For port and logistics giant DP World of Dubai, its bid to acquire the Haifa Port Company is just the beginning in a series of possible projects in Israel, says group chairman Sultan Ahmed bin Sulayem in an interview with "Globes". Speaking from his home in Dubai, bin Sulayem reveals that his group may be offering Israel the possibility of testing Hyperloop One, the super-fast transportation system it is developing together with Richard Branson's Virgin Group. In addition, he also discloses his interest in examining the development of industrial and free trade zones, like the one in Eilat, for the activity of companies operating in Dubai.
Bin Sulayem believes that Israel could become a logistics center for the entire Middle East, thanks to its strategic location, technology infrastructure, and stable court system. He is actually less enthused about the program to connect Israel by rail to the United Arab Emirates, a plan promoted by Finance Minister Israel Katz.
Close to the seat of power
In Dubai, bin Sulayem has been known for years as a leading businessman who is behind, among other things, the artificial islands venture and the development of Dubai’s Jebel Ali free trade zone, where the thousands of companies operating there are responsible for over half the local economy. Bin Sulayem is also close to Sheikh Mohammed bin Rashid Al Maktoum (MBR), ruler of the Emirate of Dubai.
A year ago, the Port & Free Zone World Company (FZE), which belongs to Dubai’s ruling family, completed its acquisition of 100% ownership of DP, in a deal with a $13.9 billion valuation. Bin Sulayem is the chairman of the parent corporation and also serves as the chairman and CEO of DP, which currently operates 78 ports around the world.
Bin Sulayem’s connection to Israel, formed over a decade ago, has strengthened in recent years. He visited Israel in 2018 and 2019, each time for a period of three months, for outpatient medical treatment. He lived with his family on Rothschild Boulevard in Tel Aviv and, he says, the stay changed his views about Israel.
"All of us, we were blinded by the fake media that will tell you things which are not true about Israel," he says in a video call from his home in Dubai. "But when you visit Israel, you see that they’re [Israelis - A.B.] just people like us, who want to live, who want to do business, who work very hard to develop their country and have made an amazing development.
"[Living in Israel] was an eye-opener. To see the dynamism, to see the business drive, and to see the innovation, to see the determination of people - they want to really do something with their life, want to improve, and I had the opportunity to meet many people in Israel."
In your opinion, will the new administration in the United States have an impact the process of normalization between Israel and the United Arab Emirates?
"I am optimistic regardless of who runs the States. The peace process is continuing and hopefully others will see the results and not be too late to join."
Were you surprised by the influx of businesspeople from Israel to the United Arab Emirates after the signing of the Abraham Accords?
"Well, certain businesses were trading with Dubai even before the Accords, but for me, it was also a surprise. I happened to be in Israel in 2018 and 19… At that time, we were looking at ‘how do we do business with them’?
And so, we have a port in Cyprus, and we thought maybe Cyprus could become the median, where Israeli people come there and from there we could do business with them through Cyprus. The Abraham Accords have, of course, fast-tracked that. Because you didn’t need to go gthrough Cyprus, you could go directly."
And what impression did they make in Dubai?
"The only difference I see between Israel and the UAE is that in Israel people are very interested in politics, while in the UAE, we don’t even talk about it, I mean, politics is the last thing. If you read the newspaper, believe me, the majority of UAE people read the economic section onward and maybe the sport."
Improving global transport
The interview with Bin Sulayem was conducted at the time of the announcement that the Israel Chamber of Commerce would join the World Logistics Passport (WLP), an initiative announced at the World Economic Forum in Davos in 2019.
"We noticed an inefficiency in the supply chain when it comes to air cargo," explains bin Sulayem. "Air cargo comes from the Far East to Europe, and Europe is the hub to distribute to Africa and Latin America. It’s just like a triangle. And the idea is how I make it south-south, which is a straight line. It shouldn’t be through Europe. It takes more time and costs more money. And so, we started to identify routes, along the south-to-south initiative… could be Eilat or Ethiopia, depending on which part of Africa."
Bin Sulayem’s idea is that state aviation authorities will set reduced levies on a higher level of air cargo traffic.
In other words, some of this activity will now pass through ports in Israel?
"Absolutely… "You know, people look at DP World, they think we are just a port operator. We are not. We are a logistical company. We operate maritime services… we operate ships… we operate transport… we operate trains. We are the second largest train operator in India. We operate trains in Europe. We have ferries in the UK. Our ferries carry cargo and passengers in the UK… We have also logistics parks which are one of the biggest in India, in Chile, in Peru. We believe there is opportunity in Haifa, in Ashdod, in Eilat. You have a unique situation where Eilat is closer to the Red Sea while Ashdod and Haifa are on the Mediterranean. Both are important.
