Pension, longer visa for Dubai expats proposed

Dubai’s financial and economy experts are supporting the idea of introducing new policies concerning longer duration of visas, sponsored free visas for expats as well as the implementation of a pension system.

According to experts, by loosening expat policies, Dubai will ultimately draw higher levels of both investments and human capital, which will increase domestic spending and maintain economic growth.

Dubai’s governance and Deloitte formed the Dubai Economic Council (DEC), which has drawn up a report that outlines policy suggestions that will help the emirate enhance its competitiveness and maintain economic growth. 

Every year large amounts of expatriate incomes leave the United Arab Emirates (UAE), therefore the DEC’s report outlines policies that aim to reserve these funds within the country. The DEC proposes that Dubai introduces a government pension scheme targeted towards skilled expats, issue longer visa durations as well as grant free-sponsored visas to certain skilled professionals.

Consequently, expatriates would remain within Dubai for a longer period of time and invest their money domestically and not in foreign countries. Based on statistics taken from the World Bank in 2011, 40%-50% of expatriate incomes were sent abroad. Additionally, at present the duration of visas issued last for two to three years.

The DEC report outlines that by granting expatriates with visas that carry a longer lifespan Dubai would benefit immensely because expatriates would remain in the UAE longer, thus consumer expenditure and home investments would rise. The DEC proposes that Dubai follow the example of other countries like Singapore where expats are granted visas that last for ten years.

Moreover, if Dubai grants visas to skilled professionals, it will allow expats to engage in part time and/or temporary work or even invest in their own businesses. By alleviating labour restrictions Dubai would attract higher-skilled workers, who in turn would transmit their expert knowledge to domestic businesses and enhance the setting up of new businesses.

The National Bank of Abu Dhabi also supports the DEC’s suggestions and believes the policies it proposed will indeed attract foreign investors but mostly will increase the number of start-ups and enhance domestic spending. Dubai is already an attractive business hub when compared to other hubs like Singapore and Hong Kong. By implementing longer visa duration, it is believed that Dubai will attract investments from Europe and South-East Asia.

Based on the Dubai Statistics Centre, the number of UAE nationals is anticipated to drop to 5% of the total UAE population between 2010 to 2020. From 2014 and onwards, statistics reveal that 30% of real estate investments in Dubai come from the GCC nationals.

Nonetheless, Dubai maintains its leading position within the Middle East and North Africa (MENA) as well as the GCC concerning features such as political stability, healthcare, quality of life, diversified strategies as well as crime and safety levels.

Overall, Dubai has developed and grown incredibly, proving that the state’s diversification strategies have worked well. Presently, the oil-based sector contributes merely 2% to the emirate’s total GDP. Additionally, the emirate provides high quality of life to its people as it was voted first within the MENA and 75^th internationally in the Quality of Living Survey conducted by Mercer in 2014.

 Dubai should now focus on enhancing its regulatory structure and competitiveness. Even though Dubai more advanced and developed than MENA and GCC markets, it is not as advanced when compared to more advanced countries.

The policies proposed by the DEC are generally supported by major banks and authorities in Dubai. If Dubai implements a state pension scheme, the state can also coerce workers to invest a proportion of the pension fund in domestic assets. Therefore, investment funds will stay within Dubai’s domestic economy benefiting both bond and equity markets stabilise in the long run.

The present dividend scheme has inadequacies regarding structure, due to the fact it is broad, complicated and corporate accounting can easily find loop holes and manipulate it.

An efficient state pension scheme should be one of the components that make up an employment package. Pension plans are also decisive factors workers take into consideration when deciding which company or employer to work for. Employees that do not have effective pension schemes risk facing financial difficulties when they have retired, except if they set up personal pension plans. Additionally, being part of a pension scheme adds a sense of security and belonging. 

Dubai the leader of world's emerging markets

According to Dubai Economic Council (DEC), Dubai is the most dynamic emerging market on an international scale.

Dubai’s diverse market, business friendly environment and competitiveness attract both domestic as well as foreign direct investment (FDI), establishing it as the Arabian Gulf’s top business hub and regional centre. However, in a recent delegation led by Deutsche Bank, Dubai was ranked amongst the leading dynamic emerging markets of the world.

Dubai believe that creating strong alliances and partnerships with both regional and international structures is essential for sharing advice, knowledge and gaining insight on a variety of issues.

