Dubai: Last week’s announcement that private firms would no longer have to provide a Dh3,000 bank guarantee to recruit each new employee is just the latest of a series of measures aimed at transforming the UAE’s economy.
The packages announced this year are an indication that the objectives announced in a series of medium- and long-term visions are becoming reality.
The UAE Vision 2021 calls for the development of a competitive knowledge-based economy, and the announcement of 10-year visas for scientists, and investors and professionals in the medical, scientific, research and technical fields is an important step in attracting the human capital necessary to achieve this.
The Abu Dhabi Vision 2030 and the Dubai Industrial Strategy 2030 further set out the ambitions for developing the UAE’s non-oil sector to create a diverse, forward-thinking, innovative business ecosystem.
The UAE is among the 10 most competitive countries in the world and our goal is to remain a top destination for ease of doing business, through an agile economy based on flexibility and openness. A strong economy drives us as a nation to be among the first and best.”
- His Highness Shaikh Mohammad Bin Rashid Al Maktoum
Vice-President and Prime Minister of the UAE and Ruler of Dubai
What is notable about the measures announced so far this year is how tightly focused they are on making business easier to conduct in the UAE — a country that is already ranked the 21st top nation on the World Bank’s latest Ease of Doing Business report.
Measures announced cut down on red tape, relax business ownership rules, reduce registration and operating costs. They make it easier — and cheaper — to recruit.
In addition, the support and encouragement for innovation and start-ups help drive a crucial sector of the economy. It’s estimated that small- and medium- enterprises (SMEs) contribute 40 per cent to Dubai’s GDP and employ 42 per cent of the workforce.
Many of the measures announced will disproportionately benefit SMEs, who do often suffer from low liquidity and do not usually have the resources to employ staff to deal exclusively with paperwork. Measures that benefit business tend to benefit SMEs even more.
The new economic initiatives and incentives cover ease of doing business, supporting new sectors, developing SMEs, stimulating tourism, developing local economy and creating jobs, so as to build a unique investment environment that enhances Abu Dhabi’s competitiveness.”
- His Highness Shaikh Mohammad Bin Zayed Al Nahyan
Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces
And it is clear that although the measures announced so far are wide-ranging, we will see further announcements in the future.
“I think the dialogue is continuing,” Suresh Kumar, President of the Indian Business and Professional Council [IBPC] of Dubai, said of the latest visa announcements in a telephone interview.
“They certainly want to revisit this in a few months’ time simply to see how much of an impact this has created.”
- With addition inputs from Ed Clowes, Staff Reporter
BUSINESS SUPPORT AND IMPETUS
1) February 28: Freeze on government fees
The UAE federal government announced on February 28 a three-year freeze in government fees, saying the move was intended to attract more foreign investments, promote economic stability and support the industrial and commercial sectors.
A few days later, on March 4, Shaikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council, announced a three-year freeze on Dubai government fees. Shaikh Hamdan said the move was aimed at promoting Dubai’s economic competitiveness and boosting investments in the emirate.
2) April 14: Economic stimulus package announced in Dubai
His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, announced a package of policies aimed at boosting Dubai’s economy.
The package included setting up a consultative council to represent international companies operating in the emirate and a proposal to allocate 20 per cent of government contracts to small- and medium-sized companies (SMEs).
The package included numerous measures from government departments, including the Department of Finance waiving company fines and trade violations, and offering fee payments by instalments, and encouraging transit visitors and families to stay longer and more frequently.
Dubai International Finance Centre would be strengthened and tasked with attracting foreign direct investment and increasing benefits from financial flows, estimated at $200 billion.
Dubai Chamber of Commerce and Industry would review fees and local laws to reduce the cost of doing business and the material burden on companies. And Dubai Land Department would develop a mortgage and finance law, attract foreign investment and revitalise the property market.
3) May 1: VAT on gold rolled back
The UAE federal government rolled back the five per cent value added tax (VAT) on the gold and diamond sectors at a wholesale level. Retailers, however, said they will continue to impose five per cent on all jewellery transactions taking place in their shops.
Experts said the move by the UAE cabinet could set off a revival in consumer sentiments for gold and diamond jewellery sectors, which had been sluggish in the beginning of the year. Retailers are expected to adjust their costs as a result of the wholesaler exemption, in turn benefitting consumers with lower prices.
