Dubai Economy shows resilience

In spite of the plunge of oil prices, instability in China, Russia and across Europe as well as decreased international demand for commodities, Dubai remained resilient in 2015.

Based on Dubai Chamber of Commerce and Industry, Dubai remained resilient due to its diversified economy. Dubai’s diversified economy minimised the degree of impact of the negative effects international slowdowns inflicted on various sectors of the economy.

During the previous year more than 1300 new members were initiated each month by the Dubai Chamber of Commerce and Industry. Dubai encouraged international investors with more than 16 thousand companies becoming members of Dubai Chamber of Commerce and Industry last year. In all, 185 thousand companies have joined the membership of the Dubai Chamber.

Dubai Chamber of Commerce and Industry marked a 9.5% increase in membership, establishing the organisation as one of the largest-sized chambers of commerce throughout the world.

The member companies of Chamber of Commerce and Industry contribution is shown in their yearly export and re-exports numbers. In 2015 the total amount of exports and re-exports amounted to Dh286 billion of which 37% (Dh105.7 billion) were shipped to Saudi Arabia.

Dubai Chamber of Commerce and Industry also recorded a 5% increase in amount of Certificates of Origin issued in 2015 that amounted to 930,000, in contrast to 887,000 Certificates of Origin issued in 2014.

In general the United Arab Emirates (UAE) has successfully moved past its dependency on oil by diversifying its economy. The UAE has focused on strengthening other sectors such as tourism, hospitality, logistics and trade. The UAE has also focused on new innovative sectors, which will be the foundation of the country’s future progress and growth.

During 2016, Dubai Chamber of Commerce and Industry intends to continue supporting the state’s vision and enhance as well as explore the business community’s interests. The Chamber of Commerce and Industry explores and evaluates new markets and identifies business opportunities for investment and trade. The organisation will also continue with its Global Business Forum on Central Asia as well as Africa.

Dubai Chamber is committed in enhancing the development of business as well as establishing the UAE as an international business centre. Therefore, the organisation has launched initiatives to promote Dubai’s business competitiveness such as the Dubai Innovation Index, which is in accordance to the Dubai Plan 2021. The Dubai Plan 2021 aims to establish the emirate as a top business and investment destination.

  

The Chamber of Commerce and Industry also recorded an impressive 41.6% increase in issuance of ATA Carnets.

Furthermore, during 2015 took part in 66 events in 38 different cities across 30 countries, while receiving more than 670 delegations from almost 70 countries.

Trade Dispute Settlements

In 2015 the Dubai International Arbitration Centre handled a total number of 183 cases in contrast to 174 cases the organisation handled in 2014. The department of Dubai Chamber’s Legal Services handled 555 cases in all in 2015.

Evaluating Draft Laws & Legislations

Dubai Chamber reviewed and evaluated 42 local laws and drafts. In all, the Dubai Chamber review of laws rate increased by 100%. All recommendations were passed on to the emirate’s Supreme Legislation Committee and other related authorities.

Efficient Customer Service

During 2015 Dubai Chamber assisted 330 thousand customers, 15 thousand more than it served in 2014. Out of the 330 thousand customers, 66% of the requested transactions were handled in less than 6 minutes, which highlights the continuous efforts of the organisation to attract foreign investments as well as promote Dubai as a top international destination for finance and trade. 

IMF Estimates a 2.3% Fiscal Deficit for UAE in 2015

In contrast to private-sector predictions, the International Monetary Fund (IMF) forecasts the United Arab Emirates (UAE) will experience a 2.3% financial deficit.

The UAE’s Government budget deficit has been anticipated due to the decrease of oil prices. It is the first time since 2009 that the UAE will experience a shortfall in the Government Budget. During the previous year, oil cost approximately $100 per barrel whereas this year, oil has slumped to approximately $60 per barrel.

The IMF predicts that the UAE’s Gross Domestic Product (GDP) will drop by 2.3% in comparison to the 5% surplus it experienced in 2014. The IMF also forecasted that the UAE’s non-oil based sector economic growth rate will increase by 3.4% while inflation rate is also expected to rise by 3.8% due to increased rents regardless of the fact residential prices have stabilised in Dubai. A complete IMF report will be released during the following month which will include all of its forecasts.

