- NEWSLETTER,SAUDI ARABIA
- April 6, 2022
A five-year Memorandum of Understanding (MoU) has been signed between the Saudi Accreditation Centre (SAC) and the UK Accreditation Service (UKAS) to help improve quality infrastructure and boost consumer confidence. This is one of the most notable among several agreements being reached between Saudi Arabia and the UK recently.
Matt Gantley, the Chief Executive Officer (CEO) of UKAS and Dr Adel Alkeaid, the Executive Director of SAC signed the MoU on 16th March 2022 to establish a long sustainable professional relationship between the two national Accreditation Bodies.
Both SAC and UKAS are experts in the field of accreditation and expressed their willingness to share individual knowledge, experience and expertise through this MoU for national quality infrastructure building.
UKAS and SAC agreed to work jointly to offer technical consultation and support, implement joint certification programmes on areas of mutual interest, and develop plans for accredited activities.
Besides consultations and support services, the MoU also addressed several other aspects of cooperation such as training programs, joint events, and any other promotional aspects for enhancing trade exchanges between the two nations.
While the accreditation authority in the UK is one of the oldest and leading accreditation bodies in the world, the SAC is the only national body authorized to grant accreditation services in the Kingdom of Saudi Arabia for conformity assessment bodies in the field of inspection and certification bodies, testing and calibration laboratories.
This MoU will help Saudi Arabia to establish its global status as a top-class-quality provider of products and services and enhance the economic prosperity of the country through increased trade and investments.
The agreement formalizes the engagement of UKAS with SAC to boost accreditation services and establish and develop a strong long-term relationship for cooperation and facilitation of international trade and investment through reduction of barriers and increased foreign investment through new company formation in Saudi Arabia.
Dr Al-Qaid noted saying, ‘The MoU stems from the centre’s strategy in developing the technical competencies and capabilities of the centre and preparing qualified national personnel of assessors and experts, which contributes to strengthening the role of accreditation and its importance in the quality infrastructure in Saudi, benefiting from research, studies and joint experiences.’
‘We welcome this opportunity to work with SAC to increase services and capacity, developing an even stronger relationship of mutual long-term cooperation and aiding in the reduction of barriers to international trade,’ the CEO of UKAS commented.
In 2021, the Saudi Accreditation Center (SAC) gained national achievement by obtaining global recognition from the International Laboratory Accreditation Organization (ILAC), through the Arab Accreditation Cooperation (ARAC), in the areas of accreditation of testing laboratories, calibration laboratories and inspection bodies.
It is believed that the MoU will bring global recognition for national quality infrastructure services in Saudi Arabia and contribute significantly to the Kingdom’s signing of bilateral and multilateral trade agreements. It would also enhance the confidence of the International investment community in investing and doing business in Saudi Arabia.
Accreditation activity has long been recognised as one of the most important pillars of national quality infrastructure for its crucial role in enhancing the quality and adequacy of services and products, and increasing consumer confidence.
- NEWSLETTER, U.A.E, INDIA
- April 6, 2022
Introduction
India-UAE CEPA was signed on February 18 in New Delhi during the India-UAE Virtual Summit. The CEPA holds strategic importance to both countries as the UAE is currently India’s third-largest trade partner and second-largest export destination after the USA. UAE has also made considerable investments in company formation in India with an estimated investment of $ 18 billion. India and the UAE have recently entered into a Memorandum of Understanding (MoU) whereby the UAE has committed $ 75 billion towards infrastructure development in India.
Bilateral trade between India and the UAE stood at USD 43.3 billion in 2020-21 Exports were worth USD 16.7 billion and imports aggregated at USD 26.7 billion in 2020-21.
It is expected that CEPA would increase the bilateral trade between the two countries from the current USD 60 billion to USD 100 billion over the next 5 years.
The Key Impacts and Benefits
Commerce and Industry Minister Piyush Goyal on 27th March 2022 unveiled the negotiations for India-UAE CEPA during his visit to the UAE. The India-UAE CEPA document is now available in the public domain.
Tariff Elimination
The pact, which is expected to come into force on the 1st of May 2022, will eliminate duties for 90% of India’s exports in value terms to the UAE across several sectors including gems and jewellery, textiles, leather, and engineering goods.
Rules of Origin
Stringent rules of origin have been provided in CEPA to prevent the routing of products manufactured in third countries to India and to ensure that preferential tariffs can only be claimed during clearance only after the production of the certificate of origin issued by a government agency of the relevant country.
The agreement mandates up to 40% value addition on most goods and wholly-obtained criteria for Agri products to prevent misuse of the CEPA and take advantage of lower tariffs. The steel needs to be melted and cast before being shipped.
Establishing Investment Council
The two countries agreed to set up a technical council on Trade promotion, Investment and Facilitation
Tariff Elimination on Pharma Products
India and the U.A.E. will accept the pharmaceutical products manufactured in either country, requiring no prior inspection, subject to approval by the regulatory authorities of Australia, Canada, the European Union, Japan, the U.S. or the U.K. Indian pharmaceutical products and medical products will get regulatory approval within 3 months.
India’s free-trade pact with the United Arab Emirates eliminated tariffs on finished pharmaceutical products and tariffs on other items including enzymes for pharmaceutical use & pharmaceutical glassware have also been done away with.
Permanent Safeguard Mechanism
The agreement also has in place a permanent safeguard mechanism for certain goods. It covers government procurement and intellectual property and dispute mechanisms.
Trade in Services
Regarding trade in services, India has given market access to the UAE in almost 100 sub-sectors, while Indian service providers will have access to about 111 sub-sectors from the 11 broad service sectors such as business services, communication services, construction and related engineering services, distribution services, educational services, recreational services, financial services, environmental services, health-related and social services and tourism & travel services.
The wide market access across these attractive services sectors in the UAE is all set to lure Indian investors and promote Indian investment in the UAE through company formation in Dubai.
