UAE government policy recognizes that the private sector is of major importance in the drive for diversified economic growth and full employment for nationals. The creation of a facilitative business environment, which encourages local investors to put their wealth to productive use, as well as attracting foreign investment, has been an important aspect of this policy. Key elements in the UAE’s incentive strategy have been the provision of first-class industrial facilities and business support services, the reduction of red tape and streamlining of administrative procedures, as well as the updating of commercial laws and regulations to meet international obligations, increase transparency and ensure effective protection for investors. Favorable tax laws and political stability also assist in making the UAE a prime business location.
The UAE joined the World Trade Organization (WTO) in 1995 in the knowledge that developing countries, including Arab states, cannot ignore WTO - sponsored agreements and their impact on the global economy. At the time, the Ministry of Economy and Commerce argued that joining WTO would provide an opportunity for the country to contribute to future commercial decisions and policies and that, as a country aspiring to become a regional trade hub, adherence to the General Agreement on Tariffs and Trade ( GATT), a WTO - sponsored multilateral trade treaty, would help boost the UAE's industries and exports. Other relevant WTO treaties are the General Agreement on Trade in Services (GATS) and the Agreement on Trade - Related Aspects of Intellectual Property (TRIPS ) . Although the WTO prohibits discrimination in investments or shareholding between nationals and non-nationals, the UAE has been granted certain exemptions for its financial services sector. Nevertheless, WTO agreements will have a direct impact on domestic services such as insurance, banking, transport, tourism, property, brokerage, investment, construction, communications and information, all of which will be required to improve performance to be able to compete globally.
Abu Dhabi Chamber of Commerce and Industry
A bridge between the private sector and government has been provided by the Abu Dhabi Chamber of Commerce and Industry (ADCCI) for over 30 years. Since its inception in April 1969, operating from a two-room apartment in the capital, the ADCCI has grown in stature to become the largest chamber of commerce in the AGCC states, with a membership of 51,399 at the end of 1998, increased from 27 in 1969. It is now housed in an imposing building on the Corniche.
for more information, visit www.adcci-uae.com
Policies pursued by ADCCI have enhanced the private sector's partnership in local enterprise. In addition to developing economic regulations and offering advice to the government in this field, ADCCI provides a wide range of services, including setting up the Sheikh Khalifa Fund to provide technical and financial support for small and medium enterprises initiated by national youth; establishing a database to furnish businessmen and investors with up-to-date commercial information; organizing trade fairs in Abu Dhabi; sending delegations abroad to promote Abu Dhabi as a commercial center; as well as initiating training programmes such as 'Passport for Work’, which trains nationals to join the private sector.
To mark its thirtieth anniversary, in 1998 the chamber opened a new hall for membership registration and the processing of official documents. It also established a new center for businessmen and another for businesswomen, issued 6,118 certificates of origin and organized 37 trade fairs. The chamber participated in the Cairo International Fair, the Lisbon International Expo Fair, the Second UAE Exhibition in Beirut and the Baghdad International Exhibition. In addition, during 1998 the chamber received 39 international trade delegations and official delegations from the ADCCI visited Oman, India, Taiwan, Britain, Thailand, Malaysia, Sing a pore, Australia, Finland, Sweden, Norway and Denmark, to promote Abu Dhabi as an investment opportunity.
ADCCI has also been concerned with setting up a one-stop shop at Abu Dhabi Municipality to facilitate the issue of trade licenses in the capital. The measure, initiated by the Higher Consultative Committee of Abu Dhabi Emirate, is aimed at simplifying and expediting procedures for issue of trade licenses. By the end of 1999 applications for commercial licenses sent by e-mail were due to be processed within four hours, instead of three to four months. The multi-departmental section comprises representative offices of the Ministries of Labour and Social Affairs, Economy and Commerce, Information and Culture, the ADCCI, Civil Defence and Abu Dhabi Police. The project is the first phase of a comprehensive development of the municipality's infrastructure.
New Business Support Services in Dubai
Dubai has also been streamlining its administrative procedures to provide an efficient service for investors. A telephone and fax hotline has been installed at the Dubai Naturalization and Residency Department. The 24-hour computerized system, operating in Arabic and English, can handle enquiries about documents needed for all types of visas, including visit, transit, investor, work and domestic servant visas. Callers can access information about documents needed to open a company file at the department, documents for stamping and canceling visas, court appointments, changing visas and departure certificates. A 50 percent reduction in municipality fees levied on business in Dubai, which was announced during 1999, should also assist business development in that emirate. The municipal levy, originally set at 10 percent of the lease rental, is a major establishment cost for any company. Dubai Municipality, the Department of Economic Development and the Dubai Chamber of Commerce and Industry are working together to ensure that the new system operates efficiently.