"I’m looking, for example, at a very interesting situation whereby cargo from our port in Europe can come by sea to Israel, and then from Haifa or Ashdod, we take it by truck through Jordan to Iraq to our country, so there are advantages.
"I mean, Haifa or Ashdod even, is like 1,000 kilometers from Baghdad and Basra is 600, so if you go by sea it is probably 5,000-6,000 kilometers, so cargos with high value, low weight, and time being of the essence… Israel will become a very good logistical place.
"Israel is well placed to take advantage… because you have highly educated people, you are high in technology, you are in the Middle East. It’s the center. You are close to a big market. And in Dubai today, for example, we cover two-thirds of the population of the world in our airports. You can reach over two billion people in three hours. This is an advantage and you have a very interesting proposal."
Do you understand the fear Israel has of handing over control of the port of Haifa to a foreign government-owned company?
"Our business, mainly, is when the ship comes to dock, we use our cranes and our smart system to offload efficiently, and put it in the yard. And that’s all we do. It’s got nothing to do with sovereignty, or anything.The government makes the rules and regulations and we follow.
"I’m partnered with, let’s say, 60 governments because we’re in 60 countries. So, we are a partner with many governments, and we know how to deal. We are very good with the unions, we have good relations with the unions in Australia, which is not easy. So, we know how to operate and we know, at the end of the day, for us, the people who work for us are the biggest asset we have, because their well-being and their knowledge and training in the new technologies is what gives us the opportunity to improve and compete. And that’s our biggest asset."
Do you believe you’ll be able to compete with the Chinese operating the adjacent new port?
"We’ve been operating in many places with many people, with many operators… We operate with everybody. We have no issue competing. The customer will decide whom he likes."
A strong legal system
Bin Sulayem points to additional advantages that Israel has over other countries in the region. "Israel has rule of law, Israel has good infrastructure - when we invest in any country, I mean, we’re bidding for Haifa, like anybody else, what we like is when we’re bidding in a country that has rule of law, transparency, and that encourages us to invest.
"Transparency is key today for investment. Why do people invest in Singapore? Because of transparency. Why do people come to Dubai? Transparency and rule of law. Why do they go to Israel? Because there’s a law, there’s a rule, you follow it.
"The rule of law is very important. It encourages us. I’ll give you an example. I was in one of the countries in Africa - I won’t mention which- and I was looking at a port. And the government official liked us. He said, ‘Oh, I can cancel that contract with the other company and give you the job.’ And I said, ‘No’ and he said ‘Why’? And I said, ‘Because if you cancel for them, you’ll cancel for me in the future.’ Anything that is done illegally or behind the scenes or under the table is a double-edged sword."
You mention the legal system in Israel favorably, but on the other hand, we hear constant complaints about the bureaucracy here. Take, for example, the Haifa Port tender, which is currently being delayed due to bureaucracy.
"We have patience… we are not discouraged. We invest in many other places and some countries take longer than that. It takes time for them to them to understand - let them take their time. We have no issue with that. But our commitment is there.
"So, there are many businesses we’d like to see in Israel. A port is one. But there are others more meaningful than ports - logistics parks, industrial parks, free zones are added value. Today in Jebel Ali I have 8,000 companies, 10,000 hectares - 90% of the land is gone. I need more area for my customers… They have expanded several times. I can’t expand them anymore because I have no land. That’s why we took land in Egypt to develop for them a subsidiary location. Also in London…in India. In many places, we look for land... All of these companies want to expand into markets. And there, Israel is a gateway to Europe.
"A free zone concept in Eilat… will be interesting. Because the border of a country is a trouble area. It's smuggling, its all the bad things that happen. Imagine if you create a free zone on the border. That makes it suddenly an economic activity, whoever lives on the border will be doing legal trade instead of illegal trade. And we’ve seen it in Kazakhstan. We advised them on the border with China, where there's a problem for them with smuggling, and we did it for them in a place called Khorgos between Kazakhstan and China, and today, it’s a thriving business."
What do you think about the vision of building a railway connecting the Haifa Port with the Persian Gulf?
"I’m in transportation and I know what I’m talking about. Rail is not cheaper than truck. If you look at transportation in the world today, the cheapest transportation mode is by sea, second cheapest is by truck, third is by train, and fourth is by air. Train is not cheap. The truck goes directly to the customer. So, truck is always cheaper."