Trade in Goods
India has offered a 1% duty concession for gold imports from the UAE for up to 200 tonnes of inbound shipments. It has also given significant tariff concessions to the USE on dates, petroleum products, petrochemicals, metals, and minerals.
Preferential market access is given by the UAE on over 97 % of its tariff lines which account for 99% of Indian exports to the UAE in value terms, especially for all labour-intensive sectors such as Gems and Jewellery, Textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, medical devices, and Automobiles. India reciprocated by providing preferential access to the UAE on over 90% of its tariff lines.
Seventeen agencies from the Indian side have been listed, besides the export inspection council, to issue certificates of origin to exporters digitally which would enable speedy clearances and trade.
Mutual Recognition of Professional Degrees
CEPA would facilitate mutual recognition of professional degrees in various fields including architecture, engineering, medical, nursing, accountancy, and company secretaries and allow easier mobility of skilled professionals across the two nations.
Digital Trade
CEPA is a bilateral trade agreement with a dedicated chapter on digital trade. The chapter focuses on aligning regulatory standards on how digital trade between India and UAE is handled.
Conclusion
As CEPA classifies the subjects chapter-wise with minimum interpretation hassles, the adaptation of this trade pact is expected to be easier as vowed by Industry experts.
Additionally, the inclusion of a few government agencies for issuing certificates of origin will help streamline the process for effective implementation.
- NEWSLETTER,SINGAPORE
- April 6, 2022
A new Complementary Assessment Framework (COMPASS) for evaluating applications for Employment Pass in Singapore (EP) will come into effect from September 2023 and would enable employers to select highly qualified foreign talents and diversify the workforce.
COMPASS will be applicable for new EP applications starting 1st September 2023, and renewal of EP applications from 1st September 2024. The Singapore Ministry of Manpower (MOM), for the first time, rolls out a points-based system for evaluating Work Passes for foreign nationals.
Of late, the MOM also introduced stricter advertising requirements for jobs to help promote transparent employment practices with employers. The new system reaffirms the continued effort on the part of the Singapore government to protect the local labour market amidst weaker job prospects and uncertain employment growth forecasts.
Under COMPASS, the passing score for the applicants will be 40 points which will be based on four Foundational and two Bonus criteria considering severals employee and employer-related factors including Salary, Qualifications, levels of Nationality Diversity, Support for local employment by the employer, Skills Bonus and Strategic Economic Priorities Bonus. COMPASS evaluation will be applied in addition to the minimum standard salary requirement about Singapore employment pass. The new COMPASS framework evaluates EP applications using a points-based system to ensure complementarity with local Singapore workers.
Salary is an employee-related foundational criterion and COMPASS will account for sectoral salary differences. If sector-specific benchmarks for local professional, managerial, executive and technician (PMET) salaries are met, the EP applicant will earn points. The MOM periodically updates labour market statistics, including residential income and salary trends.
Qualification is also an employee-related foundational criterion and all Graduates of the top 100 universities based on international rankings will earn 20 points; those with degree-equivalent qualifications will earn 10 points, and those with no degree-equivalent qualifications will earn zero points.
Diversity is an employer-related foundational criterion and COMPASS will consider whether the candidate improves nationality diversity in the firm. Higher points will be granted to applications where the candidate’s nationality forms a small share of the firm’s PMET employees. If the candidate’s nationality forms the major share of its PMET employees, no points are earned by the firm.
Support for local employment is employer-related foundational criteria and more points are awarded for applications if the employer has more number of Singaporean PMETs relative to other employers in the same sector.
Skills Bonus is an employee-related bonus criterion and is based on the Shortage Occupation List (SOL). More points are given if an EP application is made for a role that is on the SOL. It is expected that an SOL will be published by the MOM by March 2023.
Strategic Economic Priorities Bonus is employer-related bonus criteria and more points are awarded if a company undertakes innovative and/or international projects in partnership with the Singapore government and is supportive of job creation for the local Singaporeans.
Candidates not meeting the 40-point passing score deadline can earn extra points by surpassing standards in specific categories or by gaining bonus points. The EP applications will, however, be rejected if the 40-point threshold is not reached.
The existing Fair Consideration Framework (FCF) job advertising requirement continues to be in full effect. Candidates will be exempted from COMPASS subject to fulfilling any of the following conditions.
- Earning a minimum of SGD 20,000 fixed salary per month.
- Applying as an overseas intra-corporate transferee under the World Trade Organisation’s General Agreement on Trade in Services or any Free Trade Agreement that applies to Singapore.
- Working on a short-term basis, i.e. 1 month or less.
With COMPASS being in effect, the MOM would introduce a Pre-Assessment Tool (PAT) to help employers with an indicative
COMPASS score on each criterion for the prospective EP applicant before applying online.
COMPASS is not only about employment pass as the Singapore government mulls over introducing a similar point-based system to other Work Pass categories including the S Pass whenever appropriate.
- NEWSLETTER,U.A.E
- April 1, 2022
The Growth Forecast
The UAE Central Bank (CBUAE) in its December report projected a stronger economic growth of 4.2% in 2022 more than the previously estimated 3.8%. The UAE’s economic recovery is expected to strengthen further in 2022 and the country’s banking system can support the financial system and its growth, CBUAE said.
The banking regulator convened a meeting with chief executives of national and foreign banks based in the UAE on Thursday, 16th December 2021 and remarked just after the meeting saying that the Emirates’ banking sector also demonstrated resilience amid the covid 19 pandemic, helped by the CBUAE’s Targeted Economic Support Scheme (TESS).
The ongoing support of the local financial system by the CBUAE through the Tess scheme was welcomed by the chief executives.
Rapid and widespread Covid-19 vaccination and testing drive for mitigating the pandemic
played the most vital role in strengthening the economic growth rate, the CBUAE 2021 second-quarter review reported.
The UAE celebrated the Golden Jubilee of the Union in 2021. “Looking ahead, expectations on the role of the banking sector will increase further,” remarked H.E. Khalid Mohammed Balama, governor of the CBUAE.
