The globally interdependent financial and economic system has been running hot for several years and partially it explains why while all of us are intimidated by uncertainty, we are also subconsciously realizing that the crisis, the one we had been expecting, has come.
In the chaos of media pressure and global uncertainty, there is evidence which is unconditionally and irrevocably certain to reshape the global business environment:
• COVID-19 has triggered a global recession.
• Pandemic and consequent damage are accelerating trends that were already changing business.
• During the next 6, 12, or 18 months we are going to see the strongest, proactive, mainstream enterprises to adapt and conquer the market, while others will have to abandon the field.
Discarding prejudices, the target of this article is to give a pragmatic approach fueled by clear thinking on the situation concerning the COVID business environment in the UAE and convenience which UAE market is offering to entrepreneurs from all around the world, starting from online work from home to building a business empire.
For the UAE, challenges of pandemic and forthcoming global change of economic and business environment are all yet another stepping stone towards stronger internal boundaries and external partnerships. In reaction to the pandemic crisis, the UAE government has introduced wide stimulus measures to support business. These include:
• Dubai Customs: Refund on 20% customs duties on imported goods which are sold locally, cancellation of bank guarantee, and 90% reduction of customs clearance fees.
• The UAE Central Bank: Dh50 billion with 0% interest loans for banks to support SMEs; a stimulus measure of Dh95 billion to ensure liquidity in the market, reduction of cash reserve requirements. The total package offered by the UAE Central Bank as of 5th April is Dh256 billion [Source: PWC Middle East: Middle East Tax and other measures in response to COVID-19].
A multipronged approach, thorough analysis, strong ties, and trust between the government and core business players are integral conditions for gaining even more influence in GCC and at the global stage. That is the time for boosting enterprises and going into inter-governmental partnerships along with public-private joint ventures.
Watching the business environment from the perspective of our corporate experience at My Business Consulting DMCC, we would like to outline the most promising fields of doing business which will consistently serve as major multiplicators for higher demand in technologies, workforce, and knowledge and attract international capital.
According to British Petroleum Statistical Review of World Energy 2019, the world’s consumption of oil has increased from 4142.9 (million tonnes) in 2008 to 4662.1 in 2018; natural gas from 2578.5 (million tonnes) in 2008 to 3309.4 in 2018; coal from 3503.4 (million tonnes) in 2008 to 3772.1 in 2018.
Even though we are forwarding to the era of renewable energy resources, traditional one will stay in the game as long as they exist.
Nevertheless, in terms of technological breakthrough and long-term thinking, investment in renewables is considered wiser by financial institutions. Global consumption of renewable energy has skyrocketed over the last 10 years from 124.1 (million tonnes) in 2008 to 561.3 in 2018. UAE has huge potential in terms of solar and wind power energy generation and a room for tech start-ups (inter-governmental, public-private joint ventures, and private). The commitment of the UAE towards the transition to green energy has been developing over the years and among the most representative projects, there are EU-GCC Clean Energy Technology Network and Masdar City.
A couple of months ago speaking of national food security would be considered a completely outdated anachronism by global system, yet the complete lockdown and consequent distortion in supply chains have brought it high on the agenda of national governments. It is a vital objective of the government to make sure the country may sustain the lockdown crisis without counting on importing food supply. According to the Global Food Security Index 2019, the UAE was ranked 21st.
In 2018, the UAE government has launched National Food Security Strategy 2051, which targets the development of sustainable local food production via the use of modern technologies. During the time of complete global lockdown, UAE-based agro-tech start-up Pure Harvest Smart Farms, which is specializing in growing tomatoes in a controlled-environment farm secured $120 million commitment of investment (including $20.6 million of fresh funding).
3. E-Commerce, Automation and Digitalization
The current crisis has accelerated the megatrends like advanced robotics in multiple fields, from medicine and production to education; IoT and total automation and digitalization of production and services.
The demand for e-commerce, automation and digitalization is now driven not solely from the perspective of business processes optimisation and quality perfection, but these are also considered inevitable in terms of COVID-19 and fears of a new emergency which may come anytime and disrupt production. Advanced technologies provide numerous solutions for remote business monitoring which is already widely used in production and logistics with the minimum human involvement.
Switching from the human workforce to robots in manufacturing lines and foundries is highly expensive and time-consuming, but the idea of securing production from an emergency like COVID-19, saving on human-related expenses (such as insurances, pensions, salaries), and outrunning competitors with flawless quality of machine perfection will earn its keep.
We are going through a major crisis which most probably will become the turning point for our society. Nevertheless, throughout the history humankind has fought for survival and gained the skill of adapting to the new environment.
The UAE is executing its power consistently by making sound decisions and taking into account the interests of business while prioritizing the safety of citizens as well as expatriates. Crisis challenges every one of us, but these challenges can be met and those companies who propose the solutions and foresee the market needs ahead of time will win the market for the next years to come.
The writer is Corporate Services Manager at My Business Consulting DMCC