fujairah has deep waters that allow access to ships of up to ultra-large crude carrier size (500,000 dead weight tonnes). This has enabled it to become the world’s second-largest (after Singapore) bunkering destination for cargo ships to refuel, restock on vital supplies and even wait between jobs without having to pass into the Gulf of Oman and wait at its notoriously congested ports.

This has drawn some of the world’s largest fuel trading and supply companies to the emirate. They have invested heavily to develop the port’s fuel storage and transport facilities.

However, the government of Fujairah has yet to see major returns from the port, where it is a service provider and operator. As Dubai learned to its cost during the first decade of the new millennium, building a service and trade hub does not necessarily mean that government revenues increase. But three new projects are set to change the nature and status of both the emirate and its port.

The first is the $3bn crude oil pipeline linking Abu Dhabi, which has the world’s sixth-largest oil reserves, with storage and export facilities at Fujairah. The second project is a new highway to Dubai. The third involves a rail network that will link the UAE’s seven emirates and later connect with railways being planned in the other GCC states.

Construction of the Abu Dhabi Crude Oil Pipeline (Adcop) project was overseen by local investment firm International Petroleum Investment Company (Ipic). The 380-kilometre, 48-inch pipeline runs from Abu Dhabi’s central Habshan oil processing and distribution hub to the eastern port and is able to transport 1.5 million barrels a day (b/d) of crude, bypassing the Strait of Hormuz. Italy’s Belleli was commissioned to build new storage tanks and export facilities capable of holding up to 12 million barrels of crude oil.

The pipeline was inaugurated in July 2012. Much has been made in the local media of its capacity and the difference it will make to the logistics of crude exports in the UAE and to the economy of Fujairah. However, project insiders and analysts remain cynical as to how much it will be used in the near-to-medium-term. They say that the project is more about diversifying export routes than boosting output levels.

The Adcop scheme will serve as a contingency route if the Strait of Hormuz – through which 17 million b/d of oil passes, according to the US’ Energy Information Administration – becomes severely congested or entirely cut off. This could be caused by anything from a major accident or oil spill to military conflict with Iran – widely seen as the most likely cause for a blockage of the waterway.

Abu Dhabi wants to raise its total production capacity to 3.5 million b/d over the next decade, and should be able to reach this target by about 2018. Once this target has been achieved, the boost to Fujairah’s economy should be significant, especially if oil demand returns to levels seen before the fiscal crisis of 2008-09 cut global consumption.

From the outset, Ipic planned to build a refinery in Fujairah to complement the Adcop project, but its development was put on hold in 2008, as refining margins were hit hard by the recession. The size of the plant has since been reduced from 500,000 b/d to 200,000 b/d. Ipic moved ahead with the scheme in 2011, awarding the project management consultancy contract for the front-end engineering and design to the US’ Shaw Group.

Meanwhile, the road and rail projects are being undertaken by federal bodies, the Ministry of Public Works and Union Railway. The former was completed last year and is aimed at promoting tourism in Fujairah. The new highway links Dubai with Fujairah, cutting average journey times by more than half to about 45 minutes. The implications of being closer by road than Ras al-Khaimah or Umm al-Quwain are multiple in terms of increasing the attractiveness of the emirate to residents. At the same time, products manufactured in the free zone can be moved to domestic markets more quickly. The road could also serve as an import/export route should access to Dubai’s Jebel Ali port be restricted. The $11bn UAE rail network is due to be completed in 2016. It could also serve as an alternative cargo route and, once the rest of the GCC network is completed, will facilitate the transportation of goods across the region.

Free Trade Zones

Fujairah Free Trade Zone

Fujairah’s free trade zone was established in 1987 and began operations in 1991. It now hosts 2,000 companies. Their main activities are manufacturing of textiles, gold, castings, IT, heating and cooling units, plastics and perfumes, along with trading and services. Its location near the Port of Fujairah makes it popular with export-oriented manufacturing businesses.

According to the Fujairah Free Zone Authority, the costs of setting up a new firm there are low. Setting up and the first year’s running costs start from AED22,500 ($6,131) and renewal is as low as AED12,000.

The authority is working hard to improve the attractiveness of the zone. Sharif Habib al-Awadhi, director-general of the Fujairah Free Zone Authority, promotes the use of virtual offices. “As part of our plans to provide low-cost solutions that attract investment, we present investors with virtual offices. This gives them all the advantages of traditional offices, such as a land line, postal address and meeting room, although the investor is not actually present in the office. Virtual offices are the optimum alternative for firms wishing to work in the country with the least possible cost and human resources.”

She says that one or two visas can be issued for each virtual office: “These offices allow their owners to open a bank account and perform import and export operations at the country’s ports and airports.”

Tel: (+971) 9 222 8000

E-mail: freezone@emirates.net.ae

Website: www.fujairahfreezone.com

Fujairah Creative City

Creative City is a new media zone that aims to take advantage of its location by the newly constructed Dubai-Fujairah highway. It is managed by Fujairah Culture and Media Authority and is operated by Fujairah Media. Creative City has various zones dedicated to different areas of creative activity, including audio-visual, publishing, training, theatrical arts, design and graphics, technology and IT and cinema. The facilities at the zone are still under development, but companies can register and use its business centre at Fujairah Tower.

Website: www.creativecity.ae

Transport and Logistics

Port of Fujairah

The Port of Fujairah is the world’s second-largest refuelling port and has been operational since 1983. It is run by Dubai’s DP World, which also counts Abu Dhabi’s Khalifa Port and Jebel Ali Port in Dubai among its operations. All information relating to prices, legal requirements, entry procedures and contacts are available on its website.

Tel: (+971) 9 222 8800

Email: info@fujairahport.ae

Website: www.fujairahport.ae

Fujairah International Airport

The emirate of Fujairah is well connected thanks to its sea port, international airport and improved domestic road links. The UAE’s only airport on the east coast became operational in October 1987, reflecting the emirate’s growing importance as a centre for aviation, commerce and tourism.

Tel: (+971) 9 222 6222

Email: info@fujairah-airport.com

Website: www.fujairah-airport.com

Accommodation and business premises

Fujairah’s property market has been less affected by Dubai’s economic downturn than many of the other emirates, as its demand is generated locally. This means that rents have not fallen as much as they have elsewhere and in some cases rental rates remained stable between 2009 and 2010. According to US property consultants CB Richard Ellis, this is due to the limited supply of housing, the continued use of residential units for commercial purposes and a slower delivery of units.

Healthcare

Gulf Medical College (GMC) Hospital is Fujairah’s only private hospital and is listed by all major health insurance providers. The 20-bed facility is being expanded to 60 beds and it also has a support agreement in place with the 250-bed GMC Hospital in Ajman.

Tel: (+971) 9 224 4233

Email: gmcfuj@gmchospital.ae

Website: www.gmchospital.com