The latest issue features a pinnacle focus on the global financial crisis and what led to the markets to tumble. As well as paying tribute to several empowered women.
posted on 28/08/2007
Saudi Business Focus
Ras Al Khaimah
Those who meet Dr. Khater Massaad, who is Advisor to H.H. Sheikh Saud bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah, express great admiration for his personal dynamism. As well as being Sheikh Saud’s Advisor, he is also the CEO of RAK Ceramics and of RAK Airways and is the Executive Chairman of Rakeem, the company set up to be the master-planner and developer in real estate and township development within the Emirate and overseas.
(Dr. Khater Massaad)
Back in 1991, Dr. Massaad was, along with H.H. Sheikh Saud, instrumental in founding RAK Ceramics. Having been the driving force behind the Company all along, he has guided the destiny of what is now the top-most ceramic manufacturing organisation in the world. RAK Ceramics is acknowledged as a jewel in the manufacturing sector of the entire Middle East.
It could be said that the first of Dr. Massaad’s career milestones in the Middle East region was when he started, in the early 1980s, geophysical investigations for clay deposits, dams and water in the countries of the GCC and in the Levant. Later, he was assigned the position of “Project Manager” for various underground water projects in the United Arab Emirates and in the Sultanate of Oman.
His vision, however, went beyond geophysical-related investigations and projects to see the vast potential for the development of a strong and diversified industrial sector within the context of the UAE, where he initiated a multiplicity of feasibility studies for various factories and industries.
Thereafter, he envisioned a major plan for a ceramic factory in the Emirate of Ras Al Khaimah and set up and managed R.A.K. Ceramics, a landmark in the global ceramics industry. RAK Ceramics has gone on to become the industry’s world leader.
Ibrahim Berjaoui and Suhayb Saran of Saudi Business Focus Magazine and Zakharia Al Ghassani from Oman met Dr. Khater Massaad in his office at RAK Ceramics and talked to him about business opportunities within the Emirate of Ras Al Khaimah.
The RAK Conference received a very positive response from companies, entrepreneurs and the press. Can you inform our readers of the new initiatives that are evolving as a result of the conference?
We are very confident; last year we attracted several investments into Ras Al Khaimah, good investments. We have investments from the US and today we are working on some very good potential investors. And this year we think we will have probably the same amount of investors coming into Ras Al Khaimah.
As CEO of the world’s largest ceramics production facility, what in the business model of RAK Ceramics sets it apart from other producers of ceramics?
It is a combination of factors. Sheikh Saud Bin Saqr Al Qasimi, His Highness, is a very intelligent and smart businessman and he has a very good faculty, very quick decision making. What is more, he’s got many people working for him so, combined with our experience and myself and my team, we have made sure that we have always put into place here the very latest technology. In fact, every time we build a plant, we go for the biggest and best possible of options. This has meant that we have got further ahead that anybody else in the industry. Each year we are putting in new plant and each year we are ahead of everybody and as a result of this, nobody has been able to compete with us in the productivity and efficiency of our operations. Of course combined with all of this is the overall climate in the country. Ras El Khaimah is a very easy place, a very simple place. There are no problems, no corruption, no tricks, so it is this combination which makes this place very prosperous. Ras El Khaimah has very quickly been able to become number one in the world, in exports, in communication and in everything, so for us it is possible to do it.
Given that RAK Ceramics already has factories in China, India, Sudan, Bangladesh and Iran, do you foresee the company setting up in Europe in the near future, in order to target specifically that market?
I don’t think that RAK Ceramics will be establishing itself in Europe. We have studied the case and we acquired one factory in France and one in Slovakia, and it turned out not to be a good venture. Europe is easier to supply from here. From here to Europe, a container is $800 and from Europe to Europe, it is probably more than $800 and today moreover, you have a lot of restrictions within Europe and the manpower is too expensive as are taxes and there are many limitations. Within the context of this type of industry, you can see that Europe is shrinking its production of ceramic tiles and other emerging markets are increasing. In Italy, for example, the total production is less than 500 hundred million square meters. So we don’t think we will be moving into Europe. We may, though, also consider other potential countries and markets.
So, Ras Al Khaimah will remain the mainstay of the company?
This factory today is producing full capacity and it is also selling full capacity. We have made very good agreements with big names in the market and we are establishing our own grounds for distribution.
As an industrialist, do you see the way forward for the Emirate as being through the encouragement and development of a strong industrial base?