Additionally, according to IMF the UAE’s economic growth rate will increase by 3% during 2015 marking a drop of 1.6% in comparison to the previous year’s growth rate which was recorded at 4.6%. On a bright note, the IMF commended the UAE government on continuing to invest on infrastructure as well as implementing innovative policies which eased the negative impact of decreased oil prices. 

Numerous economic predictors within the private sector have forecasted that the UAE will experience a higher shortfall than the 2.3% predicted by the IMF. Even though the IMF has made its predictions based on the UAE’s expenditure plans, it does not mean that its predictions are more precise than those of the private-sector due to the fact the IMF does not take into consideration future oil prices.

Abu Dhabi Commercial Bank predicts the UAE will experience a 4% fiscal deficit during this year. The forecasted deficit is viewed as modest in comparison to the country’s large financial reserves. According to the bank, due to the government’s policies and reforms implemented during the past few years the UAE’s non-oil GDP rate will remain healthy.

Additionally, the government’s focus on housing, transportation, tourism, healthcare as well as education and energy projects in Abu Dhabi and Dubai will support and sustain the UAE’s economy

Although the IMF commended the UAE government for its innovative policies and budget spending it has made some suggestions so as to help regulate the deficit. According to the IMF, the UAE government must sustain investment spending, ease off on subsidies, regulate the public wage bill, increase non-oil profits and minimise transfers towards state-linked entities.

Most of the aforementioned measures are currently being endorsed. The IMF also calls that the financial community of the UAE and the government to be more transparent especially concerning state-linked entities as well as state debts.

According to an Abu Dhabi-based investment company, the National Investor, the UAE’s spending patterns and reforms rely on whether the price of oil will even out or fluctuate. In the past, the UAE government was practical and sensible as it restricted government spending at times when oil prices dropped. In contrast, the UAE government has not followed the same tactic this time and carries on spending. The reason remains unclear as to whether it is due t the fact the state believes oil prices will pick up or whether due to the fact it has implemented new reform policies.

Currently, the UAE government has large amounts of reserves to manage the drop of oil prices as well as to deal with the small shortfall in its budget. However, if oil prices remain low, the government will have to make long-term plans and introduce new policies as a precaution.

The IMF reflects the same views and will include details concerning the UAE’s spending in its report in the following month.

Dubai’s economy growth increased in 2014

Dubai’seconomy grew by 3.8% in 2014 according to Dubai Statistics Centre (DSC). Dubai’s real Gross Domestic Product (GDP) marked AED338 billion by the end of 2014. Dubai’s government officials commend and congratulate the city’s excellent economic performance. According to Dubai’s government, the city’s economic growth is attributed to its diversified economy.

According to the DSC’s report, all Dubai’s economic sectors developed in the previous year leading to increased growth rates, which consequently led to an increased GDP. Government officials assert that Dubai’s increased economic growth reveals that the emirate’s non-oil based sectors are also marking continuous growth. T according to the statistics, the emirate’s non-oil based economy contribution increased by 98.7% during 2014. In fact, Dubai’s oil-based sector contributed an amount of AED4.4billion whereas its non-oil sector’s contribution amounted to AED333.5billion.

These statistics confirm that Dubai’s overall economic diversification, whereby the city focuses on both service and industrial activities, is paying off.  The statistics also showed that 34% of Dubai’s GDP is attributed to the emirate’s communication, storage and transport sector that developed greatly from 2013 to 2014, marking an increase in growth rate of 8.6%. 

Dubai- India ties

A delegation from Dubai visited India, Mumbai with the intention of discussing new investment opportunities in order to enhance the two countries economic relationship. Dubai’s main intention is to strengthen Dubai-India trading ties.

The Dubai International Financial Centre‘s (DIFC) delegation, made a number of presentations and discussed the idea of implementing and developing Dubai’s position as a competitive business jurisdiction. The delegation noted that the two parties, India and the UAE, have developed a strong foundation thanks to their long and fruitful collaboration and that it is time to make their relations stronger by investing in areas both countries have interest.

The DIFC is not only interested in attracting skilled employers and industry expertise, but also to invest in investments that will eventually generate and establish effective commercial, investment and economic allies.

The DIFC delegation was attended by nearly 50 potential as well as existing clients who were interested in the DIFC’s effective regulatory structure, infrastructure as well as legislation framework.

