The Dubai money-making machine
From oil sales and Salik, to traffic fines and the Dubai Mall: The incredible facts and figures behind Dubai’s multibillion-dirham economy.Peter Iantorno March 26, 2015
At the start of 2015, the government of Dubai unveiled a public expenditure plan that will see the emirate spend a jaw-dropping AED 41 billion - the biggest public budget since before the global financial crisis.
At a time when oil prices are tumbling around the world and policymakers across the GCC are being forced to reconsider their financial forecasts, Dubai is able to splash out on an ambitious budget that will create an estimated 2,530 jobs and operate with a predicted surplus of AED 3.6 billion.
How is this possible, we hear you ask? Let us introduce you to Dubai: the money-making machine.
The first point to note about the 2015 budget is that oil accounts for only four per cent of it. Reflecting the global downturn in oil prices, the government has decreased its dependence on oil from nine per cent last year, leaving the unpredictable oil market with comparatively little importance in the grand scheme of things.
The slack left by the reduction in oil revenue is more than picked up by a massive increase in charges for government services, which are set to account for 74 per cent of the total budget - a giant leap of 22 per cent from last year's plan. Also important is the big increase in tax revenue - thankfully not on us residents, but in the form of customs and excise charges and the corporation tax imposed on foreign banks, which will increase by 12 per cent this year, comprising 21 per cent of the total budget.
Cashing in on traffic
With more than 2.35 million permanent residents in Dubai and some 1,413,150 vehicles registered in the emirate (according to Roads and Transport Authority figures, as of December 2014), traffic congestion is an issue that has dogged the city for a long time, as the number of cars increases by at least 100,000 every year.
While heavy traffic might make it difficult for us to get to work in a morning, one thing it does mean is money in the bank for the Dubai government. Why? Well, aside from vehicle insurance and registration fees for every single car, there's also the small matter of Salik: toll gates that earn millions every day. The are six Salik toll gates in Dubai (Garhoud, Al Maktoum Bridge, Safa, Barsha, Airport Tunnel and Mamzar), which cost AED 4 each time a driver goes through them. There used to be a maximum daily charge of AED 24 per day, but this was removed in 2013, leaving drivers who pass through multiple gates in the same day liable to pay unlimited fees. Let's say that half of all the registered vehicles in Dubai pass through one Salik gate per day (an extremely modest estimate). The total amounts to AED 2,826,300. Even using our pigeon maths skills, it's safe to say there's a lot of money coming in every day from Salik alone. And for those who don't play by the rules, the windfall is even greater.
According to statistics revealed by Dubai's Traffic Police earlier this month, a single Emirati driver has so far amassed an incredible AED 280,000 in fines from a total of 477 traffic offences. And he's just the start, as the three worst violators have committed a whopping 1,022 offences between them, clocking up massive fines.
Although there are no official statistics, the fines must run into to the tens of millions, and, of course, none of these reckless drivers have been banned, so the stream of fine money keeps on rolling in.
The cash cow
While Salik and traffic fines are massive earners, the real big bucks - and massive figures - come from the jewell in Dubai's crown: The Dubai Mall. Last year an astounding 80 million visitors (almost 220,000 per day) visited the mall, making it the world's most popular tourist destination by far. Making up around five per cent of the emirate's GDP, the world's biggest mall dwarfed other tourist attractions around the globe, with New York's Times Square picking up less than half the amount of visitors (39.2 million) during the same period.
And there's no sign of let up, as The Dubai Mall's Fashion Avenue is set to undergo a massive expansion, with another 1 million square feet, including a further 150 high-end brands set to be added to the salubrious area.
With the Dubai economy now going from strength to strength after recovering from a massive setback in 2008, it seems that not even the tumbling oil prices have the power to slow it down.