Ras Al Khaimah Free Trade Zone Delegation Visits the USA to Present UAE Investment Opportunities

An assigned team from Ras Al Khaimah Free Trade Zone (RAK FTZ) ,the second largest Free Zone within the United Arab Emirate (UAE), is visiting the west and south of United States of America (USA) with the intention of tightening their already existing relations, create new grounds for relations and to present USA companies with new and innovative investment opportunities.

The RAK FTZ delegation team is led by the emirates CEO, Peter Fort who has his schedule booked throughout his visit to the USA. The delegation has arranged face-to-face meetings in Los Angeles where the team will meet and present investment opportunities to private companies, industry organizations and chambers of commerce in an throughout the regions of Dallas, Los Angeles and Houston. More than 500 USA-based companies have already set up operations in the free zone and thus, the delegation team aims to build on the already established foundation.

Ras Al Khaimah is amongst the seven emirate cities that make up the UAE, alongside with other great emirate cities like Abu Dhabi and Dubai. the UAE has developed into a international hub attracting foreing investment because of the country’s business-friendly environment, beneficial tax-regime, efficient economic policies and political constancy and stability.  Ras Al Khaimah’s free zone offers foreign investors a stable and safe haven-like environment where they can set up businesses and expand. Opportunities are available to all forms of companies ranging from SMEs to global mega-companies. Once more, RAK FTZ ideal geographical position offers prospective investors easy access to numerous countries across the MENA, South Asia and Europe of course.

For over a decade now RAK FTZ has developed into a lucrative and cost-efficient haven attracting rapidly expanding regional and international markets. At present, the free zone is the home to more than 8 thousand companies originating from more than 100 countries. The companies are engaged in more than 50 industries.

as the other emirate free zone, RAK FTZ offers a plethora of benefits to its clients such as 100% foreign ownership, top-notch and already established facilities. However, the RAK FTZ differs from the other emirates in the respect that its required costs are significantly lower, offering clients and investors to obtain the maximum return on their investment. RAK FTZ free zone allows clients to set up their businesses very easily within the UAE, offering quick and simple procedures in order to get a business license, register, worker and investor visa, freedom to hire employees locally and internationally and continuous business support services. Each business’ needs and requirements are met completely. RAK FTZ provides clients top-notch business facilities, office spaces, warehouse space as well as land for lease in any of the four free zone parks in the free zone.

The two parties, UAE and USA, have long formed a partnership and both benefit from their continuous trade and investment relations which have risen significantly the last few years. According to the delegation team, UAE has created one of the strongest economies in the world and thus offers USA businesses, companies, businesspeople related in the service, trading, manufacturing and educational sectors the opportunity to expand within the Middle East, Africa and South Asia.

Among the top ten USA states in terms of UAE exports are California and Texas. The UAE is confident that this fact will further highlight RAK FTZ strategic development and accentuate the free zone’s dedication towards the largest economy of the world-the USA. The overall international shift concerning typical trade patterns alongside with the increase of status marked by the southern region that links the MENA and China, has further strengthened the UAE’s geographical importance as well as highlighting Ras Al Khaimah as the best home to businesses and corporations that are presently leading the market and will do so in the future.

The delegation team intends to present potential USA investors with an efficient and detailed illustration of the benefits offered and set up business opportunities available and offered by the RAK

UAE Shines among Gulf Cooperation Council countries (GCC)

The United Arab Emirate stick out from all the countries included in the Gulf Cooperation Council as the country that is most capable to deal with troubles that may arise in the future due to the sharp drop of oil prices because of the economy’s diversity and strong buffers.

According to recent reports concerning the impact of oil prices, the UAE’s foreign and financial position will be manageable due to the country’s account surplus (12.3%) and high GDP (6.8%).

Due to the UAE’s diverse economy and resources, the country have managed to maintain its external oil price at approximately $64 per barrel-according to its 2.6 Million Barrels Per Day (mbpd) during 2014, although its financial oil price has decreased steadily during the last three years from $93/bbl to $79/bbl

The diversification of the economy and the composition of its resource base have allowed the UAE to keep its external breakeven oil price around $64 per barrel, based on exports of 2.6 mbpd in 2014, while its fiscal breakeven oil price has fallen from $93/bbl to $79/bbl over the past three years.

Therefore, on the basis that UAE’s oil exports remain steady over the next year or so, it is predicted that the UAE will maintain its large account surplus as long as the price of oil does not drop below $64/bbl.

Due to the UAE’s continuous efforts to broaden its economic sectors and structure as well as expand its non-hydrocarbon dependent sectors, its economy has grown considerably.

