article administrative reforms and globalisation strategy

Administrative Reforms and Globalisation Strategy in Dubai （Horinuki）1

Article／論文

Administrative Reforms and Globalisation Strategy in DubaiA Study of Double-Edged Development from 1990 to 2009

HORINUKI Koji

Ⅰ . IntroductionⅡ . Development and Globalisation Strategy in Dubai

Ⅲ . Administrative Reforms in the Government of Dubai

Ⅳ . Characteristics, Achievements, and Implications of Administrative Reforms in Dubai

Ⅴ . Conclusion

ドバイにおける行政改革とグローバル化戦略両刃の開発戦略の研究（1990～ 2009年）

堀拔　功二

本稿は、アラブ首長国連邦（UAE）のドバイ首長国における行政改革とグローバル化

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2AJAMES no.26-2 2010

戦略の試みについて論じるものである。1971年に独立したUAEは、わずか30余年の間に豊富な石油資源を背景に急速な発

展を遂げた。一方で、UAEの一首長国であるドバイは、独自に経済特区を設置し、中継貿易や国際金融、観光などの非石油部門を中心に経済開発を進めた。その結果、今日では中東を代表する経済拠点にまで成長した。このようなヒト・モノ・カネ・情報などを集中させ、自らをグローバル化させることで成長を遂げる開発方針を「グローバル化戦略」と呼ぶことができる。2008年の世界金融危機や2009年の「ドバイ・ショック」は、皮肉にもドバイが経済・金融の側面において世界と一体化したことを証明した。これまでの研究において、ドバイの急速な発展はドバイ政府による経済政策を中心に論じられてきた。しかし、同様に重要なことは、経済政策を実務面で支える「インフラ」としての行政機能である。すなわち、ドバイはグローバル化戦略を支える機能を強化するために、経済政策と同時に行政改革を展開したとみなすことができる。そこで、本稿ではドバイの経済発展を支える行政機能の発展について、ドバイ政府の財政構造や行政資料、具体的な成果の検証を通じて実証的に論じる。その上で、ドバイはどのような行政改革を導入したのか、そしてその結果はどのようなものかを明らかにする。はじめに、先行研究と行政改革の世界的な潮流を整理し、理論的枠組みとしてのニュー・パブリック・マネジメント（NPM）を検討した。そして、連邦国家におけるドバイの位置づけを政治・経済的側面から明らかにしたうえで、ドバイの発展プロセスを概観し、さらにグローバル化戦略とは何かを示す。そこでは、ドバイの経済的発展と政府系企業の活動が、ドバイ政府の財政構造と密接に関係していることを論じた（第II節）。つぎに、ドバイの行政システムを明らかにし、NPMの枠組みを用いてマクトゥーム首長期（1990～2005年）とムハンマド首長期（2006～2009年）における行政改革の実践について論じた（第 III節）。以上の議論から、ドバイにおける行政改革の実績と特徴を明らかにし、行政改革を導入した理由と意義を検証した。さらに、一連の金融危機が行政改革に与えた影響を評価した（第 IV節）。本稿の議論を通じ、ドバイの行政改革はグローバル化戦略を支える重要な役割を担っていたことが明らかになった。そこでは、NPMの様式が採用されており、一貫した行政改革のプロセスを経ていることがわかった。しかし、このような行政改革は急激な経済成長を後押しし、社会に否定的な影響を与えた側面も指摘された。さらに、世界金融危機とドバイ・ショックによって、行政改革と経済戦略によってつくられた、ドバイ政府の構造的な財政問題が露呈した。その意味で、ドバイにおける行政改革は、経済発展とドバイ・ショックの遠因を生みだした「両刃」の開発戦略の一端を担ったと言える。

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I. Introduction

1. Dubai and its Globalising ProcessThis article aims to discuss how the emirate of Dubai has developed and

adapted to globalisation through administrative reforms.Initially developed as a mercantile city, the emirate of Dubai became part of

the United Arab Emirates (UAE) in 1971. After gaining independence from Britain, Dubai attempted to diversify its economic structure as a part of its development process, resulting in the expansion of non-oil sectors such as business, construction, international trade, finance, and tourism. In other words, Dubai attempted to globalise its economy to attract people, goods, money, and information from all over the world as an economic survival strategy. Toward this end, many skyscrapers were built, such as the highest building in the world, the ‘Burj Khalifa’ (it was renamed from ‘Burj Dubai’, to the name of the president of the UAE and ruler of Abu Dhabi), along

with huge man-made islands, luxury hotels and resorts, and big shopping malls. This strategy helped Dubai establish itself as a global actor and a hub of economic activity. Dubai’s growth has had a political, economic, and social impact not only on its own economy but also on the UAE as a whole. Although this economic policy has ventured to embrace the ongoing globalisation process, knowing how to achieve this goal poses a huge challenge for Dubai’s survival as a non-oil producing emirate in a small oil-producing state. What then is the driving force behind Dubai’s rapid development?

Previous studies on the development process in Dubai have mainly focused on economic development and government participation [Davidson 2008a, 2008b; Hosoi 2005, 2008, 2009; Hvidt 2007]. In addition, the leadership and business sense of Al Maktoum, the ruling family of Dubai, are considered crucial for its development. However, the situation changed with the global financial crisis in 2008 and the Dubai debt crisis in 2009, and Dubai’s economy has attracted international attention̶both positive and negative̶ever since. Many economists and investors have dwelled on the manner in which the Dubai government has handled financial matters. They believe that the factor underlying Dubai’s growth and rapid progress is its economic policy,which is rooted in globalisation. From this viewpoint, one may say that the crises demonstrated that Dubai has integrated international politics, economy, and finance. In this paper, we define ‘globalisation strategy’ as the strategic formation of institutions, infrastructure, and environment according to global standards to attract

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people, goods, money, and information from around the world, and thus, extend the quest for business opportunities to a global scale.

2. Global Trend of Administrative Reforms and New Public Management: An Analysis Framework and Questions

However, this definition of a ‘globalisation strategy’ gives rise to the following question: Is it possible to explain Dubai’s development only from the perspective of its economic policy? Arriving at a direct answer to this question is difficult because policies cannot work without the effective management of administration, institutions, infrastructure, services, transportation, logistics, and security. Administrative infrastructure provides these services, and in addition, a stable fiscal base is required to support them. Therefore, a relationship must exist between developing the economy and improving administrative functions in Dubai. In the mid-1990s, Dubai became the first emirate to initiate administrative reforms(1). The aims of these reforms implemented under the auspices of the government of Dubai and Dubai Municipality were reorganisation; recruitment of technocrats and efficient external staff; privatization of the government sector; and development of an ‘e-Government’ to promote streamlining of the administrative services. Furthermore, western concepts such as ‘transparency’ and ‘accountability’ were adopted as key aspects of the reforms.

Thus, as mentioned earlier, the roles of government and administration in the development process deserve greater attention. Some studies have addressed the administrative reforms (al-Iṣlāḥ al-Idārīy) and administrative development (al-Tanmiya al-Idārīya) in the Arab states [al-Saigh 1986; Jreisat 1997, 2000, 2002, 2003], Gulf states [Abdel Khalek 1986; Ehteshami and Wright 2008], and the UAE [Farīd 1991; Mansour 2008]. Although these studies have presented general problems with the administrative system in the Arab world, they are essentially historical descriptions and fail to analyse the economic and social impact of the administrative functions and their improvement. However, one of the basic roles of government is to provide economic infrastructure. As Anderson has pointed out, the role of government in the economy is to provide economic infrastructure, various collective goods and services, resolution and adjustment of group conflicts, maintenance of competition, protection of natural resources, minimum access, and stabilization of the economy [Anderson 1989: 19-22]. The administrative sector acts as a gateway between the private sector and the government and allows for communication between the two sides. Thus, an

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empirical analysis focused on the administrative functions and institutions isneeded to clarify the characteristics of Dubai’s development model. This analysis will be helpful in the discussion on improving the administrative function and socioeconomic impacts.

