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What’s happening in the UAE: View from British Centres for Business
Joe Hepworth, CEO at British Centres for Business (BCB), discusses recent significant developments in UAE of interest to UK businesses, with commentary from Santander’s UAE Country Manager, Monika Gajek.
Winter tourists to Dubai will probably be familiar with the Dubai Shopping Festival (DSF), which is the local equivalent of the UK’s January sales. It has a summer sister: Dubai Summer Surprises (DSS) which entices tourists and residents into the malls to engage in some serious retail therapy.
In the summer of 2018 a raft of economic stimulation measures, announced at both Federal and Emirate level, provided a pleasant surprise for foreign companies and investors doing business in the UAE, far beyond the superficial lure of shopping sales events.
At the core of the new announcements was the long-awaited confirmation that a new Foreign Investment law would be implemented allowing for majority overseas ownership in local UAE companies (previously limited at 49%), with the prospect of 100% control in certain industries. This law is currently being worked through and we expect to see more clarity in 2019 as the specific sectors where this will be permitted, along with new foreign ownership thresholds, are announced and start to take shape.
As the market for FDI (Foreign Direct Investment) attraction becomes ever more competitive both globally and in the MENA area, the UAE’s move to relax these restrictions will only be positive for attracting further overseas investment and maintaining its regional primacy in this area.
A list of sectors where increased foreign ownership will not be allowed has been published and includes strategic sectors such as utilities, telecommunications, oil and gas exploration and military/security services. The corresponding list of where foreign ownership will be allowed is expected to be released later this year.
Monika Gajek, UAE Country Manager at Santander, commented:
While the UAE and wider Middle East have always been attractive to internationally trading businesses, the implementation of these new measures announced by the local governments will further enhance the business environment. We envision that with the upcoming Expo2020 in Dubai there will be an even greater demand for international products.
Changes to immigration laws
At the same time, the federal government also revised the UAE’s immigration laws, specifically to attract and retain longer term talent, residents and investors.
Previously, residents’ visas have been granted for a maximum of two to three years’ and been directly tied to full time company employment. Recognising that this was an impediment to long-term settlement and deeper economic involvement, a number of amendments have been made to encourage and facilitate more enduring foreign residency in the UAE.
This includes providing long-term visas to both expat retirees and foreign students who have studied in the UAE and achieved strong results, allowing them to remain after the conclusion of their degree courses.
There is also a new ten-year visa for both investors and professionals who fulfil certain economically positive criteria and the first of these were issued in January 2019, mainly to leaders in the scientific and research community.
A number of key business drivers are shaping 2019.
Firstly, the stabilisation of the oil price around the ‘new normal’ of circa USD 60 per barrel is at a level where the region’s economies have realigned fiscally and investment is starting to flow again which is of fundamental importance to the whole region’s economic health, liquidity and outlook.
Opportunities at Expo 2020
Looming ever larger on the horizon is Expo2020 Dubai which, for the UAE, is by far the greatest business catalyst. This year is likely to see the shift from Capex (capital expenditure) to Opex (operational expenditure) procurement activities as the main build is completed and considerations start to be made for running the event itself and the huge undertakings involved for a six-month programme, with circa 25 million visitors.
This year is also when around 180 country and commercial exhibitors will be implementing their pavilions and presence, meaning manifold opportunities for UK companies to get into wider supply chains.
The launch at the end of 2018 of the ‘Online Market Place’ provides for a transparent and simple way for British companies to see and access these spends.
Help for British businesses
Whilst Expo is rightly is at great lengths to make sure that every procurement opportunity is bid out transparently, both DIT (Department for International Trade) and the BCB are able to provide support around the process.
DIT in the UAE for example, has a very large Expo ‘task force’ comprised of the many UK firms who are already active on the project from whom much can be learned from in terms of the bidding and project delivery process.
The BCB provides support for firms looking to diversify and identify additional market opportunities beyond Expo; and our 24-month Incubator platform that we offer in partnership with Dubai Government is particularly well-suited to companies who need to be here for the next two years in order to deliver on the project.
With Expo providing an obvious boost to most sectors given the wide impact of such a massive project (and the need for things to be completed before autumn 2020), 2019 is likely to continue to see a flurry of business activity in the UAE.
As ever, UK firms should seek advice, ensuring that financing is in place, carrying out due diligence and spending time getting to know their potential commercial partners before embarking on any business activities in the UAE.
Working closely with Santander UK, we will continue to provide market intelligence on opportunities in the UAE and be running visits and trade mission programmes in 2019 in support of exporters who are looking to develop their market presence in the region.
In collaboration with BCB we continue to work with UK SME’s supporting their international ambitions to the UAE. At the end of June 2019, we are hosting a webinar highlighting the trading opportunities that are available to food and drink businesses. To register please click here
Find out more about how we could help your business prosper internationally on our International Hub.