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Boston Strategies International, Inc. November 27 Global Infrastructure Series Global Supply Chain Management: Dubai www.bostonstrategies.com b t t t i (1) (781) 25 815 Page 1 This report has been prepared by Boston Strategies International at the request of CLIENT for the purpose of establishing its operating strategies. It may not be appropriate for other purposes or audiences. This report contains forward-looking statements and projections with respect to anticipated future performance of CLIENT, suppliers, customers, and/or general or specific economic conditions and factors that are based on Boston Strategies International s analysis of market trends and external data. Forward-looking statements and projections are not guarantees of future performance and involve significant business, economic and competitive risks, contingencies and uncertainties, which are difficult to predict. Accordingly, these projections and forward-looking statements may not be realized and actual results may vary up or down. This report may not be reproduced or distributed without express written approval from Boston Strategies International.

Summary Historical view of shipping in the region Trade in the Middle East is booming Dubai is a major trans-shipment hub The majority of Middle East trade is conducted with Asia and Europe Lots of intra-regional trade The UAE s reliance on oil is decreasing rapidly Dubai and the changing face of the GCC Infrastructure is extensive and increasing in capacity Dubai Internet City, Dubai Media City, and other complexes Planned industrial infrastructure projects Planned commercial and residential infrastructure projects New transit system between Dubai and Jebel Ali Planned airport infrastructure projects Logistics case studies Jebel Ali Free Trade Zone Jebel Ali Free Trade Zone Port Jebel Ali Free Trade Zone Warehouses Outlook: the promises and challenges of growth Advice for doing business in the UAE Page 2

Historical view of shipping in the region Page 3

Trade in the Middle East is booming TEUs Historical evolution of trade in and out of Dubai 5,, 4,5, 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, 1991 1993 1995 1997 1999 21 23 25 Imports Exports Transhipment Source: DP World Page 4

The majority of Middle East trade is conducted with Asia and Europe Merchandise imports of the Middle East by region Merchandise exports of the Middle East by region North America 1% South and Central America 2% North America 13% South and Central America 1% Asia 28% Middle East 17% Europe 38% Asia 55% Europe 17% CIS 1% Africa 2% CIS 3% Middle East 1% Africa 3% Source: World Trade Organization Page 5

The UAE s reliance on oil is decreasing rapidly 9% Oil trade flow in the UAE 8% 7% 6% 5% 4% 3% 2% 1% % Source: FCCI UAE 199 1993 1996 1999 22 Oil % of Total Exports Oil % of GDP Page 6

Dubai is a major trans-shipment hub Dubai trans-shipped 1.9m containers so far this year, vs. 7, TEUs imported and 35, TEUs exported. 64% of all value is trans-shipped shipped Jeddah Islamic Port Jeddah Islamic Port Transshipment Jebel Ali Containers 2,, Port Rashid 1,5,, TEU's Jebel Ali and Port Rashid Cargo Flows 8 7 6 5 4 3 2 1 26 27 *Note: 27 figures are through August 27 Import Export 1,, 5, 24 25 26 TEUs Sources: Saudi Ports Authority, DP World Page 9

Lots of intra-regional trade ($54b) Iraq 3% Qatar 5% Imports by country, 25 ($billions) Israel 8% Oman 3% Yemen Bahrain 3% 3% Saudi Arabia 27% Qatar 5% Exports by country, 25 ($billions) Iraq 5% Israel 8% Oman 3% Bahrain 2% Saudi Arabia 35% Kuwait 12% Iran 16% UAE 2% Kuwait 9% Iran 11% UAE 22% Source: World Trade Organization Page 1

Major inter-regional trade flows in the GCC Dubai Dubai Dubai Dubai as % of as % of as % of as % of 3% UAE UAE GCC GCC 25 26 25 26 25% 35% Average growth rate 24-26 Exports Imports 2% Exports 23% 2% 7% 6% 15% 1% Imports 63% 63% 27% 28% 5% % Source: Analysis by Boston Strategies International, Inc. Page 11