In view of the global trend of administrative reforms, let us then consider the framework for analysis. The earliest administrative reforms were initiated by the Thatcher Administration in the United Kingdom (UK) and the Reagan Administration in the United States (US) in the 1980s; these reforms were motivated by wide-ranging attacks on the size and capability of the public sector [Hughes 2003: 9]. Accordingly, the governments of these Western countries attempted administrative reforms, introducing privatization and relaxation of regulations to decrease the size of the government. In the first half of the 1990s, such reform trends were known by the term ‘New Public Management’ (NPM). The concept of NPM has been defined as a means

to promote the rationalisation and activation of the administrative sector through the introduction of management principles, approaches, and practices in the administrative fields [Ohsumi 2002: 12], or simply, a means for ‘improving public management, reducing budgets, privatization of public enterprise’ [Hughes 2003: 5].

NPM has spread widely to the developing countries through the efforts of the Organisation for Economic Co-operation and Development, the World Bank, and the International Monetary Fund in the form of loan conditionality [Hughes 2003: 5]. However, this management philosophy has not been officially adopted in Dubai but has been implemented as more of a spontaneous effort because the government did not borrow any money from these international financial agencies and had a strong preference for independent administrative reforms.

According to Christopher Hood, NPM consists of seven elements [Hood 1991: 4-5]:

(1) ‘Hands-on professional management’ in the public sector(2) Explicit standards and measures of performance(3) Greater emphasis on output controls(4) Shift to disaggregation of units in the public sector(5) Shift to greater competition in the public sector(6) Stress on private sector styles of management practice(7) Stress on greater discipline and parsimony in resource use

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One of the most important concepts of NPM is that the citizens are considered ‘clients’ of the administrative services, and accordingly, the strategies implemented

by the administrative management reflect their needs [Ohsumi 2002: 30]. In addition, ‘strategy’, ‘strategic planning’, or ‘strategic management’, originally private-sector

concepts, form important elements of NPM [Hughes 2003: 136]. At the basic level, NPM involves (1) adoption of a ‘strategic plan’ as the core of administrative management; (2) breakdown of the strategy to suit each individual administrative body; (3) allocation of budget and implementation of concrete policies; and (4) evaluation of the achievements, followed by (5) modification in the strategy as appropriate [Ohsumi 2002: 29-30].

As we shall discuss later, administrative reforms in Dubai are assumed to follow the NPM style. The use of the term ‘administrative reform’ is reserved for mature administrative systems in the West in the ‘reform’ context. In case of Dubai, however, using ‘administrative reform’ in a general sense is slightly inappropriate because there are two aspects to the administrative system in Dubai, namely, the developing and the reforming elements. The administrative system is still developing in Dubai as well as in the other Gulf countries, and at the same time, reforms are needed. Therefore, in Dubai’s context, we use the term ‘administrative reform’ to mean both ‘development’ and ‘reform’.

We address the following question in this paper: What types of administrative reforms were introduced by Dubai and what were the resulting achievements? To answer this question, special attention will be given to the period after the 1990s, which was the time of remarkable economic growth followed by the global financial crisis of 2009. Dubai itself is an emirate in the UAE, but as we have already pointed out, Dubai’s impact on the global economy and its potential cannot be ignored. This study will serve not only as a case study of public administration in the Gulf States but also as an evaluation of Dubai’s political influence on the federal government(2), an aspect that affects the relationship between personnel affairs, politics, and economics in Dubai.

In this study, we briefly describe the development process of Dubai and its position in the UAE and establish the globalisation strategy as a means of survival for the emirate of Dubai. We then clarify the actions of the government during the reform process. Finally, besides the responses to evaluations of the Dubai debt crisis, we examine the characteristics and achievements of the administrative reforms and point out the underlying reasons for their introduction by the Dubai government.

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II. Development and Globalisation Strategy in Dubai

1. Emirate of Dubai in the United Arab Emirates: Political and Economic PerspectivesFirst, we must look at the political structure of the UAE to understand the

reason why Dubai was seeking an independent economic development process.In December 1971, the six small emirates of Abu Dhabi, Dubai, Sharjah,

Ajman, Umm al-Qaiwain, and Fujairah established a federation state̶the UAE. A seventh emirate, Ra’s al-Khaimah, joined the federation in February 1972. Dubai played a crucial role in forming the federation with Abu Dhabi after the declaration by the UK in 1968 to withdraw from the Middle East; however, Dubai preferred to maintain its power rather than submit to centralisation by the federal government(3). This attitude caused political crises with Abu Dhabi in 1976 and 1979, which resulted in the present federation system in the UAE; after the crisis in 1979, the ruler of Dubai doubled as the prime minister of the federal government [Horinuki 2008].

According to the constitution of the UAE, the jurisdictions are divided into federal and emirate (local) governments: for example, the federal government shall have exclusive legislative rights and exclusive jurisdiction in important matters such as foreign affairs, defence, security, federal judiciary, federal finance, and education [UAE Constitution Article 120]. The key point is that the federal government has authority in one major area, however ‘The natural resources and wealth in each Emirate shall be considered to be the public property of that Emirate. Society shall be responsible for the protection and proper exploitation of such natural resources and wealth for the benefit of the national economy’ [UAE Constitution Article 23]; thus, each emirate has the right to develop its own natural resources and economy.

Although the emirate of Abu Dhabi̶which owns 90% of the oil reserves in the UAE̶has great power not only politically but also economically in the UAE, the resource-poor emirates are financially dependent on the federal government. Although each emirate has unique development programs, they are not enough to get a free rein like Abu Dhabi. As we have mentioned, Dubai has attempted to avoid dependence on the federal government by adopting its own unique economic development strategies.

2. Brief History of Economic Development in Dubai Today, the economic development process of Dubai is well known and has been

documented in many studies; thus, we describe it only briefly in this section.

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Dubai has been a trading port in the Persian Gulf since the late nineteenth century, and its importance as a port rose after the merchants of an Iranian port, Lingah, moved to Dubai when the Persian government introduced oppressively high customs for imports and exports [Heard-Bey 2004: 244]. In the first half of the twentieth century, Dubai experienced political, economic, and social transformations that helped define it as a unique mercantile city. In the 1950s, ‘Creek Bonds’ were issued to dredge the Dubai creek̶the symbol of Dubai’s development̶to expand it to a trade port [Heard-Bey 2004: 258]. Following the development of the creek, the Dubai airport and Port Rashid were established to facilitate commercial activities.

