Uncertainty is not something that people in Dubai face alone. It is a variable that we all face with some degree of foreboding. It is this uncertainty that has become part and parcel of the new normal.
This in turn reflects on asset prices and economic activity that regulators monitor on a continual basis to ascertain the levels of intervention that are needed. It is therefore a source of amusement for me to note that in these times, the calls for regulation have increased.
Readers have always commented on the level of activism required by government agencies and have called me out for being an apologist. For me, the issue of government intervention has always been a function of the efficacy of legislation and not simply for its own sake.
However, there is another variable that this discussion encroaches upon — the one of culture, which is worth scrutiny.
Culture has been commonly defined as the collective programming of the mind, which distinguishes the members of one human group from another. The Arabic culture is a proud legacy, which has contributed much to the domain of Western civilisation.
Today, there are more than 2,000 words in the English language that have Arabic roots, including words such as check, coffee, sofa, sherbet etc. As these words indicate, the influence has been across the board, and is explained by the fact that Arabic as a language has been the unifying force throughout the ages.
And today is the language of the law throughout the Middle East. While there are “free zones” that make exceptions and resort to common law principles, Arabic has its own set of jurisprudence, which at its heart, explain the rise of society in the Middle East, and is the lens through which we look at for much of regulatory discourse.
However, what does this have to do with culture and uncertainty?
Different cultures are typically broken down into strong vs. weak avoidance of uncertainty. The approaches by a regulatory regime both reflect and affect the structure of these societies.
Strong uncertainty avoidance societies maintain rigid codes of belief and behaviour and are intolerant towards new people and ideas. Weak uncertainty avoidance societies maintain a more relaxed atmosphere where practice counts more than principles.
These societies understand intrinsically that the future is unknown and adapts in a way to let emergent outcomes emanate.
In Dubai, the cultural system, as well as its regulatory structure is one more dominated by optimism, and hence a laissez-faire approach, one where risk taking is at the heart of its endeavour. While these value systems are not the only variables at play, there is a recognition that this is a mindset that is widely recognised.
In Dubai for example, the regulatory approach has been one that has encouraged start-ups in the New Economy, leading to successes such as Souq and Careem, as well as allowing for innovative practices such as post-handover payment plans in real estate, all the while maintaining a vigilant eye with regulatory structures that are itself innovative. (The formation of RERA is one such authority that is now being adopted in various parts of the world).
More recently, there has been legislation to include regulating and pioneering research in artificial intelligence, as well as the creation of the Ministry of Possibility, itself an optimistic endeavour that gives an insight into the optimism of the society.
Such patterns of regulatory regimes throughout the world ultimately reflect the weightages that a culture and city places on optimism and transparency versus conservatism and principles. Dubai, and the UAE, have been examples of a culture that has embraced openness and transparency, and its regulatory regime reflects the need for such innovative practices and companies to flourish.
By its very definition, this admits to a greater degree of flux. Uncertainty then becomes a by-product of tolerance and optimism. However, it is this uncertainty that triggers a greater degree of flexibility to adopt to fast changing needs of the marketplace.
And, in an era of nationalism, defies the rigidity of borders by calling for a more open and confident set of laws that nurture the unifying spirit of optimism and value creation.
In the final analysis, the regulatory set-up, with its emphasis on industries of the future is reflective and an output of our proud culture. And an example for others to emulate.
Nasser Malalla Ghanem is Senior Partner at the law firm of NM Associates, which is a joint venture with GCP.