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Dubai eyes Orangeburg investment
By Dan McCue
Staff Writer
It’s the kind of deal that can change communities. A planned $600 million to $700 million investment in a logistics, manufacturing and distribution “megahub” on 800 acres in Orangeburg could bring up to 10,000 jobs to the region.
And that would drastically change the rural landscape of Bamberg County and the western reaches of Dorchester Country.
Jafza International, a subsidiary of Dubai World, a holding company wholly owned by the Dubai government, has put Orangeburg on its short list of potential sites in the Southeast for the center.
If the plan comes to fruition, Jafza International could literally transform the community into a substantial trade-based economy through the creation of 8,000 to 10,000 jobs over the next decade, said individuals involved in the discussions.
A delegation from Jafza International met with South Carolina officials and business leaders on Sept. 5 as part of their ongoing due diligence and site review process and said they could make a decision on the Orangeburg site sometime in October.
An undisclosed number of sites in other parts of the Southeast are also still in the running, members of the delegation said.
“This process is entirely about who wants our global expertise and investment,” delegation members said during a daylong series of discussions.
They also told state and business officials that $600 million to $700 million is only a “general calculation” of the minimum investment that would be required “for building our vision somewhere in the region.”
Based on their previous experience, delegation members said, additional investment from companies locating on the site could be as much as another $1.2 billion.
Jafza officials said Orangeburg has everything they’re looking for, but there are still logistical issues that need to be resolved, namely the creation of a cloverleaf at the S.C. Highway 301 and Interstate 95 interchange in Orangeburg County, and the purchase of the land where the center would be developed.
The company is eyeing the same 800-acre parcel where CaroLinks, the Charleston-based startup, has long maintained it would build a logistics park. In connection with that project, U.S. House Majority Whip James E. Clyburn secured $4 million during the past two years to provide initial funding for the creation of the cloverleaf interchange.
S.C. Department of Transportation officials said the cloverleaf project is still in the early planning stages but that the eventual cost would likely be in the $40 million to $60 million
range.
The site, a former sod farm, is roughly 800 acres in total and is comprised of several smaller parcels. CaroLinks still holds the options to purchase some of those parcels; many of its other options on the site have expired.
Jim Roquemore, president of Orangeburg-based Super Sod Inc. and co-owner of the site along with Ben Copeland, CEO of Patton Seed Co., declined to comment on the status of the property, citing “sensitive and confidential negotiations” currently under way.
Gregg Robinson, executive director of the Orangeburg County Development Commission, also declined comment on potential development of the site.
Formed in 2000, Jafza International has created free trade and special economic zones in its home country of Dubai as well as in Morocco, the Republic of Djibouti and Malaysia.
So successful have these enterprise zones been that developing countries are lining up to work with the company. The Jafza delegation told local officials that they are currently assessing more than 30 similar projects around the world.
In early September, Sheik Mohammed bin Rashid Al Maktoum, vice president of the United Arab Emirates and Ruler of Dubai, announced that Jafza International and two of Dubai World’s other subsidiaries had entered into an agreement with Vietnam in regard to developing a global logistics hub there.
Al Maktoum and Dubai World Chairman Sultan Ahmed bin Sulayem are currently in Vietnam to discuss bilateral relations between the UAE and Vietnam.
The government of Romania has also invited the leaders to visit later this month to discuss similar possibilities.
The delegation indicated that while Jafza International is continually looking for opportunities all over the world, the ongoing population shift from the northeastern United States to the Southeast—a trend that shows no sign of abating—suggested that the time is right to consider an entry into the market.
Also contributing to that decision were the persistent congestion and labor problems at ports on the U.S. West Coast, and physical constraints on East Coast ports that stymie their future growth.
Jafza delegation members said they consider the entire I-95 corridor in South Carolina attractive because of its proximity to the Port of Charleston, airports, the interstates and rail connections and the availability of land.
Also appealing to the company is South Carolina’s readiness and ability to continue to grow.