Dubai is one of the oil-producing emirates in the UAE; however, Abu Dhabi’s reserves dwarf those of Dubai. In 1958, an oil field was discovered in Abu Dhabi, and commercial production began in 1962; in comparison, crude oil production did not commence in Dubai until 1969, after a discovery in one of the city’s offshore rigs in 1966 [Heard 1998: 38]. Oil production in Dubai originally supported its development; however, it has since sought to develop a post-oil economy. Dubai’s economic policy has been to attempt to diversify the economic sectors from trade and business into manufacturing, international finance, real estate business, and investment. The most momentous achievement has been the creation of the free economic zone̶the Jebel Ali Free Zone (JAFZ)̶that commenced operations in 1983 to attract foreign companies and allowed them to operate without being subjected to any domestic legal regulations and corporate tax. Another important development was the Dubai International Financial Centre, which was established in 2000. At present, there are more than 20 free zones(4) in Dubai, which serve to boost its economy. In other words, Dubai has sought to attract people (human resources and visitors), goods (trade and business), money (investment and finance), and information (media and internet) from all over the world for development purposes. Today, Dubai accounts for 32% of the total gross domestic product (GDP) of the UAE, second only to Abu Dhabi.

From the viewpoint of the UAE’s development, the total GDP has increased considerably, and in the last five years, in particular, the emirates have enjoyed extraordinary growth. Figure 1 shows the GDP growth for the emirates from 2000 to 2008. Abu Dhabi is the largest economy, and the international high price of crude oil has boosted its GDP since 2004.

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Figure 1 GDP Growth in Emirates (2000‒2008)

(Note) 2008 is estimated data.(Source) Ministry of Economy [2008: 15].

3. Fiscal Structure and Globalisation Strategy of Dubai Over the last 20 years, Dubai has attempted to attract international attention to

the whole of the UAE as a means of survival. Moreover, government investment arms and domestic construction developers in Dubai have advanced their operations overseas. That is, becoming globalised per se and adapting global trends has been a key strategy for development; today, not only Dubai but also the federal and other emirates’ governments are attempting to adapt their globalisation strategies to remain viable in the contemporary world.

Although development of infrastructure and institutions is important for its policy, Dubai is not an oil-rich emirate, and business operations rely on funds collected from both domestic and international investors. An important point is that the economic and development policy of Dubai is directly linked to its fiscal structure. Table 1 shows that Dubai government’s expenditure in 1998 was Dh 8.9 billion; it crossed the Dh 10 billion mark in 2003, then reached Dh 26.5 billion in 2008. So, how does the government secure revenues? Basically, there is no corporate or income tax; rather, there is customs duty and a small service tax in Dubai and the UAE(5). According to the annual financial report of the Dubai Financial Department, the

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revenue of the government was Dh 26.5 billion in 2008 and consisted of 24.5% oil revenue(6), 20.5% tax revenues (include bank tax and customs), and other revenues [Dā’ira al-Mālīya 2008b: 34-39]. We have no definite information about the other revenues, but it can be presumed that these revenues were from government-linked companies(7), investment profits from the sovereign wealth funds, real estate investments, land selling, and debt loans for development projects(8). For example, it has been reported that the government received Dh 1.54 billion in dividends in 2008 from six listed companies of which it holds varying percentages of shares; the largest dividend amounted to Dh 560 million and was from Emirates NBD [Emirates Business 24/7 April 6, 2009]. This fiscal situation indicates that Dubai needs to develop independently and work toward the success of government-linked companies or government business to ensure annual revenues; in other words, ‘Government is business, and business is government’ [Hvidt 2007: 571].

On the other hand, the breakdown of expenditures shows that 33.9% in 2008 was for development projects (infrastructure), 27.7% was salary and wages, and 15.7% was administrative cost [Dā’ira al-Mālīya 2008b: 23-28]. It is important to note that for the annual budget of the federal government̶Dh 42.2 billion̶in 2009, Dubai contributed just Dh 1.2 billion, while Abu Dhabi contributed Dh 17 billion [Gulf News December 31, 2008]. Each emirate is obliged by the constitution to make budget contributions though more than half the budget has been contributed by Abu Dhabi since independence. Thus, Dubai escaped its responsibilities because it did not have to deal with federal government matters such as security, social services, and education. Dubai has, therefore, been able to concentrate its financial resources on strategic areas.

One of the most crucial economic policy decisions in the globalisation strategy was the opening up of the real estate market in 1997. The government of each emirate can design institutions to be freely administered within its jurisdiction, unless it violates the federal laws. As for the economic policy in Dubai, the government exploited legal loopholes and created a fait accompli for building free zones and carrying out property transactions; the JAFZ violated the stipulated federal laws regarding foreign business ownership during the 1980s, and marketing of properties to foreigners was also technically illegal [Davidson 2008a: 128-134]. However, the government has supported construction and real estate companies by planning large-scale development projects, granting permissions to both government-owned and private developers, advertising, and selling land and property. Huge man-made

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Table 1 Revenue and Expenditure of the Government of Dubai (1998-2008)Year Revenue Expenditure Surplus/Deficit

1998 9,474 8,978 496

1999 8,674 8,044 630

2000 11,079 8,391 2,688

2001 10,210 9,281 929

2002 9,103 9,240 ▲137

2003 10,450 10,760 ▲310

2004 12,814 9,834 2,980

2005 14,002 12,187 1,815

2006 20,315 16,722 3,593

2007 22,629 23,595 ▲966

2008 26,535 26,535 0

(Note) Million Dirhams.(Source) Dā’ira al-Mālīya [2008b: 15].

islands such as the Palm Islands and the World would not have been created without government support. As Sample and Eigner pointed out, ‘Risk taking appears to be a crucial part of the government’s role, as family-owned businesses in Dubai are famously risk-averse’ [Sampler and Eigner 2003: 73]. As a result of the globalisation strategy, Dubai attracted foreign direct investment of US$21 billion in 2008̶the largest number in the Middle East̶rivaling those in London and Shanghai [Financial Times May 5, 2009]. Government policy makers played a considerable role in the development of the real estate sector, which boosted Dubai’s international profile, because as the then crown prince of Dubai, Shaikh Muhammad, extolled ‘What is good for Dubai is good for business’ [MEED November 8, 2002].

In this section, we have observed that Dubai’s globalisation strategy is crucial for its survival in the UAE because of Dubai’s lack of natural resources; this strategy has made ‘Dubai’ a global icon. Next, we will discuss how administrative capability and reforms are the keys to efficiency and effectiveness.

III. Administrative Reforms in the Government of Dubai

1. Administrative System of the Government of DubaiThe administrative system and the structure of the Dubai government are

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somewhat obscure because the government does not disclose much information on policies and their implementation; however, we can build a framework as depicted in Figure 2 from various sources.

The highest-ranking official of Dubai is the ruler (ḥākim), who is the highest authority in both political and administrative domains. Second to him in rank are the crown prince and the two deputy rulers of Dubai, followed by top royal members and key officials who form the Dubai Executive Council, the decision-making body of the government of Dubai. The government has more than thirty departments (dā’ira) and authorities (hay’a). Every administrative body plays an essential role in governing Dubai, but in addition, the Dubai Municipality (DM), Roads and Transport Authority (RTA), Dubai Electricity and Water Authority (DEWA), Dubai Naturalization and Residency Department (DNRD), Department of Economic Development (DED), Department of Finance, Dubai Chamber of Commerce and Industry (DCCI), and Real Estate Regulatory Agency (RERA) are important bodies responsible for economic policy and administrative infrastructure.

