Dubai economic package to boost investments, job growth
(4/16/2018 7:31:00 AM)
Government of Dubai has called on government departments to work on a comprehensive reform package to boost business confidence and economic growth in the Emirate.
Stimulus plans include proposals to allocate 20 per cent of government tenders to small and medium-sized businesses, developing low-cost family tourism systems through a timeshare basis, and enact a mortgage law to enhance demand and prices in the real estate sector.
Government officials, analysts and business leaders expect a proactive move from the government to support private sector will go a long way stabilising and building on the growth momentum.
“The initiatives launched by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, to reduce cost of doing business and facilitate inward investment in the emirate, draws on past experiences and seeks to move towards the future with confidence,” said Sami Al Qamzi, Director General of the Department of Economic Development (DED) in Dubai.
“The directives also show the leadership’s keenness in dealing constructively with all local and international economic variables and seize new investment and development opportunities towards creating a stronger economy, more efficient environment and improved work mechanisms to provide everyone with an advanced, high quality living,” Al Qamzi said.
The DED is implementing four initiatives to stimulate competitiveness and achieve sustainable economic development in Dubai. They are related to exempting businesses from fines and trade violations, reducing operational cost in the retail sector, supporting local production and procurement, as well as attracting the best start-ups to Dubai and promoting them.
The Executive Committee in the Department of Economic Development will follow up on the implementation of these initiatives as directed by Shaikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council.
Dubai government’s plans include incentives for various key sectors of the economy. The reform packages could range from rationalising the fee structure, cancellation of fines on business licences and measures to reduce operating costs of retail sector. The new efforts to boost the economy comes on the back of a recent decision by both the UAE Federal government and Government of Dubai freeze government fees.
Dubai Economy Tracker Index (DET) data that covers key sectors such as travel and tourism, construction and wholesale and retail sectors for March signalled an improvement in business conditions across Dubai’s non-oil private sector but the data also showed employment slipped into contraction for the first time since February last year. The new incentives are expected to boost job creation.
The new reform package also includes setting up an inclusive consultative council that will have the participation of international companies in shaping legislative changes needed to enhance investments and competitiveness.
The new plan comes at a time when many small and medium enterprises (SMEs) are facing challenges in securing funding for both working capital for business expansion. Tighter lending standards implemented by banks following several cases of loan defaults during the past two years and a disruption in cash flow chains have impacted several business.
Recent spike in consumer price inflation in the UAE has taken its toll on overall demand. While the one-off cost increase in the economy largely caused by the introduction of 5 per cent VAT is likely to linger on for a while hurting purchasing power.
“At the moment there is lot of pessimism in the retail industry but the economy-boosting initiatives will give boost to the economy in the long run, especially for small — and medium-sized businesses. There is no direct benefit for retailers but indirectly, yes, he said and added that the biggest cost is the space cost of retail and unless that is not tackled, it will be “very difficult” for retailers,” said Deepak J. Babani, executive vice-chairman of Eros Group. Amid the macroeconomic backdrop of slowing demand and credit growth, incentivising supply side through a robust stimulus package for business can revitalise the economy. Proposals such as allocation a 20 per cent of government tenders to SMEs, developing low-cost family tourism systems through a time sharing concept and a revised mortgages law to support the real estate sector are timely and will go a long way in boosting private sector confidence.
The initiatives will allow people to start growing again. Even though it is targeted at SMEs, they end up spending with us and it is a cycle. The freezing of government fees for three years will allow businesses to plan things ahead. The rental cost of retail space will also be controlled in the long run,” said Ashish Panjabi, COO of Jacky’s Business Solutions.
What individual government departments are planning
Department of Finance ¦ Pay government fees by instalment, allocate 20 per cent of government tenders for small and medium-sized enterprises, and collect 3-4 stars hotels’ fees on a half-yearly basis instead of monthly Dubai Department of Economic Development (DED)
¦ Waive companies of fines and trade violations, Renew commercial licences, reduce the operational cost of the retail sector, support local purchase by encouraging local production and attract 1,000 emerging growth companies in Dubai, especially in the field of technology The Department of Tourism and Commerce Marketing (DTCM)
¦ Increase the number of visitors at a low cost by attracting 10 per cent of the transit passengers, constituting an additional 1 million visitors annually. Promote family tourism using the time share system. Increase the number of family tourists from 70,000 to 150,000 annually, in addition to encouraging tourists to stay longer and make frequent visits. Dubai World Trade Centre ¦ Attract foreign investment, particularly from Southeast Asia. Attract foreign direct investment and benefit from financial flows, estimated at $200 billion. Strengthen the role of the DIFC. Facilitate the movement of financial products. Increase the volume of financial investments in Dubai. Dubai Land Department
¦ Develop a mortgage and finance law. Revitalise investment in the real estate sector. Attract foreign investment portfolios.
Dubai Chamber of Commerce and Industry
¦ Reduce the cost of doing business by reviewing fees and local laws to reduce the material burden on companies.
¦ A consultative Council will be set up as part of enhancing the contribution of international companies. This is to boost their contribution to shaping the legislative atmosphere and investment infrastructure and enhance their role in building the local economy while focusing on creative industries.
The Dubai Islamic Economy Development Centre (DIEDC)
¦ Develop and improve the sukuk market, increase sukuk issuance and listing in Dubai, develop new platforms including retail sukuk and the Secondary Sukuk Market for Small and Medium Enterprises
Ports, Customs and Free Zone Corporation
¦ Conducting pre-customs clearance agreements and approved operator system, reduce the time required for foreign trade procedures, Activate shipping and air freight and boost and increase the volume of foreign trade by about Dh27 billion. Maintain the competitiveness of the Emirate as a global trading centre. Establish Aluminium Derivatives Complex to draw the largest international companies operating in the field of aluminium derivatives.