KHALEEJ TIMES, Thursday, Jun 14, 2018 | Ramadan 29, 1439
UAE's reform measures are truly bold undertakings
The recent spate of
investor-friendly reform initiatives by the UAE government, including 10-year
visas for investors and professionals as well as a move to allow 100 per cent
foreign business ownership, along with some proactive stimulus packages unveiled
by Abu Dhabi and Dubai separately will stir up investor confidence and
accelerate the growth of the second largest Arab economy, experts and corporate
Combined, the three-pronged
stimulus programmes, undertaken by the federal government and two emirates, will
give a major fillip to real estate, construction, information technology, small
and medium enterprises sectors. In addition, these bold measures along with the
easing of liquidity through the Dh50 billion package announced by Abu Dhabi will
help banking and manufacturing sectors while considerably easing pressure on
business community, analysts said.
They said other critical
measures, taken by Dubai, including a one-year freeze on school-fee hikes,
waiver of some fees on aviation and real estate transactions, and cutting
charges levied on businesses, will help arrest cost of living and doing
Most analysts and corporate
leaders believe such bold strategies would help offset the impact of VAT-induced
slowdown while reinforcing investor confidence leading to a pick up in foreign
Rashed Al Blooshi, chief
executive of the Abu Dhabi Securities Exchange, said the Dh50 billion stimulus
package for Abu Dhabi reflects the vision of the country's leadership to
establish the UAE as a leading global economy.
Stressing that the Abu Dhabi move
came at a good time, as the emirate's economy continues to grow, he said the
infusion of liquidity would positively impact the business sector over the next
three years. Al Blooshi noted the move to clear late payments of companies
involved in government business is a timely measure.
"Pending payments hinder the
progress of SMEs and settling them would help increase liquidity and enable
these organisations to contribute to the economic development of the nation.
This, in addition to reviewing the fines and fees imposed on SMEs, which help to
support the local business environment, especially in terms of issuing instant
licences," he said.
Dr Azad Moopen, founder chairman
and managing director of Aster DM Healthcare, welcoming the move to curb the
rising cost in Dubai by the Executive Council, said there has been significant
impact on the life of the common man as well as profitability of the business
due to the increase in various expenses in the last five years.
Atik Munshi, senior partner at
Crowe Mak, said such positive measures would bring about enhanced investor
confidence, "particularly from multinationals and overseas investors who have
been sitting on the fence so far". As the impact will be long term, the results
are expected to last much beyond 2020.
"I think such stimulus should be
seen in conjunction with the recent announcement of 10-year visa and 100 per
cent ownership for foreign investors. I believe that this is a game-changer,"
"Although the government has
announced some sectors like innovation, manufacturing and education to benefit
from the visa and legislative reforms, we need to await specific plans from the
authority. Overall, even if such stimulus is targeted at certain sectors, its
effect will percolate to the entire economy positively over a period of time."
Jitendra Gianchandani, chairman
and managing partner at Jitendra Consulting Group, said recent stimulus measures
would have far reaching positive impact.
"Measures such as 10-year visa to
professionals, 100 per cent ownership in mainland companies and five-year to
10-year visa to students will reignite investor confidence across all the
sectors," he said.
Maryam Eid AlMheiri, CEO of Media
Zone Authority - Abu Dhabi and twofour54, said the new, forward-thinking
initiatives would create more opportunities for all companies in Abu Dhabi.
"By making it easier for private
sector companies to do business, it will create more opportunities for growth,"
Firoz Merchant, founder and
chairman of Pure Gold Group, said the new measures of the Dubai Economic
Department to boost business and attract foreign direct investments approved by
the Dubai Executive Council would greatly enhance the growth of the economy.
"Such measures, coupled with the recent Dh50 billion stimulus package for Abu
Dhabi, will strengthen economic stability, sustainability and growth in the
country," he said. "Apart from the strong initiatives that will help the SME
sector, I believe that relaxation of VAT for the gold industry will bolster
Dubai's tourism sector for which the gold trade is relevant and will enable
increased consumer spending on the gold and jewellery," he added.
Analysts said the Dubai
initiative to exempt companies from penalties and trade violations is aimed at
ensuring continued business growth and to reduce the financial burden on
As per the decision of the
Executive Council, Dubai has waived fees on 19 business activities related to
aviation industry and aeroplane landing with a view to attracting more than Dh1
billion in aviation sector investments. The move aims to make Dubai a global hub
in the aviation industry in line with Dubai Plan 2021 and Dubai Industrial
Strategy 2030. The government is halving the market rate, a municipal charge on
businesses, to 2.5 per cent and waiving a four per cent fee for delayed property
A research note from Emirates NBD
said the new measures should offer some relief for businesses across all sectors
as well as providing a boost to the key transport and logistics sector. "The
measures were broader in scope than we had expected following the instructions
to reduce the cost of doing business in the emirate and take steps to accelerate
economic growth," the bank said.
Al Blooshi of the ADX added that
the decision to establish the Abu Dhabi Accelerators and Advanced Industries
Council under the title of Ghadan, comes at a time when the emirate is
attracting and supporting investments and value-added technologies that
contribute to Abu Dhabi's knowledge-based economy.
"Supporting the issuance of
double licences to Abu Dhabi Free Zone companies will also allow them to operate
outside free zone areas and participate in government tenders," he said.
Munshi said SMEs are a major
contributor to the employment in the country and a substantially large number of
entities in the UAE belongs to this category as it accounts for 95 per cent of
the total enterprise population in Dubai and employs around 42 per cent
workforce of the emirate. However, the sector needs a bigger support to play its
due role in the success of economy.
"SMEs at times need a little hand
holding to ensure commercial success. Currently bank-lending norms for SMEs are
stringent, which hinders startups and expansion. In some countries, the central
bank issues directives to banks to lend a certain percentage of loans to SME
sector, a similar step may help," Munshi said.
Most analysts are of the view
that the real estate and construction sectors would be major beneficiaries of
the Dh50 billion stimulus drive. Sectors that will reap the benefits immediately
include construction and infrastructure developments, which have been facing
payment delays due to cash constraints that had a cascading impact on all