New City States
by David Forrest

© David Forrest, November 2000

There are precedents for what is happening today. Very common in ancient history, city-states emerged again in medieval Italy. By the end of the thirteenth century, the region had become a patchwork of small principalities and independent towns. Five major players – the Papal States, the republics of Florence and Venice, the kingdom of Naples and the duchy of Milan – exercised such power over their hinterlands that they became a major force in European politics. Banking, commerce and industry fueled their growth.

Hong Kong and Singapore are more recent examples of cities whose influence extends far beyond their immediate geographic domain. The former British colonies are prosperous bastions of capitalism - Hong Kong’s return to China notwithstanding. Already well entrenched as global business and financial centres, they have moved boldly to embrace the new electronic economy. Both have invested heavily in communications infrastructure.

Hong Kong was the first city in the world to install a fully digital telephone network, and the first to provide interactive television with video-on-demand. More than 80% of Hong Kong households and 90% of commercial buildings now have a broadband connection. More than half of the population owns a mobile phone.

Singapore’s Intelligent Island initiative, begun a decade ago, will connect computers in virtually every home, school and workplace. The Singapore ONE network will provide universal access to broadband services including videoconferencing, high-speed internet, teleshopping, entertainment-on-demand and electronic libraries.

These and other urban centres appear destined to become the new city-states of the twenty-first century, connecting their hinterlands to the global network and bridging the physical and the virtual worlds. These cities will become the primary hubs for electronic commerce and communications and, as new affinities develop between them, a radically different global power structure will emerge.

Competition for a place in this new structure has already begun. On October 28, Shaikh Mohammed bin Rashid Al Maktoum, the Crown Prince of Dubai, formally opened Dubai Internet City, a free-trade zone for electronic commerce. When he launched the initiative the year before, the Shaikh said: “My vision is simple. In the future, all commercial action will be in cyberspace. But the cyberworld will need a ground base, on this physical world. Internet companies will need physical offices, a community and on-the-ground technology. I want Dubai to be the best physical location in the world for any and every virtual company.”

Dubai is promoting its new free-trade zone as a hub for the digital economy, serving the region from “Egypt to the Indian Sub-continent and from South Africa to the CIS” – an area with a population of more than 2 billion people. The government is spending $272 million to create a world-class, low-cost communications infrastructure with broadband access to all offices and homes. Private sector investment is expected to double that number as new businesses move in.

Dubai Internet City hopes to attract information technology, multimedia and telecommunications companies; dot-com start-ups; remote service providers; incubators; venture capitalists; and professional services firms. The government has established significant incentives for companies to locate there, offering 100% foreign ownership and 50-year land leases, and levying no taxes on sales, profits or personal incomes. It also offers “no-hassle” company registration (the process takes 24 hours) and a streamlined legal framework. Knowledge workers can obtain visas within 24 hours, and the government has instituted a fast-track immigration process. Intellectual property laws and “cyber regulations” are planned that support e-business.

Thousands of companies have expressed interest. More than 95% of the space developed in the first phase of the project has been leased, and over 140 companies have registered to establish operations. Occupants will include Compaq, Cisco, Microsoft, Oracle, Sun and Hewlett-Packard. Hewlett-Packard will transfer its regional offices to the City before the end of the year. Microsoft will move its Gulf and Eastern Mediterranean headquarters there next spring. The original plan for a three square kilometer free trade zone has already been surpassed, and the intention now is to create an entirely new urban centre.

Dubai Internet City aims to attract the best and brightest, and India is seen as a key source of skilled professionals. An official in Dubai described the objective as creating a place with “the talent of India, the infrastructure of Singapore, the attitude of Delaware and the financial muscle of Wall Street." It’s a bold vision, and one that will be repeated, with variations, in other parts of the world.

The model implemented in Dubai is already attracting attention. Dubai Internet City will host the Organization for Economic Co-operation and Development’s Emerging Market Economy Forum on Electronic Commerce, on the 16th and 17th of January, 2001.