DUBAI: Samir Chaturvedi is the old hand on the block turned into the new kid in town. The chief executive of Kizad — the Khalifa Industrial Zone of Abu Dhabi — is former senior executive of Jafza — Jebel Ali Free Zone Authority.
For 13 years, Chaturvedi helped Jafza to consolidate its place as the leading maritime-based industrial hub in the Middle East; now he is charged with developing a far more ambitious project in the UAE capital that — if all goes to plan — will eventually overtake its Dubai counterpart.
He is reluctant to use the word “rivalry,” preferring instead to emphasize the beneficial effects of competition and the potential for the UAE to become a global logistics and industrial hub.
“This makes it a very competitive sector — and that’s a good thing. Healthy competition provides customers with broader options and developers with greater incentives to improve their services and offerings,” he said. “Fortunately, we have a strong value proposition; the combination of Khalifa Ports’ assets, Abu Dhabi’s growing industrial sector, plus KIZAD’s innovation is a value proposition that is not typical for the region and puts us in an excellent position to thrive and grow,” he added.
Chaturvedi was speaking after a lavish ceremony last week that unveiled an alliance between China and Abu Dhabi to make the UAE capital the main regional hub for the “Belt and Road Initative” — the multibillion-dollar strategic investment program by the Peoples’ Republic to develop land and maritime trade routes along the path of the Silk Road — from Asia through the Middle East and into Africa.
Khalifa Port — the heart of the huge Kizad development — has joined with Cosco, the giant Chinese shipping group and port operator, to build a new terminal, backed by a 1.1 billion dirham initial investment, that will help to shift the center of economic gravity 50 km along the Gulf coast from Jebel Ali to Khalifa Port.
While some analysts focused on the duplication of port assets in the Emirates, Chaturvedi prefers to see it as a natural historical development of the UAE trading infrastructure.
“The same question was asked of Jebel Ali when it was being developed and Port Rashid was the largest port in the region. These infrastructures are created to bring in new trade and new business and create a better and more sustainable economy rather than just competing with each other,” he said.
The Cosco terminal is the second at Khalifa Port, and part of a 10 billion dirham expansion plan that will lift its capacity to 8.5 million TEUs — 20-foot equivalent units, the main metric of the shipping business — in five years’ time.
Chaturvedi said Khalifa Port has the potential and infrastructure to eventually get to 20 million TEU. Some 25 shipping lines use the port, including Cosco, the third largest in the world, and MSC, the second placed behind market leader Maersk. Jebel Ali currently handles 22.1 million containers.
Kizad is part of the UAE’s 2030 strategic development plan, but its horizon extends beyond that date. By 2050, it will be an enormous development, two thirds the size of the island of Singapore and at 410 square km, some eight times the current size of the Jebel Ali zone.
Chaturvedi believes that the existence of such an ambitious industrial and logistics project had an influence on the Chinese decision to back the new Khalifa terminal.
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BIO
Born: 1962, Delhi, India.
Education: Annamalai University, India.
Chartered Institute of Logistics and Design, UK.
Harvard University Graduate School of Design.
Career: Competent Automobiles, sales manager.
Lemuir Group (now part of DHL), general manager.
Maersk Logistics, India, manager and director.
Zim Integrated Shipping,
Hong Kong, project director.
Jafza and Economic Zones World, business development and vice president for Europe,
Central Asia and India.
Kizad, CEO
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“Undoubtedly, the opportunity to tap into the business network at Kizad and the rapidly increasing need for shipping services in and out of the zone was a key factor when Cosco was looking for a port to be a regional hub, as was the presence of so many Chinese firms at Kizad and the potential to attract many more,” he said. Part of the Chinese commitment is the creation of the largest container freight station in the Middle East at an investment cost of $120 million.
Kizad will be home to the full spectrum of industrial and logistics activities, ranging from the huge Emirates Global Aluminum plant to an entrepreneurship and incubation center to encourage smaller businesses and startups into the development. In between, there are specialized “cities” within the zone, offering facilities to companies in the construction, logistics, plastics, food and automotive sectors.
Automotive brands such as Toyota, Jeep, Dodge, Fiat, Honda already operate out of Kizad, with Ghassan Aboud, the international car trader, establishing its global hub there. On the day the Chinese deal was announced, Kizad also unveiled a plant that will build the first automobile tires in the region. “We are offering the complete spectrum, from micro-businesses to heavy industry,” Chaturvedi said.
With all that big business going on in a sensitive marine-desert environment, Chaturvedi is keen to emphasize Kisad’s sustainability credentials. The port was built offshore so that the delicate coral reef on the edge of the Gulf was left untouched, he said, and the zone’s masterplan stipulates requirements for environmentally-efficient facilities for desalination, energy usage and waste disposal.
“But any port is only as good as its connection network,” he added. Kizad — with its hi-technology port near the arterial E11 motorway and close to three airports in the UAE — already has good sea, road and air connectivity.
When the long-awaited Etihad Rail project is completed, Kizad will be able to plug into the planned rail network for the Emirates and beyond. By 2023, Chaturvedi estimated, “rail will take us to the fourth dimension.”
It is an ambitious strategy, and dependent both on sustained growth in the economy of the UAE and the Arabian Gulf region, and on world trade levels continuing to increase. There have been some doubts on both counts recently.
On the economic health of the UAE and the wider region, Chaturvedi is sanguine. “The global economy is facing a period of slower growth, which is a normal phase of any economic cycle. Despite economic pressures, regional container volumes grew at an annual rate of 6.4 percent in the last 10 years, and is expected to continue growing at a rate of 5.3 percent.
“Kizad is on track to drive the diversification of Abu Dhabi’s economy away from oil and gas. We currently contribute 3.6 percent to Abu Dhabi’s non-oil GDP and by 2030 we estimate that our contribution will reach 15 percent,” he said.
“This is still very much a growth region that is in the early stages of industrialization. This industrialization is driving the demand for ports and logistics services in the region and is one of the reasons why the GDP impact here is significantly higher than other parts of the world,” he added.
The increased worries about the outlook for world trade, with US-Chinese confrontation growing, is something he sees as outside the control of anybody in the region. “We hope that both countries come to an amicable solution. We believe in the power of collaboration,” he said.
The alliance with Chinese state-owned Cosco could be seen as an example of the “tilt to the East” that has been a feature of the global economy since the financial crisis.
The “Belt and Road Initiative” has been called the biggest infrastructure project in history, but it has also drawn some criticism from analysts who think the partner countries to the Chinese investment plans become too dependent on finance from Beijing. Chaturvedi does not share those concerns.
“We believe that China’s Belt and Road initiative is a positive one. It has the potential to create opportunities to provide the infrastructure that will drive global trade, encourage cooperation between countries, and promote prosperity for all.
“Through the new Abu Dhabi terminal, China recognizes Abu Dhabi’s position as a gateway for trade and investment in the Middle East. Being a hub means that Abu Dhabi is not connected to just China, but all Cosco ports around the world; a true connection with both East and West,” he said.