Can India Move Past The UAE?

A Reality Check

Gateway, 10 February 2010

Jan Rein Scheele

As bustling economic activity of the Middle East has slowed down considerably due to the global turmoil, can India (a relatively less affected nation) take advantage of this situation and zoom past this region, especially the UAE in terms of maritime trade and development? Jan R Scheele provides the ground realities.

The UAE marine ports industry recorded an impressive 19 per cent growth over the past three years, matching the collective annual growth rate of the Middle East, Europe and Africa. The majority of the country’s large marine infrastructure development projects are expected to be completed within the next 10 years, if all the shelved or postponed projects are going to be reviewed this or next year, or as a Dubai World spokesman said, “if market demands justify these planned projects“.

The Middle East region, particularly the GCC sub-region, has witnessed a significant, demand-driven increase in the quality and quantity of marine companies and operators, which is making the Middle East, and the Arabian Gulf in particular, one of the most dynamic and vibrant international maritime centres in the world. At the same time, however, the real-estate industry in one of the Emirates of the UAE has been hit hard by the global financial crisis, specifically Master Developer Nakheel of Government-owned Dubai World which recorded a debt of US$ 26 billion.

Marine development projects in the region have really come to the forefront during the past five years, and the UAE has led the way in development projects. The massive economic growth witnessed in the Middle East region, coupled with the coastal location of the GCC countries, is driving major seaport expansion in the region, and over 50 projects worth over US$ 40 billion are currently underway, with individual budgets ranging from US$ 10 million to US$ 5.5 billion.” However Jebel Ali’s third terminal has now been delayed and will not resume until 2013.

In the first half of 2009, there were 13 major maritime developments in the Middle East and GCC regions. Of the 13 projects, the UAE boasts four prominent developments: the US$ 2.5-billion Port Khalifa and Industrial Zone in Abu Dhabi; the US$ 599-million Mina Rashid in Dubai; the US$ 560-million Dana Island in Ras Al Khaimah; and the US$ 1.8-billion Al Marjan Island, also in Ras Al Khaimah; while KSA has three major projects underway: the US$ 5-billion King Abdullah Economic City Port; the US$ 700-million Ras Al Zoor Port; and the US$ 450-million Red Sea container station at Jeddah Islamic.

The remaining six projects are divided among the Sultanate of Oman (two major projects – the US$ 1.1-billion Duqm Port and the US$ 400-million Sultan Qabus Port), Qatar (two major projects – the US$ 5.5-billion New Meseaid Port and the US$ 1.2-billion Ras Lafan Port development project), Kuwait (the US$ 1-billion Bubian Island project), and Libya (the US$ 2-billion project in the Gulf of Sirt).

Once the economic crisis is over and global markets become stable, further expansion projects are expected to be announced in the Middle East region, and the strategic importance of marine projects will be an important factor in countries’ trading activities. These projects will likely have a significant influence on the gross domestic product (GDP) figures of Middle Eastern and GCC countries, in accordance with GDP readings issued by advanced and established global economies in terms of ports and free zones development projects.

The Indian story

During the last 10 years, India’s maritime and related industries have seen an impressive and substantial growth in terms of capacity and quality in several areas such as new port development, shipbuilding and repair capacity and development of international logistic centres.

India has 12 major ports and 185 intermediate ports. India also has the largest merchant shipping fleet among the developing countries and is ranked 17th in the world. There are approximately 55 shipping companies in India, of which 19 deal exclusively in coastal trade, 29 are engaged in overseas trade, and the rest all operate in both types of trade.

It has many business opportunities as the maritime industry is booming at a very fast pace. The number of containers has increased by 44 per cent from last year. Many international top players have committed huge investments in port / terminal and logistic /shipping ventures for the coming years, as a result of the India’s government stimulus plans on Private Public Partnership (PPP) modalities within the ports and shipping sectors. To build infrastructure for economic development of the country, India has committed to spend US$ 100 billion over the next 10 years on infrastructure projects, with US$ 10 billion to be spent just on the shipbuilding and port sectors within the next five years. A turnaround has been observed that Indian shipbuilding industry, which was totally domestic and defense-oriented, has now become export-oriented. Today out of around 190 ships on the order book 125 are for the exports. Another important development being witnessed is the involvement of the state maritime boards, which are now competing with the major ports by following land lord port model and corporatisation. In another 5-10 years, India might become the global refinery hub wherein the refinery capacity will be increased to 100 million tonnes per annum.

Apart from the Indian maritime industry, many countries from Europe, North America and Asia are pouring technology, investment and manpower into India. Japan alone has committed US$ 30 billion to India's infrastructure. Norway and South Korea are also heavily involved in shipbuilding, ship repair and other sectors. Holland, France, Germany and England are involved in port and terminal ventures. Singapore, Hong Kong, Malaysia, Dubai and Australia have made major investments and joint venture arrangements in India's port, terminal operations, and shipbuilding sectors. Shipping lines in India and from around the globe are ramping up capacity to handle increased container and non-container shipments to and from India.

