Thousands of inactive companies detected

A special committee set up after a cabinet decision to study regularisation of trade licences has found out there are 180,000 inactive companies, sponsoring around 540,000 people.

The committee is set up on the basis of a memorandum presented in the cabinet by the Ministry of Economy and Commerce on the problem of issuing a large number of trade licences.

The result of this study about such companies is based on the Ministry of Labour's statistics. These show there are 350,000 firms registered at the ministry, 48.6 per cent of which are active or operating, and 51.4 per cent are inactive, or the activity is limited only to trading in visas, and sponsoring expatriates looking for jobs elsewhere in the UAE labour market.

In its final report, which is expected to be submitted soon to the cabinet, the committee suggests the licensing authorities should start regularising these licences to enhance economic activities which are considered "marginal" - that is, which do not contribute effectively to the gross national product.

They employ large numbers of workers with low productivity and poor skills, such as small vehicle maintenance workshops, manual cleaning and tanning companies, restaurants, coffee shops, and small groceries, tailoring and beauty salons, and used car lots.

The committee report recommends investment in big supermarkets is to be encouraged in order to limit the spread of small groceries. It also recommends establishment of cooperative societies, and large workshops that host different handicrafts, with special emphasis on skills and the use of modern technology.

It recommends stopping issuing licences to more than one firm operating in the same rented place.

It asks for suspension of any new licence applied by a national, if he holds an expired licence, which has neither been cancelled nor renewed after expiry. Recommendations also include laying down of a rule to specify the maximum number of licences issued to a national.

The report recommends that the licensing authorities in different emirates must observe Federal Law No. 18 of 1995 when they issue licences to small traders. They must ensure that the self-sponsored trader is not holding another similar licence issued in another emirate, and that his national partner has not been issued more than three trade licences.

The report further calls for the regularisation of the employment policy for domestic servants, farmers, chauffeurs, and the like. It sets the number of this category of expatriates at 507,000 in 2000 (based on the statistics of the General Department of Naturalisation and Residency).

The report states the ever growing number of this category of labour has become a phenomenon which is worth attention. Such a work force represents 26 per cent of the total active labour force, and 16.3 of the total population in 2000.

The committee recommends the authorities concerned coordinate with the department to lay down rules for the regularisation of employing this work force. It suggests to take into account an owner's social status, his monthly income and the number in his family, if he submits an application to bring in any or more domestic servants, farmers, chauffeurs, and the like.

The committee said the size of such a work force will jump to 800,000 by 2005 and to 950,000 in 2010.

According to the report, the number of trade licences has increased from 109,000 in 1994 to 190,000 in 2000, at a rate of 73.8 per cent. This rate is also 39.4 per cent higher than the population growth rate in the same period.

The same rate surpasses the gross national product by 50 per cent in 2000. In addition, the share of nationals and expatriates, as compared to the total number of licences issued, is one licence per national and 10 for every expatriate.