Dubai’s troubled Abraaj nears out-of-court settlement: Lawyer
A Sharjah court has adjourned until July 11 a case involving the founder of private equity firm Abraaj, Arif Naqvi, and another executive for issuing a dud cheque, a lawyer involved in the case said on Thursday.
The case relates to a cheque for Dh177.1 million, signed by Naqvi and a fellow executive, and written to Hamid Jafar, another founding shareholder in Dubai-based Abraaj, according to a prosecution document.
Khalid Al Bannay from Al Tamimi & Co, the law firm representing Jafar, said the court has adjourned the case until July 11. Naqvi’s lawyer said that the adjournment was an opportunity for both sides to reach an understanding.
“The adjournment has given an opportunity to reach a deal,” Habib Al Mulla, the lawyer representing Naqvi, said.
Al Mulla said the parties are close to an out-of-court settlement in the case.
“Parties have reached an understanding last night. Now, they will put it in a document. A provisional agreement has been reached … over the main issues to repay the loan,” he added.
However, Al Bannay said: “Until now, there is no agreement and to have one, we need at least an initiative from the defendants.”
The court case in Sharjah is another challenge for the founder of Abraaj, which is battling allegations that it misused investor money in a healthcare fund. The firm has denied these allegations.
Naqvi, 57, is currently outside the UAE after the public prosecutor issued a warrant for his arrest. The bounced cheques case is one of several woes facing Naqvi’s group.
Founded in 2002 by Naqvi, Abraaj had nearly $14 billion of assets under management before being granted a court-supervised restructuring last month in the Cayman Islands, where it is registered, following allegations of the misuse of funds.
The Cayman Islands court appointed liquidators to oversee an “orderly restructuring” of the group.
Four key investors in a $1-billion healthcare fund managed by Abraaj, including Bill and Melinda Gates and a World Bank affiliate, have demanded an inquiry into allegations that money from the fund had been misused.
Mohamed Bin Zayed at AIFC opening
President Nursultan Nazarbayev, and His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.
The President of Kazakhstan received Sheikh Mohamed, who was accompanied by Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, upon his arrival at the Centre.
The Kazakh President expressed his delight at Sheikh Mohamed’s attendance of AIFC’s inauguration, which he said was launched after examining the successful experiences of the financial markets in a number of countries, including the UAE.
In a speech delivered before senior international financial officials and guests, President Nazarbayev said that AIFC will serve Central Asian countries by supporting the development of the private banking sector, and opening investment opportunities. It will also facilitate the development of Green Finance, and support environmental-friendly investments. He also pointed out that the official launch coincides with the 20th anniversary of the founding of the capital Astana, and is part of the country’s continuous quest for modernisation and development.
AIFC – positioned as a financial hub for Central Asia, the Caucasus, the Eurasian Economic Union, the Middle East, Western China, Mongolia and Europe – is located at Expo 2017, and is equipped with modern infrastructure and advanced technologies. Another key strategic objective of the Centre will be to provide financial solutions as per Islamic laws.
The event was also attended by Dr Anwar Gargash, Minister of State for Foreign Affairs, Suhail bin Mohammed Faraj Faris Al Mazrouei, Minister of Energy and Industry, Sultan bin Saeed Al Badi Al Dhaheri, Minister of Justice, Noura bint Mohammed Al Kaabi, Minister of Culture and Knowledge Development, Dr. Sultan bin Ahmad Sultan Al Jaber, Minister of State, Khaldoon Al Mubarak, Chairman of Executive Affairs Authority, and Dr. Mohammed Ahmed bin Sultan Al Jaber, UAE Ambassador to Kazakhstan.
UAE’s skilled workers will see hefty salary increase
Businesses across the UAE need to plan ahead for the next few years as the shortage of highly skilled workers in the region will result in a substantial increase in salaries, experts predicted.