The GCC countries face challenges due to the drop of oil prices because their diversification of export and financial revenue sources are limited, thus their economies extremely depend of the price of oil. Nonetheless, the UAE is the exception, as it is the best equipped among the GCC to face the drop of oil prices and the most competent when it comes to adapting its economy to the changes occurring in the international oil market.

Although the UAE’s bank sector liquidity may be influenced, the country’s Loan Deposit Ratio (LDR) remains well below 100%, its government support as well as the corporate sector’s deleverage schemes will further aid.

The non-hydrocarbon sector contribution to the UAE’s general GDP has increased immensely during 2000-2003, from 44.7% to 61.1%. The government’s efforts to diversify its economy and promote non-dependent hydrocarbon sectors has paid off and helped in increasing the UAE’s non-oil GDP. After a climatic rise in 2009, where non-oil GDP reaches 30.6%, the rate dropped by 2013 to 25.3%. Although the non-oil GDP remains high, when compared to the 56.6% non-oil GDP in Saudi Arabia, the public sector’s lessening efforts to enhance the UAE’s activity within the economy is highlighted.

The UAE’s decreases focus and dependency on oil is mirrored by the increase in the country’s exports and financial revenues not attributed to oil-related activity and sector. This fact is especially highlighted by the increased investment income generated from net foreign assets as well as the significant non-oil exports of both goods and services, especially evident in Dubai. 

On a financial note, it is anticipated that Abu Dhabi will restrict its spending by cutting subsidies and re-examining investment projects as well as reducing the amount of funds the city loans its neighboring countries. In this way, the UAE’s combined budget will be maintained at a surplus of 6.1% of GDP in 2014 and 5.4% of GDP in 2015.

It is evident that UAE’s financial competency has strengthened and its buffers have been boosted incredibly. The UAE’s gathering of great foreign and financial surpluses over the last 10 years as well as the government’s management of the country’s net foreign assets have aided to boost its foreign exchange reserves located in the Central Bank as well as enhance Abu Dhabi’s Sovereign Wealth Fund (ADIA) to approximately 120% of the country’s GDP.

The nation’s public debt is lower than 12% of its overall GDP, thus allowing the UAE to obtain further financial help if required. The UAE’s banking sector is in the position to help the UAE’s economy grow, regardless of the drop in oil prices. The bank sector’s improved performance reflects their strength and ability to help the UAE’s growth. 

Dubai is anticipated to grow at a faster rate than Global economy

It is anticipated that Dubai’s economy will experience an increase in growth during the following year, which percentage is higher than the international increase projected which stood at 3.5%. Dubai’s government and private sector will strengthen and generate more growing in the following years. 

Dubai is confident that its strong and efficient infrastructure will keep it competitive in the coming years. On that note, Dubai is also aware of the general instability evident in other international markets, but is ready to face any challenges that may occur. Dubai is convinced that it will avoid any budget shortage.

Additionally, it is anticipated that the United Arab Emirate (UAE) economy will also mark an increase in growth of 4.5% during the following year. The growth forecast is considered as a great sign when taking into consideration the instability and volatility present in other international markets.

During the next year, Dubai aims to restrict inflation in order to remain competitive as well as to maintain consumers’ spending on high levels. According to statistics, Dubai’s inflation rate climbed to 4.4% during October 2014, the highest inflation rate since May 2009, when the crisis hit Dubai. Fortunately, the rate dropped to 4.2% in November 2014, and Dubai is hopeful inflation will remain stable.

Dubai’s GDP rate also marked an impressive increase reaching 4.6% during the previous year. It is anticipated that Dubai’s GDP will increase by 4% during the following year mainly due to its diverse economy.

Dubai is confident all its sectors in general will experience growth-including its real estate, manufacturing, trade and services sectors. It is anticipated that Dubai’s economy will again increase by a higher rate than global growth because of Dubai’s economic diversification.  Although, international markets are facing instability and great unpredictability in their markets, Dubai is certain it will not be influenced negatively but is alert to face any challenges that may come up.

Furthermore, although the decline in the oil of prices will not affect the emirate on the short-run, if the prices continue to drop, Dubai’s economy will be affected in the long-run. According to projections, Dubai’s spending will remain stable throughout 2015 and changes to spending patterns may change during 2016.

It is also anticipated that households in Dubai will restrict their spending during 2015 as a result of the decrease of oil prices that may influence the amount of income they receive. 

Nevertheless, Due is confident that during 2015 the emirate will continue to grow due to its strong ability to adapt easily as well as being an international trade hub.  

UAE Ranked among the Most Developed Countries Internationally

The Most Recent World Economic Forum Report

According to the World Economic Forum’s World Competitiveness Report 2014-2015, issued during September, the United Arab Emirate (UAE) moved up seven places in the economic competitiveness ranking in comparison to the previous year. The most recent report shows that the 

UAE has been ranked in 12^th position, above countries like Canada, South Korea, Denmark and other leading economic markets, outranking them in several indicators.