The governor emphasized saying “The banks will be expected to contribute significantly to our nation’s far-reaching and ambitious agenda, and to become leaders not only in the region but also in the global financial industry.”
The Tess scheme has supported the banks in liquidity management during the economic crisis caused by covid 19 as the CBUAE provided a stimulus package of Dh 100 billion consisting of a direct Dh 50 billion fund infusion through collateralized loans at no cost.
Earlier, during October 2021 the Chairman of the UAE Banks, Abdulaziz Al Ghurair highlighted that the banking assets of UAE are expected to grow by 8 to 10% in 2022 as the country’s economy continues recovering from the pandemic-led slowdown and benefitting from hosting Dubai Expo 2020.
CBUAE stressed that the banks in UAE need to endeavour actively towards achieving full compliance with Consumer Protection Regulations and Standards as these measures would boost consumer trust in the banking sector and positively impact the UAE banking industry and the national economy.
Other Positives
UAE is all set to witness a steady increase in government’s public spending, improved credit growth, higher employment and better business sentiment in 2022, the CBUAE predicts.
The economic activities in the non-oil private sector registered faster growth during December 2021, the IHS PMI data showed. Data also revealed that increased new order booking continued to support the expansion of economic activities in this sector.
Crude oil price gained almost 60% in 2021 and has been found moving higher during the first three trading weeks of 2022. More than 5% gains were registered by the global benchmark indices including Brent and WTI in the first week of the year taking oil prices to their highest since November 2021.
“Year-on-year residential real estate sales prices in Abu Dhabi rose for a third consecutive quarter, following five years of decline while declining in Dubai at a marginal pace. Both, the dirham effective nominal and real rates depreciated on a year-on-year basis due to lower inflation compared to main trading partners and in line with the US dollar trend,” the central bank highlighted.
Data released by the CBUAE also revealed that total bank deposits increased on both a yearly and quarterly basis. The rate of yearly Gross credit contraction also eased and registered moderate growth.
CBUAE also reported that on the back of economic recovery, financial soundness indicators remained mostly satisfactory.
Reforms- The Growth Enablers
2021 remained the year of reforms for UAE and the country, the 2nd largest economy in the Arab world witnessed numerous policy and administrative changes in legal, economic and social structures. All these reforms focused on enhancing the country’s business landscape, boosting foreign fund flow, acquiring high skilled professional and technical talents and providing incentives to companies for doing business in Dubai and UAE as a whole.
Some important reforms included changes in personal and labour laws, widening of longer-term residency visa rules, granting of 100% foreign ownership for onshore companies and very recently, the changing and shortening of workweek schedules in alignment with major economies in the world.
The cabinet also approved new regulations concerning industrial property law to further promote the intellectual property rights and patent registration process.
The new industrial property and patents law assumes particular importance in providing benefits to investors and academic institutions. R&D facilities, SMEs startups and technology companies are going to benefit the most.
All these reforms are designed for improving the business, investment and overall economy of the country. Garbis Iradian, Chief Economist, International Institute of Finance remarked, “New regulations could further help increase foreign direct investment to around $26 billion in 2022, one of the highest in terms of GDP among emerging and developing economies.” He also emphasized, ” These measures will boost efforts to diversify further the UAE’s hydrocarbon dependent economy, improve the business environment, make the economy more competitive and efficient, and thus raise potential growth.”
“In 2020, World Bank ranked the UAE among the top 16 countries out of 190 countries in terms of ease of doing business. I expect the announced measures or approved new regulations will improve further the UAEs business environment and rank the emirates among the top 10 best countries in the World in terms of ease of doing business by 2023. The manufacturing and trade sectors will benefit most,” the Chief Economist commented.
Dubai Budget 2022
Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, approved a general budget for the fiscal cycle of 2022-2024 with a total expenditure of Dhs 181 billion. Dhs 59.95 billion expenditure has been budgeted for 2022 with an operating surplus of Dhs1.8 billion representing 3% of the expected total revenue.
The Dubai Government continues its journey to realize its future goals of an accelerating economy and enhancing its business competitiveness by consolidating its position as a leading global commercial hub to attract foreign investors for company formation in Dubai.
The Takeaway
Besides CBUAE, most of the industry experts, entrepreneurs and financiers are very upbeat about UAE’s stronger economic growth in 2022 in light of the Expo and growth in the real estate, banking, finance and tourism sectors compared to the previous years. The government has also done lots of positive work in the last 12 months in terms of regulatory reforms and investments in the economy.
UAE with its world-class infrastructure, business-friendly policies, rich and attractive social life and the credible labour market is expected to attract high levels of FDI flow in its economy. The UAE authorities have been relentlessly striving for a diversified and knowledge-based economy and continuing its focus on a broad range of policy reforms, clean and renewable energy, innovative technologies and the fourth industrial revolution to accomplish socio-economic goals.
- NEWSLETTER,U.A.E
- March 23, 2022
Key Highlights
- RPSCS regulation came into force on 15.07.2021
- Allows financial service companies and FinTech’s to participate in retail payment services
- Ensures greater safety during retail digital payment
- Includes four-category licenses with nine types of payment services
The Central Bank of UAE (CBUAE), vide Circular No.15/2021 dated 06.06.2021, issued the Retail Payment Services and Card Schemes (RPSCS) Regulation and stipulated the rules and conditions for acquiring and maintaining a licence for the provision of the retail payment services and card scheme operation.
The regulation was enforced on 15 July 2021, with a one-year time limit for transition, to all existing payment service providers and card schemes for obtaining the relevant licences.
Earlier to this regulation, UAE banks used to be the sole provider of retail digital payment services. However, since the introduction of this new regulation, other financial service providers including FinTech’s can now participate in providing such services.
CBUAE has rolled out this regulation to ensure safety, soundness and efficiency of retail payment services, enhance the reliability of card schemes and public confidence in Card-based payment transactions, create a level playing field for market participants through innovation, helping service providers adopt an effective and risk-based licensing requirement and promoting UAE’s status as a leading payment hub.