Definitely I am an industrialist, and I believe that industry is the backbone of every economy. I believe that Ras El Khaimah has to improve on its industrial development, and this is what I am always personally doing and His Highness agrees with me, and that’s why he created RAK Investment Authority. He appointed me because I know what an industry needs so that any industrialist that comes here, we will be able to help him to the best of our knowledge, so thereby we hope to attract more and more investments and to create more investor zones. In fact, the latest is on a 28 square kilometre site and we have been successful in attracting investors. We are continually trying to bring sustainable long term industries like RAK Ceramics which produces here and distributes around the world.
So, the Emirate and its leadership are making a priority of encouraging industries to relocate here?
His Highness, as I said, he is very intelligent and highly educated. He has a Master in Political Economy from the University of Michigan. He likes education. Also, he likes technology and he likes industry. He loves to develop this Emirate and he is working day and night thinking of how to develop the Emirate and exactly how he should do it. And from this point of view, we are all committed and our job is to make sure that we target industries. What we have been doing in several cases is that we have been targeting manufacturers in Europe and in Asia who need to be relocating either to increase profit or to have an industrial base to distribute to the Gulf and the surrounding countries. In fact, I believe and the thinking of His Highness is along the same lines; I believe when you put an industry into an economy, all the other services relating to that industry come along, too. Last year for instance, to give you an example, all the industries which we have in the RAK Investment Authority, they created 12,000 jobs. Sooner or later these 12,000 jobs or visas will be taken by Emiratis; if not today, then, in five years, in ten years or in fifteen years. Therefore when you create 12,000 jobs from the lowest to the big CEO, all these people, well, they need housing, they need food and they need cars so this is how we increase the economy. So each and every industry we locate here, well, they will all be supporting our economy. So from this point of view, this is real development.
Today if you look at the world, which are the most industrialised countries? It is France, America, Germany and Japan etc. And why? Because they have built up their industrialised bases and yet, at the end of the day, these countries, comparatively, have very few natural resources. Or not in the same way as is available in this region. If I make 50 or 100 hundred buildings here tomorrow, who will we have to live in them? You have to have people, who are working here, establishing businesses and the economy and so on, to come to live here, and I believe that today there is a lot of money in the Arab world especially in oil prices. If we invest all our money into industry, believe me, a similar thing as what has occurred with RAK Ceramics can be repeated, over and over again. In a mere 15 years, RAK Ceramics has become the leader in the ceramics industry. Last year in 2006, RAK Ceramics realised net profit of 40 million dollars.
In Italy there are 400 ceramic factories, and all of them, their total profit was 76 million Euros which means sooner or later, all these 400 factories could be in Ras El Khaimah or indeed anywhere in the Gulf. We are here producing more efficiently, better quality and supplying to Italy. We are supplying to Giorgio Armani, Benetton and to Prada. We supply Mercedes Benz in Germany. In England, we provided Wembley Stadium with all the black tiles specially done for them. We are supplying Terminal 5 at Heathrow Airport and many airports in Germany, plus many others.
How is Ras Al Khaimah aiming to position itself within the global tourism market? How does the Emirate intend to set itself apart and carve out its own niche?
There will be tourism industry, and I think it will be a good thing to work on tourism and to create here a tourist destination. When you talk to many people, too many think that the whole Middle East is one place so the potential tourist doesn’t know that he or she is going to relax. People want to have peace of mind. The trouble is that the minute our potential tourist hears of the slightest problem somewhere, tourism stops. So then you will have your hotels empty so this is why I believe in industry. Industry is a safer path to development. Through education and industry, you ease the problems of poverty and terrorism and both aid in economic development.
Dr. Khater Massaad Dr. Khater Massaad was instrumental, along with H.H. Sheikh Saud Bin Saqr Al Qasimi, the Crown Prince & Deputy Ruler of Ras Al Khaimah, in founding the world-renowned, leading ceramics manufacturer, RAK Ceramics in 1991. He has been the driving force behind the Company all along and has guided the destiny of what is now the largest ceramic manufacturing organisation in the world.
Under the stewardship of Dr. Khater Massaad, RAK Ceramics was awarded the Mohammed Bin Rashid Al Maktoum Business Award (MRM Business Award) for Industry in 2005. Dr. Massaad received the award at the hands of UAE Vice President and Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum on Dec 13th 2005. R.A.K Ceramics was also chosen as the “Arabian Business” Company of the Year for the year 2004. RAK Ceramics as a brand was also rated as one of the top four brands of the UAE and the topmost brand in the manufacturing sector in 2006 in a study conducted by Brand Finance Middle East of the United Kingdom.
