There are turbulent winds blowing the stock market indices of the world into negative territory, with the major markets in the United States and Europe in particular, retreating to levels in some cases not seen in a decade. For investors, these are worrying times as a unique set of circumstances — ranging from the ongoing trade and tariff war between the US and China, erratic foreign policy decisions in Washington, uncertainties about the global economy, the hiking of bank rate by the US Federal Reserve board, and the over-emphasised positions of market giants such as Amazon, Facebook, Alphabet, Google and Netflix — all combine to create strong downward pressures.
Here in the UAE, these external forces exert pressure on our domestic indices too, showing that our economy is indeed integrated on a very broad macro scale with those buffeted markets. It’s a worrying time, but there are measures that can be put in place here to ward off the effects of those external forces that are at play. And the current situation presents an opportunity for agencies at every level of government to boost the microeconomy of the UAE, countering those at work at the macroeconomic level. Indeed, the government of this nation has never been slow in offering measures that shield our economy when it faces times such as this, buffeted by global headwinds.
Last year, the successful implementation of the value added tax (VAT) system put in place a sophisticated tax collection mechanism. Simply put, that tax regimen now offers a vehicle for the UAE to implement tax-rebate schemes that would immediately boost participants at every level — a direct and regulated monetary stimulus. And given that the dirham is directly linked to the US dollar, the rebate scheme would be advantageous. This, combined with a relaxing in regulatory measures such as loan-to-value or debt-burden ratios would also prove beneficial.
Over the past months, both the federal and Dubai governments have set a course for the next three years, opting to freeze fees for the next three years, and the Government of Dubai has gone further to take measures to incentivise economic growth and boost business confidence in the emirate. Given the turmoil in markets, similar measures may indeed be timely for investors, and perhaps it’s time now too for a review of regulatory measures that are at play in a negative manner.
Whether it’s the real estate sector, retail, logistics, construction, trade and tourism, there are effective measures that have been put in place. All these measures have to be implemented in full with some creative input that would be timely and well-received.