In an effort to ensure that the smallest investor is not forgotten, Dubai has also launched an innovative programme in which ‘individual establishment’ trade licenses are granted to UAE nationals to set up businesses at home once they have satisfied home ownership requirements. The experimental programme aims to encourage housewives, nationals with spare time, and those who have low-budget projects to establish businesses without facing the competitive risks of the open marketplace. Introductory seminars and technical and economic advice will be provided. Products from such businesses will be marketed through promotional shows and on the Internet.
The UAE has made it a condition that foreign firms bidding for lucrative defence contracts should invest a portion of the value of the deals in joint venture projects with local partners. The UAE Offsets Group (UOG), which manages this offset programme, has developed its role to become a pioneering institution playing a vital part in the establishment of joint vent ures . Under the offsets programme, foreign defence firms are entitled to hold up to a 49 percent stake in the joint ventures with the rest being held by local private investors. Projects must generate added value to the UAE within a period of seven years. Since 1992 the offsets programme has announced 31 projects, 17 of which are in operation, with a total investment of around Dh 2 billion. The projects range from a ship-building company to a health care center. Abu Dhabi Shipbuilding Company, a Dh 178 million venture, was one of the first public shareholding firms to be set up under the scheme. The two biggest ventures are The Oasis International Leasing Company, an aircraft leasing firm, and TABREED, which has developed innovative cooling systems, each capitalized at Dh 500 million. Assault, with which the UAE signed a US $3.2 billion defence deal, has contributed to five separate offset projects, including a horticulture project, a plant for manufacturing fire-fighting materials, a business services company, as well as fish processing and fish farming companies.
UOG's participation in the Dolphin Regional Gas Network, a US $8–10 billion project to build a regional gas network from Qatar to UAE and Oman was announced in early 1999 (See section on Oil and Gas). The Dolphin project represents a strategic initiative to attract i n vestment in industrial sectors in the UAE and other regional countries by modernizing the gas supply infrastructure and is intended to provide a framework to stimulate investment in a variety of related industries throughout the value-added gas chain. It will provide employment and wide investment opportunities in financial and other industrial fields. Key potential regional customers for gas from Dolphin will include the offset programme’s own initiatives, especially Sina'at which has been set up with a capital of Dh 550 million to develop basic industries and petrochemical facilities. Other customers will include independent power producers, aluminum smelters, iron and steel plants and gas trading operations.
The increased number of free zones operating in the country is serving to offer a wider range of options to potential investors, including 100 percent ownership of investments. The massive Jebel Ali Free Zone (JAFZ) has become one of the largest industrial complexes worldwide which, together with the adjacent port, the world's largest manmade harbour, has continued to attract investors. Fujairah Free Trade Zone (FTZ), which was awarded an ISO 9002 certificate in 1999, offers businessmen the location advantage of an east coast port as well as the benefits of partnership with the Fujairah Government. FTZ has been growing at a rate of 20–22 percent annually and currently has over 125 projects registered at the zone, representing sector investment worth Dh 750 million. Trade value out of the zone by the end of 1999 should top Dh 1 billion. Arab, Gulf and international capital investment in Sharjah’s Hamriyyah Free Zone had exceeded Dh 2.5 billion by the end of 1999, with local investment accounting for 50 percent. The Sharjah Government has invested Dh 600 million in infrastructure projects in the zone.
The US $3.3 billion Emirates Global Capital Corporation (EGCC), which was incorporated in April 1999, has been granted a 50-year concession by Saadiyat Free Zone Authority (SFZA) to establish a major new commodities market and free zone on Saadiyat island near Abu Dhabi. The concession covers an area of 26 square kilometers. EGCC will develop a 50,000 square meter trading center with a stock exchange, futures exchange and clearing house and warehouses, the requisite commercial and residential real estate and physical infrastructure, including a port with storage facilities and a freight airport. Construction of the necessary infrastructure is scheduled to take three years to complete. Planned facilities on the island, which will have a six-lane bridge to link it with Abu Dhabi, will include a marina, an extensive exhibition center, a luxury hotel, a golf course, an equestrian club, a motor racing circuit, water and power plants, a telecommunications network and other utilities. The Basic Law for the Authority imposes no restrictions on foreign ownership of companies and assets and allows full repatriation of capital and profits as well as exemption from all taxes. Companies and residents will be offered land on lease for periods of 50 years or more and leases will be fully transferable. Since the announcement of its creation in July 1996, the Saadiyat project has attracted considerable attention from regional and global investment and banking circles. The project will have a major impact on many economic sectors including trade, industry, agriculture, real estate, building contracting and engineering, banking, brokerage, insurance, tourism, hotel, entertainment and services, as well as providing employment for nationals. Saadiyat Free Zone, shares in which will be offered on domestic and international markets, will give a major boost to the UAE ’s investment policy and is intended to complement the Jebel Ali Free Zone and other zones in the country and the AGCC.