The DEC has cooperated with numerous state entities, both locally and internationally, including top international companies and organizations like China Development Bank (CDB) as well as US Ex-Im Bank. These collaborations emphasize the coordination between Dubai and other countries as well as the similar visions and interests they share for the future.  

DEC is open to the idea of collaborating strategically with the Deutsche Bank. The DEC anticipates working beside the Deutsche Bank, due to its extensive experience and knowledge in the financial and banking sector.

Dubai is confident that it has the potential to maintain its economy not only within the area but also on an international level. the emirate’s confidence derives from its top-notch infrastructure, efficient financial and logistics services, present inclination towards the clean energy sector as well as the increasing development projects led by PPPs. All the above features contribute in making Dubai’s economy resilient.

Apart from the above factors, the DEC’s research proposes that the emirate’s financial maintenance is the key factor that will contribute to its development in the future. Another crucial point is the fact Dubai is the host of the EXPO 2020. Therefore, its long-term cooperation with the Deutsche Bank will benefit the emirate in terms of comprehending the Critical Success Factors (CSFs) required to sustain its financial stability. 

During the previous year, DEC set up the Global Financial Alliances Initiative, in order to establish a platform targeted for export agencies and leading international banks. The aim was to enhance infrastructure investment as well as international trade initiatives within the emirate. 

The Deutsche Bank is also looking forward to the opportunity of collaborating with the DEC in order to converse about the region’s economy.

UAE a strategic Trading Stop of IT goods

Prior to the glamorous Dubai, we all know or have heard of packed with impressive skyscrapers, artificially manmade islands and effective infrastructure, the emirate was already one of the top trading hubs in the world.

A significant amount of products valued at billions of dollars pass through the emirate before being exported to diverse countries. The main reason most products pass through Dubai is due to its ideal location, which links suppliers and consumers from countries such as Asia, Africa, Russia and many more.

Therefore, as aforementioned, Dubai is not only a preferred stopover for travelers, but also for products that are shipped to Dubai before being exported to a variety of other countries. Besides, from its ideal location, Dubai offers a tax-free jurisdiction with beneficial state laws as well as a variety of trade embargoes. All of these features have aided the emirate to make its mark as an international trade hub.

After completing a research on Dubai’s trading activities, the International Data Corporation (IDC) concluded that there are two essential features that characterize Dubai’s trading trends. The IDC underwent a research to develop a better understanding of the emirate’s trading trends as well as how these influence the trade of IT products.

The first feature the IDC noticed is that Dubai engages in the so-called grey market movement, which essentially describes the action of exporting goods via a country without using the official designated route. In such circumstances, the vendor is unaware of the channels the products take and the shipment usually goes through countries whereby traders purchase and sell goods from a diverse variety of countries. the majority of grey shipments the UAE receives are immediately sent off to their final destination. Nonetheless, a small proportion are left behind of which are either introduced in to the local market or exported again.

The second noticeable feature is re-exporting the goods. This includes products that have already authoritatively been shipped to the UAE or shipments the UAE has received through grey shipment markets, which are then re-exported to a variety of other countries. The shipments, which are re-exported from the UAE, are of considerable volume, therefore these influence the amount of products that UAE consumes in contrast to what was actually imported. Thus, it is incredibly significant to understand this trading pattern, since the seller’s international headquarters usually assumes the demand arises from the UAE market.

The IDC research also revealed how the amounts of goods, which are re-exported, vary according to brand and technology. In general, the research has shown that up to 30%-50% of goods that have officially been shipped to the UAE end up being re-exported.

There are several reasons that explain the cause of these trading trends. First, Dubai seeks to satisfy demand. Dubai has always been regarded as a trading centre and a jurisdiction where many IT products are available for purchase. Therefore, there are always wholesalers who seek to buy these goods from Dubai, even though the same goods are available in their own countries.

Another reason goods are re-exported from the UAE is when specific good are not obtainable or offered in another jurisdiction. Either this is due to the fact sellers have not yet established direct trading channels to export their products to specific jurisdictions, like Asia or Africa, or they have made specific products unavailable to certain countries. Therefore, demand of these goods is met through grey channels.

The final reason is due to the cost of goods and products. Not all goods and products are priced the same, therefore a specific product may be cheaper to purchase in one country than in another. Thus, buyers prefer to import the specific good from a country that offers the cheapest price. Due to the large amounts of shipments the UAE receives, in comparison to other jurisdictions, the price of goods tends to be much lower. In addition, Dubai is within the vicinity of many countries, thus accessibility of goods is made easier.