Key elements of the licensing regime
The key elements of the RPSCS regulation are as under.
1. The regulation mandates that no entity can provide or promote any retail payment service listed in the regulation without a CBUAE licence. The CBUAE licensed banks are exempted, however, need to notify the CBUAE if they plan to undertake retail payment services.
2. An entity intending to provide Retail Payment Services shall need to apply for one of the four listed categories of License, category 1,2,3 & 4, depending on the types of the Retail Payment Services in the UAE. The regulation specifies licensing of nine types of services as below.
- Payment account issuance services
- Payment instrument issuance services
- Merchant acquiring services
- Payment aggregation services
- Domestic fund transfer services
- Cross-border fund transfer services
- Payment token services
- Payment initiation services, and
- Payment account information services
3. The principal business of the payment services provider (PSP) must be aligned with the retail payments service for which it is granted a payments licence.
4. For ancillary services beyond the scope of its licence, an entity must obtain approval of the CBUAE. A separate entity, duly approved by the central bank, needs to be created for this purpose.
5. The RPSCS regulation excludes its application to the payment transactions involving stored value facilities (SVFs), commodity or security tokens, virtual asset tokens, remittances or currency exchange operations.
6. RPSCS doesn’t cover Payment transactions made between payment service providers and settlement agents, central counterparties, clearing facilities and central banks, or payment transactions and related services between a parent undertaking and its subsidiary or between subsidiaries of the same parent undertaking as long as no intermediary is involved in these payment transactions. Technical support operations involving digital payments are also kept out of the purview of the regulation.
Condition and procedure for licensing
Article 4 deals with the licensing condition and stipulates that at the time of submission of application, PSPs seeking RPSCS license need to fulfil the Legal Form and meet the respective initial capital requirements per License Category specified in Article 6. They should also submit the necessary documents and information specified in the Central Bank application form as provided by the Licensing Division.
Article 5 for Licensing Procedure sets out that the licensing of Applicants shall be subject to the procedure envisaged in the Central Bank’s Licensing Guidelines and it is preferred that PSP management meets with the Central Bank’s Licensing Division before submitting a formal application.
Applications for CBUAE license under any of the Payments Category can only be made by a company incorporated per Commercial Companies Law. The regulation doesn’t throw much light on the eligibility criteria of companies incorporated in the non-financial free zones. Companies in financial free zones in DIFC and ADGM may not apply for payment services licenses.
Initial capital requirements
The regulation specifies the initial capital requirements for each type of licence, with the minimum levels determined based on the average monthly value of payment transactions and the sole exception being the payment initiation services and payment account information services, where an initial capital requirement of a minimum of AED 100,000 is required irrespective of the average monthly value of transactions.
The CBUAE expressly reserves the right to impose higher aggregate capital fund requirements if considered necessary.
Value of payment transactions exceeding AED 10 million for three consecutive amounts, attract higher aggregate capital fund requirement for a PSP and as determined by the CBUAE.
Card scheme
Card schemes are also regulated by RPSCS regulation that requires them to get a licence from the CBUAE. The conditions for these licences as well as the ongoing requirements of licensed card schemes are specified in article 18 of the regulation.
A card scheme may be a private or public sector entity with similar ongoing requirements as those specified for payment services including governance, risk management, reporting, auditing requirements, etc. CBUAE, however, is very discrete in issuing card scheme licenses.
Wage protection system
The RPSCS regulation also specifies participation and accessibility criteria to the wage protection system and allows PSPs to submit applications to the CBUAE to participate in and be given access to the system once approved by the Central Bank.
Conclusion
RPSCS Regulation can be seen as a regulatory enhancement journey of the UAE Central Bank for setting high standards of safety in digital payment systems. The new regulation also promotes competition and innovation and facilitates easier access to banking services in case of the non-availability of traditional banking services.
- NEWSLETTER,OMAN
- March 18, 2022
The private sector in Oman is a key partner in the Sultanate’s efforts towards economic expansion and social development as embodied in Vision 2040, stated Qais bin Mohammed Al Yousef, Minister of Commerce, Industry and Investment Promotion.
He noted, “His Majesty Sultan Haitham bin Tarik has launched Oman Vision 2040, which focuses on attracting foreign direct investment and developing the private sector as a priority.”
“Oman’s government is pro-business and has invested heavily in creating robust infrastructure and a friendly business environment that will help foreign investors set up production facilities in key sectors here,” the Minister emphasized.
Al Yousef while addressing the potential investors, said, “I invite you to come and experience the possibilities and opportunities for yourself. Oman looks forward to welcoming you.”
The Oman Chamber of Commerce and Industry (OCCI) is an organisation responsible for liaising between the private sector and the Omani government, and the Minister’s comments appeared in an interview shared by this organisation.
The private sector investors must become a part of Oman Vision 2040, which focuses on diversifying and building a sustainable & growing economy, creating good standards of living, generating employment opportunities for all and supporting business enterprises to withstand the potential adverse impact of global developments, encouraged Redha Al Saleh, the Chairman of OCCI.
The OCCI Chairman emphasized, “The chamber requires foreign investors to invest in Oman Vision 2040, which banks heavily on the private sector to lead Oman’s comprehensive economic development process.” “Foreign investors are also allowed up to 100 per cent foreign ownership,” he remarked.
“They can also gain an advantage using Oman’s unique geographical location, which is well-connected to both the east and the west by air, road and sea,” highlighted Al Saleh.
The government of Oman is also focused on developing the private sector and adopting business-friendly proactive approaches to promote the country’s business landscape that include zero income tax for individuals, tax waiver for five years or more, full repatriation of profits and capital, 100% foreign ownership rights and one-stop-shop online services platform. The ‘invest easy’ portal of this platform helps prospective investors on how to start business in Oman. Omanuna, the official Oman eGovernment Services Portal guides how to register SME in Oman.
There has been a bigger infrastructure push by the government in recent times and the country heavily invested in developing the logistics and transport infrastructure.