In accordance to the report which examined an overall of 144 countries, the UAE’s has improved drastically in 78 out of the 114 indicators in only one year.

Ranked in Second Position-Attracting Investment

In line with the 2014 United Nations Conference on Trade and Development (UNCTAD) report, the UAE scored second position internationally in terms of attracting and receiving investments from foreign sources. The report outlined that for four consecutive years the UAE has marked continuous flows of investments. During 2013, the UAE overall received $10.5 billion dollars of foreign investments. This inflow in investments coincides with the UAE’s efforts to overcome its economic troubles since 2009. The UAE has been trying to overcome the crisis that hit it by developing both its oil and non-oil industries by expanding and maintaining development in the non-oil industry particularly in manufacturing of aluminium and petrochemicals but also the tourism and aviation industries.

The UNCTAD report positioned the UAE in first and 13^th position in the Middle East and international scope respectively, as the most attractive destination concerning investors during 2013-2015. The World Forum for Foreign Direct Investment 2013 report outlined that the UAE received a total of Dh36.7 billion direct foreign investments by the end of 2012 whereas it marked a total of to Dh28.14 billion in 2013 recording a percentage growth of 31.5% in total. According to the latter report, the UAE came 2^nd amongst the Arab world concerning attracting foreign direct investments as well as ranking 3^rd in West Asia where its total foreign investments amounted to $47bn.

According to the UNCTAD foreign investment report for 2013 the UAE collected approximately Dh202.1bn of foreign direct investments whereas UAE investments abroad amounted to about Dh146bn during 2007-2012 respectively.

What’s more the Kuwait-based Arab Investment and Export Credit Guarantee Corporation (DHAMAN), also established that the UAE was positioned 1^st throughout the Arab countries, regarding its attractiveness for foreign direct investments during the previous year.

UNCTAD statistics revealed that 92 in total foreign and Arab countries had received a flow of investments amounting to US$ 300 billion in total during the decade of 2002-2012 each year. Amongst the countries receiving the most inflow of investments were the USA, the UAE, the UK, Saudi Arabia, Japan, the Netherlands, Germany, Kuwait, France and China.

The UAE came 1^st amongst the Arab countries during the 2002-April 2014 with total investments reaching $217b.

The UAE has been ranked amongst the top countries in terms of attracting foreign direct investments mirroring the beneficial policies it has enforced and adopted since it was established many years ago. In regards to the International Institute for Management Development 2013 report, statistics rank the UAE 4^th and 1^st internationally and in the Middle East respectively, in the openness to the world index and positively benefiting from international globalisation. The specific report ranked Ireland in first place whereas the UAE came before many developed countries. In accordance to the World Index, Ireland was positioned first, acquiring 8.15 points, which was followed by Hong Kong, the UAE and Malaysia each obtaining 8.08, 7.82, 7.8 points respectively.

The UAE established a leading ranking on its economy

During 2014, international indicators and reports have revealed that the UAE has been ranked amongst leading countries in terms of its competitive economic capabilities.

In comparison to the previous year’s World Bank report regarding ease of doing business, the UAE moved three positions upwards, to 22^nd position internationally, while maintaining first position throughout the Arab world.

Likewise, in the Financial Stability report, issued by International Monetary fund in October 2014, outlined that the UAE would sustain a surplus concerning its state budget for the following 6 years (2014-2019). The estimated rates fluctuated between 6.9% to 10.5% regarding GDP. Similarly, IMF’s report regarding exports, ranked the UAE as one of the top 20 exporters in the world. the IMF report also claimed that the UAE’s exports, both services and goods, would amount to Dh1.47 trillion by the end of 2014 and that by 2015 the country’s exports would rise to Dh1.59 trillion. It was also predicted that by 2018 the UAE’s exports would soar to approximately Dh2trillion.

Furthermore, the Index of economic Freedom 2014, conducted by the credited Fraser institution, placed the UAE amongst the top ten countries. The index ranked the UAE first throughout the MENA region and in 6^th position internationally.

In accordance to the Global Enabling Report, the UAE came first throughout the MENA and was ranked 16^th on the international level, rising three positions when contrasted with the 2012 ranking. The Global Enabling Trade Report uses four features consisting of nine pillars, when categorising and ranking countries. These indicators include a county’s border management, accessibility to their market, infrastructure and communications. Out of the 135 countries which were examined, the UAE ranked 13^th internationally under the business environment category.

According to the International Institute for Management Development’s report in Switzerland, the UAE came ranked first and sixth among the Arab world and on the international scope respectively concerning the Economic Elasticity Index.

