The outbreak of Covid -19 shook the foundation of the global economy and compelled businesses to adapt to a new normal. Around this time last year, the world was entering into a lockdown that caused a seismic shift in the way businesses functioned. Global supply chains came to a halt, consumer confidence plummeted, unemployment was high and liquidity crunch crippled businesses. The International Monetary Fund (IMF) predicted that the global economy is likely to have shrunk by 4.4 per cent in 2020. Every sector of the global business landscape was scathed, and it will take years of recovery to bounce to pre-Covid levels of profitability.
UAE’s path breaking approach
As the UAE based CEO and Managing Partner of UHY James, an independent member firm of UHY International, I can vouch for the fact that the UAE was a casualty of the Covid crisis. However, in this article the spotlight is on how UAE chose to weather the crisis and the changing role of professional services firms in helping businesses adapt to a dynamic economic climate.
From the initial phase of the Covid outbreak the visionary leaders and authorities ensured public health and financial health of the UAE was safeguarded in the best way possible. The Central Bank of the UAE came to the rescue of the business community by launching the Targeted Economic Support Scheme (TESS). As of February 2021, the total economic support packages provided amounted to Dh395 billion. What is even more interesting is that recently UAE’s national banks returned Dh14.47 billion from the stimulus incentives they had received since March 2020. This move reiterates the adept handling of the Covid crisis by the key financial institutions & leaders of the UAE.
Revamping regulatory landscape & socio-cultural fabric
While Covid did disrupt engines of growth in the UAE, the UAE government pulled a masterstroke by announcing the introduction of 33 new initiatives aimed at driving economic growth, attracting investment and strengthening the regulatory landscape. In August 2020, the UAE Government released Federal Decree Law 26/2020 to accelerate 100 per cent foreign ownership of mainland companies. This move was bound to lure foreign investors and fuel inbound investment. Further, UAE continued its pursuit of creating a regulated economic environment by introducing legal initiatives like VAT, ESR, Ultimate Beneficial Owner (UBO), AML Registrations for DNFBPs and more.
The UAE also brought into force the Retirement Visa, Cultural Visa and Golden Visa that would revolutionise its socio-cultural fabric. If we were to look through a magnifying glass, 2020 was the year when UAE adopted a multi-pronged approach to ensure its economy is future-ready and sustainable in the long haul.
Value generators in a new normal
Being at the helm of affairs at UHY James, an audit, advisory, tax and consulting practice, that has a long-standing presence in the UAE, we have a ringside view into the business challenges in the UAE. One of my key takeaways from 2020 is that firms dealing in professional services like audit, advisory and consulting cannot follow a one-size-fits-all approach anymore. Each business is unique and Covid has exposed them to a whole new set of risks. Professional service firms must curate solutions that meet the demands of the business and help it adapt to the evolving landscape. At UHY James we have 5 partners in total, wielding over 150 years of solid industry experience and expertise, who are well poised in assisting businesses in their pursuit of growth & expansion.
Digital adoption is gaining momentum. Every business - be it a conglomerate or SME - is exploring the best way possible to have a digital footprint. I believe that to go digital having a skilled IT team on board will just not suffice. Businesses should invest in experts who can provide a strategic roadmap that will amplify their digital presence without losing sight on what needs to be done on ground. Similarly, the growing compliance and regulatory demands of the UAE economy make it imperative for businesses to stay on the side of the law, to avert penalties that could end up costing way more than hiring professional services would!
Future driven focus
The fact of the matter is that the ‘new normal’ is not so ‘new’ anymore yet businesses have an arduous road ahead. The financial health of most businesses is fragile, the risks that lie ahead are unevaluated and efficiency may be lacking; thereby hindering the pace of growth. The rules of the game have changed and to survive one must level up. My two cents, the way forward for professional services firms lies in delivering value for businesses by focusing on the future.