“Many countries have reached out to Jafza, but didn’t meet the standards of being ready to grow in terms of available infrastructure or regulatory regime,” sources close to the discussion said.
Those same sources indicated that state officials understand that Jafza International is “very serious about the Orangeburg site,” which local economic planners have already dubbed the
“Global Logistics Triangle.”
Although Jafza International as a formal entity is only seven years old, it grew out of the creation of Dubai’s Jebel Ali Free Zone in 1985. Company officials said their plans for the U.S. site—wherever it may be—are modeled on Jebel Ali, which is widely considered one of the most successful and fastest-growing free-zone operations in the world.
Within the zone, a sister entity to Jafza International, the Jebel Ali Free Zone Authority offers business and tax incentives to corporations. The facility also provides warehousing and distribution facilities to international and local corporations using the Dubai Port, which currently ranks ninth in the world in terms of cargo container traffic.
In addition to that achievement, Jafza International’s Web site touts the organization’s existing partnerships with 4,300 national and multinational companies—140 of them members of the Fortune 500—from more than 110 countries. The delegation has told state officials that the actual corporate makeup of the U.S. site, and whether it’s weighted more heavily toward distribution or light manufacturing, would be determined largely by local needs and expertise.
The delegation is said to be looking for stability in future plans for whatever community the organization chooses to locate in. According to individuals involved in the discussions, Jafza International wants to play an active role in helping to recruit its current corporate clients to the area surrounding its facility “whether those companies ultimately choose to locate in (the company’s) facility or someone else’s.”
While all this bodes well for the company’s future U.S. location, the delegation took pains to emphasize that they prefer to traffic in reality rather than in promises. Still, a delegation member said, it would safe to say that if Jafza builds a facility of the size it envisions, additional collective investment of at least another $1.2 billion could be expected.
“The additional ($1.2 billion) investment we discussed is from companies that we anticipate coming into the site, but we need to be careful in how we characterize that additional investment,” a person privy to those conversations said. “It is speculative, and depends on the type of company, and also you have to understand that they would come in phases lasting several years.
“Of course, the factors impacting that are massive and not in our control. These include economic and trade trends, local incentive packages (for these companies), competition issues, and infrastructure building from the local to the global. In other words, we can build it, but we are not the only ones who will make them come. That’s why it is crucial our local public partners are truly committed as well.”
Telling words, particularly in light of what Dubai experienced in the U.S. court of public opinion just two years ago.
Jafza International’s parent company, Dubai World, is probably best known from the controversy that surrounded the March 2006 purchase of Peninsular and Oriental Steam Navigation Co. by its DP World subsidiary.
The British P&O was then the fourth-largest ports operator in the world, but therein lay the rub—among its holdings were port facilities in New York, New Jersey, Philadelphia, Baltimore, New Orleans and Miami.
Although the $7 billion deal was reviewed and approved by the Committee on Foreign Investment in the United States, an inter-agency group chaired by the secretary of the U.S. Department of the Treasury that includes representation and input from the State, Commerce and Homeland Security departments, it unleashed a political firestorm.
The chief concern expressed by opponents of the deal revolved around port security. Led by then-Speaker of the House Dennis Hastert and Tennessee Sen. Bill Frist, critics pointed to the Sept. 11 Commission report, which said two of the Sept. 11 hijackers were UAE nationals and that money that funded al Qaeda had passed through U.S. banks, albeit without the knowledge of the Dubai government.
The controversy was the first significant break between President George W. Bush and the Republican leadership in Congress. To quell the controversy, DP World announced that it would transfer its operations of American ports to a U.S. entity. It eventually sold P&O’s U.S. operations to American International Group’s asset management division, Global Investment Group, for an undisclosed sum.
But if the opportunistic haymaking of U.S. politicians was an uncomfortable experience that still rankles business and government officials in Dubai, it may ironically and ultimately turn out that the controversy benefits South Carolina.
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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