13 January 2020

UAE cements status as Middle East’s business hub

Already the most business-friendly nation in the region, the UAE is seeking new ways to create a favourable environment for investors and job seekers.

As the Middle East’s business hub, the UAE has spent the past few years further building on its strengths, bolstering its business processes, cutting bureaucratic costs, and nurturing new industries to maintain its advantage amid rising regional competition.

The UAE has maintained its position as the region’s most business-friendly country for 2020, and was ranked 16th globally out of 190 nations in the the World Bank’s latest Doing Business Survey.[1]

The annual World Bank survey measures the regulations that enhance business activity and those that constrain it across 10 indicators, such as procedures for starting a business, dealing with construction permits, obtaining electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

Top place to do business

Measures taken by the federal government to increase business friendliness include slashing fees and regulations for the private sector to become more competitive compared to its peers and ease business processes in Abu Dhabi. 

This included exempting all new licenses from the requirement of having an office or a work space in the emirate for two years, permitting permanent home licenses, and implementing instant licensing systems in most commercial license types and all services provided by the government.

As a result, the latest survey saw the UAE rank among the top 50 nations in seven of the 10 categories, and among the top 20 in six of the areas, underscoring its competitiveness.

The UAE was 1st (a ranking it shares with other nations) in obtaining electrical power supply, 3rd in dealing with construction permits, 9th in enforcing contracts and 10th in registering a property. Globally, it was ranked 13th in protection of minority rights, and 17th in starting a business. In addition, the country was among the top 50 nations in paying taxes (30th) and securing credit (48th).

The UAE has taken several measures to boost the economy, reducing the fees for business incorporation and facilitating trade across borders by reducing the time to export and the cost to import.

Reforms to help investment

Authorities both at the federal and emirate levels are seeking new ways to create a favourable environment for attracting investment and creating jobs in an otherwise lacklustre outlook for the global economy. In a landmark move, the UAE Cabinet [3] approved 122 economic activities across 13 sectors eligible for up to 100% foreign ownership, including renewable energy, space, agriculture and manufacturing. 

This means that investors can acquire shares in a number of economic activities such as the production of solar panels, power transformers, hybrid power plants and green technology.

Stimulus packages

In 2018, the Abu Dhabi government launched a three-year, AED 50 billion [4] stimulus package to supercharge the country’s non-oil sector, which had seen lacklustre growth amid regional and international slowdown.

The Dubai Municipality cut imposed market fees from 5 percent to 2.5 percent, and slashed costs to property registration, aviation services and others to boost economic activity and make the UAE environment cost competitive for entrepreneurs and businesses.

In November, the  Abu Dhabi Executive Council [5] decided to exempt all new economic licenses issued in the capital from all local fees for two years, effective from the date of issue. The Council also approved another resolution exempting and reducing the fees of 98 basic services charged by the Abu Dhabi Municipalities on the private sector.

Increased economic activity

The spate of new measures is expected to lead to greater economic activity in 2020. Coupled with activities related to Dubai World Expo, the new reforms should lead to more economic stimulus.

The International Monetary Fund (IMF) said that while the UAE has worked hard to implement a comprehensive national small-to-medium development strategy, it should continue to lower start-up costs, operationalise the new insolvency framework, and promote greater financial inclusion.

“Economic activity is recovering and likely to pick up more momentum next year, helped by Expo 2020 and existing fiscal stimulus,” the IMF [6] said in its latest report. “Fostering growth of the non-oil private sector, including SMEs, and developing transparent, rules-based fiscal frameworks will support long-term sustainability.”

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