Week of April 8, 2002
Blockbuster Deal of the Week
from Site Selection's exclusive New Plant database
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Siemens Plugs Regional Telecom
HQ into Dubai Internet City
By JACK LYNE, Site Selection Executive Editor of Interactive Publishing
DUBAI, United Arab Emirates Siemens LLC (www.siemens.com) has made a major expansion move in the Middle East, announcing that it will build a 300-employee, 100,000-sq.-ft. (9,000-sq.-m.) regional telecommunications headquarters in Dubai Internet City (DIC at www.emirates.com/dubaiinter.asp). Siemens is signing a 50-year land lease on its site in the 408-acre (163-hectare) DIC, financed by the Dubai government and opened in late 2000.
Siemens' facility will open in March or April of 2003, company officials said. Subsequently, they added, Siemens expects to "gradually increase employment" at its new headquarters in Dubai, widely considered the Gulf region's commercial capital.
"This move to DIC, the Gulf region's technology and telecom hub, is a sign of our ongoing commitment to the region and the strengthening of our presence here," said Volker Jung, head of Siemens regional operations for the Middle East, Africa and the Commonwealth of Independent States.
Built to cater to new economy businesses, the US$700-million DIC was a major draw for the subsidiary of Munich-based Siemens AG, Jung added.
"DIC's infrastructure provides an ideal environment for the development and continuing rapid, consistent growth of our business in the region - especially those related to information technology and telecommunications," he said.
HQ Will Be DIC's Largest TenantSiemens' memorandum of understanding with DIC marks a major win in Dubai's efforts to diversify its economy. When completed, the lower Gulf region headquarters will be DIC's largest tenant.
"Partnering with companies on the cutting edge of technology like Siemens is important to Dubai Internet City's strategy of becoming a global hub for the knowledge economy," said DIC Chairman Mohammed Al Gergawi. "Siemens' presence in DIC will add to the synergy generated by its information and communication technology community and will make it more self-sufficient."
The German parent company was no stranger to DIC. Dubai's government in 1999 tapped Siemens Business Services for a $21-million assignment as general contractor for DIC's information and communication infrastructure.
Siemens' 300-worker regional headquarters will be DIC's sixth single-tenant facility. But while the electronics and industrial giant's operation will be DIC's biggest, Siemens is hardly the first big name to site operations in Dubai's technology nexus. Other corporate bluebloods that have already located or committed to locating in DIC include Cisco, Hewlett-Packard, IBM, MasterCard International, Microsoft, Oracle and Sun Microsystems.
DIC Offers Broadened Internet AccessDIC's appeal to such high-profile players got a big boost with Dubai's relaxation of its restrictive policies on Internet access. State-owned Etisalat holds a complete monopoly on all telephone, fax and Internet communications that enter or leave the United Arab Emirates.
Several firms that were considering locating in DIC publicly chafed over the restriction of Internet options and the loss of online speed. Dubai's government relented, exempting all companies located in DIC from Etisalat's monopoly.
Siemens LLC, like all other companies in the techno-centric complex, will have 100 percent ownership of its DIC operation. Foreign companies locating outside of government-established "free zones" can own only 49 percent of their operations.
Other incentives for Siemens' DIC headquarters include no corporate tax and free repatriation of profits and capital. Those incentives, however, are available throughout Dubai.
Such generous incentives triggered Dubai's initial major success in attracting foreign firms. The Jebel Ali Free Zone established in 1985 has proved to be an expansion magnet, attracting operations for more than 2,000 companies.
Goal: 100 Percent of GDP
Oil is a major factor, though, in Dubai's re-export trade, the emirate's largest economic sector, contributing 20 percent of GDP. Major oil-producing countries in the region like Kuwait and Saudi Arabia are the economic engines that drive Dubai's re-export business.
"I had a vision to transform the old economy by making Dubai a hub for the new economy," Dubai's Crown Prince Mohammad bin Rashid told the crowd at DIC's opening. "This is the project to be pursued with energy and efficiency. . . . This is Dubai's future."
Mohammad's new economy drive has extended to creating Dubai Media City (www.dubaimediacity.com), a sister project to Dubai Internet City. Dubai's crown prince also spearheaded the e-government@dubai initiative, which converted all government agencies to doing all business online. Mohammad gave his e-business campaign a strong performance incentive: Managers of agencies that weren't online by the September 2001 deadline would be fired.
Siemens Aiming to Increase
The lower Gulf region accounted for some $305 million in orders during Siemens' fiscal year ending in September 2001. Siemens' regional revenues will spike up considerably with a 1,500-megawatt power plant in Abu Dhabi, another member of the United Arab Emirates. Siemens Power Generation Group has secured an $872.5 million order to construct the Abu Dhabi plant.
Accordingly, Siemens DIC operation is being set up to capitalize on opportunities in both the new and old economies. The new Dubai facility will house not only the regional telecom headquarters, but also several other lower Gulf region business units. Among that number will be Siemens' Power Transmission and Distribution unit, as well as its Industrial Solutions and Services unit.
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