With the ongoing developments in Dubai, workload of the administrative affairs has expanded. For example, the DED plays a crucial role in managing business activities in Dubai; in 2005 alone, it issued 11,868 new business permissions; this number increased to 13,170 in the next year and 14,185 in 2007 [AME Info January 21, 2007; May 19, 2008]. Moreover, the size of the administrative body has also been expanding(9). In 1985, the staff of DM numbered just 5,101; it gradually grew to 7,522 in 1994 and nearly doubled to 13,300 in 2006 [Dubai Municipality 1995: 159, 2007: 3]. However, since resources are limited, the government must resort to rationalisation to save money in personnel affairs and human resource management. Today, a challenge faced from the perspective of human resource management is the nationalisation of labour forces (Emiratisation) to reduce unemployment among the UAE nationals and dependency of expatriate workers. The government of Dubai has employed considerable expatriate workers, both skilled and unskilled. In general, the UAE nationals are considered negligent workers and require higher wages than the expatriates; however, the government is required to employ Emirati staff because the function of the public sector is resource allocation through government services and government jobs [Mansour 2008: 66]; in other words, nationalisation of labour forces is important for the legitimacy of rulers. Therefore, the effective utilisation of the national labour force is also a part of administrative reforms and must be considered in the efforts to strike a balance between managing employment and saving money.

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Figure 2 Structure of the Government of Dubai

(Source) Government of Dubai website; UAE–Japan Association website; various newspaper reports.

2. Administrative Reforms under Shaikh Maktoum bin Rashid Al Maktoum (1990–2005)

Shaikh Rashid bin Said Al Maktoum became the ruler of Dubai in 1958. Having founded much of the modern Dubai, he is known as the ‘Father of Dubai’. After his death in 1990, he was succeeded by Shaikh Maktoum bin Rashid Al Maktoum, his eldest son and the crown prince. Shaikh Maktoum had been the prime minister of the UAE from 1971 to 1979 and from 1990 to 2006; as such, he contributed substantially to his father’s efforts in building Dubai. In 1995, Shaikh Muhammad bin Rashid, the third son of Rashid, was appointed the new crown prince by Shaikh Maktoum, following which the institutional foundation of leadership, as it is today, was formed.

We do not have a clear, complete picture as to exactly when the government of Dubai initiated administrative reforms, but we can assume that the NPM-style

LandDepartment

Ruler ofDubai

Dubai Executive Council

DeputyRuler

CrownPrince

Dubai Ports,Customs & Free

Zone Corporation

Road &TransportAuthority

Dubai CivilDefence

Center ofAmbulance

Service

Dubai ExportDevelopmentCorporation

DubaiChamber of

Commerce &Industry

Department ofTourism &CommerceMarketing

Protocol &Guest HouseDepartment

Dubai PublicProsecution Dubai Courts Dubai Police

DubaiMunicipality

Knowledge &Human

DevelopmentAuthority

Dubai AirportFree ZoneAuthority

DubaiElectricity &

WaterAuthority

Dubai CivilAviation

DubaiNaturalization &

ResidencyDepartment

Department ofEconomic

Development

Department ofFinance

Dubai MediaCorporation

StatisticsCenter of

Dubai

Dubai SportsCouncil Dubai Culture

Awqaf &Minors Affairs

Foundation

Islamic Affaors &CharitableActovties

Department

CommunityDevelopment

Authority

Department ofHealth &MedicalService

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administrative reforms started in the mid-1990s. The first five-year economic development strategy was announced in 1996 by Muhammad al-Abbar (director of DED at that time); the strategy, targeted for the period 1996–2000, aimed at the development of Dubai’s economy by reducing the oil dependence rate and enhancing the presence of the UAE nationals in the labour force [Reuters November 9, 1996]. The year 2000 saw the start of Dubai Strategic Plan 2000, which aimed at increasing Dubai’s GDP to US$30 billion. These two strategic plans constituted the economically centred policy; however, Dubai Municipality Strategic Plan 2005–2009, announced in 2004, was more focused on administrative improvements.

Improving the quality of the government staff is a significant challenge faced by Dubai. As enhancing efficiency and service improves customer satisfaction, enhancing efficiency in administration is one of the requirements of investors and business entities. The DM staff magazine Multaqā al-Muwwaẓẓfīn/Employees’ Forum features many articles on the training undertaken for improvement in staff, work ethics, organisational reform, and promotion of service quality. According to Qassim Sultan, the ex-director general of DM, implementing Dubai’s strategy of becoming a ‘City of Finance and Trade’ would require the availability of highly skilled staff who

are both efficient and aptly qualified to render civic services when the city launches massive investment projects as well as large-scale infrastructure development projects [Employees’ Forum August 2002: 10].

With respect to political and economic matters, personnel affairs form the key to understanding the ongoing events. In other words, personnel affairs directly reflect the political and economic relations in Dubai. Shaikh Muhammad bin Rashid Al Maktoum sought to ‘handpick’ the most able employees from various organisations and groom them for higher responsibilities [Davidson 2008a: 157]. Most of these individuals are educated in the UK or US and possess masters in business administration (MBA) degrees or degrees in economics and engineering. Examples would be Muhammad Ali al-Abbar, the former director of DED and chairman of Emaar; Muhammad Abudullah al-Gergawi, a minister of cabinet affairs and chairman of Dubai Holdings; and Sultan Ahmad bin Sulayem, the chairman of Dubai World [Davidson 2008a: 157]. These individuals are strong administrators as well as effective managers of both government-owned and private companies. Muhammad al-Gergawi, in particular, plays a key role in administrative reform in Dubai.

In terms of concrete actions, the government has introduced some reform plans.

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First, an ‘e-Government’ was established in 2001 to open and promote the websites of the different governmental bodies, and all the administrative procedures and services were computerised. Hussain Nasser Lootah, the director of DM since January 2009, was a core member of the e-Government committee. The introduction rate of online services in DM reached 90% by 2006 and successfully brought about cost reduction of Dh 66 million [AME Info November 8, 2006]. Today, the e-Government has become a standard not only in the UAE but also in other regions; this internet-based system is widely used in both federal and local governments. Second, the government set up the Executive Council in 2003 for the purpose of political institutionalisation and to make the political and administrative process somewhat visible. The third area that the reforms targeted was personnel affairs, and accordingly, various compulsory training programs were provided to the staff to improve their capabilities. In addition, the DM launched a personnel evaluation system and online suggestion scheme in 2002 to improve staff efficiency [Employees’ Forum April 2002: 12]. Furthermore, external specialists were recruited for carrying out specific responsibilities.

As for the government’s budget, they have to finance large sums of money for strategic investment and expansion of infrastructures. The government-owned Emirates Airline issued a Dh 1.5 billion bond in the summer of 2001. In addition, it was remarkable that the Dubai government planned to issue a US$400 million bond for infrastructure development for the International Monetary Fund (IMF) and World Bank annual meeting in Dubai in 2003; however, big problems were pointed out by a banker, who said, ‘First, they will have to change the UAE law, and second, they will have to get a credit rating’ [MEED March 8, 2002]. After that, a bond program̶a five year, local currency issue worth an estimated Dh 1.5 billion̶was launched in February 2003 and arranged by the bank group [MEED January 31, 2003]. Since the bond program, Dubai and its government-related companies have started issuing bonds to expand their economy and investing in large projects, but these investments have translated into large debts since the global financial crisis in 2008.

3. Administrative Reform under Shaikh Muhammad bin Rashid Al Maktoum (2006–2009)

Shaikh Muhammad bin Rashid Al Maktoum assumed the position of Dubai’s ruler in January 2006, after the death of his predecessor Shaikh Maktoum bin

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Rashid Al Maktoum. At the same time, he was appointed the vice president and prime minister of the UAE. To fill the newly vacated position of the crown prince, he appointed his second son, Shaikh Hamdan bin Muhammad Al Maktoum; he also appointed his third son, Shaikh Maktoum bin Muhammad Al Maktoum, as the vice-ruler of Dubai in 2008, thus strengthening the Maktoum regime for the coming generations. In this section, we discuss the administrative reform carried out during Muhammad’s administration.