Experts said that since the introduction of VAT in January, the jewellery retail sector had been struggling with an exceptionally difficult trading environment. Prior to the rol back, gold sales were down by 30 to 40 per cent from a year ago, with the January decline being in the range of 50 per cent.
4) May 20: 100% foreign ownership and 10-year visa for professionals
The UAE federal government announced it would relax company ownership rules to allow 100 per cent foreign ownership. In a landmark decision, it also announced new 10-year visas for investors and professionals in the medical, scientific, research and technical fields along with their families, as well as all scientists and creative people.
Shaikh Mohammad Bin Rashid Al Maktoum said: “Our open environment, tolerant values, state-of-the-art infrastructure, and flexible legislation are the best plan to attract international investment and exceptional talents.”
5) June 5: Abu Dhabi announces Dh50b economic stimulus package
His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces and Chairman of Abu Dhabi Executive Council, announced a Dh50-billion economic stimulus package for Abu Dhabi. Measures were aimed at boosting the non-oil economy by helping business, supporting SMEs and stimulating tourism.
Initiatives include dual licences enabling firms in free zones to work onshore and bid for government contracts and helping SMEs boost their competitiveness.
Most commercial licences would be issued immediately, with no requirement for a physical presence, and home licences would allow for working from residential premises. Shaikh Mohammad also ordered the setting up of an Abu Dhabi Accelerators and Advanced Industries Council to attract and support investments and technologies to further diversify Abu Dhabi’s economy.
He further ordered the creation of 10,000 jobs for Emiratis in the public and private sectors.
6) June 6: Dubai freezes school fees
Earlier this month, the Dubai Executive Council issued a decision freezing school fees for all private schools in the emirate for the coming academic year, in a bid to reduce the financial burden on parents. Shaikh Hamdan instructed the Knowledge and
Human Development Authority (KHDA) to put the decision into effect immediately by informing private schools and parents.
The move comes at a time when parents say their budgets are already tight due to an overall increase in the cost of living.
Major school networks in Dubai said they would abide by the decision while others said they had already frozen fees.
On the same day, Dubai Municipality announced it would be halving the annual "market fee" charged on commercial premises.
The fee — charged annually as 5 per cent of the commercial rent at the time of a business’s annual registration — would in future be charged at 2.5 per cent.
7) June 7: Dubai Land Department waives registration penalty
The Dubai Land Department announced it would waive the 4 per cent late registration penalty on developers and purchasers who had failed to notify the department of unit sales.
A four per cent registration fee would still apply and, in future, would be applied as soon as a purchaser booked a unit.
The move is aimed at encouraging relatively older projects and properties where developers and buyers were yet register them even after the handover.
8) June 11: Dubai cuts hotel sales fees
Shaikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council, announced a cut in Dubai’s hotel sales fee, from 10 per cent to 7 per cent in a move aimed at boosting the tourism sectors.
Shaikh Hamdan said: “We have a strong tourism sector enjoying excellence, and we have a huge trust that the tourism sector will continue to have an influential contribution to the emirate’s GDP.” Dubai saw 15.79 million tourists in 2017, and aims to increase the number of visitors to 20 million by 2020.
9) June 13: Sweeping changes to UAE employment and visa rules
The UAE Cabinet adopted a series of changes to employment procedures and visit visas.
Instead of paying a Dh3,000 deposit when recruiting new employees, private companies would instead pay an annual insurance fee of Dh60 per employee to cover end of service benefits, vacation allowance, return tickets and, in case of injury, up to Dh20,000 insurance cover per worker.
The federal government estimated this would release Dh14 billion into the economy.
Furthermore, jobseekers would be granted a six-month visa without fees, and changes in visa status would be processed without the visa holder having to leave and re-enter the country.
Transit passengers would be able to get 48-hour transit visas without a fee, and people overstaying their visas would be able to leave voluntarily without incurring a return ban.
10) Various dates: Attracting top students
In recent weeks, the government has announced a number of measures to bolster the UAE’s position as a global educational hub.
In May, the UAE introduced five-year residence visas for students, and 10-year visas for outstanding students. Currently, most students in the UAE are required to renew their visa every year.
Then, as part of the UAE’s sweeping changes to visa and labour legislation announced last week, the cabinet announced that exceptional students would be given two-year residence visas after they graduate, allowing them to pursue internships and job opportunities.
The move will bolster the country’s knowledge economy.