Dubai Airport Free Zone Authority
Dubai Airport Free Zone Authority (DAFZA), one of the most recently established free zones in the UAE, grants licenses to companies with an international reputation who intend to invest properly in environment-friendly projects that are not labour-intensive. The emphasis is on long-term gains within the context of a five-year business plan. By mid-1999, 54 percent of the 50 companies operating out of DAFZ were European, 32 percent American, 4 per cent each from the Far East, Middle East and GCC states and 2 percent from Africa. Applicants to date include global dealers in the jewellery, diamonds, crystal, cosmetics, electronics and computer industries. The free zone has been allocated an area of 1.2 million square meters, including 473,000 square meters of apron space, which will be developed in stages over the coming years.
Ajman Information Technology Park
Ajman Free Zone (AFZ) commenced work in July 1999 on the region's first information technology park. The park will be developed in two phases, the first of which, a pilot project of 10 offices, is under way. A further Dh 5 million will be invested in a purpose-built block that will house 100 offices. The IT park will offer a ‘move in and plug in’ facility in which a company can start operating as soon as it occupies designated premises . The park offers all the facilities needed for an effective business operation – PCs, ISDN, phone and fax lines, Internet access and related services – to attract IT developers and IT support centers, besides emerging Internet retailing, wholesale and e-commerce business. AFZ already has a wide cross-section of companies involved in textiles, medical equipment, furniture, foodstuffs, tobacco derivatives, watches, electrical appliances, paper, metal and plastic products. In 1998 the number of companies operating out of AFZ quadrupled and in the first six months of 1999 the zone grew by 7.5 percent from 400 to 430 companies. Total capitalization of companies now stands at Dh 1.1 billion (US $300 million).
Recognition of the close link between the protection of intellectual property rights and foreign investment has acted as an incentive for vigorous action against intellectual property violations in the Emirates.
The UAE is a member of the Paris Convention for the Protection of Industrial Property, the World Intellectual Property Organization (WIPO), and a signatory of the WTO Agreement on Trade - Related Aspects of Intellectual Property (TRIPS) with which it must comply by the year 2000. The latter deals with such issues as copyright, trademarks, patents, industrial designs and trade secrets. The country also acceded to the International Patent Cooperation Treaty in 1998, which protects inventions registered with the International Bureau at WIPO and local patent offices.
Federal Law No. 40/92, Protection of Intellectual Works and Copyright, was issued on 28 September 1992, embracing all aspects of intellectual property such as trademarks, patents, industrial design and copyright. After an extended grace period, the law was implemented in the second half of 1993. In June 1999 the UAE National Committee for Industrial Property Protection discussed amending the federal law within the context of TRIPS, including regulations governing the protection of patents on pharmaceuticals. The initiative to amend the law in line with WTO obligations was announced by the Ministry of Finance and Industry in mid-1997 and work has been under way ever since. All articles of the legislation as well as subsequent by-laws are being reviewed.
Enforcement of trade marks comes under the purview of the Ministry of Economy and Commerce, the copyright law under the Ministry of Information and Culture and the patent and design law under the Ministry of Finance and Industry. Enforcement is also assisted by the Ministry of Interior, particularly the police and the Criminal Investigations Department, Dubai's Department of Economic Development and Sharjah Municipality. International organizations that are also engaged in the anti-piracy drive in the UAE are the Motion Pictures Association (MPA) the Business Software Alliance (BSA) and the International Federation of the Phonographic Industry (IFPI). In July 1999 thousands of pirated audio and videocassettes, compact discs and computer play station tapes confiscated in a series of government raids we re destroyed and some shops selling the goods were shut down. The raids on video and CD shops in Dubai and the Northern Emirates were carried out by the Ministry of Information and Culture, Dubai Police Economic Crime Section and the Business Software Alliance. In August, a trader who had been convicted of selling pirated videocassettes had his sentence increased from the original Dh 5,000 fine to three months’ imprisonment following an appeal brought by the Motion Picture Association Middle East.
In the last few years the UAE has achieved tremendous results in fighting piracy at the local and federal levels. As a result the UAE continues to have the lowest piracy level in the Middle East according to statistics released by the Business Software Alliance (BSA). Of the US $190 million re venue estimated to have been lost by the IT industry on account of illegal copying of software in the Middle East, the UAE's contribution was a mere US $3.6 million. On a global scale, the estimated loss of revenue in the UAE is not even 1 percent of losses perceived to be suffered by IT companies due to software piracy in countries such as the UK, Canada, Germany and France.
In order to keep abreast of commercial trends worldwide, the UAE intends to set up an Internet-based central financial forwarding and clearance facility known as the Payment Gateway Server (PGS). Several top companies are working with government departments to establish the facility which is expected to be the first of its kind in the AGCC area.
PGS, a major step in the introduction of e-commerce, is the equivalent of central clearing and forwarding of financial transactions carried out on the Internet. The server, which will permit secure electronic transactions, is an intermediary between Web-based merchants, financial institutions and consumers.
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