Shaikh Muhammad is well known for being a very active member of the Maktoum family. His political career began in 1971 at the young age of 22 years, with the post of minister of defence of the federal government. Over the years, he has also participated in the domestic policy, and in 1995, he was appointed the crown prince of Dubai. There are many anecdotes celebrating his commitment to his responsibilities. He often visits government offices without invitation to check the progress in different areas of work and demands improvement if unsatisfied with any aspect. It is important to highlight that administrative reform in Dubai significantly relies on his leadership.

Shaikh Muhammad launched two major strategies in 2007 to adopt global standards. The first, Dubai Strategic Plan 2015, targets economic, social, and governmental development. This is a nine-year, comprehensive development strategy that aims ‘to establish a universal understanding of Dubai’s vision among the various government entities and to ensure a common framework for the operations of these entities’ [Government of Dubai 2007: 9]. Five sectors were set up as the core strategic targets: (1) economic development; (2) social development; (3) infrastructure, land, and environment; (4) security, justice, and safety; and (5) government excellence [Government of Dubai 2007: 9]. Although this plan is a comprehensive one, it focuses primarily on the first sector, i.e., economic development; the other four sectors are designed to provide the basic infrastructure to support economic development. The government has set a target of achieving a sustainable GDP growth of 11% in the next 10 years and an increase in the real GDP per capita to Dh 162,000 (US$44,000) in 2015 [Government of Dubai 2007: 21].

By focusing on the fifth sector, i.e., government excellence, we will show how this strategy based on ‘economic priorities’ is supported by the administration. This strategy assumes the following qualities in the government:

As the Emirate evolves and as the global environment witnesses

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increasing competition and change, Dubai will need to continuously modernise its government. A world-class government marked by greater transparency, accountability, efficiency, equity, and excellence in customer service is essential in supporting Dubai’s evolution and growth [Government of Dubai 2007: 40].

As mentioned, the concepts of ‘transparency’, ‘accountability’, and ‘efficiency’, which have been used in corporate management in the recent years, appear to be reflected in the business management philosophy of the nucleus of the Dubai government. These concepts are specifically mentioned in the five core aims of this sector: (1) to strengthen a strategic and forward-looking focus, (2) to enhance organizational structures and accountability, (3) to increase efficiency, (4) to enhance responsiveness and customer service, and (5) to empower and motivate public service employees [Government of Dubai 2007: 40]. These aims are the features of the government’s NPM strategy.

The second strategy introduced by Shaikh Muhammad in 2007 was Dubai Municipality Strategic Plan 2007–2011, a follow-on strategy of the DM, which was to be handled by Hussain Nasser Lootah, the then acting director general of the DM. This strategy was more focused on public service by the DM and constituted drawing up an updated plan for 2010–2014 in June 2009 [AME Info June 15, 2009]. According to this strategic plan, the DM was assumed to be a ‘service organisation’ and its value was to excel in delivering services to the customers and community [Dubai Municipality 2007: 1]. A strength, weakness, opportunities, and threats (SWOT) analysis(10) was employed to evaluate the municipality’s performance and to improve its strategy based on this evaluation. The strategy comprised fourteen strategic targets, of which customer services, financial efficiency and effectiveness, and human resources were crucial from the administrative viewpoint [Dubai Municipality 2007].

In another strategy, the government also began charging a fair price for public services that were previously free; for example, the Salik system (road toll) and paid parking meters were instituted [Davidson 2008a: 180]. The idea was to collect fees to strengthen the financial base(11).

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VI. Characteristics, Achievements, and Implications of Administrative Reforms in Dubai

1. What Did Dubai Achieve through Administrative Reforms?It might be too early to evaluate the Dubai government’s achievements through

the ongoing administrative reforms and strategic plans; however, we will attempt to point out the characteristics of such reforms, and then analyse these achievements in the context of the globalisation strategy.

Table 2 summarises a representative example of the policies, characteristics, and results. We categorised the policies implemented into four classes: (1) improvement and streamlining of administrative services, (2) finance, (3) personnel affairs, and (4) staff training. Administrative reforms in Dubai are primarily focused on improving and streamlining the administrative services. The establishment of the e-Government is the best example of a strategy with the combined aims of improving customer service and cutting costs. Moreover, it has been reported that the e-Government initiative successfully resulted in 91% of the administrative services becoming internet-based and cut the costs by Dh 66 million [WAM April 29, 2008]. Another example of an achievement is the successful application of standards from the International Organisation for Standardisation (ISO) to the governmental bodies. The Dubai Central Laboratory was the first to obtain the ISO 9002 certification in 2001, after which various government departments obtained ISO certification. A characteristic of NPM is that it is undertaken in a cycle involving planning, implementation, evaluation, and modification; an important aspect of these strategic administrative reforms is that they are not simply planned and implemented but are evaluated as per the standards and assessed, following which they may be modified as part of NPM. Through these reform programs, the government bodies are able to behave in a cost-conscious manner and improve the public services that they provide.

As we have already mentioned, the strategic plans often contain certain key words such as ‘accountability’ and ‘transparency’; moreover, these terms are not mere slogans but are descriptions of changes actually implemented through practical means. This brings us to the second point: Why does the government exhibit nervous hesitation when it comes to these key words? One possible answer is that they are required by credit rating companies to obtain good ratings for issuing bonds because ratings provide important information to the investors in making a decision(12); thus, these credit ratings directly reflect fund procurement cost. One good way to illustrate this logic is with

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reference to the big corruption scandals in government-related companies in 2008. In April, Zack Shahin, the CEO of Deyaar(13), Dubai’s second largest property developer, was detained and is currently under investigation for alleged financial irregularities [Gulf News April 17, 2008]. Another instance of corruption was reported on Thursday, August 14, 2008: Adel al-Shirawi, the former chief executive of the Islamic mortgage lender Tamweel, and Feras Kalthoum, a former head of investments at Tamweel̶both were executive officers at the government-owned investment institution Istithmar World when they were detained̶were investigated by the Dubai Police Prosecution for alleged financial misdemeanours [Bloomberg August 14, 2008; Khaleej Times August 15, 2008]. As a result of these allegations, the share price of Tamweel fell by 5.7% to Dh 6.11 on the Dubai Financial Market on that day, and it has declined by 26% since July 23 after rumours of an investigation first emerged [Khaleej Times August 15, 2008]. The following day, Nakheel said in a statement that a senior employee was questioned by the authorities for taking kickbacks [Gulf News August 15, 2008; Khaleej Times August 15, 2008]. These corruption scandals dealt a huge blow to the government because the parties involved were government-owned and were strategic entities of economic development(14).

