DUBAI: JEWEL OF THE CROWN
THE EMIRATE OFFERS SIGNIFICANT COST ADVANTAGES DUE TO THE ABSENCE OF FOREIGN EXCHANGE CONTROLS AND TRADE BARRIERS OR QUOTAS.
SHABBIR H. KAZMI
Mar 12 - 18, 2012
Dubai is one of the seven emirates constituting United Arab Emirates (UAE), besides Abu Dhabi, Ajman, Fujairah, Ras al Khaimah, Sharjah and Umm al Qaiwain. Over the last four decades, it has grown from small desert principalities to a modern state offering highest standard of living and one of the Middle East's most important economic centers.
Dubai has emerged as a leading regional commercial hub with state-of-the art infrastructure and a world-class business environment. It has emerged as the largest business centre of the Middle East, providing investors unique but comprehensive value added platform.
Dubai is the perfect base to target opportunities in a market that has enormous appetite for new financial products tailored to regional investors' preferences and risk requirements.
International and regional players who establish themselves in Dubai are perfectly placed to take advantage of the regional market's huge long-term potential for financial services market growth.
Dubai has transformed from an oil and gas dependent state to a broadly diversified economy based on international trade, banking, tourism, real estate, and manufacturing.
Oil has gradually attained a diminishing role in the Emirate's economic profile. In 1985, oil sector contributed about half of Dubai's GDP. By 1993 that figure declined to 24 per cent and now hovers below five per cent.
Dubai can be termed the focal point of the global economy, stretching from North Africa to South Asia and the Caspian to South Africa. This region comprises of 42 countries, some of which are the world's fastest growing emerging markets.
The Gulf Cooperation Council (GCC) is one of the most prosperous and fast growing areas within this region and has had an average annual real GDP growth rate, which is one of the highest in the world. The GCC is home to some of the largest Sovereign Wealth Funds including the UAEís Abu Dhabi Investment Council, Saudi Arabia's SAMA Foreign Holdings, and Kuwait Investment Authority.
After the global downturn which also affected UAE, several steps were taken by the government to promote recovery from the crisis. These have led to deposit growth and capital inflows, increased activity in the markets, and a rise in indexes. Dubai's well-developed banking system ensures extensive credit facilities and ample liquidity. The state has shown consistent commitment to business friendly and liberal economic policies. Dubai's open economic policy, minimal government control, and private sector regulation have played an instrumental role in attracting vast foreign direct investment (FDI).
Businesses in Dubai do not pay direct taxes on corporate profits or personal income (except for oil companies that pay a flat rate of 55 per cent and branches of foreign banks that pay a flat rate of 20 per cent on net profit generated within Dubai). Customs duties are low at four per cent with many exemptions. Businesses can avail up to 100 per cent repatriation of capital and profits. There are no foreign exchange controls, trade quotas, or barriers. A stable exchange rate exists between the US Dollar and the UAE Dirham. Liberal visa policies permit easy import of expatriate labor of various skill levels from almost anywhere in the world.
Dubai's policy of investing heavily in its transport, telecommunications, energy, and industrial infrastructure has significantly enhanced its attractiveness to international business.
Apart from a favorable tax environment, companies in Dubai offer significant cost advantages due to the absence of foreign exchange controls and trade barriers or quotas. Historically, high real estate costs have undergone a correction and are currently very competitive.
Dubai boasts of an extensive foreign trade network, offering investors an extensive choice of potential global marketing outlets for a diverse portfolio of goods and services.
Within the UAE, Dubai is part of the world's third-largest export and re-export centre, after Hong Kong and Singapore.
Expatriates comprise over 80 per cent of Dubai's population, with over 150 nationalities working and living harmoniously in a safe, almost entirely crime-free environment. Dubai attracts a highly skilled workforce, which is absorbed by the growing number of international companies, professional service firms, and financial institutions. Expatriates enjoy tax-free salaries, schools accredited to international standards, a high standard of health care and excellent recreational facilities.
The asset boom and the vast increase in private and institutional wealth in the region have created a huge demand for specialist financial services.
Story of the Emirate is incomplete without mentioning Dubai International Financial Centre (DFFC). Over the years, this onshore finance and business hub has been connecting the region to the world, and the world to the region. DIFC is strategically located between the east and west, which provides a secure and efficient platform for business and financial institutions to reach into and out of the emerging markets of the region. The quality and range of DIFC's independent regulation, common law framework, supportive infrastructure, and its tax-friendly regime make it the perfect base to take advantage of the region's rapidly growing demand for financial and business services.
DIFC fills the time-zone gap for a global financial centre between the leading financial centers of London and New York in the west and Hong Kong and Tokyo in the east. Guided by its core values of integrity, transparency, and efficiency, DIFC is playing a pivotal role in meeting the growing financial needs of the region.