Abu Dhabi, Apr 15: Originally concerned primarily with the healthcare sector, New Medical Center (NMC) Group has seen its investments broaden and its revenues grow. BR Shetty, managing director and CEO of NMC Group and UAE Exchange, spoke to Emirates Business about the health of both businesses and recent growth in the financial transfer and healthcare industries.
He said the group intends to increase its investments in the UAE four-fold in the next three years. Abu Dhabi will have the biggest share of the investment, as the group plans new projects worth more than Dh3 billion.
UAE Exchange received a significant award in March. Can you talk about the award and your future expansion plans in the UAE?
UAE Exchange has had a lot of success, crowned by winning the Mohammed bin Rashid Al Maktoum Business Award under the finance category.
I received the award in a big ceremony held on March 8 from Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Dubai Civil Aviation and President of Emirates airline. UAE Exchange currently has 384 branches in 17 countries, including 56 branches in the UAE, 24 in Oman, nine in Kuwait, six in Doha, 32 in Australia, nine in Hong Kong and 210 in India.
We also plan to increase the number of branches in the UAE to 112, an increase of 100 per cent. This increase is due to large demand in our branches, especially after the Labour Ministry obliged private sector companies to pay the salaries of their staff via exchange offices and banks.
Our branches account for 58 per cent of the total exchange offices across the UAE. Their work is not restricted to changing currencies, and they also transfer money outside the country. We applied recently to the UAE Central Bank to establish a bank, under our umbrella group.
We hope to get the licence soon, especially as we have succeeded in conducting the transfer of money from the UAE to other countries in a matter of minutes. In addition, we have strong relations with many local and international banks.
Has there been an increase in the number and amount of financial transfers from expatriates living in the UAE during the past two years?
Yes, we have noticed a trend and this is a very worrying phenomenon. The rate of money transferred by expatriates from the UAE to outside countries over the past two years has increased by at least 20 per cent, especially to India, the Philippines, Pakistan and Sri Lanka.
The reason behind this increase is that many expatriates, whether Asians or Arabs, have sent their families back to their homelands and remained alone in the UAE to avoid high residential rents and the high cost of living. Definitely, the increase of financial transfers is a big loss for the state and the national economy.
There should be solutions to limit this phenomenon. The solution in the meantime is that the government should build a big number of low-cost residences for expatriates so that they will be able to remain in the country with their families.
When expatriates remain in the country with their families, they will enjoy peace of mind and respectable living. Besides, this will result in many positives for the national economy, as the rates of expenditure will increase and trade movement and the real estate sector will be boosted.
NMC Group is known for its activity in the medical sector. What is your evaluation of revenue on investment in this sector, especially given the mandatory health insurance in Abu Dhabi?
NMC Group currently has three big hospitals in Abu Dhabi, a 100-bed hospital in Al Ain, three large specialised hospitals in Dubai, a family clinic on Sheikh Zayed Road in Dubai and a medical centre in Sharjah.
And we will open a Dh300 million hospital in Fujairah in September. We have a series of pharmacies spread across the country, most of which operate 24 hours a day. In addition, we have medical equipment distribution centres and a Neopharma factory, which is the first and biggest of its kind in Abu Dhabi for the manufacturing of medicine.
The factory was opened by India’s former President Dr APJ Abdul Kalam recently with an investment value of more than Dh250 million. The factory manufactures 110 kinds of medicine registered in the UAE. It creates self-sufficiency for the group’s hospitals with regard to medicine.
We also recently received appreciation certificates from medical and medicinal establishments in Belgium and Switzerland. Some 40 per cent of the factory’s production will be distributed inside the UAE and 60 per cent will be distributed outside the country, especially in Libya, Iraq, Yemen, Morocco, Switzerland and Belgium.
The group’s revenue in 2007 topped its revenue in previous years. The application of health insurance system in Abu Dhabi led to an increase in the number of patients and our hospitals and clinics in 2007 recorded about three million patients.
More than 3,000 patients visit Abu Dhabi-based hospitals alone. We have a plan to increase our investments in Abu Dhabi for 2008. The value of new investments will not be less than Dh3bn. Our plan includes the set up of 500-bed hospitals.
If my 35-year experience in the UAE is anything to go by, investment in the medical sector is very profitable, especially if it focuses on state-of-the-art diagnosis equipment.
What has been the impact on your investments of the dirham’s continued peg to the US dollar?
Undoubtedly, our group was passively affected by the dirham’s peg to the dollar. The dirham lost over the past five years more than 35 per cent of its value due to its pegging to the dollar.
The dollar might weaken further, but I am sure it will recover and regain its strength, like in 1973 and 1974 when the dollar fell and recovered again. I think the government is keen to achieve stability in the financial market and it has made the best decision.
Its latest decision to keep the dirham’s peg to the dollar is the correct decision, because it is based on studies aimed at achieving public benefits in the UAE.
What do you think explains the increase of foreign investors in Abu Dhabi?
The increasing number of foreign investors is mainly due to high returns on investment in Abu Dhabi. Returns are very good. Abu Dhabi today is different to Abu Dhabi in the past. It has become more open and we now see foreign investors in big numbers.
Most of them are from Britain, the United States, Malaysia, Singapore, Russia and India. The government provides them with all the requirements to establish successful investment projects. There are no taxes or restrictions on money movement.
I encourage all investors, including UAE national investors, to invest in Abu Dhabi because investment there is currently a golden opportunity.
PROFILE: BR Shetty, Managing Director and CEO of New Medical Center Group and UAE Exchange
BR Shetty arrived in Abu Dhabi for the first time in 1973 and first worked as a medical representative, selling products to different health institutions.
His specialisation in pharmacology helped his practice and he took the decision to open a pharmacy in the capital, named New Medical Center Pharmacy.
After a few years, he partnered with UAE national Abudullah Al Mazroui to set up a new clinic named New Medical Center. The clinic enjoyed a good reputation in the early 1980s because it offered modern equipment and care.
Eventually, the clinic was transformed into a hospital and set up branches in Al Ain, Dubai and Sharjah. The value of the group’s investments currently tops Dh2.5 billion.