STEP 2022: UAE wants to host 20 unicorn startups by 2031, says minister Al Falasi
Corporate tax introduction will work in favour of small businesses, says minister
Dubai: The UAE has set its ambitions clear about unicorns – having 20 of these startups valued at $1 billion-plus each based here by 2031.
This will form the basis for the UAE’s ‘Entrepreneurial Nation’ initiative, which will work on creating public-private alliances and funding possibilities to help startups grow. “A number of large corporations have come to us saying we want to be a part of this,” said Dr. Ahmad Belhoul Al Falasi, Minister of State for Entrepreneurship and SMEs. “We want to help you grow these companies; we will interpret the value of the company.”
The Entrepreneurial Nation offers three programmes:
• The SkillUp academy is designed to equip the UAE population with entrepreneurial skills.
• The StartUp initiative aims to achieve success stories and help entrepreneurs in the UAE and beyond to embark on their journey.
• The ScaleUp Platform will empower future unicorns by providing a full support system to unlock high potential companies’ growth potential
Attractive labour market
The challenge for launching new entrepreneurs in the UAE is the attractive labour market, said Al Falasi. “It is very tempting to go for a job than to start a business - the majority of entrepreneurs here are actually employed and have a side hustle. But today, we want to encourage young students to look into (full-time) entrepreneurship.”
Corporate tax
The UAE’s announcement of corporate tax is a win for entrepreneurs, reaffirmed the minister. “With the latest corporate tax announcement, you will see for sure government fees being reduced - that is what has been agreed,” he said. “Three years down the line, you will get a position where setting up a business would be much cheaper, and you would not be paying government and fees or taxes unless you are profitable.
“The government needs to create revenue, and this model is a fundamental gamechanger for startups.”
Dh1b equity fund
The UAE has launched a Dh1 billion private equity fund to lend to SMEs operating in strategic sectors. The first funds will be released during this quarter and over the next five years. The government is seeking advice from the VCs about investment strategies to promote entrepreneur excellence in the region.
Decriminalising bounced checks
Talking at the 10th edition of the STEP conference, Al Falasi talked about initiatives taken by the UAE government for entrepreneurs. He said, “The first thing we did was to decriminalise bounced cheques as there were many cases where entrepreneurs renting office space, retail space were being criminalised.”
From January 2, 2022, a law came into effect in the UAE that decriminalised cases involving bounced cheques, with a few notable exceptions.
Increased lending
The UAE is ramping up lending activities to support the SME ecosystem to boost their contribution to GDP by offering strategic financing solutions. “I’m putting my other hat as Vice-Chairman of the Emirates Development Bank (EDB). We introduced a credit guarantee where the federal bank guarantees 50 per cent of loans through eight commercial banks that will lower the interest rates for entrepreneurs.”
Patent push
In February 2021, the Ministry of Economy launched the Innovation Patent initiative to empower inventors to protect their inventions at the national level. “It’s a stepping stone for startups,” said Al Falasi. “This way you are able to protect your product before going to the market. Otherwise, you would have to wait for a long time, and that delays your access to market.”
Opening accounts in 48 hours flat
“The No.1 complaint I got was the amount of time it takes to open up a bank account,” said Al Falasi. To avoid this, EDB launched an app that supported over 500 UAE-based SMEs and startups by opening accounts in less than 48 hours over the past three months alone. The account is free to all, across all emirates, with no minimum balance criteria.