The DIFC has benefited by the visit to Mumbai as many potential clients have shown their interest including investment banks, banks, insurance and reinsurance brokers and providers. Additionally top India-based firms also expressed their interest in setting up in the UAE to expand in the Middle East and Africa.

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. 

Kobyakov supporting the strengthening of Belarus-UAE economic relations

Belarusian Prime Minister Andrei Kobyakov insists that Belarus and the UAE need to tighten their relations by increasing trading and economic collaboration between the two nations. The Prime Minister of Belarus believes that presently the two countries’ bilateral trading and economical activities do not match their political relationships. The amount of trade between the two countries should increase, in order to benefit both markets as well as third country markets which each collaborates with.

Belarus was officially included in the Eurasian Economic Union (EEU) at the beginning of the year. The EEU owns approximately one-sixth of the world’s land. Some of Belarus trading partners includes Armenia, Kazakhstan, Russia and Kyrgyzstan to name a few.

Belarus regards the UAE as a great partner within the Middle East region. Even though Belarus is aware of the UAE’s successful trading activities, it proposes that an increased cooperation between them will be beneficial to both. Belarus offers a large variety of goods that may be in demand throughout the UAE, such as medical, petrochemical, engineering as well as food products. Additionally, Belarus is willing to offer assistance on any business venture the UAE requires. Belarus is open to the prospect of UAE businesses setting up in the country.

The UAE was open to Belarus’ proposal to strengthen relations between the two countries. UAE and Belarus are alike in many ways. During the previous three years investment, economic and trade has increased between the two nations. The UAE is hopeful their ties will tighten both within the public as well as within the private sectors.

The UAE is Belarus’ leading trade partner between the Arab countries included in the Persian Gulf.  Belarusian exports to the UAE increased by 44% during 2013-2014, amounting to $59.3 million worth of trade. In total, Belarus gained $48.9 million in trade with the Arab country. UAE exports also marked an increase of 16.5% during the same years, amounting to $10.4 million.

During the previous year, the UAE invested approximately $95.1 million in Belarus, out of which $4.2 originated from direct foreign investments, leading to net revenue of $1.57 million. In total UAE participates in 15 Belarusian organizations.

Dubai forecasts air passengers will reach 126 million by 2020

Dubai’s aviation sector has soared to the sky during the last year, and will continue to do so according to airport reports. It is expected that the number of passengers will increase to 126 million until 2020.

Dubai International and Al Maktoum International airports have been forced to expand due to growing number of travelers visiting or passing through the emirate.

Based on a recent report, Dubai’s airports are expected to cater to 126 and 200 million passengers by 2020 and 2013 respectively.

At present, Dubai International has been ranked the number one international airport. It has also been ranked the sixth busiest airport in the world. On the other hand, Dubai’s Al Maktoum International Airport, which is located in Dubai World Central (DWC), catered to almost 850,000 passengers during its first year of operation last year.  Currently it is able to cater to 5-7 million passengers.

After the expansion plans will have been completed, DWC’s airport will be able to cater to 220 million passengers. The expansion plans will be completed into two phases. It is hoped that over the next 6-8 years, the first phase of the expansion will be completed. It is projected that the expansion will cost over 30 billion dollars and the airport will have the capacity to cater to 120 million passengers.

Dubai’s vision to develop into an international hub is well on its way. The emirate is considering ways in order to cater to the demand its on-going growth has generated. As Dubai’s officials confirm, Dubai does not simply plan but it executes what it plans.

Dubai’s Al Maktoum International lies on 140 square kilometer plot on the southern part of the city. By the end of the expansion project, Al Maktoum International will be tenfold in size compared to Dubai International, establishing it as the largest international airport in the world.

During the previous year, Dubai International accommodated just over 70 million passengers, marking an increase of 6.1% compared to 2013 statistics. It is projected that the airport will cater to nearly 80 million travelers during 2015, having the capacity to accommodate 100 million passengers after 7.8 billion dollars were invested for its expansion.

During 2013, the aviation sector attributed to 27% of Dubai’s GDP, a sum amounting to approximately 26.7 billion dollars. Around 416,500 people are engaged in the aviation sector, which stands for 27% of Dubai’s labor force.

It is expected that by 2030 the aviation sector will contribute just under 90 billion dollars to the emirate’s economy, a figure that is threefold the amount the sector contributed to the economy in 2013. One out of three employees will be engaged in Dubai’s aviation sector.