Infrastructure is extensive and increasing in capacity Dohuk Mosul Tikrit Ramadi Baghdad Karbala Najaf Diwaniya Samawa Nasiriyah Umm-Qasr Jeddah Irbil Kirkuk Sulimaniya Hilla Kut Basra Kuwait Dammam Bahrain Doha Riyadh Diyala Amara Bandar Abbas Sharjah Muscat Abu Dhabi Page 12

Ports are small but growing fast Saudi Arabia and U.A.E. Ports Total Throughput Tonnage 24-26 45 4 35 3 35 3 25 Millions Millions 25 2 of tons of tons 2 15 15 1 1 5 Reference Points: World Port Ranking Total Throughput Tonnage 25 5 45 4 5 Sources: Saudi Ports Authority, AAPA 24 25 26 Page 13

Trucking connections are extensive DHS 2 18 16 14 12 1 8 6 4 2 UAE Trucking Tariffs ex Jebel Ali 2 X 2 or 1 X 4' Container & General Cargo 1 X 2' Container 7 ton Truck Source: DP World Page 14

Dubai and changing face of the GCC Page 15

Jebel Ali Free Zone s cargo intake is increasing rapidly 7, Jebel Ali Free Zone Imports 12, 6, 1, 5, 8, Millions Kg 4, 3, 2, 6, 4, Millions AED 1, 2, 1995 1996 1997 1998 1999 2 21 22 23 24 25 Weight (Kg) Value (AED) Expon. (Value (AED)) Source: Analysis by Boston Strategies International, Inc. Page 17

as well as the output 4, Jebel Ali Free Zone Exports 9, 3,5 3, 8, 7, 2,5 6, Millions Kg 2, 5, 4, Millions AED 1,5 3, 1, 2, 5 1, 1995 1996 1997 1998 1999 2 21 22 23 24 25 Source: Analysis by Boston Strategies International, Inc. Weight (Kg) Value (AED) Expon. (Value (AED)) Page 18

Dubai growth in perspective World port rankings 25, 2, 15, ' TEUs 1, 5, 24 25 Source: Analysis by Boston Strategies International, Inc., Hong Kong Port Development Council Page 22

Planned industrial infrastructure projects $3 billion in GCC projects between 27-212 $1 billion in power generation $5 billion in industrial sector Hydro-carbon sector which contributes to 47% of the GCC s GDP will account for the remaining project dollars. Relocation of main cargo port Mina Zayed to Khalifa Port by 211 Sources: U.S.-Arab Chamber of Commerce, UAEINTERACT Page 23

Planned commercial and residential infrastructure projects Fully-automated Dubai Metro system lines with a total of 47 stations, 1 underground, and 2 in Sharjah Emirates Industrial City - 7.7million 7million square meter industrial park Emirates City 72 residential and commercial towers Al Qaiwain waterfront community of villas and apartments Mina al-arab - $2.7 billion beachfront development with resorts, 5-star hotels, and 3,5 residential units Fujairah Paradise and Fujairah Dana villas, hotels and malls DEWA power generation capacity expansion and desalinated water production- $5.45 billion by 212 Source: U.S.-Arab Chamber of Commerce Page 24

Planned airport infrastructure projects Over 2 years, airport development will exceed Dh75 billion (US$2.43 billion) Infrastructure Project Estimated Cost (Dh) Estimated Cost (US$) Abu Dhabi International Airport redevelopment 3 billion 8.17 billion Expansion of Dubai International Airport 15 billion 4.8 billion New Dubai World Central development 3 billion 8.17 billion Sharjah International Airport redevelopment 227 million 61 billion Ajman new airport 2.9 billion 8 million Fujairah terminal & associated structures expansion 183 million 49 million Al Ain International Airport redevelopment 75 million 2.43 million Ra s al-khaimah airport expansion 1 billion 272 million Source: UAEINTERACT Page 26

Boston Strategies International David Jacoby: djacoby@bostonstrategies.com Tel: +1 (781) 25-815 Boston Strategies International is a global management consulting firm that helps market leaders achieve competitive advantage through supply chain management through: Supply Market Analysis that helps identify emerging issues that affect their supply chains Supplier Enablement that facilitates global growth and local content requirements Supply S l Chain Ch i O Optimization ti i ti that th t reduces d project j t and d lif life cycle l costs t Al Khobar Boston Doha Dubai Manama Page 34