The following week, government officials announced a series of anti-corruption measures. The attorney general stated, citing an anti-corruption campaign issued by the office of Shaikh Muhammad bin Rashid Al Maktoum, that the government of Dubai was fighting corruption as one of its top priorities. In addition, he stated, ‘There will be no tolerance shown to anybody who tries to exploit his position to make illegal profits’ [Khaleej Times August 18, 2008; The National August 18, 2008]. The minister of interior, Shaikh Saif bin Zayed Al Nahyan, told Gulf News that ‘The government is committed to combating corruption, however large or sensitive in keeping with instructions from the political leadership’. In addition, according to the minister of labour, Saqr Ghobash, ‘Fighting corruption is a global challenge and a never-ending effort for all countries, and the UAE is committed to maintaining the highest international standards to fight graft’ [Gulf News August 18, 2008]. However, further instances of corruption became apparent after the chief executive officer (CEO) and staff of a project under Sama Dubai, one of the government-owned real estate developers, were placed under investigation [Gulf News August 21, 2008; Khaleej Times August 22, 2008]. These corruption scandals resulted in market capitalisation losses between August 1 and 21, 2008, amounting to Dh 81.31 billion [Gulf News August 21, 2008].

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Table 2 Characteristics and Achievements of Administrative Reforms in DubaiCategory Implemented Poli cy Year Aim/Characteristics/Achievements

Improvement and Streamlining of Administrative Services

Dubai Municipality Management Seminar 1998 Comprehensive strategic plan for upgrading

staff efficiency

Dubai Municipality Innovation Award 1998 Gathering suggestions to improve efficiency

and reduce cost from the DM staff.

Dubai Government Excellence Award 1998

Honoring excellent staff and departments of the Dubai government, as a reflection of efficient personnel affairs and promotion

Creation of a Special Action Team for Female Staff 1999 Suggestions for improving the performance

and productivity of female staff

Dubai Municipality Comprehensive Quality Project

1999 Enhancing and integrating the concept of quality among staffs

Suggestion Scheme 2000

Inviting efficient and constructive suggestions for performance improvement from both the public and staffs. It was introduced in June 2000, and 1,560 ideas were collected in the first two years, of which 438 were considered. This achieved a 2-million increase in revenue

Performance Indicator 2001Information supplement to support public service, urban development, cost management, and decision-making

Setting up a New E-mail Address to Communicate between the Director-General and Staff at the DM

2001 Direct communication between top officials and staff in the Dubai Municipality

E-Government 2001

An online information portal for citizen, residents, visitors, and businesspersons. Around 50 services were offered on a 24-h basis for the first year. Awarded the United Nations (UN) e-Government Service Award in 2006. In the Dubai Municipality, more than 90%service became online by November 2006

Obtaining ISO certification 2001

ISO standardisation for various Dubai government bodies. The Dubai Central Laboratory was the first to obtain standardization in 2001

Environmental Vision 2002 Comprehensive planning for improving environment in Dubai

Committee for Marketing Promotion 2002

Efforts to improve the image of the Dubai Municipality, and to offer qualified service both locally and internationally

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Category Implemented Poli cy Year Aim/Characteristics/Achievements

Dubai Municipality Strategic Plan 2005–2009 2004

Comprehensive plan of administrative reform undertaken in the Dubai Municipality; eleven strategic fields were set up

E-Government for Mobile Portal 2005

Websites for the Dubai e-Government were set up for mobiles and personal digital assistants (PDAs)

Auto Sourcing of Some Works of IT Department 2006

Improving the quality of service, quick implementation, technical standards, quick problem solving, cost rationalisation, and customer satisfaction measurement

Dubai Municipality Strategic Plan 2007–2011 2007

Comprehensive plan of administrative reform in the Dubai Municipality; 14 strategic fields were set up

Finance Parking Meters 2001 Collection fees for public services

Recruitment of External Consultant 2003

Aqil Hassan, the associate dean of Economics Department, UAE University, was recruited as the financial and economic consultant

Salik System 2004Began collecting fees for public services and prevent traffic jams on the Shaikh Zayed Road

Implementing Hotel Sales and Service Charges 2007 Consolidation of the hotel and tourism

sectors

Personnel Affairs

Introduction of the Performance and Motivation provisions

1998 Presented employee evaluation documents to staff superiors every year in January

Committee for Evaluating Work Satisfaction 1999

Evaluating the DM staff’s work satisfaction to improve work environment and their motivation

“Model Employee” of the Month 1999

Evaluating and honoring the staff members every month; honorees are nominated for the Dubai Government Excellence Award.

System of Lodgment Complaint from Employees 2002

Enhanced healthy relations between the staff and the Dubai Municipality, and introduced dispute settlement

360-degree Evaluating System 2007 Raised awareness of both good and bad points, and improving skills

Staff Training Staff Training of Dubai Municipality in 1999 1999 There were 96 training courses, and 950

staffs participated

Mandatory Staff Training 2001 Those staff members who were selected were required to attend the training sessions

Staff Training of Dubai Municipality in 2001 2001 There were 494 training programs, and

5,770 staffs participatedNew Staff Training Accommodation 2006 The cost exceeded Dh 7 million

(Source) Baladīya Dubay [1997–2008].

Ironically, this market situation reflected the ‘soundness’ and ‘governance’ of the stock market because the government admitted to the allegations of corruption and

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refrained from intervening in the market. Although the government might have been tempted to conceal corruption, owing to widespread concerns about Dubai’s negative image and market turmoil, they brought the facts to light. Furthermore, this situation presented the government with an opportunity to make an appeal for transparency and accountability and, at the same time, tighten its grip on those employed with the government and government-owned companies. The government of Dubai and its related companies are heavily dependent on loans for the completion of projects; therefore, if transparency and accountability are not secured, the fund procurement costswill increase.

2. Global Financial Crisis and the Response by DubaiThe series of financial crises̶the global financial crisis in 2008 after Lehman

Brothers’ fall and Dubai’s debt crisis for repayment of Nakheel’s bond̶revealed serious flaws in the fiscal structure of Dubai, and subsequently, the government had to depend heavily on borrowing(15). These crises have strongly affected the globalisation strategy and administrative reform of Dubai.

After the global financial crisis, the UAE government and the Central Bank injected Dh 120 billion cash (it is almost equal to 14% of the GDP) to the private banks in the UAE and ordered them to raise the capital adequacy ratio to secured liquidity. Officials from both federal and local governments reiterated that the economic condition was stable. However, even the UAE and Dubai could not escape from the crisis; the construction sector of Dubai, which played a leading role in Dubai’s growth, was primarily affected. Property prices dropped, and some developers dismissed their employees(16). On November 19, Nasser Al Shaikh, the then director of Dubai’s Department of Finance, announced that Dubai had created a High Level Committee for Financial Crisis headed by Muhammad Ali al-Abbar (the chairman of Emaar Properties) to assess the impact on the emirate’s economy [Gulf News November 20, 2008](17) amid mounting international concern regarding the economy in Dubai. Muhammad al-Abbar announced that Dubai had US$10 billion (Dh 37 billion) in sovereign debt obligations and that government-related companies had taken another US$70 billion (Dh 256 billion) as a debt; however, he attempted to dispel any concerns by also stating that the emirate had US$90 billion in sovereign assets and US$260 billion in company assets [WAM November 24, 2008]. Some of the companies, such as Dubai Holding Commercial Operation Group (DHCOG) and Dubai World, were faced with the ordeal of repaying the debt from the end of

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November, but it was still manageable; Standard & Poor’s and Moody’s downgraded the ratings of some companies.