Statistics reveal that as many as 192 thousand passengers pass through Dubai International on a daily basis. The airport caters to 980 flights every day.

Concourse A was completed nearly two years ago, which enhanced the airport’s capacity to 75 million passengers. Nonetheless, the airport needs to expand again as due to increased amount of passengers; its capacity is approaching its limits.

Dubai plans to complete the next expansion plan during this year, by opening Concourse D.

Dubai’s vision has been in place for many decades, which is in the process of developing an aviation enterprise, home to the largest international airports, which host international leading airlines and cater to millions of passengers. 

The UAE confirms that Gulf States are contemplating on value-added tax (VAT)

The Gulf region is currently conversing on implementing VAT on regions, which are rich in oil. According to sources, a meeting will be held in order to further discuss the matter later on during this month.

The six states part of the Gulf Cooperation Council (GCC) has been considering implementing VAT ever since 2007 in order to increase profits. All discussions and negotiations concerning the implementation of VAT have been conducted in the presence of all six Gulf States in order to prevent one state from excluded from competition.

Due to the plunging of oil prices, the Gulf nations are considering the introduction of VAT now more than ever before. This is because it is anticipated the six Gulf States will mark a budget deficit during the 2015 financial year and are not willing to cut off state spending on neither infrastructure nor social expenditure, which aim to enhance their economic status and as such improve the lives and lifestyle of the people.

Although the GCC has held several meetings, nothing has been decided yet. The GCC has arranged another meeting during February in order to further discuss the matter. The GCC is contemplating on introducing VAT on specific services and goods. No decision has been officially made, as some states do not want VAT to be imposed on food products whereas others do not agree on imposing VAT on healthcare.

The six countries part of the GCC includes the UAE, Qatar, Kuwait, Saudi Arabia, Oman and Bahrain. The GCC has suggested setting the VAT rate between 3%-5%, although it has not been made official.

IMF has long supported the idea of GCC implementing a levy in order to make sure governments will receive profits no matter the instability of oil prices. Furthermore, the UAE will possibly introduce a corporate tax, but again nothing has been made concrete. 

Non-oil sector on track in UAE

According to a new survey conducted in the UAE, its private non-oil sector is continuing to experience growth, in spite of plunging oil prices. However, it is anticipated business activity may drop or slow down during 2015.

According to January’s Purchasing Managers Index (PMI), international boost of orders attributed to increase in production output and employment rate. The PMI reached 59.3 in January, marking an increase of 0.7 from December’s PMI. The PMI calculates production output, spare capacity, prices and orders in order to represent the UAE’s non-oil based growth. The growth of the UAE’s non-oil sector is mainly attributed to the launching of new products, steady market and increase in sales.

The cost of production rose more sharply than the cost of finished products, since the increase in expenses (income and expenses of raw materials) hit the private non-oil based companies.

Increase in production and input expenses has not yet led to major increases in the cost of finished goods. On the contrary, decreasing commodity costs will possibly decrease inflationary issues and pressures. The UAE’s inflation rate is almost as high as it was in 2009 due to increasing housing and utility expenses.

During the previous month the IMF amended its forecasts concerning UAE’s economic growth reducing anticipated 2015 economic growth from 4.5% to 3.5%. The IMF expects that plunging oil prices will reduce UAE’s exports and consumers’ confidence.

However, Abu Dhabi’s non-oil based sector is anticipated to increase 5.5% during 2015. The percentage rate growth is significantly higher than its oil based sector, whereby the IMF anticipates will increase by 0.5%.

The significant decrease of oil price from US$110 per barrel during the last months of 2014 to $50 per barrel will inevitably influence oil dependent countries throughout the GCC.

UAE’s government spending and 2015 Budget is anticipated will remain steady due to its large government foreign asset and currency reserve wealth funds. The UAE’s reserves amount to approximately 400% GDP, in comparison to its expected 2015 financial deficit of 3.7% GDP.

Plunging oil prices will possibly influence the demand for imports from the UAE’s trade partners, which inevitably will negatively influence the country’s growth rate.

Nonetheless, the fact that business activity boosted in the beginning of 2015 is promising, although it is anticipated business activity will slow down as the year unfolds due to decreased oil prices and lower demand from significant export markets throughout the Gulf.

