Danube puts on hold planned Dh30 million retail unit in Qatar

Rizwan Sajan, the founder and chairman of Danube, says they are concerned and are watching the situation closely. Amy Leang / The National

Businesses in the UAE and Saudi Arabia are taking stock of a diplomatic rift with Qatar which has led to the withdrawal of those countries’ ambassadors from Doha.

Danube Group, one of the largest building materials companies in the Middle East, is putting on hold a plan to open a Dh30 million retail unit in Qatar until more clarity emerges on the dispute, said Rizwan Sajan, the company’s chairman. Danube, based in the Jebel Ali Free Zone in Dubai, already has a wholesale building materials business in Qatar and was seeking to grow the 10 per cent share the market formed within its overall business.

“We are concerned and are watching the situation closely,” he said. So far, there is no problem with goods moving from the UAE to Qatar.

“We were planning to do some investments there but are putting them on hold.”

In March, the UAE, Saudi Arabia and Bahrain pulled their ambassadors from Qatar, citing the latter’s support for the Muslim Brotherhood and its affiliates across the region. Political observers see the move as the most serious sign of division within the GCC since the body was formed nearly 33 years ago.

The disagreement would not dent trade ties, said Juma Al Kait, assistant undersecretary for foreign trade affairs at the UAE Ministry of Economy.

“Trade flow remains on the same level and nothing has changed,” he said.

Trade between the UAE and Qatar rose by 18 per cent between 2011 and 2012 to reach Dh9 billion, according to the latest data from the Ministry of Economy. Around Dh2.7bn of that was non-oil exports from the UAE, with a further Dh4.3bn re-exports. Among the largest traded items were cement, plastering materials, gold, diamonds, copper, iron, steel and machinery.

Any escalation of the dispute threatens to smother trade ties and also opportunities for UAE and Saudi Arabian businesses with a regional footprint. Qatar has become viewed as one of the region’s hottest markets because of the rapid growth in recent years in government spending. About US$200bn is being spent in preparation for the country to host the Fifa World Cup 2022.

“It’s not clear at this moment whether this is a minor blip or something more significant,” said Karim Nassif, a credit analyst at Standard & Poor’s, the rating agency. He added he did not see any concern about a potential impact on the Dolphin Pipeline that supplies the UAE with natural gas from Qatar.

The flow of lorries carrying everything from petrochemicals to household products across the border from Saudi Arabia to Qatar remained constant, said S I Mustafa, the chief executive of the logistics arm of Almajdouie Group, a Dammam-based conglomerate.

“Operationally there is no change in business,” he said. “Personally I don’t think it [the diplomatic rift] will be prolonged.”

Vinesh Bhimani, the managing director of Kimoha, a Dubai-based packaging company, is also optimistic the dispute will blow over.

“I am still positive the UAE will find a solution to overcome the situation,” he said. “We have a local partner in Qatar and business is continuing. Less than 10 per cent of our business is from Qatar.”

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