Business leaders and stakeholders have welcomed a slew of measures announced by the UAE last week – easing visa, insurance and business processes.
To them, they have not just come at the right time but can also potentially reverse what has been described as a slowing business cycle. More importantly, these measures are likely to have a major imprint on the ease of doing business in the country.
There is also a broad agreement that much of confidence will come from stable real estate market and booming retail sector besides consolidation of the UAE’s trading hub status.
A report released by Association of Chartered Certified Accountants and the Institute of Management Accountants late last year had said that “confidence in the UAE fell in the third quarter to its lowest level since the first quarter of 2016” even though preparations for the 2020 World Expo should support the country’s economic prospects.
Setting up businesses
A typical business cycle starts with luring companies to set up shop, something the UAE has excelled over the years. Going by anecdotal evidence, the decision announced by the UAE is likely to sustain attractiveness.
Steve Mayne, Managing Partner at Creative Zone, says the new laws will have an immediate positive impact on the “ease of doing business” sentiment for the UAE’s entrepreneurs and small and medium enterprises (SMEs). Creative Zone is a registration company, equipping businesses with the tools to promote and grow business.
“We have helped thousands of entrepreneurs and SMEs setup their companies in the various freezones we represent, as well as mainland registrations and on an average setup around 120 new businesses per month,” Mayne says suggesting the momentum of registrations is likely to continue in the UAE.
This should calm the nerves of those holding investments awaiting bottoming out of the present business cycle. According to Mayne, reducing costs for businesses in a challenging economic climate is an extremely prudent and timely move by the UAE government.
“For example, the AED 3000 guarantee deposit saved for each employee will be better used by these businesses for immediate services that can help their business grow. We see this as an immediate impact for the economy,” he says.
Gold and jewellery has been integral to the UAE’s rise as a business hub and people associated with the industry for decades are continuing to repose faith. They attribute their success to the measures taken every now and then to support the sector.
Firoz Merchant, Founder and Chairman of Pure Gold Group, says the new visa rules further enforces the nation’s standing as a highly competitive economy, offering professionals and workers more opportunities for personal growth and well-being.
“It will enhance the nation’s access to talent – especially youth – and promote its ease of doing business,” he says.
According to Merchant, the new rules are also humanitarian in their outlook as they offer a second chance for people who have overstayed and makes it easier for people to transfer their visa status, which will be a relief for many and will add to the overall positivity.
“The new rules are also comprehensive in strengthening the overall economy, especially the relaxation in rules for transit visitors – which will boost the tourism, hospitality, FMCG and retail sectors,” he says.
Another businessman – who has been operating in the UAE’s retail sector for a long time – says the AED 50 billion stimulus package will greatly benefit all the sectors and give confidence to investors.
Kamal Vachani, Group Director of Al Maya Group, said the new system of replacing the bank guarantee requirement for the employee’s visa is very welcome.
“Allowing 48-hour visa to transit passengers is a great step taken by the government and will allow passengers to enter Dubai easily,” he said. Vachani also called the six-month temporary visa without fees for job seekers as “bold steps”.
Such steps, complemented with a slew of other measures, are bound to inject a new lease of life into businesses in the UAE.
Reports of positive sentiment building up for Dubai’s future projects have already been doing the rounds. For the UAE, the headline seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index rose from 55.1 in April to 56.5 in May.
According to the bank, the figure was indicative of a “sharp improvement” in UAE business conditions, above the long-run average. Going by these reports, it seems, the business cycle will follow the summer months’ cycle.