Bin Sulayem states that the challenge will be reducing the bureaucracy at border crossings that would hold back the trucks, and proposes unifying documentation to lessen inefficiencies along the supply chain.
"The pandemic taught us something - that manufacturing in China, in one place, is dangerous. And when China closed, everybody got hurt. Today, most of the foreign companies in China want a second location. They don’t want to be in China only. And they’re looking for a place… China is too expensive for manufacture. We’ve been in China for 12 years, to date, and I can tell you the labor costs in China, the cost of workers, has increased every year by 20%.
"The Belt & Road really reduced shipping time but… the Chinese are manufacturing $450 billion of Chinese products in Vietnam to sell to China. They can manufacture cheaper. That’s fine for China. But they cannot manufacture in Vietnam for Europe. We can manufacture in Israel. I am very optimistic about that."
Labor costs in Israel are also not cheap, especially when the shekel is so strong.
"What manufacturing needs today is smart engineers who can monitor the machine, who can improve the manufacturing, who can add the new technology, who can actually make a new technology. That is where Israel will be very useful. I will not be surprised if someday you will make electric cars in Israel. I believe in batteries, in renewable energy - which you are very good at in Israel - many technologies that you have developed here could be deployed, not just as software but as hardware, and you could play a major role in trade."
Investing in Musk's vision: "Travelling between Be'er Sheva and Tel Aviv will take 4 minutes"
The Hyperloop project is based on a concept that has, for decades, been implemented in internal mail systems at large organizations.
Entrepreneur Elon Musk first publicly mentioned the concept in 2012 when he proposed using huge reduced-pressure tubes in which pressurized capsules ride on aerodynamic bearings. Musk's original plan to transport passengers from Los Angeles to San Francisco did not come to pass, but a number of entities decided to take on the idea. One of the leading ventures based on the Musk concept is Hyperloop One, founded in 2014. DP and Richard Branson's Virgin Group took control of the venture in 2017, committing to a $400 million cash injection.
The main difference between Hyperloop One and Musk's concept is that passenger capsules are propelled using passive magnetic levitation, similar to China’s high-speed ‘maglev’ trains. Insulated metal tubes allow almost frictionless movement, saving energy and allowing travel speeds of up to 1,000 km/h.
During the first experimental phase, conducted in the Nevada desert in May 2017, a speed of about 400 km/h was achieved using a two-passenger capsule that glided along a 500-meter-long track in 12 seconds. For the next phase, the developers are seeking suitable sites in ten different countries.
At present, a 10 km long track is planned, using far larger capsules with a 25-passenger capacity. The final stage of testing will be on a 50 km track. The first operational system will run between Dubai and Abu Dhabi, shortening the travel time between the two principalities from two hours by car to just 12 minutes.
"When we invested in it, it was just a computer simulation," bin Sulayem says. "Now Hyperloop is not something that’s going to go tomorrow. It’s going to take years. But at least the first big leap - we’ve done it in Vegas, with a test in 2017.
"I would be interested to talk to the government of Israel do a test track in Israel because I believe there are many engineers in Israel who could be, you know, very innovative and we will talk to the government in Israel about that."
It sounds very expensive. What will a track to Eilat cost, for example?
"Per kilometer, the cost is about 30% cheaper than the fastest train. When you look at the fast train of 500 kilometers in China - ours is 30% or 25% cheaper. It’s a tube, there is no noise, nobody sees where it is - you just see a nice tube going through a city. Easy to build. Nobody hears it. But it gets you there fast. So, for Eilat, it could be less than 50 minutes, maybe 20 minutes. Beersheva to Tel Aviv could be two, three, four minutes."
Sultan Ahmed bin Sulayem
- 65 years old. Resides in Dubai
- Holds a BA in Economics from Temple University, Philadelphia.
- Group chairman and CEO of DP World; chairman of the Ports, Customs & Free Zone Corporation; chairman of Virgin Hyperloop One; board member of the Dubai Executive Council, the UAE Federal Tax Authority.
- Heads a group operating 78 ports worldwide
- Established and leads Nakheel, a real estate and tourism property development firm that has created many Dubai tourism and real estate projects, including The Palm, the world’s largest man-made islands.
- Headed the Investment Corporation of Dubai, the emirate's sovereign wealth fund, until November 2009, when he was removed in the wake of the debt crisis that struck Dubai that year.
- Has visited Israel many times. The initial connection was formed via his son Ahmed, who manages the group’s diamond and gold trading activity.
Published by Globes, Israel business news - en.globes.co.il - on February 17, 2021
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