Hans-Paul Bürkner, President and Chief Executive Officer of The Boston Consulting Group; and Co-Chair of the World Economic Forum on the Middle East, gives his views on some of the issues on the agenda of the meeting which will take place at the Dead Sea from 18-20 May.

In your capacity as Co-Chair, what results would you like to see from the World Economic Forum on the Middle East, particularly given the summit’s theme of “putting diversity to work”?

The Arab World is Janus-faced: While the economic face is smiling, the political face seems more worried than ever. While the economy prospers, the political situation remains complex and provides a major constraint to faster growth and competitiveness.

The conflict in Iraq, the unresolved Israeli-Palestianian problem, tensions over Iran’s nuclear programme, and the sectarian schism between Sunni and Shia Muslims demonstrate that the quest for peace and stability remains one of the most urgent challenges. But there is also progress on coming together. For example, the ongoing efforts of the Gulf Cooperation Council to achieve monetary union by 2010 are advancing steadily – and closer economic integration may encourage greater political cooperation

In order to sustain and strengthen the Arab World’s competitiveness as well as to maintain its growth momentum, harnessing its diversity will be crucial. The region’s rich heritage of religious and ethnic diversity can represent a powerful source of advantage—provided it evolves toward a peaceful “melting pot”. Enhancing common understanding and tolerance among faiths and peoples is the first step to fostering peace and stability in the region. And I am confident that the World Economic Forum on the Middle East in Jordan will once again provide a neutral platform to facilitate and enhance the dialogue among parties and to enable new insights into the root causes of conflict.

“Putting diversity to work” also addresses an often-neglected issue: the need to balance the interests of local Arab populations and a rapidly-growing expatriate community. Dubai, for example, has 1.4 million inhabitants—of these 800,000 are South Asians, Westerners, or other foreigners. In integrating these diverse groups and creating a new common spirit, the UAE might become the New York of the 21st century.

As an international business leader, how would you characterize the business environment in the Middle East? What emerging opportunities do you see?

The Middle East is a diverse business region comprising fast growth areas, emerging markets, and less-developed areas. But generally speaking, the whole region and in particular the Gulf Cooperation Council members, are experiencing an exceptional period of economic growth and a booming commercial sector. Although this boom is driven by high oil prices, the region is no longer solely dependent on sun, sand, and oil, but decisively diversifying into other businesses. This growth is helping to fuel an investment and consumption boom that is accelerating the transformation of the region into a global financial and business hub.

The region is undergoing major changes. First of all, there is a fundamental change in capital flows. Financiers estimate that up to US$ 2 trillion in investable assets originate in the Gulf region, the bulk of which is parked abroad, often as American Treasury bills and in places like Switzerland and London. Increasingly, however, Arabs are investing in their home region. Governments are also spending billions of dollars on infrastructure, and national investment agencies are on the prowl for opportunities. As a consequence, we will see a continuous flow of investments in infrastructure, real estate, travel and tourism, as well as in other sectors.

This abundance of capital is complemented by a large pool of labour. And the pool of young blue-collar workers from India, Pakistan, and other countries is growing constantly. These trends favor businesses that are energy-intensive, labor-intensive, and rely on large plants that are typically unwelcome in densely-populated, urban areas, but ideally located in deserts. For example, cement and building materials, chemicals, and other raw materials that can be further processed in Europe or China can be competitively produced in the region.

Another sector which will be at the heart of the region’s economic growth is transport and logistics, especially as the UAE emerge as a new hub for long-haul carriers and container shipping. Travel and tourism will see further expansion as well, with huge duty-free stores and shopping complexes, the world’s first seven star hotel, luxury beach resorts, and tourist attractions like man-made islands and the planned branches of the Louvre and the Guggenheim museums.

The Middle East is even outpacing the growth rates of other rapidly-developing countries such as China and India. Sooner or later it will produce its own global challengers outside of the oil and petrochemical sector. When BCG published a list of 100 new Global Challengers from rapidly developing economies last year, most of the emerging multinationals had their roots in Asia, Russia, or South America. But I would not be surprised at all to see Arab companies on our next list. An increasing number of companies such as banks, airlines, property companies, construction firms and hotel chains are already regional champions and will soon be entering the world stage.

What is it about the World Economic Forum that inspired you to get involved in this event?

I know no other organization that can convene top policy makers, business leaders, and public figures and engage them in a continuous dialogue to shape global, regional, and sectoral agendas. The World Economic Forum’s meetings play an influential role as one of the world’s most effective sensing systems for future trends and developments. Whenever I have participated, I have come away enriched with new insights, perspectives, and relationships.

I strongly support the World Economic Forum’s central premise that the most urgent global challenges can only be solved by close cooperation between the public sector and an engaged and responsible private sector. Companies are increasingly distrusted—in some recent studies even more than politicians! Increasingly, competitive advantage can be lost and won on the issue of corporate responsibility. More than ever companies need to balance social and commercial needs and explore limits and opportunities for business and society in equal measure.

The World Economic Forum also has a proven record for enabling and facilitating the dialogue between the West and the Islamic World across countries, religions, and ideologies. I am deeply concerned about the potential business implications of the conflicts in the Middle East. Globalized conflicts may disrupt global capitalism. But in the long run, I hope that capitalism will prove to be the more convincing choice. I am confident that the discussions in Jordan will help foster an understanding of the urgency of promoting the peace and understanding that can provide the foundation for turning the region’s diversity into an asset rather than a source division. Personally, I am also eager to learn more about the reshaping and transformation of the region’s economies.

Can you tell us more about The Boston Consulting Group’s plans for expanding its activities in the Middle East?

For many years BCG has served multinational clients in their expansion in the Middle East with staff from our global network. With our recently-opened offices in Dubai and Abu Dhabi, we have established a permanent local base in the Gulf region to deepen and expand relationships with both local and international clients across all industries.

With the rapid growth of many economies in the Middle East and their diversification away from oil, local companies and public authorities face the challenges of modernization, managing growth, and globalization. In order to be successful in the long term, their businesses must be grounded in differentiated strategy and excellent management skills—which are at the core of BCG’s mission and client work.

Our local team in the UAE will enable BCG to participate in, and contribute to the economic transformation in the Middle East. We are committed to serving both our global and local clients and to increasing our investments particularly in the Gulf region. We have assembled a team from across the world, both men and women, from many different backgrounds, with deep expertise and experience in the relevant industries. And we are actively recruiting top talent in the region who combine an Arabic background with an international education or business experience. The diversity within the team will, I am sure, greatly benefit our clients and will also contribute to a better understanding between cultures. We have ambitious growth targets for our Middle East offices and plan to double our revenues within each of the first several years.