As the Chief Executive Officer of RAK Ceramics, Dr. Massaad has implemented the globalisation strategy of the company’s business and has conceived a rapid diversification programme which has so far encompassed high value investment ventures in the hotel & tourism industries, the computer hardware industry, and high value consumer products such as exclusive porcelain-ware.
Dr. Khater Massaad was appointed in August 2003 as the Advisor to the Crown Prince and Deputy Ruler of the Emirate of Ras Al Khaimah, His Highness Sheikh Saud Bin Saqr Al Qasimi. He also plays a key role in the rapid development of the Emirate as CEO of the RAK Investment Authority (RAKIA), a position to which he was appointed in 2005. In its first 2 years, RAKIA has attracted more than US $ 1 billion in industrial investments into Ras Al Khaimah.
Dr. Khater Massaad is also the Executive Chairman of RAKEEN, the entity functioning as land-usage master-planner and developer in real estate & township development in the Emirate and overseas. RAKEEN was created through a royal decree by His Highness Sheikh Saud Bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah,
Dr. Khater Massaad has played a major role in the tourism sector for the Emirate of Ras Al Khaimah through his worthwhile contribution as Managing Director of Al Hamra Fort Hotel & Beach Resort. He also is the Managing Director of RAK Airways and the Al Hamra Real Estate Development LLC.
Dr. Massaad holds a Master’s degree in Engineering and a PhD in Geophysics. A professional pilot as well, Dr. Massaad likes to use the little spare time available to him in flying his private jet.
RAK sets up a Financial City
Ras Al Khaimah's leading developer recently unveiled an iconic Financial City, which will be the centrepiece of the RAK Offshore project, a free zone financial hub which is at present under development.
Announcing the project, Dr Imad Haffar, Chief Operating Officer of Rakeen, the developer of the city, said they are expecting more than 1,000 companies to operate from the zone within a couple of years. The city will consist of 12 towers, of cutting-edge design, and is set to facilitate the Emirate's growth by acting as a regional financial centre, he added.
Dr. Haffar said the RAK Offshore project, currently under development by the RAK Investment Authority, RAKIA, will position the Emirate as a sought-after business and investment destination. Already, the Financial City, which is projected to be a role model in cost effectiveness and competitiveness, has more than 50 companies registered. "We are very ambitious and expect the project to propel the Emirate as the choicest destination for global investors and businessmen."
The RAK Offshore project will offer financial, legal, logistic and insurance services in a free zone environment. RAK Offshore is owned by Ras Al Khaimah Investment Authority and will facilitate the operational and legislative requirements of the Emirate.
"The development will be a landmark on the coastline of the Arabian Gulf and its design is something Rakeen is very proud of. However, it is also crucial that Ras Al Khaimah has a centre of financial strength that will further instigate the growth of the Emirate and we are determined that is what RAK Financial City will do," said Dr Khater Massaad, Executive Chairman of Rakeen. Dr. Haffar said, “The novel design of Ras Al Khaimah Financial City will lead to the establishment of an icon for the emirate and a modern, functional complex for business and legislation.”
He said the growth of Rakeen, a private joint company of the Government of Ras Al Khaimah, RAK Airways and RAK Properties, exceeded all expectations within 11 months after being set up with Dh400 million in paid-up capital. With operations now spreading across eight countries, its asset base is now Dh4 billion.
Rakeen develops and manages projects in Iran, Egypt, Jordan, Ukraine, India, Azerbaijan and Georgia. It will soon be expanding its operations in Congo, Italy and Bulgaria. In Georgia, it plans to invest $1.5 billion. In Iran, Rakeen's joint venture company, Prestigeland has invested $130 million for a city centre project. Its $120 million India joint venture has already made its presence felt in Coimbatore, Chennai and Vizhakapattanam. Dr. Massaad said Rakeen recently purchased the Metechi Sheraton Palace in Tbilisi from Georgia's Ministry of Finance at auction for $67.5 million. Seven bidders representing Georgia, Greece, Israel, India and the UK participated in bidding that began at $25m.
Dr. Massaad said his company must now decide how to develop the property. Rakeen is also slated to develop a multi-billion free economic zone in the Georgian Black Sea port of Poti.