Generally, the UAE’s decreased growth concerning its oil-based sector will be counterbalanced by Dubai’s significant growth in non-oil based sectors. In spite of this, inflows to the emirate will be significantly influenced due to plunging oil prices. During 2015, business activity is anticipated will slow down but no alterations in consumption behavior is projected.

According to Saudi Arabia’s PMI, its figure remained constant at 57.8, revealing economic growth due to increased orders. Egypt’s January PMI dropped to 49.3, revealing output slowed down. This is the fifth time Egypt’s PMI figure dropped lower than 50 since Hosni Mubarak was removed in 2011. 

Ras Al Khaimah Free Trade Zone awarded ten excellent companies

Ras Al Khaimah Free Trade Zone awarded ten excellent companies at the First Annual Business Excellence Awards

Ras Al Khaimah Free Trade Zone (RAK FTZ) awarded ten companies during the first Business Excellence Awards Programme for their exhibiting excellence in their Business activities, showing the most growth as well as innovation and corporate social responsibility amongst other business-orientated features. RAK FTZ is home to more than 8000 companies involved in investment business.  More than 120 were included in the free zone’s awards. A judge committee from the International Performance Excellence (IPE) selected the winners.

His Highness Sheikh Ahmad Bin Saqr Al Qasimi, Chairman of RAK FTZ, congratulated the winning businesses for their outstanding business performances and for their contribution to the economic development of the free zone as well as the business sector in which they are involved. The free zone’s government believes that commemorating the most successful business activity and excellence does not only accentuate the awarded businesses but also the free zone itself for providing them with benefits so as to run their businesses more effectively. Some benefits include A-class facilities, top-notch quality business set-up support and lower costs. RAK FTZ is looking forward to helping even more corporations set up their businesses in RAK FTZ during the following years.

The winners of RAK FTZ’s Business Excellence Awards Programme included:

J & R Business Consultancy-which provides business consultancy services as well as training. The company was awarded the ‘Best Small to Medium Size Business Award’ due to its outstanding provision of services.

Burkert-Contromatic AG International Middle East-was awarded the ‘Best Technology Award’ accentuating their efforts for producing new and innovative products and services linked to technology and promoting them into the market.

Eurocap-an organisation that manufactures lids and caps for cosmetic products including perfumes as well as plastic packaging products was awarded the ‘Best Contributor to Ras Al Khaimah Development’ award. The award highlights the important role the business has played in the economic and social progression of the emirate.

Biri Industries-was awarded the ‘Fastest Growing Company’ award, highlighting the immense growth it has shown since its launching. Biri Industries manufactures and supplies hoses and pipes for agriculture, domestic use, oil and gas as well as marine and for other industrial linked sectors.

Utico-was awarded the ‘Best Corporate Social Responsibility’ award for its beneficial business activities towards both the environment and society. The company is the largest private service company throughout the Middle East.

Milly Pack-was awarded the ‘Best Start-Up’ award which highlights the efforts of a corporation that has been running for under three years and has shown innovative business practices. The organisation is involved the packaging and packing of material industry.

RAK FTZ also awarded companies for their successful accomplishments and support towards the emirate and free zone. Several of the companies are outlined below.

Both Zaher Kayyali Trading and TCA International were awarded with the ‘Referral Champion of the Year Award’ for contributing the most referral to RAK FTZ. 

Both Intertrad and RamJet Aviation Support were awarded with the ‘Pioneer Award’ honouring them for conducting their business activities the longest in the free zone. The first company is involved in the import and export business of wool, tiles, synthetic rubber as well as spices, tea and other food products. The latter is involved in the aviation services sector and has run business activities in RAK FTZ since 2007.

The judging committee were part of the International Performance Excellence (IPE) company, a private company that supports business quality throughout the world. Eithad Airways, National Bank of Abu Dhabi, Abu DhabiEducation Council, Abu Dhabi Police as well as the UAE Ministry of Health are several of the IPE’s many clients. 

Dubai Cautions over US dollar

Dubai is apprehensive about the consequences the strengthening of the US Dollar will have on its economy. According to DubaiEconomic Council (DEC) a strengthening US Dollar will negatively influence loans, exports and debts. Due to Dubai being a diversified economy, it will be influenced more by the US dollar than plunging oil prices. The DEC is directly involved in the economic decision procedures of Dubai’s government.

Attention was initially focused on the international drop of oil prices, which fell more than 50% since June 2014.