The federal government extended assistance for Dubai’s debt repayments: Dubai launched a US$20 billion bond program, and the UAE Central Bank subscribed to the first issuance of US$10 billion worth of five-year bonds that carried an annual interest rate of four percent [Khaleej Times February 23, 2009]. The government-related developers such as Emaar and Nakheel were also injected with financial support from the government; however, it was not enough to repay their debts and dispel all the concerns held by the creditors and the international market. In July, Shaikh Muhammad issued a decree to establish the Dubai Financial Support Fund to administer the proceeds of Dubai’s US$20 billion bond program [The National July 22, 2009]. Even though financial support was provided by the federal government, the companies’ interim results showed losses under the economic situation; thus, concerns over debt repayment continued to spread. Finally, on November 25, the Dubai government announced restructuring of Dubai World and asked the creditors for a‘standstill’ on their US$26 billion debt; this event caused another financial crisis in the world market, now known as the Dubai debt crisis. Abdulrahuman al-Saleh, the director of the Department of Finance, said that the government was not responsible for Dubai World’s debts(18). His statement caused new concerns over the default [BBC News November 30, 2009].

In this situation, the globalisation strategy and administrative reform of Dubai became unclear. Before the crises, the government and its related companies were mainly managed by technocrats and professionals. However, after that, Shaikh Muhammad bin Rashid attempted to centralise all the power in his hands. Although this situation is usual in a monarchy, it reverses the trend of administrative reform in Dubai because it forms a nontransparent government body. He ordered sudden changes in some important positions and reshuffled board members, such as the directors of the Department of Finance, Dubai World, Investment Corporation of Dubai, Dubai International Financial Centre, and Nakheel, with no clear explanations. It was not clear whether the move was meant to be a temporary measure for dealing with the financial crisis or not; however, the government of Dubai failed to provide accountability with regard to the crisis and to ensure transparency of debts(19). Institutionalised administrative transformation went beyond normal personnel affairs, as Christopher Davidson pointed out, and ‘now everything is pretty much being run by

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the ruler and his family’ [The Wall Street Journal November 22, 2009].

3. Motivation and Impact of the Administrative Reform and Globalisation Strategy Administrative reform is a key component of the globalisation strategy

because of its effect on the business environment. As discussed earlier, Dubai has attempted to develop as a business centre for the region to attract more companies and entrepreneurs to start businesses. Assembling these business sectors and investments would encourage the economic development of not only Dubai but also the UAE as a whole. Therefore, it is important to improve the business environment.

We can highlight five points from previous discussions that indicate the motivation for administrative reform in Dubai. First, the quality of administrative services is an important barometer of investment and the business environment because improving the quality of services is directly linked with competition and business advantage in the region. Second, promoting regulatory reforms as a required means of attracting investments is also a key factor in boosting the business environment. Third, building frameworks and institutions, such as setting up a financial market for companies to raise funds, and establishing real estate laws for trade houses and land properties, will stimulate economic activities. Fourth, the population size and the number of companies have been growing on an annual basis, and so have the required administrative services. Prompt action is required to avoid falling behind in these projects. Finally, there is a need to restructure the administrative process from the perspective of the government’s financial condition. Therefore, the government of Dubai has introduced administrative reforms that can be considered a part of the globalisation strategy. In other words, the globalisation strategy, which includes administrative reforms, is imperative to Dubai’s continued success.

It is also important to evaluate the impacts of globalisation strategy and administrative reforms in the emirate of Dubai. The globalisation strategy and administrative reforms for economic development have resulted in many positive achievements. However, there have also been several negative impacts on the local society. The most prominent example is that of ‘excessive’ economic development through the easing of regulations. The increased inflation and speculation have led to a real estate boom that, in turn, has resulted in a rapid increase in the number of expatriates, labour issues, problems in the urban infrastructure, cultural friction, and

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diminished local culture [Horinuki 2009]. Both locals and expatriates have suffered as a result of the high cost of living and housing. At the root of these problems is the fact that economic development has sometimes been too rapid and the administrative reforms have not kept up with overall growth. Some problems of urban infrastructure, such as traffic disturbance, have exerted financial pressures on the government [MEED February 9–15, 2007]. In addition, incautious expansion of activities and investments by both government and its related companies has caused a serious financial crisis that involuntarily has proved the global connectedness of Dubai. One could say that Dubai’s administrative reform itself has contributed to the development of Dubai, but administrative reforms have no power against the crises. After the Dubai debt crisis, the government introduced new laws addressing the management of public funds, annual budgets, and public treasury for all government bodies [WAM December 18, 2009]; however, it was too late to introduce fiscal management systems.

The administrative reform of Dubai is not without limitation; a feature not only of this reform but often seen in the political system of Dubai as a whole is that the implementation of these strategies has been highly dependent on the leadership of Shaikh Muhammad bin Rashid. Various ad hoc policies were implemented under his guidance and the directions of those close to him; however, these measures have not become institutionalised. Therefore, it is crucial to build a system of verification and management for the post-Muhammad administration instead of being reliant on strong leadership.

V. Conclusion

In conclusion, we have described the types of administrative reforms introduced in Dubai and the resulting achievements. As discussed, Dubai has developed continuously since the early twentieth century as a port city, and its economy has been diversified in an effort to build an oil-independent country in an oil-dependent era. The unique environment surrounding Dubai and its position in the federation significantly affected Dubai’s strategy. This process of economic development, especially after the 1990s, can be described as a globalisation strategy ̶ i.e., the strategic formation of infrastructure and environment to attract people, goods, money, and information to adapt to globalisation and expand globally in search of business opportunities. In other

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words, globalisation was seen as the key to Dubai’s survival.We can identify five major reasons why the NPM-style administrative reform

is considered an important strategy for Dubai: (1) Developing economies require reinforcement of administrative capacity; (2) easing and reforming of regulationsare needed to boost investment and business activities; (3) building frameworks and institutions is necessary for new economic development; (4) increase in the population size and number of companies necessitates expansion of administrative services; and (5) fiscal changes are needed to improve the government’s financial condition. The fifth point is crucial when we consider the relation between the globalisation strategy and administrative reforms because they rely on a stable financial base. Thus, both government and its related companies are operating their own businesses and raising funds from domestic and international investors. However, difficulties arose after the global financial crisis in 2008, and Dubai has entered a new phase that requires new strategies and reforms.

Dubai’s rapid development and its strategies have had a big impact at the global and regional level, and have spread to the surrounding areas as a new development model in the Middle East. Dubai’s administrative reform has also impacted the federal and Abu Dhabi government recently, as well as the Qatar government. Dubai faces a classic dilemma involving development and money that is much broader than the matter of the economic bubble bursting or the Dubai debt crisis, and more implications may yet be revealed.

Notes

(1) Administrative reform can be defined as the ‘reforming of the structure, personnel, administration, procedure, permission, and authorization of central government or local government by rational means’ [Kawano 2000: 240]. However, it is believed to be very difficult to distinguish between politics and administration of the government, not only in Dubai but also in the other Gulf monarchy states. In other words, rulers can exercise discretion on anything related to political, economic, social, religious, and cultural matters and those matters between which these lines are blurred. Therefore, administrative reform constitutes political and economic reform at the same time. In this paper, we mainly attempt to focus on the administrative perspective.

(2) There is room for further argument that administrative reforms in Dubai are currently spearheaded by both federal and emirate governments. Since Shaikh Muhammad bin Rashid has

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become the vice president and prime minister of the UAE, he has implemented administrative reforms with the aid of his right hand, Muhammad al-Gergawi, from the federal government’s Ministry of Cabinet Affairs. Shaikh Muhammad launched a three-year development plan, the UAE Federal Government Strategic Plan, in 2007; in addition, the Abu Dhabi government introduced similar reform plans: Policy Agenda 2007–08 in 2007, Abu Dhabi Strategic Plan in 2008, and Abu Dhabi Economic Vision 2030 in 2009. We can assume that Abu Dhabi’s reform is following the example of Dubai because of its style and time of introduction. However, the case of the federal and Abu Dhabi government cannot be discussed here owing to space constraints.