According to IIMD’s World Competitiveness Centre Lausanne-based report, the Global Competitiveness 2014, the UAE was placed first throughout the Arab and Middle Eastern nations for the secong consecutive year. The UAE also came fourth internationally concerning the image it projects as a business-friendly environment. The report especially highlighted the UAE’s economic flexibility, the opportunities it offers in the business sector and its overall development. 

MoF holds a Tax Treaty Workshop

MoF holds a Tax Treaty Workshop about Base Erosion and Profit Shifting (BEPS)

The Ministry of Finance (MoF) in collaboration with the Organization for Economic Cooperation and Development (OECD) organized the Tax Treaty Workshop.

On December 8, 2014, a Tax Treaty Workshop was held in Dubai, which was hosted by the MoF. The workshop intended to reconfirm the MoF’s commitment in cooperating closely with both regional and international partners. The workshop was co-hosted by the OECD and was named ‘Taking tax treaty work related to BEPS forward.’

The workshop covered a range of important issues. Some of these topics included a legal and logistic study of the process linked with creating introducing new tax treaties, the challenges entailed in e-commerce, BEPS discussions, the crediting of profits to establishments, manners in which to improve exchanging information amongst countries as well as OECD models concerning tax treaties and modifications and explanations about memorandums. The workshop that was held is the eighth in total that has been co-organized by the MoF and OECD.

Besides MoF employees, representatives around the world including Bahrain, Kuwait, Bermuda, Romania, Kosovo, Sri Lanka, Saudi Arabia, Oman, Nigeria, Malta, Cameroon and Sudan attended the workshop. Additionally, local UAE entities also were present at the workshop including representatives from the UAE Central Bank, UAE Free Zones, UAE Ministry of Foreign Affairs, and various finance departments, the Emirates and the Abu Dhabi National Energy Company (TAQA) and Etihad Airways.

Since 1987, the UAE has created a large tax treaty network with multiple trading partners throughout the world. At present, it has established 78 tax treaty agreements. Its immense experience in the field has helped the MoF to obtain logistical and legal expertise concerning closing agreements and conforming to all the necessary requirements. 

Dubai World aims to reorganize Debt

During the following week Dubai has scheduled restructure its loan repayments. Dubai World, the emirate’s largest state-owned company, made the loan. Dubai intends to extend the repayment period by taking advantage of the fact its economy is constantly growing.

In 2011, state-owned Dubai World agreed on a $25 billion restructuring agreement. The company now aims to the repayment of $10.5 billion, which was initially due for 2018 due to the fact Dubai is planning to invest in its aviation sector in order to accommodate and prepare for the World Expo 2020. The mega-company will present its proposals to creditors during the first ten days of December 2014 in London and Dubai.

Dubai World intends to repay a $4.5 billion installment, initially due in 2015 while negotiating the possibility to extend the 2018 installment to 2022. In order to assure creditors apprehensions, Dubai World will propose better or higher interest rates and extra fees.

The main lenders, including HSBC, Standard Chartered, Abu Dhabi Commercial Bank and NBD have all agreed to the new proposal and the main terms outlined in the agreement.  Nonetheless, Dubai World is still required to convince many more creditors to agree on restructuring the 2018 deadline agreement. The majority of banks (creditors) asked for higher fees and interest rates in order to agree on the extension.

Bankers believe the majority of lenders will respond positively to the new proposal due to Dubai’s economic prosperity and prospects for the future. They also argue that the finalized agreement is both fair and reasonable. On the other hand, some may not agree, influenced by Dubai’s debt crisis a few years ago. They may view Dubai is attempting to avoid repaying the amount due in 2018.

However, DP World purchased Jebel Ali Free Zone Logistics Park, which as all know, is Dubai’s port operator. The amount Dubai World received from the sale is more than enough the emirate needs to repay the 2015 installment in advance.

Dubai World needs the consent of creditors obtaining three-quarters of the loan value in order for its proposal to comply with UK legislation. However, Dubai is able to pressure for their proposal to be approved by securing the approval of two-thirds of the creditors at the Dubai World Tribunal. Dubai World Tribunal is a legal committee that was founded after the debt crisis in 2006.

Dubai’s services sector has grown excessively due to increased trade, tourism and transportation. Dubai is still in debt, owing approximately $120 billion, but experts are optimistic the emirate will repay the debt without any trouble.

Due to the fact Dubai plans to invest excessively in its domestic infrastructure and mega-projects, it will have to ask for more funds from banks and other capital markets. Dubai intends to invest in its aviation sector, by enlarging its second airport AI Maktoum and estimates the project will amount to approximately $32 billion.