A serious competitor?

The Middle East, and specifically the UAE ( Dubai ), is the most important hub for (containerised) cargo for Asia, and the Far East, not only for its modern and well-equipped ports and warehouse facilities, its efficient well organised maritime service industries and its liberal government facilitated trade policies, but also for its ability to attract quality human resources and top class world players to set up shop in the UAE and transfer their knowledge and experience onto an increasing well-educated, trained and motivated local management and workforce.

The most modern port technology, systems, safety and security regulations implementation, computer hard and software, international best practice using electronic data exchange, are making sure that calling vessels at their ports are benefitting from the shortest possible turnaround times. Although these ports don’t advertise their respective Port Performance Indicators, it is well known by the international major players that these ports are in the top 100 of world’s best performing ports.

Having said this, we need to ask the question if these positive contributions to become world class ports and terminals are currently valid for the maritime industry in India.

In order to become a serious competitor to the Middle East ports, India still has to go a long way in applying the newest port and terminal technology and systems and comply strictly with international maritime laws, conventions, rules and regulations concerning port and shipping, health, safety and security standards, transparent and logic tariff systems for the services offered, meeting world class standards as well as continuously improve their efficiency through ongoing education and training programs for top, middle management and their workforce

In this respect, the private maritime sector should work closely with knowledgeable government maritime agencies, major employers and trade unions. The private maritime sector should design a system to identify and implement KPIs for better management of ports and terminals, while government should continue to promote the private sector with new initiatives such as establishing free zones to enable and continue sustainable economic growth.

With abundant opportunities and challenges in store, it is right time for India to reap the fruits of the current momentum and consequential developments.

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Tree Planting May Endorse Forest Clearing

The Jakarta Post, 15 January 2010

Adianto P. Simamora - The Jakarta Post/Jakarta

The government’s tree-planting drives could be a means to endorse forest conversion by plantation firms in Indonesia, which will harm the country’s plan to slash carbon emissions from the forestry sector, environmental activists warn.

Greenpeace Indonesia criticized the government for its mitigation plans, which include industrial forest concessions (HTI) as a priority sector in its tree-planting program.

“We are worried that the tree planting program is a way to hide conversion activities by HTI companies,” Greenpeace Southeast Asia forest campaigner Bustar Maitar told reporters on Thursday.

Most HTI companies cut down trees to clear land before replanting including with acacia trees, he said.

“If planting acacia trees is also considered part of climate mitigation, the government has made a public lie,” he said.

The Forestry Ministry is campaigning for 1 billion trees to be planted this year among efforts to reduce greenhouse emissions from the forestry sector.

The ministry has placed enhancing carbon stocks from planting trees — including those planted by HTI companies and communal forests — as a top priority to meet the national target of a 14 percent emissions reduction from the sector.

Tree-planting drives are planned to be held in 5.8 million hectares of HTI concession areas, including those in Riau, Jambi and West Kalimantan.

The ministry has also promised to combat illegal logging and reduce forest fires to slash emissions.

Greenpeace said that planting trees would never balance the deforestation rate, which is believed to have reached more than 1 million hectares a year.

Greenpeace forest campaigner Yuyun Indradi said clearing forests also damages the ecology of forests.

“Replanting forests will never replace such ecological diversity,” he said.

“The government’s proposal for a replanting program must mean ecosystem restoration and no more timber plantations.”

Indonesia is the world’s third-largest forest nation with about 120 million hectares of forest.

But with a deforestation rate of about 1 million hectares per year, it also means Indonesia has the highest rate of deforestation and forest degradation.

The reducing emissions from deforestation and forest degradation (REDD plus) scheme allows forest concession holders to run carbon projects by planting trees.

Greenpeace has long been campaigning for a logging moratorium to save Indonesia’s remaining forests and habitats, to help the planet in dealing with climate change.

“The Forestry Ministry, in particular, appears to lack determination to stop rampant deforestation in Indonesia,” Bustar said.

Greenomics Indonesia also criticized the ministry’s mitigation plans allowing more mining firms to operate in forested areas.

The ministry said it planned to allocate a further 2.2 million hectares of forests for mining activities between 2010 and 2020, which would release an estimated 550 million tons of carbon into the

atmosphere.

President Susilo Bambang Yudhoyono has distributed millions of tree seedlings, including during the recent Christmas celebrations, to encourage the public to plant more trees in efforts to mitigate climate change.

While observing Indonesian Planting Day in West Java in December, Yudhoyono asked the nation to plant up to 4 billion trees by 2020 and 9.2 billion by 2050.