(3) In contrast, the then ruler of Abu Dhabi and the first president of the UAE, Shaikh Zayed bin Sultan Al Nahyan, sought to unite seven emirates under the centralised federal government. As we show later, Abu Dhabi has strong political and economic power in the UAE, and the president of the UAE, conventionally, has been elected from Abu Dhabi. In addition, Abu Dhabi has borne more than half of the federal annual budget since independence, while every emirate must bear part of it.

(4) The currently operating free zones in Dubai are as follows: Dubai Airport Free Zone, Jebel Ali Free Zone, Dubai Internet City, Dubai Media City, Dubai Auto Zone, Dubai Biotechnology and Research Park, Dubai Flower Centre, Dubai Gold and Diamond Park, Dubai Healthcare City, Dubai International Financial Centre, Dubai Knowledge Village, Dubai Logistics City, Dubai Maritime City, Dubai Multi Commodity Centre, Dubai Outsource Zone, Dubai Silicon Oasis, Dubai Studio City, International Media Production Zone, International Humanitarian City, and Techno Park. In addition, around 10 more free zones are being set up [UAE Free Zones Website].

(5) Technically, all companies in Dubai are required by law to pay tax on their earnings. In practice, however, some special categories of items such as oil, gas, petrochemical companies, hotels, and the branch offices of foreign banks are required to pay tax, although there is no provision for this in the law [al-Tamimi 2006: 171].

(6) Oil reservation and production in Dubai are relatively limited; estimates are 70,000 barrels per day (bpd) [AFP February 10, 2010] and annual revenues of 5% of Dubai’s GDP. In addition, oil revenues are strongly affected by the market trends; international crude oil prices have risen since 2004, and thus, oil revenues of Dubai have almost doubled compared to those in 1998 [Dā’irat al-Mālīyat 2008b: 31].

(7) The government of Dubai owns many companies from different fields through holding companies and equity holdings. The most important and representative companies are Dubai Holding Commercial Operation Group (DHCOG) and Dubai World. The former owns the Jumeirah Group (the hospitality sector), Dubai Group (finance), Tatweer (sovereign wealth funds), and Sama Dubai (real estate). The latter owns DP World (port operator), Nakheel (construction), and Istithmar World (investments). Moreover, the national carrier Emirates Airlines is owned completely by the government, which also holds some shares in Emaar

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(construction), Dubai Aluminum, Emirates National Oil Company, Emirates NBD (banking), and the others.

(8) As we showlater, government-related companies pay part of their profits to treasury receipts.(9) The government of Dubai employs 70,000 people in 26 government departments, namely, the

Dubai Municipality, Land Department, Department of Tourism and Commerce Marketing, Dubai Civil Aviation Authority, Dubai Health Authority, Dubai Police, Dubai Courts, etc. [Gulf News January 10, 2009].

(10) SWOT analysis is a strategic management tool for business and organisations that analyses the ‘strengths, weaknesses, opportunities, and threats’ [Houben, Lenie and Vanhoof 1999: 125-126].

(11) RTA introduced the Salik system on Shaikh Zayed Road to reduce heavy traffic congestion in July 2007. It has also become one of the major sources of income for the RTA; it has collected Dh 1.658 billion in about two-and-a-half years since its introduction [Gulf News June 3, 2010].

(12) The government of Dubai and its companies are rated by rating agencies such as Standard & Poor’s, Moody’s, and Fitch.

(13) A 45% share of Deyaar was held by the Dubai Islamic Bank (DIB), and the government of Dubai holds 30% of DIB’s stocks.

(14) According to the Dubai Police data, the police registered 37 bribery cases in 2008 and 36 cases during the first nine months in 2009 [Gulf News November 14, 2009].

(15) There were growing concerns regarding the default of the Dubai government and its businesses after the financial meltdown; the government held US$10 billion in debt, and the total debt of government-owned companies amounted to US$70 billion. This added up to a total debt of US$80 billion̶170% of Dubai’s GDP in 2006.

(16) Following DAMAC’s dismissal of 200 employees in November, Nakheel dismissed 500 employees in December. In addition, Nakheel dismissed 400 more employees in July 2009.

(17) The committee also included Muhammad al-Gargawi (the minister of Cabinet Affairs and chairperson of Dubai Holding), Eisa Kazim (the chairperson of Borse Dubai), Muhammad al-Shaibani (the head of Dubai Ruler’s Court), and Marwan bin Galita (the CEO of RERA).

(18) This statement came from a BBC report, in which Abdulrahuman al-Saleh also said, ‘Creditors need to take part of the responsibility for their decision to lend to the companies’, and ‘They think Dubai World is a part of the government, which is not correct’ on Dubai Television. However, this comment was strongly criticised, and after a week, he said, ‘The government of Dubai will support Dubai World as its owner’ [Nikkei December 9, 2009].

(19) For example, DHCOG dropped Standard & Poor’s as its rating company because of ‘lack of understanding of the business, its operations, and relationship with the government of Dubai’. Earlier that day, Standard & Poor’s had downgraded Dubai Holding’s rating to ‘B’ before withdrawing the rating citing ‘lack of information’ [Gulf News January 26, 2009].

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ABSTRACTHORINUKI KojiAdministrative Reforms and Globalisation Strategy in Dubai: A Study of Double-Edged Development from 1990 to 2009

This article aims to discuss how the emirate of Dubai has developed and adapted to globalisation through administrative reforms.

Dubai has developed continuously since the early twentieth century as a port city, and its economy became diversified in an endeavour to build an oil-independent country in the oil era. This

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process of economic development, especially after the 1990s, can be described as a globalisation strategy, i.e., the strategic formation of infrastructure and environment to attract people, goods, money, and information to adapt to globalisation and expand them globally to seek business opportunities. In other words, globalisation is the key to survival in the contemporary world, and administrative reform in the government of Dubai is very important to understand it. We can point out that the global financial crises in 2008 and 2009 demonstrated that Dubai has integrated international politics, economy, and finance.

We would like to address the following questions in this paper: What types of administrative reforms were introduced in Dubai and what were the resulting achievements? In this study, we first briefly describe the development process and its position in the UAE and establish globalisation strategy as a means of survival for the emirate of Dubai. We then clarify the actions of the government during the reform process. Finally, besides the responses to evaluations of the Dubai debt crisis, we examine the characteristics and achievements of the administrative reformsand point out the underlying reasons for their introduction by the Dubai government.

In conclusion, we can identify five major reasons for which the New Public Management (NPM)-style administrative reforms is considered an important strategy for Dubai: (1) developing economies require reinforcement of administrative capacity, (2) easing and reforming of regulations are needed to boost investment and business activities, (3) building frameworks and institutions is necessary for new economic development, (4) increase in population size and number of companies necessitates expansion of administrative services, and (5) fiscal changes are needed to improve the government financial condition. However, difficulties arose after the global financial crisis in 2008, and Dubai has entered a new phase that requires new strategies and reforms.

Graduate School of Asian and African Area Studies, Kyoto UniversityResearch Fellow of the Japan Society for the Promotion of Science (DC)

京都大学大学院アジア・アフリカ地域研究研究科博士課程日本学術振興会特別研究員（DC）

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