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.