Offsets: Creating Collateral Benefits, Features
The size and scope of the UAE’s defence procurement programme is such that the federal government believed it might adversely affect income distribution to its people. It therefore introduced a national offsets programme in 1990, aimed at achieving wealth for the benefitof the UAE population.The programme was also designed to assist with the global integration of the UAE’s economy by creating commercially viable ventures through partnerships between the domestic private sector and international businesses.
The national programme means offset proposals are required for all significant defence purchases, although they are evaluated independently of technical proposals relating to the procurement.According to Dr Amin Badr-El-Din, head of the UAE Offsets Group (OUG): “Contracts are awarded to bidders whose proposals constitute the best combination of technical and economic offering.”Offset commitments, furthermore, are contractually binding in the UAE and the subject of a separate contract. Their success is determined,according to Dr Badr-El-Din, “by reference to achievement or output and not the cost of resources or input.”As one of the world’s highest per capita income countries, estimated to be around $17000, economic prospects in the UAE are excellent.Although the economy has traditionally been based on revenues from oil and gas, largely from Abu Dhabi, the federation’s most important oil producer, the government is keen to broaden the industrial base and boost private sector activity.Government policy has therefore encouraged economic diversification to reduce the vulnerability of the economy to external factors,particularly world oil prices.Since 1989, growth has been steady with GDP rising rapidly by around14 per cent in 1990 at Dh123.6 billion ($33.6 billion). Since then,the rate of growth has slowed but remains.
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