The Logistics Strategy of Oman sets out long-term objectives for enhancing the logistics sector’s contribution to the country’s GDP. During the past several years, the Sultanate’s strategic objectives revolved around increased government spending for capacity building and congestion reduction by expanding roads, ports and air links. The country aims to leverage its deep-water ports on the Gulf of Oman and the Indian Ocean to become one of the world’s top ten logistics and shipping hubs by 2040.
Tanfeedh initiative, Oman’s National Programme for enhancing economic development has received international praise and recognition. The economic expansion under the Tanfeedh initiative focuses on strategic areas including manufacturing, mining, agriculture and fisheries, energy, tourism, transportation and logistics. The export contribution of fisheries to the country’s GDP, in all likelihood, will touch OMR 1.3 billion in 2023.
Besides the country’s huge wealth of untapped natural resources, Oman has huge attractions of tourists with some amazing places to visit amongst which are beautiful and mesmerising mountains; a long coastline with sandy beaches, species-rich coral reefs and steep cliffs; golden desert with incredible sand dunes and many more. International travel magazine Lonely Planet ranked Oman as one of the world’s 10 best tourist destinations in 2022.
The business landscape of Oman is undergoing rapid transformation. In the recent past, during November 2021, the opening of 13 national projects worth approximately OMR 3.5 billion was announced by the Oman Investment Authority in key sectors including food security, manufacturing, health, energy and tourism.
To realize economic diversification under Vision 2040 and attract foreign direct investment, the country has established several free zones in the country. The Chairman of the Public Authority for Special Economic Zones and Free Zones, Dr Ali bin Masoud Al Sunaidy highlighted, “The purpose of establishing the special economic zone in Duqm, as well as free zones in Sohar, Salalah and Mazyona is to reach out to the outside world.”
“The special economic zones and free zones are well-equipped and they are all close to large ports and airports, gas pipelines, road infrastructure and recently expanded 5G infrastructure,” the Chairman noted.
“Right now, within the framework of the special economic zones and free zones, we are concentrating on renewable energy, in line with Oman Vision 2040,” he added.
Oman is more liberal compared to many other gulf nations in allowing 100% FDI in most of the business sectors. Company registration in Oman costs differently depending on company types and associated business activities. The share capital of the company is also taken into consideration while determining registration cost. Hence, not all companies cost the same amount to register with the Corporate Affairs Commission of Oman.
- Newsletter
- March 16, 2022
The recent outbreak of COVID-19 throughout the world has had a tremendous adverse impact on the economy and brought a massive shift in the way companies did business. SMEs and startups have been the hardest hit with insurmountable challenges of declining revenues, layoffs and salary cuts, and shifting workplaces with long-standing implications.
At this unprecedented time, outsourced cloud accounting services have come as a gift as companies strive to adapt to the new normal by lean operations, innovation and cost-cutting. The pandemic has played the role of a catalyst for the wide adoption of cloud-based accounting outsourcing due to cost savings, increased efficiency and remote working. The traditional business structure incorporating production, planning, advertising, marketing, sales, accounting, IT, HR, etc. have started becoming unviable for companies, especially for SMEs due to resource crunch and the dire need for value addition in business, and such companies are increasingly turning to outsourced finance and accounting solutions.
HOW MUCH DOES IN-HOUSE ACCOUNTING REALLY COST?
A team of a minimum of 3 employees is needed by an SME for its financial operations, each with varying roles. The size and business growth of the SME will decide if it needs to employ additional staff including the accounting manager, CFO.
Wages or salaries, plus the cost of benefits and overtime costs add up for computing employee costs. Besides, there can be other benefits that you may need to cash out from time to time. If there is a healthcare and pension plan, then the employee cost becomes higher still.
Apart from the employee cost, you need to take into account the cost of overheads as an in-house accounting department will need resources such as electricity, water, office space, supplies, computers, and other equipment. You will need to incur extra costs in hiring, training, and managing them as well.
For a company based in California City, USA the average yearly employee salary for an in-house accounting facility with 3 staff comes out to be,
Bookkeeper: $48,274
Staff Accountant: $61,715
Financial-Controller: $249,161
Therefore, a total of $359,150, median must be paid towards employee salary expenses.
Bureau of Labor Statistics data reveals that the average yearly cost of benefits per employee is $13k per year as of September 2021.
Most of us often forget to consider the intangible costs while choosing an in-house accounting department. However, every SME must critically analyze the time spent on handling accounting issues vis a vis the value that is generated. Employee turnover and time spent on hiring and training could be better used in increasing your overall productivity.
In addition to employee turnover; miscalculation and errors, fines and penalties due to changing compliance and regulation issues, overtime, embezzlement of funds are also some other hidden costs usually not taken into consideration.
Hiring ‘not so good and experienced’ accounting professionals can be a very bad idea and could be a real threat for any business. As inexperienced accountants are prone to making mistakes you may end up losing more as an opportunity cost.
WHY OUTSOURCED ACCOUNTING IS A COST-EFFECTIVE PROPOSITION?
The rates of accounting services providers vary depending on the business size, industry, and accounting & finance services needed. Professional and reputed finance and accounting services providers, on average, charge around $ 50K to $70K per annum for small and medium-sized businesses and provide huge cost benefits over in-house accounting.
As outsourced accounting services providers are seasoned professionals, they provide the most accurate and timely information to facilitate financial decision making. This helps in eliminating hidden costs associated with any accounting mistake. Secondly, the overhead costs are drastically reduced as there is no need for recruitment and in-house infrastructure. The outsourced accounting services cost is also scalable and gives you the cost advantage during any downturn in your business.
You are also relieved of frustrations from managing your businesses’ finances that keep you up at night and help you focus on more productive use of your time to achieve business growth.
HOW CLOUD ACCOUNTING CAN HELP SAVE MORE MONEY?
