Interview: Mohamed Alabbar, Emaar Properties

Q. I'd like to ask about your ambitions outside the UAE. Where are you looking to expand and in which sectors?

A. I spend most of my own time outside the UAE. I think you become a very ignorant person if you just stay in one place - whether it is Dubai or if it is Bahrain or wherever, and you only know that environment. The world is changing so fast. As I go to new places, I meet new people, I learn so much. I do have a special interest in business in the Far East.

Q. So what commercial interests are you expanding and where?

A. I have a public company, in fashion, based in Singapore that operates in the Philippines, Hong Kong, Malaysia, Taiwan, Vietnam, Indonesia and Australia.

Q. Is production in the Far East?

A. No, we have about 900 stores with all the brands that you hear of nowadays, in the mid-range. We will be launching the same fashion chain in March on the East Coast of the USand the Middle East.

Q. What will the name be in the States?

A. I don't want really to say too much now, since we have not signed the papers yet.But we are taking Mango, the famous Mango brand, to the East Coast of the US. In India, we are operating a food chain. We have started a food company that is doing quite well. For me, interacting and knowing what is going on in other parts of the world is something that really excites me. I am learning. I am very keen to know things - to know people and how the world operates.

Q. Recent history has shown that businessmen who seek to expand everywhere at once frequently run into problems.

A. I would say that that statement is partly true. I also know some businessmen who do not expand at all and just run one business, like a tire shop, and they also go bust. It all depends on what team you bring on board. It all depends on what partners you have around you.

Q. Are you doing this from the heart? And are you enjoying it? Wherever I go, I bring in partners with me. My experience and my global contacts help me, and I do my due diligence. You know, I spend $500,000 to do a proper business plan and evaluation. I put all my big boys on top of it before we say yes or no. But, in this world, if you don't take a little bit of calculated risk, you will never get anywhere.

Q. Regarding Emaar, what will happen when you run out of land that has been given to you by the government?

A. Our land base is quite large. It is huge, actually. But I promise you that every six months, we come up with a new concept. The concept must really add value to the city, improve the quality of life for the people in the city. It helps the city put up infrastructure without them paying for it.

We are paying for the infrastructure and, as a result, we acquired the land. Now keep in mind that the government is a 30 percent shareholder in the company, so they can't really lose. They still get 30 percent of whatever is being done.

Keep in mind, too, that we are now looking at investment in the region, because we think that liberalization is going to reach the countries around us within the coming 24 months.

Q. Regarding real estate, the federal government has not yet approved schemes that allow leasing over 99 years.

A. Correct. But we have legislation in the city of Dubai that allows us to do it. Today, I do not think that there is a truly clear federal rule in this regard. I do not see any problems at all in this, though.

Q. What's the strategy for your new subsidiary, Sahm Technologies?

A. Everything really goes back to what technology you use as a backbone for all these entities. We have been subcontracting so many of these services that we decided to hire 60 people who basically provide all the technology backup for Emaar Properties, the bank, whatever.

We have a nice real estate maintenance company to provide a backing solution, a bit of telecommunication services, bundling video on demand, stuff like that. Instead of creating an entity, taking that outside, our aim was that we will have our own entity so that when it comes to real estate we don't have anyone to compete with us that can provide the bundled services we give.It is almost like a little monopoly.

Even if other developers wanted to do a development, they will not have the technology advantage that we have. So we go and spend the money to make sure that our development has a technology twist that is a little different from others.

Q. Speaking of an advantage, do you have an unfair advantage?

A. Do we have an unfair advantage? I thought we used to have an unfair advantage, but I don't think that's the case anymore.

Q. What unfair advantages did you have in the past?

A. We had cash. We were public with 45,000 shareholders. The government looked at us with a bit of mercy since we represented 45,000 shareholders. Now, the government has its own real estate companies: Jumeirah and Palm Island. Now we have to go head to head. In fact, it is even tougher on us than on them.