Speaking at a press conference on Wednesday, experts at Korn Ferry highlighted the results of ‘The Salary Surge’ report, which noted that several global economies, including the UAE, will have to pay more in salaries to attract and retain highly specialised talent. Unless certain actions are taken, organisations around the world could add more than $2.5 trillion to their annual cost of labour by 2030. Over $593 billion of this amount will be added by companies in the Europe, Middle East, and Africa (Emea) region alone.
“The supply of highly skilled workers right now is falling very much short of demand across major economies,” explained Jonathan Holmes, MD of Korn Ferry Mena. “By 2030, it is estimated that the global supply of highly skilled labour will fall short of demand by 16 per cent.”
Korn Ferry’s study focused on the talent-supply gap in 20 developed and developing economies, and concluded that the potential salary surge is the direct result of a shortage of an estimated 85 million highly skilled workers required for companies to succeed in the new digital economy.
In the UAE, while overall wage increases are just keeping pace with inflation, salaries for in-demand workers could add as much as $5.9 billion to the total national payroll by 2030, a nine per cent increase. The ‘TMT’ sector faces the greatest challenges in the UAE, with a potential wage premium of $1.124 billion, followed by ‘Financial and Business Services’ at $612 million.
In addition, Vijay Gandhi, regional director for the Emea region at Korn Ferry Products, said that skilled workers will be put in a strong position to negotiate higher salaries, as the competition for talent heats up. “With existing highly skilled workers, leaders must focus on what really drives retention,” he explained. “We know that employees who have the opportunity for career development, benefit from inspiring leadership and feel their work has purpose are more likely to stay at an organisation, and – crucially – will be more engaged and productive. Companies need to identify the talent of tomorrow and help them achieve their potential.”
Holmes further noted that changing demographics at work also mean that there is a new generation of workers that are looking for a better rewards system. “We have to change the paradigm of how people are rewarded; millennials, in particular, look for a safe environment where they can take risks, be creative and innovative. They don’t like to work for organisations that have a grade-based pay structure, and will instead for companies that have flexible working hours and role-based pay structures.”
This point is supported by data from another recent Bayt.com survey that found that in addition to seeking advanced technology, a challenging work environment is highly desired among respondents in the Mena region. Other elements that were considered important in a workplace include work-life balance, fair evaluation and innovation and creativity.
Suhail Masri, VP of employer solutions at Bayt.com, said there is optimism in the market right now on salaries in the UAE increasing. “The Bayt.com Middle East and North Africa Salary Survey, conducted among working men and women in the UAE in partnership with YouGov, revealed that 66 per cent of respondents in the UAE believe that salaries are either increasing or staying the same. At the same time, 56 per cent of employees in the UAE expect to receive a raise in 2018, with 27 per cent expecting a raise of up to 10 per cent.”
More relief as three UAE free zones are out of VAT scope
The UAE’s Federal Tax Authority (FTA) has added three new free zones to the list of designated zones that will be out of the five per cent VAT scope imposed earlier this year.
The new addition sees the total designated zones increasing to 23 across the UAE.
Federal Decree Law No. (8) of 2017 on VAT specifies that any area meeting certain conditions and mentioned in the Cabinet decision is termed as designated zone for VAT purposes and should be treated as being outside the state for VAT purposes.
According to the FTA, the newly-added free zones are Al Ain International Airport Free Zone, Al Bateen Executive Airport Free Zone in Abu Dhabi, and International Humanitarian City – Jebel Ali in Dubai. The treatment of these areas as designated zones was effective from June 18, 2018.
Thomas Vanhee, partner at Aurifer Middle East Tax, said businesses that have transactions in the new designated zones will be relieved that no VAT applies on the supplies of goods inside the designated zones with some exceptions.
“Some businesses in these designated zones may potentially now deregister for VAT purposes. It will be important for them to assess again their transactions in the zone and determine which ones are actually subject to VAT and which ones are not. Although this constitutes an important relief, the transactions with designated zones can be complex,” said Vanhee.