How does cloud accounting work is a frequently asked question and the answer is plain and simple. Cloud accounting is software and essentially works the same way as other cloud-based software. Files are stored online instead of hard drives and are always accessible. You can simply log into a service and perform accounting tasks on any computer from any corner of the world. As a business owner, you can take care of your business finances even from a smartphone anytime you desire or in case of emergencies.
If you ask why cloud accounting is good for business, the following points will throw light on its superiority as a system that can open up multiple avenues to realize higher cost benefits. Irrespective of being an SME or a global conglomerate, transitioning to cloud-based accounting software will increase the operating efficiency of your business with real-time visibility into financial performance.
- Software is always up to date and you don’t need to spend money upgrading your software.
- Minimum administration helps you save money as there is no need for backups and new software installations.
- The automated platform gives you the advantage of posting transactions to the proper ledger, producing recurring invoices, automatic calculation of taxes and discounts etc. and saves time and money.
- Ease of compliance helps you avoid overpaying taxes and avoiding fines.
- Scalability and flexibility help you save money on IT infrastructure as your business expands against desktop-based systems.
- High Accuracy helps match received invoices to payments and shipments, internal transactions to bank records and save you huge by flagging mistakes.
- Customization pays as you can personalize your dashboards for making the most accurate financial information.
BEYOND COST SAVINGS, WHAT ARE THE OTHER BENEFITS OF OUTSOURCED ACCOUNTING?
Besides cost savings, outsourced accounting also provides other benefits as described below.
- No burden of hiring and training of employees
- Getting rid of complex yet repetitive tasks
- No wasted work hours and no paying of unproductive employees
- Improved data security with minimal risks of fraud
- 24/7 accessibility and availability
- Possibilities of integrating other modules across the entire business, using the same database
- Easier collaboration
GLOBAL FINANCE AND ACCOUNTING OUTSOURCING SERVICES MARKET TREND
Rising demand for transparency and increased regulations are forcing companies to put their finance and accounting in order by way of standardization and adoption of best practices in financial management. The global economic crisis is also compelling many companies to opt for cost-cutting and business remodeling by outsourcing non-core business functions. All these recent developments are driving finance and accounting business process outsourcing (F&A BPO) services across the globe. Moreover, as many F&A BPO are switching to advanced technologies including artificial intelligence, accounting tasks are speeded up and productivity improved.
Report Linker, a France based professional search engine and an excellent resource for research information, in its recent report, said that the global finance and accounting outsourcing services market will touch $ 53.4 billion by the year 2026 growing at a CAGR of 5.9%.
- NEWSLETTER,U.A.E
- March 16, 2022
As the post covid economy gained momentum, the non-oil foreign trade of UAE witnessed an increase of 27% yearly during 2021 to reach Dh1.9 trillion, equivalent to $517.27 billion.
Even in 2021, the non-oil foreign trade registered more than 11% higher growth compared to the pre-Covid levels in 2019, highlighted Vice President and Ruler of Dubai, Sheikh Mohammed bin Rashid in a tweet on Sunday, 27th February 2022.
The Minister of State for Foreign Trade, Dr Thani Al Zeyoudi noted, “This rebound proves our economy’s resilience and underlines our status as a major international trade hub.” The Minister also added, saying that the increase was a “record single-year leap”.
The UAE government also released a statement quoting, “These results come in light of the launch of the Projects of the 50 and the continuous efforts being implemented by the country to enhance its position on the international trade map and ensure an attractive, active and open commercial environment to the world and linked to a diverse and strong network of global supply chains. Non-oil foreign trade of all emirates registered a rise last year.”
The economic recovery of the UAE has gained momentum due to the country’s timely and rapid anti-pandemic response including widespread testing, containment and vaccination drive. Furthermore, the country has also rolled out several fiscal and macro-economic policies to accelerate the economy and help the hardest hit business sectors e.g. retail and tourism sectors rebound. The International Monetary Fund (IMF) said in its report dated 27.02. 2022.
As per IMF estimate, the UAE’s economy grew 2.2% in 2021, driven by a 3.2% expansion in the non-oil sector. The International financial institution expects UAE’s economy to grow by 3.5% in 2022, on the back of the expansion of the non-oil economy by 3.4%.
The Central Bank of the UAE (CBUAE) forecasts the economic growth of the country to be pegged at 4.2% in 2022, over 10% higher than the previous year’s forecast of 3.8%. Dubai Media Office reported a 27% rise in non-oil trade during the first half of 2021 amounting to Dh 900 billion.
UAE revealed its plan for a Comprehensive Economic Partnership Agreement (CEPA) with seven other countries last year, including the UK and South Korea. The country has just concluded its CEPA with India in February 2022.
The CEPA with India, the 3rd largest economy in Asia after China and Japan, is all set to promote the country’s non-oil trade further taking it to $100 billion over the next five years, from $60 billion currently. It is believed that many Indian investors will seek Dubai company incorporation due to the emirate’s strategic location and its status as one of the leading international financial hubs.
The country’s non-oil exports surged by 33.3% in terms of value to Dh 354 billion, surpassing the Dh 300 billion mark for the first time in the history of the nation and up by 47.3% of the pre-covid level in 2019.
UAE’s re-export trade registered an increase of 27.7% annually to Dh 521.3 billion, 1.6% higher than that of 2019 while the imports clocked a 23.8% jump to about Dh 1 trillion, an increase of around 7% compared to 2019.
In 2021, China was the largest trading partner of UAE and accounted for about 11.7% of the total global foreign trade witnessing a year on year rise of 27% to Dh 212 billion in non-oil trade.
India was the second-largest trading partner, accounting for 8.7% of total non-oil trade and amounting to Dh164.4 billion. Saudi Arabia too contributed significantly with Dh 125 billion of non-oil trade as the third-largest trading partner.
Conclusion:
The 27% year on year growth of non-oil foreign trade showcases consistent growth across all business sectors and signals the most opportune time to all prospective investors for business-setup-in-Dubai.