Q. Why not, then, be totally private in Dubai? And focus on developing projects in the Middle East?

A. This is a very sensitive subject because, deep down, I think if I was private, I could do so much more. Let's look at Emaar, which generated this year about 540 million in net profits. And I drive the profit up 20 percent every year.

But what I am aiming to get out of this? The Arab world still doesn't have this bonus enhancement compensation the West has, so what am I personally getting out of this? The trust of people around me, the investors.

Q. What prevents you from becoming totally private in Dubai, or the wider Middle East?

A. Whatever business I have in the Far East is bringing me a good quality of life. Even if I go private and triple my income, I will still live exactly the same life.

Q. How about Dubal and the aluminum import restrictions imposed by Europe?

A. That is a long fight, but it is getting better all the time. The consumer in Europe is on our side. But never mind. You have to fight your way sometimes.We're moving in the right direction - we're moving slowly, but we're getting there.

Q. What about your mega-mall? What is happening there?

A. I am submitting the new design this week, and then going back to the government to get approval. We are still waiting for the government's approval of the design. It is the mother of all malls. It is something you fly to. It is something you take the plane to go to, you know.

Q. But in terms of people taking a plane to Dubai to go shopping, right now, nobody is doing that.

A. Well, I tell you what. Let's not kid ourselves and talk about Gucci and Chanel: this is a middle-income market, and you have to cater to the middle-to-low end of the market.You have to be smart about it, and you have to be reasonable with your retailer so that you can operate. And you have to have the size and the magnitude and the entertainment and the rent level and the marketing.

A simple example: in the United States, 30 million people visit Disneyland every year, but more Americans travel to Minneapolis. Forty-two million people visit the Mall of America every year. It is enclosed, so people don't worry about the weather, which is severely cold. In Dubai, we are just reversing that.

Q. Post-Enron, post-WorldCom, Western businessmen are no longer trusted. Does this issue exist in the Arab world?

A. This is a very sensitive subject because people talk about transparency, about how CEOs must behave and be honest, but aren't we all supposed to be honest? Isn't that what my mother told me and what your mother told you when you were young?

So the first thing that we - as individuals, as CEOs - are telling all these guys is that it is only basic that we have to be honest. Why is greed killing us when we have made it as big boys?We've made it. Why screw around? So is it an issue? Yes, it is an issue. Do we have people who play around? I would say, yes, there are some.

What's the solution? We have to put back the culture of honesty - honesty for shareholders and employees in the company. But I think still we have to have very strict regulations and laws and they ought to be monitored. God told us, if you misbehave, I will take you to hell. We will always misbehave, so we need to have these rules that keep us straight.

Yet rules and regulations are sometimes a problem for entrepreneurs. You have to have that balance. Do I have any difficulties? Personally, no. I am a straight shooter, but, yes, it is becoming a very serious issue.

Q. How do you think you are perceived?
A. Personally?

Q. Personally.

A. Some people like me and some people don't like me. I think people don't like me because I am very aggressive. I do too many things at one time. People who like me, they think I represent what they like to see.

I used to care about how I was perceived. Now, I like to do a good job, I like to keep my family and my mother very proud. My heart is full of a lot of love. If I am aggressive, I am aggressive in business - nowhere else.

Q. In the Arab world, is economic liberalization linked to political liberalization?

A. They are linked. They are totally linked. If you want economic liberalization and you want economic progress, you've got to be able to listen to all of these businesses, and businesses have to have a voice. As a result, the government has to be very responsive to what the business community thinks. Liberalization means free minds, good education systems.

People would like to be able to speak their minds, and they would like to participate in decision-making. And, hey, if you are doing a good job and your aim is good, what is the harm? What is the harm, unless you have a hidden agenda?

Q. What is the harm in what?

A. What is the harm in people participating and raising issues - and raising their voices and offering comments and maybe disagreement about certain issues. What is the harm if you, as a government, have good intentions?

Q. As economic liberalization comes to the region, do you see it followed by major political change?

A. I don't see major political change, no. I see gradual political change. I certainly hope that we will have gradual change because I don't think the public knows how to handle anything drastic. I think gradual change is good.