The government claims that since 2007 more than 280 million trees have been planted in such

programs.

Yudhoyono has pledged to cut Indonesia’s emissions by 26 percent by 2020, with a state budget of Rp 83 trillion over five years. Another 15 percent reduction could be achieved should rich nations provide additional funding, he said.

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SBY Must Get Off The Fence And Help The Future Of Climate Talks

The Jakarta Post, 12 January 2010

Jonathan Wootliff

Failure to find the formula for an international agreement to tackle climate change at December’s summit in Copenhagen was predicted by Indonesia’s Environment Minister Gusti Muhammad Hatta.

Speaking a month before the start of the much-heralded talks, Gusti had predicted the likelihood that hopes for a new deal would be dashed.

He was sadly right.

And yet, while environmental campaigners and aid agencies branded the meeting as a “toothless failure”, President Susilo Bambang Yudhoyono said of the outcome that “Indonesia is pleased, as we have taken a wholehearted stance to save our Earth, to save the children in our country”.

The President was echoing the positive sentiments expressed by many other world leaders, ashamed to be seen returning home from Denmark empty-handed.

At least Indonesia can hold its head up high, being the first developing economy to pledge voluntary greenhouse gas reductions.

Ahead of Copenhagen, SBY had promised to cut emissions by at least 26 percent from 2005 levels by 2020, or up to 41 percent should rich nations provide assistance.

And the country has given its support to the 11th-hour Copenhagen Accord, which was brokered by US President Barack Obama in an attempt to save the event from complete collapse.

But, in spite of SBY’s strongly held views about the need to combat climate change, there was none of the passion that he had so dramatically displayed at the 2007 climate talks he hosted in Bali and was credited for saving in some circles.

The legendarily outspoken Venezuelan President Hugo Chavez controversially retorted that had the climate been a bank, it would have been saved.

SBY is far too diplomatically savvy to make such headline-grabbing comments. But given the pivotal role that Indonesia has been playing in bridging the gap between rich and poor nations, perhaps he should have been more outspoken.

Arguably, Copenhagen was so heavily subsumed by shortsighted interests from a plethora of national egos that it would be wishful thinking to believe that SBY could have saved the day anyway.

World leaders know the debacle in Denmark poses massive risks for the climate. They know global measures must urgently be introduced to enhance and replace the previous treaty agreed 12 years ago in Kyoto.

That is why many prominent statesmen are now scrambling to pick up the pieces, in a bid to save the process of international climate negotiations from total breakdown.

The very future of the UN’s role in international climate deals in now in serious doubt.

Yes. Copenhagen did at least bring the existing polluters together with those emerging economies forecasted to produce the bulk of the world’s emissions over the next half-century. And there are actions clearly scheduled for all to see.

But for those of us who have followed the process since the Rio Earth Summit in 1992, it is hard not to feel hugely dismayed by the overall lack of tangible progress.

After 17 years of talking, with climate experts clearly defining the danger threshold as a 2 degrees Centigrade global temperature rise, a new generation of world leaders in Copenhagen merely agreed some fuzzy language to combat climate change “with a view” to staying below that 2 Centigrade mark.

The dire consequences of procrastination for the fate of our planet are now well known. Almost all of the countries of the world didn’t get together in Copenhagen for fun.

Climate change is already beginning to transform life on Earth.

Seasons are shifting, temperatures are climbing and sea levels are rising. Scientists tell us that if we don’t act now, climate change will permanently alter the lands and waters we all depend on for survival.

The 3 billion people who live in poverty will be hardest hit. The poor are more dependent on natural resources and have less ability to adapt.

Diseases, declining crop yields and natural disasters are just a few of the impacts that could devastate the world’s most vulnerable communities.

We are already witnessing the first climate refugees as millions of people are forced to leave their homes as they become uninhabitable.

In Copenhagen, I heard leader after leader speak movingly of the global warming crisis. Without exception, every single one of the 190-plus nations acknowledged that urgent action must be taken to avert apocalyptic consequences.

The unbinding Copenhagen Accord now sets a end-of-January deadline for rich nations to submit economy-wide emissions targets for 2020, and for developing countries to present mitigation actions.

UN climate talks will resume in Bonn, Germany, in May, and UN officials now hope that a legally binding treaty will finally be sealed in Mexico at the end of the year.

Surely this is the last chance for the UN to be seen as a credible body in addressing the climate change challenge.

Now is the time for the President to help save the process. He must get off the fence, be more forceful and take a real lead on this critical issue.

Jonathan Wootliff leads the Corporate Accountability practice at the consulting firm, Reputation Partners. He specializes in sustainable development and in building of productive relationships between companies and NGOs. He can be followed on Twitter and contacted at jonathan@reputationpartners.com

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