- NEWSLETTER,U.A.E
- March 16, 2022
UAE has set an ambitious plan to become home to 20 privately held startups valued at more than $1 billion each, commonly known as ‘unicorns’ in business, over the next nine years, country’s Minister of State for Entrepreneurship and SMEs, Dr Ahmad Belhoul Al Falasi, noted on Wednesday, 10th November 2021.
At the launch of the “Entrepreneurial Nation Project” in Dubai, Falasi emphasized that this would be the fundamental theme of the ‘entrepreneurial nation’ initiative that would aim for public-private partnerships and bringing together funding entities to support startups to grow.
“A number of large corporations have come to us saying we want to be a part of this,” said the Minister. “We want to help you grow these companies; we will interpret the value of the company,” he added.
The national project offers 3 programmes:
- The SkillUp academy programme helps the UAE populace with entrepreneurial skills and mindset.
- The StartUp programme focuses on achieving success stories and helps entrepreneurs, in the UAE and outside, to embark on their entrepreneurship journey. It provides entrepreneurs, who are desirous in doing business in Dubai and other parts of UAE, with various incentives and support services.
- The ScaleUp programme aims to empower high revenue earning and fast-growing companies that are at least years old and have the potential to grow into a unicorn.
UAE is relentlessly working to achieve its ambitious target systematically and methodically, informed the minister adding,” We want to transform ourselves from a regional to global entrepreneurship hub.” He also appraised why the country is confident about realizing its target by 2031
The corporate tax announcement is a winning situation for entrepreneurs, emphasized Dr Falasi. “With the latest corporate tax announcement, you will see for sure government fees being reduced – that is what has been agreed,” he remarked.
“Three years down the line, you will get a position where setting up a business would be much cheaper, and you would not be paying government and fees or taxes unless you are profitable,” said the Minister. “The government needs to create revenue, and this model is a fundamental gamechanger for startups,” he highlighted.
The UAE has an advantage in attracting foreign capital because its population is overwhelmingly foreign workers, he commented. “So foreigners feel much more confident starting their business in a country, which has 90% ex-pats as opposed to other countries,” he noted.
After the outbreak of the pandemic, the UAE government has introduced visa and business reforms for attracting more expatriates to live and work in the country.
The government plans to offer funding in several formats, including equity, direct lending and loan guarantees, to boost startups and entrepreneurship, the minister added.
A Dh1 billion private equity fund has been launched for financing SMEs operating in strategic sectors. The first funding will be made available during the first quarter of 2022 and over the next five years.
The Minister attributed the country’s attractive labour market as the biggest challenge for entrepreneurship. “It is very tempting to go for a job than to start a business – the majority of entrepreneurs here are actually employed and have a side hustle. But today, we want to encourage young students to look into (full-time) entrepreneurship,” he remarked.
Opening accounts within 48 hours in partnership with Emirates Development Bank (EDB) is an initiative under the StartUp programme. “The No.1 complaint I got was the amount of time it takes to open up a bank account,” said the Minister. EDB launched an app that provided the necessary support, during the last three months, to more than 500 entrepreneurs seeking to establish a business by opening accounts in less than 48 hours. The account opening is free for all and across all emirates and doesn’t need a minimum balance.
Lending activities through strategic financing solutions are being promoted by the UAE government to support company formation in Dubai UAE as startups and SMEs. “I’m putting on my other hat as Vice-Chairman of the Emirates Development Bank (EDB). We introduced a credit guarantee where the federal bank guarantees 50 per cent of loans through eight commercial banks that will lower the interest rates for entrepreneurs,” Al Falasi remarked.
The Ministry of Economy rolled out the Innovation Patent initiative during February 2021 to safeguard intellectual properties at the national level. “It’s a stepping stone for startups,” noted Al Falasi. “This way you are able to protect your product before going to the market. Otherwise, you would have to wait for a long time, and that delays your access to the market,” the Minister highlighted.
In his speech during Step Conference 2022, the Minister informed about the government initiatives for entrepreneurs. He highlighted saying, “The first thing we did was to decriminalise bounced cheques as there were many cases where entrepreneurs renting office space, retail space were being criminalised.” A new law, decriminalizing bounced cheques has recently been announced in January 2022.
The UAE has long reduced its dependence on oil and started focusing on a knowledge-based economy that potentially harnesses emerging technologies and innovative ideas. The country’s unicorn ambition is mainly driven by Dubai, the emirate standing tall as home to more than 10,000 SMEs and startups, and organizing annual startup contests including Dubai Startup Hub’s Smartpreneur competition series. Dubai Smartpreneur is an opportunity for innovative startups to present their business ideas and eventually establish their business setup in Dubai free zone.
- NEWSLETTER,U.A.E
- March 16, 2022
On 18th February 2022, India and the United Arab Emirates (UAE), entered into a Comprehensive Economic Partnership Agreement (CEPA) and signed a wide-ranging trade and investment pact, that is set to benefit almost 90% of trade, both exports and imports, between the two nations and boost bilateral trade to more than $100 billion over the next five years.
In a meeting held virtually, the Prime Minister of India and the Crown Prince of Abu Dhabi, and Deputy Supreme Commander of the United Arab Emirates (UAE) Armed Forces, mutually agreed on a futuristic partnership roadmap between the UAE and India for broader economic cooperation. The two countries agreed to work together and address shared global challenges to achieve shared objectives of development and promotion of new trade and investment.
The CEPA was the first bilateral trade accord concluded by the UAE and was also the first for India in the MENA region and was concluded in a record time of just 88 days.
The pact will come into force by May 2022 and the provisions of CEPA will be implemented once the relevant constitutional legalities are put in place by the two countries.
INDIA AND UAE ENJOY STRATEGIC BUSINESS PARTNERSHIP
India is the second-largest trade partner of the UAE, accounting for 9% of the UAE’s total foreign trade and the number one trading partner for non-oil exports, accounting for nearly 14% of total non-oil exports. The UAE, on the other hand, is the third-largest bilateral trade partner of India. The bilateral trade between the two nations is expected to surpass $60 billion in the current financial year.
