United Arab Emirates
The UAE is a federation of seven Emirates comprising Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain and was formed on 2 December 1971.
The UAE federal constitution was permanently accepted in 1996 and provides for an allocation of powers between the federal government and the government of each Emirate. The capital and second largest city is Abu Dhabi, which is also the country’s centre of political, industrial and cultural activities.
The President of the UAE is the Ruler of Abu Dhabi, Sheikh Khalifa bin Zayed al-Nahyan. He has the full backing of the ruling families in the other six Emirates. The Vice President and Prime Minister is the Ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum. His priority is Dubai’s business development but he still takes a keen interest in regional politics. Both President and Vice President have appointed Crown Princes to ensure a smooth line of succession.
The UAE foreign policy remains a balance between the maintenance of its strategic alliances with the West and the imperative of maintaining friendly relations with Iran, with whom the UAE enjoys strong historical trade relations.
Relations between the United Arab Emirates are strong, with President His Highness Sheikh Khalifa bin Zayed Al Nahyan returning Her Majesty Queen Elizabeth’s state visit to the UAE in 2010 with a visit to the UK in April 2013. During the visit HH Sheikh Khalifa bin Zayed Al Nahyan stressed the ongoing closeness that exists between the UK and the UAE, noting the significant opportunities that exist in areas of trade, education and security. The scale of the opportunities are significant, with the construction and infrastructure sector alone estimated to be worth £1.4tn and the healthcare sector some £7.4bn by 2015.
More than 100,000 British citizens live in the UAE and some 4 million visit the UAE every year. There are approximately 4,000 British companies operating in the UAE, with notable firms including Shell, Rolls Royce, HSBC and Standard Chartered enjoying a long-standing relationship with the Emirates. Fosters + Partners are helping design Masdar City and British expertise has also played a key role in the development of iconic projects such as the Sheikh Zayed Grand Mosque, the Dubai Metro and the Burj Khalifa. The strong bond between the UK and UAE also means that many Emiratis live and invest in the UK too, with investments spanning the DP World London Gateway near the mouth of the River Thames to Manchester City Football Club amongst many others valued at an estimated £5bn.
Strong trading statistics underscore this relationship, with the UAE remaining the UK’s largest market in the Middle East and 14th biggest globally. At the third meeting of the UK-UAE Business Council in Dubai attended by ministers from both countries in November 2012, it was announced that the planned target to increase trade volume between the two states to £15bn by 2015 was on track to being achieved. Between January and December 2012, imports from the UAE totalled £2.1bn, with exports reaching £5.1bn – an increase of 9% from 2011.
Economic activity in the UAE is regulated by each individual Emirate as well as by the Federal Government. Dubai has taken the lead in constructing/developing a relatively unrestricted environment in which to do business. Competition is very keen in established sectors. Breaking into an existing market means newcomers have to work hard to capture a share. Newcomers need to find competitive advantages, for example, better quality, faster delivery, lower prices or newer designs.
Other opportunities exist alongside notable joint public / private stock companies. An example is Dubai Investments, a Public Joint Stock Company, which is developing a 3180 hectare industrial park on the outskirts of Dubai. The company has interests in the manufacturing of consumer goods, communications, light industry, high technology and environmentally friendly acquisitions. Their core business is investment in viable projects that have the potential for growth across all economic sectors.
The majority of local governments and federal ministries based in Dubai are required to purchase through local agents, who may also assist in marketing and sales, although it is still possible for a company outside the UAE to sell directly to contractors. Generally, price is the most important factor in promoting sales, although it is evident that product quality and after-sales service are also important selling factors in the UAE market. Advertising and participation in sales promotions and trade exhibitions is often helpful for raising consumer awareness and gaining market share, but effectiveness will vary according to product.
The period from September-June sees a variety of trade exhibitions and conferences in a broad range of sectors including information technology, education, interior design, construction and health. Exhibitions and trade fairs are also held in Sharjah, Ras Al Khaimah and Fujairah.
Strengths of the market
- Dubai is regarded as a regional hub
- No taxation on personal income and capital gains
- English is widely spoken and accepted as business language
- Entry route to other GCC countries
- UAE is the UK’s largest export market in the region
- Majority of UAE population are expatriates with 120,000 UK residents
Opportunities in UAE
The UAE offers major business opportunities in the Middle East with the following priority sectors identified by the federal government;
- Travel and tourism
- Financial services
- Professional services
- Transport and logistical services
- Education and healthcare
Routes to market
Apart from the obvious distinct advantages of having a physical presence in the market place, one important consideration is that businessmen in the Middle East prefer to meet, in person, those they may wish to do business with. It is important to invest time in building relationships with potential customers or partners.
Under federal legislation, the principal relevant options available for conducting business in the UAE are:
- participation in a local company or other commercial entity
- establishment of a branch office
- establishment of a branch or subsidiary in one of the Free Zones of the UAE
- appointment of a commercial agent or distributor.
Which of the above options is the most appropriate will usually depend upon the nature of the activities proposed to be undertaken and it may be that a combination of the options outlined is appropriate for your particular business.
Federal ministries, public departments and institutions will be closed on the following holidays:
- January 1, New Year's Day
- January 24, the Prophet's birthday
- June 6, Israa and Miraj night
- August 8, Eid Al Fitr
- October 14, Arafat Day
- October 15, Eid Al Adha
- November 4, Hijri New Year
- December 2 and 3, National Day
Dates for Islamic holidays are estimates, and the holidays, which are based on the phases of the moon, will be announced once the moon is sighted.