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Executive
Summary
This country business guide
presents a comprehensive look at UAE’s business
environment, market potential, legal structures of
business, their formation procedures and future
opportunities for the investors.
Due to strategic location,
UAE has been hosting & providing routes to business since
centuries. It offers easy access to the 1.5 billion
consumer markets situated in Africa, West Asia, CIS
countries, and East Europe as well as the areas
surrounding the Red Sea and the Gulf. With 11
state-of-the-art ports, 6 airports and satellite links
with 230 countries, the UAE has become one of the leading
enter port centers of the
world, rivaling the emerging tigers of South East Asia,
having long since consolidated its position among the top
oil producing nations, the visionary leadership of the UAE
is concentrating its efforts on industrial development in
the country.
A fast intercontinental road
network connects the UAE to Oman, Qatar, Bahrain, Saudi
Arabia, Iran, Kuwait and beyond to Europe. By sea, feeder
operators provide regular scheduled sailings from the UAE
terminals to the Indian subcontinent, Yemen, South and
East Africa. Dubai International Airport offers 300
flights daily to and from some 100 destinations.
Despite having abundant oil
reserves, the country has always made efforts to broaden
its economic base and reduce its exposure to volatile oil
price fluctuations. Since inception, UAE has undergone a
continuous and sustained process of transformation from
small poor principalities to a modern state with a high
standard of living. The sound and effective economic
policies have reduced its dependence on oil and natural
gas revenues. Recognizing the private sector’s potential,
the business environment in the country encourages the
local as well as foreign investors. The government
provides all industrial facilities, and has enacted
several liberal commercial laws and regulations to meet
international obligations and protection for investors.
The economy of the UAE is
doing well and it has swelled by more than six times over
the past 26 years to become the fourth biggest economy in
the Arab world. The recent years has witnessed the
emergence of pioneer industries in view of the generous
advantage and incentives granted to the investors along
with the simplicity of procedures for practicing business
in UAE. During the last decade, government has increased
its investment in the local market from $3.47 billion to
$4.93 billion, whereas, the investment in the business
sector reached to $5.41 billion from $2.89 billion.
The country offers lucrative
investment incentives and opportunities to local as well
as international investors that are not generally
available internationally. Significant among these are
absence of corporate and income tax, no personal income
taxes, no foreign exchange controls, 100% repatriation of
capital and profits.
The free trade zones with a
variety of incentives are also playing an important role
in attracting investment. The share of free zones in
non-oil exports increased to 57% in 2000 from 22% in 1999
and the net exports from these zones have reached to US $
1.4 billion in 2000. By 2002, these zones were home of
more than 3000 companies with an estimated trade of around
US$ 8 billion. The most important attraction of these free
zones is that a foreign investor can establish a legal
activity fully owned by him. Other incentives are 100%
repatriation of capital and profits, no corporate taxes
for 15 years, which is renewable for further 15 years and
no personal income taxes. Presently, there are 13 free
trade zones in UAE and some new are at developmental
stage. Although all the free zones offer more or less same
incentives, but each zone has several distinguishing
features giving investors multiple choices of selection in
view of their activity to be established.
The
industrial growth and investment policies of the
government ensure that UAE will be in the forefront of
global economy. Significant among these are: government’s
allotment of $13.4 billion towards the development of the
non-oil sector, much of which will be spent on
telecommunications and information technology; Dubai
Internet City is a great move towards e-commerce and the
vision of UAE’s future internet economy; and Dubai Media
City would act as a bridge to the future, linking the GCC
countries and to the other nations of the world. The mega
projects that will open new avenues for investment are:
Dolphin Project of $10 billion to pipe gas from Qatar to
the UAE, Oman and Pakistan; Taweelah A2 Power Plant
project (Abu Dhabi); and a proposed project of $ 3.3
billion Saadiyat Island Project - comprising a free zone,
offshore stock exchange and commodities.
In the end, the guide
provides detailed information on different types of legal
structures to be practiced by local nationals as well as
foreign investors. In general, establishing a business
presence in UAE is relatively easier and straightforward.
The foreigners can participate in most of the available
business activities in UAE. The Companies Law recognizes
seven kinds of legal structures for formation under its
provision with equity participation to foreigners in all
except General Partnership. The Law further sets forth the
general rule that participation of foreigners should never
be more than 49 percent in any company. Despite the
limitations of shares available to foreign investors, it
is still believed by some to be the easiest solution to
carry out business in the UAE with management of the
company in foreigner’s hand.
Entrepreneurs the worlds
over are looking for favorable business climate to
establish or expand their business ventures. Well if you
happen to be one of the prospectors, then United Arab
Emirates may be the one place where you can sure to find
an open economy, offering great incentives to meet your
requirements. The Middle East, especially the United Arab
Emirates (UAE) is an interesting market and economically
beneficial production site for foreign companies. It
possesses a resource rich diversified economy, which has
proved a heaven for the investors the world over. The
following pages unfold some of the basic facts,
characteristic of the area, its economy, business
environment and how the same can work to your advantage -
opening doors to success.
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