According to an estimate by the Indian Embassy in the UAE, the UAE’s cumulative investments in India are about $17-18 billion, of which more than $11 billion is in the form of FDI. While India mostly invested in the coal, oil and gas and real estate sectors, the FDI inflow from the UAE has primarily been in the real estate and ceramics and glass. The UAE is the eighth biggest foreign investor of India and its future investments in India are expected to flow in healthcare, infrastructure, and renewable energy sectors.
KEY FEATURES OF INDIA UAE CEPA
STRINGENT RULES OF ORIGIN
The trade pact between India and UAE has enforced stringent rules of origin conditions, with 40% value addition needed on exporting items to prevent routing of products manufactured in third countries to India via UAE.
As per government officials, there is a need for substantial processing of up to 40% value addition under this trade deal and a certificate of origin issued by the Ministry of Economy, UAE. Some high-valued items are kept out of these stringent value-addition requirements.
The deal also incorporates a permanent safeguard mechanism to address issues with a sudden surge in Indian imports.
TARIFF ELIMINATION AND ZERO DUTY ACCESS ON A RANGE OF ITEMS
The trade deal will eliminate 80% tariffs on Indian and Emirati goods, and 100% tariff elimination will take place within 10 years. The pact will provide the UAE zero duty access to 90% of India’s exports to the country in value terms.
Indian products set to benefit are gems and jewellery, textiles and pharmaceuticals while on the UAE side, commodities like aluminum, copper, and petrochemicals are set to benefit from the removal of tariffs.
ONE MILLION JOBS FOR INDIAN LABOUR-INTENSIVE INDUSTRIES
CEPA is expected to generate one million jobs for Indian labour-intensive industries including textiles, gems and jewellery, leather, footwear, sports goods, pharma, plastics, furniture, agricultural items and automobiles. Besides goods, CEPA will also include 11 service sectors and more than 100 sub-sectors that would benefit from the pact including construction, education, tourism, computer-related services, health, travel, nursing, engineering, finance among many others.
India-UAE CEPA will provide automatic registration and marketing authorization of Indian generic medicines within 90 days if approved by FDAs of developed countries including the USA, Japan, EU and UK.
AGREEMENT ON LIBERALIZED VISA REGIME FOR INDIANS
Under India UAE CEPA, a liberalized visa regime for Indians has been agreed including a three-year visa for intra-corporate transferees and a 90-day visa for business visitors and contractual service suppliers from India. The 90-day visa is extendable for contractual service suppliers.
THE NEGATIVE ITEMS AND SECTORS
Some items including dairy, fruit, cereals, vegetables, tea, coffee, tobacco, dyes, soaps, footwear, petroleum, tyres, toys, aluminum scrap, copper, processed marble, among others, have been kept out of the trade pact with the UAE by India. These are part of the negative list of items with a purpose to protect the domestic industry.
Some areas where manufacturing has been robust and sectors wherein the government has introduced production-linked incentive schemes (PLI SCHEMES) have also been put on the negative list,
AGREEMENTS AND MOUs OF INDIA UAE CEPA
The partnership between the two countries has resulted in joint work on several agreements and Memorandum of Understanding (MOU) in different areas as outlined below.
Economy
Some of the economic partnership agreements include establishing a dedicated India Mart in Jebel Ali Free Zone, enhancing investments in infrastructure projects for both countries, establishing a dedicated investment zone for UAE companies for doing business in India, and establishing a food corridor to boost food processing in India.
The partnership also calls for exploring investment opportunities for Indian investors in establishing specialised industrial advanced technology zones and initiating business setup in Dubai, Abu Dhabi and other free zones, in areas of logistics & services, pharmaceuticals, medical devices, agriculture, agri-tech, steel and aluminum.
Security and Defence
The bilateral partnership in this area includes
sharing of experiences, training and capacity building, and defence exchanges and maintaining regional peace and security.
Education
India will set up an IIT in the UAE and for the first time outside India.
Energy and Renewables
The partnership agreement includes collective efforts in attaining the global energy transition in future with the ongoing investment from UAE in India’s renewable energy sector.
Recognising the immediate need for climate action, the two countries agreed to strengthen cooperation for facilitating the implementation of the Paris Agreement. Working closely with the International Renewable Energy Agency (IRENA) and the International Solar Alliance (ISA) has also been part of this agreement besides establishing a joint Task Force for the production of Green Hydrogen.
Advanced Technology
The two sides agreed to collaborate and expand emerging technologies and promote e-businesses and e-payment solution platforms. The agreement also reached on promoting startups and focusing on areas such as agritech, prophecy, fintech, edutech, health care, logistics and supply chain and chip design.
Other Areas
The two countries entered into partnership agreements in other areas including International Corporation, Health Cooperation, Food Security, Skills and Cultural Cooperation.
MOUs
Two MOUs reached are
- MOU between India’s Gift City (IFSCA) and Abu Dhabi Global Market (ADGM)on financial space including projects and services
- MOU between India’s Agricultural and Processed Food Products Export Development Authority (APEDA) and the UAE’s DP World and Al Dahra on Food Corridor as a food security agreement
CEPA BENEFITS – INDIA
1 Greater access to the GCC and North African markets including markets in Europe and the Commonwealth of Independent States (CIS)
2. Increased business prospects for ready-made apparel and jewellery exporters
3. Cheaper imports of gold and plastic due to reduced tariff
4. Access to certain European countries and Africa
5. Increased Access to 40 free zones in UAE
CEPA BENEFITS- UAE
UAE’s economy is expected to grow by 1.7% in 10 years with a value of $9 billion with this CEPA with India including increased exports by 1.5% amounting to $7 billion, increased imports by 3.9% amounting to $14 billion, and increased employment, generating 140,000 new high-skilled job opportunities.
CONCLUSION
The CEPA between India and UAE is a win-win deal and has spread waves of new hopes amongst the stakeholders across industries of both countries. UAE’s strategic location is all set to open new trade vistas and Dubai company incorporation.
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