Last Wednesday, the US Dollar Index traded at 92.7640. The highest it has traded recently is 93.046. Just before oil prices began to decrease during last may, the US Dollar Index was traded at the low index of 79.5.

if the value of US Dollar soars, Dubai’s cost of servicing debt will also simultaneously increase. This will also affect other areas of Dubai’s economy. For instance, the demand for UAE manufactures goods and US re-exports may drop due to the fact their price will rise, therefore will be more expensive for non-US markets to purchase. Plunging oil prices will also influence exports since oil-based economies such as Saudi Arabia, Qatar, Oman and Iran’s income will plunge, which are the UAE’s major export partners.

What ’s more, due to the higher interest rate of the US Dollar, cost of borrowing will also increase. The US economy is recovering and recoiling at a faster rate than was anticipated, marking an average groeth rate of 4.8% during the last two financial quarters. Its growth rate and overall economic performance is the strongest it has been during the last ten years. A recoiling US economy could possibly lead to an increase in interest rate conducted by the Federal Reserve. At present, the interest rate is marked at the low percentage of 0.25. in the occasion interest rate increases in the US, the UAE’s interest rate will most probably follow, which is anticipated will not significantly influence the latter because its rate is currently very low.

Although Dubai is cautious, its government does not believe the increase in US Dollar will threaten Dubai’s economy. Decreased oil prices will probably result in increased production levels, and the increased US Dollar will lead to a decline in costs concerning re-exports to non-US countries. Last Thursday, Global benchmark Brent Crude was sold at $48.41 per barrel. When compared to June 2014, the prices of oil more than halved, marking a 57.9% plunge. 

UAE private sector is on a climb

Based on the United Arab Emirates (UAE) Purchasing Manager Index (PMI) the country’s private sector is successfully maintaining its progress even though the price of oil has soared downwards during the last few months.

During the previous month, the PMI results revealed that the UAE’s non-oil based private sector grew in terms of business activity.  The PMI’s data comprises of an amalgamated index on the UAE’s non-oil based economy, which was calculated based on the data gathered from about 400 privately owned companies throughout the emirates.

During December 2014, production growth increased in comparison to the previous month, to a level, which up until now has never been reached before. The production growth was strengthened by the boost in new orders. Simultaneously, job openings continuously opened and workers were employed, marking an increase in employment rate.

Throughout December, the PMI index was well above normal, reaching 58.4, which when compared to November 2014 calculation at 58.3%, not much had changed. However, the slight increase still reveals that the UAE’s private non-oil based sector is steadily improving and growing.

Ever since February 2010, the UAE’s non-oil based private sector production has been steadily growing. The continuous growth was maintained all through December as well, marking a significant increase, which was attributed to the fact new business inflow from the domestic and international markets.

During the last four months, export orders continuously increased, reaching a climax in December. The increase in export orders may possibly be attributed to the fact that demand on an international level has increased because the UAE has succeeded in drawing in new international customers as well as maintaining its healthy market. The PMI data also revealed that consumption soared drastically during December 2014.

According to expert financial advisors, it is anticipated that the decreased oil prices will influence the UAE within 2015, but for the time being demand is maintained at a satisfactory level. The fact that orders and production output are on the increase is a reassuring and supporting sign.

Due to growth in output production and new increased orders, UAE companies hired additional workers to meet demand. In spite of the fact that growth has marked a tiny fall when compared to December, patrol statistics have revealed a sharp increase, which is quite impressive when comparing to past data.

UAE private sector companies have been facing pressure in terms of cost and expenses. Generally, inflation concerning input goods prices rose during December, which was accompanied by a soaring increase in purchasing costs and low-income growth. On the bright side, output costs declined in December due to the declining rate of inflation in contrast to December. 

UAE private sector companies anticipate that during the future their orders, purchases and stocks will mark further increases. The most recent PMI data reveal that the UAE’s non-oil based private sector is strong, showing that declining oil prices will not influence the business operations of the non-oil sector. 

Experts insist that the UAE is completely capable of facing any problems that may arise due to the plunging of oil prices because of its diverse economy and strong buffers. The UAE shines amongst the other GCC countries as it has the potential and tools to manage its economy if prices of oil continue to surge downwards.

The continuous efforts of the UAE government to develop its non-oil sectors has paid off since in 2013 the non-oil sector contributed 61.1% of the nation’s total GDP and continues to grow fundamentally. In 2000, the non-oil sector contributed to 44.7% of the UAE’s total GDP.

