What next for the UAE after Etisalat loses its monopoly?

In 2003 the UAE enjoyed 12.5% growth in GDP to $80bn. Oil was the main driver, with revenues up 29% to $25bn. But non-oil also performed well, up 6% to $54bn, and significantly more important to the UAE economy than oil.

For the UAE is a shining example of the successful diversification of an oil economy. The decision to axe the local telecoms monopoly is just the latest example of this process, if perhaps a rather belated step.

On the non-oil side of the economy Dubai has led the way. This emirate - now the largest urban area of the UAE - has developed its ports and airport through free zones, built a strong tourism sector and expanded as a major commercial hub for the region.

The next steps are all in place for Dubai. More free zones, extending into international financial services and healthcare; a major infrastructure project at the Dubai International Airport; more hotels on the Palm Island and the $5bn Dubailand theme park; and the expansion of many other business sectors, particularly real estate with freehold ownership for foreigners.

So what are the big moves by the UAE authorities that we can anticipate over the next few years?

Certainly the final decree to create the Dubai International Financial Centre now seems very close. We can also expect moves to allow foreign firms to buy into local insurance companies, and reciprocal expansion of local banking into the GCC markets where UAE banks are likely to fare well.

The federal law on real estate - which will clarify the position of real estate sales to foreigners and allow registration of their homes - is also in the pipeline, if still hotly debated.

Abu Dhabi has also established the precedent for electricity privatization in the UAE over the past five years, and become something of a regional role model. It is thus possible that electricity privatization might be extended to Dubai and the other emirates with the UAE capital setting the trend.

Finally, we can expect serious changes to the way the UAE capital markets function. There will be more shares listed, and compulsory listing for certain categories of company. The trading floors will also operate far more as one, and the transparency of information will be enhanced.

In addition, the upcoming Dubai Regional Exchange for the cross-listing of regional shares will create a new dimension. So too will the broadening and deepening of the local corporate and government bond market.

These are exciting times for the UAE as all these economic reforms will permanently enhance the efficiency and dynamism of the local economy. This will obviously have an impact on asset values, sending shares and real estate prices skywards.

And to conclude the ending of the Etisalat monopoly will be good news and bring even greater investment into the telecoms sector with competing mobile phone operators, new ISPs and more choice of television services.