Currently, eight designated zones are located in Dubai, five in Abu Dhabi, three in Ras Al Khaimah, two each in Fujairah, Sharjah and Umm Al Quwain, and one in Ajman.
International Humanitarian City, which is to be the largest humanitarian hub in the world with the most diverse members, has 70 members including nine UN agencies, 48 non-profit organisations and 13 commercial members. Currently, over 45 free zones are across the country.
Exports from the UAE’s free zones totalled Dh225.5 billion in 2017, a growth of 6.6 per cent from the previous year, according to the Central Bank of the UAE data. That amounts to 19.5 per cent of the UAE’s total exports recorded last year.
The UAE houses one of the highest number of free zones globally at 45 with another 10 under construction. Dubai now houses around 30 free zones.
Nirav Shah, director at Fame Advisory, said all companies in the free zones will be able to avail VAT benefits for all goods that were not to be used within the UAE since all transactions within designated zones for goods movement is outside the scope of five per cent VAT.
Technically, Shah said, the Cabinet can add more free zones, because tge VAT law says that free zones with customs-restricted access will qualify for this, so if any other free zone infrastructures are developed and meet this criteria, those can also be included in the designated zones.
According to Mayank Sawhney, director at MaxGrowth Consulting, the Cabinet decision had said earlier that designated zones can be added or removed from the list.
“In the future, more free zones can be added if they fulfill the criteria of designated zones such as custom control, fenced boundaries and controlled movement of goods going in and out of it,” Sawhney said.
He pointed out companies from specific sectors are increasingly looking at moving into one free zone as it benefits them from cash-flow perspective because they are heavily involved in bilateral trade and dealings.
“In Dafza [Dubai Airport Free Zone], there a number of mobile phone companies that are engaged in buying and selling to each other. So, having a presence in one designated zones will not block their cash flow,” he added.
DXB traffic nears 37m passengers in 2018
Dubai International Airport, DXB, has welcomed 36.9 million passengers during the first five months of 2018 according to the monthly traffic report issued by operator Dubai Airports today.
DXB welcomed a total of 36,943,613 passengers during the first five months of 2018 compared to 36,969,594 passengers recorded during the same period last year, a marginal contraction of 0.1 per cent, largely due to the impact of Ramadan which fell in May this year. Passenger traffic for the past 12 months totalled 88,216,118, up 2.6 per cent compared to 85,974,096 recorded during the corresponding period in 2016-2017.
In May, passenger numbers totalled 6,589,264 compared to 6,850,052 recorded during the same month last year, a contraction of 3.8 per cent due to lower volumes traditionally experienced during Ramadan. Average monthly traffic volumes have however remained high in 2018 at 7.4 million passengers.
Eastern Europe was the fastest growing region in May with 19.4 per cent growth, thanks to robust growth on routes to Croatia, Bulgaria, Serbia and Romania and the launch of flydubai’s new services to Krakow in Poland. The Commonwealth of Independent States was the second fastest region with 11.3 per cent, followed by Africa 9.9 per cent – where Nigeria and Egypt recorded strong growth during the month. India was the top destination country with a total of 1,041,258 passengers, followed by Saudi Arabia 495,242, and the UK 429,893, while top cities for passenger volumes were London with 262,913 passengers, Mumbai 213,056, and Jeddah 179,756.
Flight movements during the month under review totalled 32,620 compared to 34,544 during May 2017, a drop of 5.6 per cent. The hub’s efficiency increased as the average number of passengers per flight was 209 during May, up 2 per cent compared to 205 during the same month last year.
Year to date flight numbers reached 168.979, down 3.5 per cent compared to 175,157 flight movements recorded during the first five months last year. DXB handled a total of 221,363 tonnes of cargo during May, down 4.9 per cent compared to 232,884 tonnes during the same month last year. Year to date cargo at the end of May totalled 1,053,549 compared to 1,087,243 tonnes, down 3.1 per cent.