The UAE does not solely depend on oil-based businesses for revenues as its non-oil based economy has marked continuous growth over the years, which is especially evident in its increased inflow of investments as well as a significant growth in non-oil related goods and services export activity. 

Estimated Dh14bn by 2020 generated from Timeshare in Dubai

It is anticipated that by 2020 Dubai’s timeshare market will contribute Dh14 billion to the emirates economy, as it is considered the most rapidly growing timeshare market internationally. Dubai’s timeshare market is on a rise due to a major boost in tourism, hotel rates and real estate property prices, which are forecasted, will carry on for the next 10 years according to the results of a new study.

Dubai is one of the top tourist destinations of our times as well as being a business hub. Due to this numerous visitors, either tourists travelling for leisure or businesspeople visiting for business matters, frequently visit the Emirati city. The number of people travelling to Dubai is higher than the majority of other hot tourist destinations in the world. Thus, Dubai has become a great jurisdiction to invest in the timeshare market.

Dubai’s prices concerning real estate property have been increasing fast. Thus, many cannot afford to invest in a second property in Dubai, either to use as a holiday or second home. Financially speaking, investing in the timeshare market is ideal for those who travel to Dubai regularly and usually stay at a Dubai hotel.

Based on the AFH report named Demand Outstripping Supply, Dubai’s timeshare sector experienced a 15%-20% increase during 2013 and grew an additional 30% during 2014.

The results of the report revealed that the boost in Dubai’s timeshare market is encouraged by the fact that international economies are on the recovery path as well as the UAE’s vigorous growth, which is especially evident by its growth in tourism and hospitality industries and its real estate property that is on the increase.

Dubai’s timeshare sector experienced a significant enhancement during 2014 due to international markets maintained recovery and boost in hotel and property prices in many tourist hubs. 

High Demand-Low Supply

The report also reveals that demand for timeshares within the UAE is significantly more than the supply. Therefore, those interested to invest in the timeshare industry look elsewhere.

The timeshare industry in the UAE has been rapidly increasing yearly at about 80%-90%, while the amount of timeshare properties available are significantly less, thus demand and supply do not balance.

The most apparent reason construction companies and developers have not been able to increase the supply of timeshare properties is that the legislation concerning the timeshare sector has not been finalized. 

Hong Kong and United Arab Emirates enter into Tax Agreement

Hong Kong (HKSAR) and the United Arab Emirates (UAE) entered into a bilateral tax agreement on December 11, 2014 concerning the avoidance of double taxation. John C. Tsang and Obaid Humaid Al Tayer, the Financial Secretary of HKSAR and the Minister of State and Financial Affairs of the UAE respectively signed the agreement.

The agreement made, the Comprehensive Agreement for the Avoidance of Double Taxation (CDTA) is the 32^nd in sequence that Hong Kong made with its trading partners. The CDTA analytically outlines the taxation rights amongst the two parties, therefore aiding potential investors review their possible liabilities concerning taxes when engaged in foreign economic activities.

The purpose of the bilateral double tax avoidance agreement is to strengthen both the economic and trade relations between the jurisdictions as well as to further motivate companies based in the UAE to invest or engage in business activities in Hong Kong and for companies based in Hong Kong to further invest and conduct business activities in the UAE.

Without the CDTA, UAE and Hong Kong residents would have been imposed Income Tax in both countries.

According to the CDTA, tax paid in Hong Kong will be permissible as a credit against payable taxation within the UAE. Additionally, without the introduction of the CDTA, the profits generated from companies in Hong Kong, which are engaged in business via a permanent establishment in the UAE, would have been imposed taxation in both jurisdictions if the profits generated derived from Hong Kong. Therefore, with the introduction of the CDTA, double taxation will be stopped since any taxation paid in the UAE by corporations will be permissible as a credit against the payable taxation in Hong Kong according to Hong Kong’s tax legislation.

The Hong Kong-UAE CDTA also includes an article regarding exchange of information between the parties. This provision will aid Hong Kong to realize its obligation on promoting tax transparency as well as diminishing tax evasion.

The Hong Kong-UAE CDTA will come into effect once both nations finalize their approval of the agreement procedure.

Hong Kong is keen on forming more CDTAs with its investment and trading partners in an attempt to further expand its CDTA network.

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.