Newsletter Archives - Page 11 of 57

Newsletter, U.A.E

UAE Israel Host First-of-Its-Kind Business Conference in Jaffa, Tel Aviv

December 13, 2021

The hosting of a first-of-its-kind business conference on Israeli technology and innovation in Jaffa, Tel Aviv on Wednesday 24 November by the UAE embassy in Israel marks the first state-sponsored business delegation from the UAE to Israel.

Government officials, business leaders and entrepreneurs were present at the conference and discussed the advancement of technology and innovation and promotion of business ties between the two countries.

The event came more than a year after the first anniversary of the U.S negotiated historic Abraham Peace Accords, signed on 13 August 2020 at the South Lawn of the White House in Washington between the UAE and Israel.

The event was held in partnership with the Israeli NGO Start-Up Nation Central, a not-for-profit organization that keeps a close tab on the technological ecosystem and the Ministry of Economy of Israel.

Start-Up Nation Central was founded in 2013 by philanthropy and a one-stop destination for governments, corporations and investors to connect with the Israeli tech ecosystem. It runs an online platform, Start-Up Nation Finder where one can identify potential Israeli technology companies based on one’s interest.

Around 200 dignitaries attended the summit and among them were members of a UAE state-sponsored business delegation led by the UAE Minister of State for Entrepreneurship and SMEs, Ahmad Belhoul Al Falasi and the Minister of State for Foreign Trade Thani Al Zeyoudi.

Mohamed Al Khaja, the UAE Ambassador to Israel initiated this conference earlier this year as the new delegation sought to collaborate on innovation and entrepreneurship ventures between the two countries.

The agenda of the conference revolved around technological innovation driven by multinational corporations, the creation of an innovative technological ecosystem and collaboration in achieving mutually beneficial economic progress.

The UAE Ambassador to Israel, Al Khaja said “As people of the region, in order to advance our own societies and our economies, it is imperative for all actors in this room, and our counterparts to find ways to ‘lean in’ to this relationship and work together to open doors and correctly navigate and fuse together the respective strengths of our societies and economies.”

“We are proud and excited to host Israeli startups, corporations and joint ventures aiming to capitalize on the language, cultural and global connections of the dynamic Emirati marketplace, and to allow you to tap into the diverse talent pool and global business acumen of the UAE,” he remarked.

The leader of the UAE envoy, Dr Al Falasi highlighted, “Everywhere I look I see alignments, both in our strengths and our challenges, when it comes to small and medium businesses, startups, and tourism. There are a lot of ways that we can work together and enable our respective businesses to expand from the UAE to Israel and the other way around.”

“It is truly remarkable how only a year after the Abraham Accords, we have already established strong relationships in the form of business and commercial agreements. This is more than simply a foundation to build on. It is a solid partnership of real significance, not just for our nations, but for the region and the world as a whole,” commented the UAE Minister of State for Foreign Trade.

Israel’s Minister of Economy and Industry Orna Barbivai welcomed the arrival of UAE delegates in Israel saying the visit “enables us to expose the visiting Emirati industry and business leaders to Israel’s wealth of innovation, technology, entrepreneurship, and research.”

After the conference, the UAE Minister of State for Entrepreneurship and SMEs and Minister of State for Foreign Trade also visited Start-Up Nation Central Headquarters to meet with entrepreneurs from leading technology companies of Israel and explore potential Israeli investors interested in company formation in Dubai.

The following day, 25 November, the UAE delegation team members held a series of one-to-one and group meetings with their Israeli equivalents.

The UAE believes that economic activity with Israel will exceed $1 trillion over the next decade and will open floodgates of business opportunities for the investors of both countries. In all likelihood, the Jebel Ali Free Zone (Jafza) in Dubai, one of the biggest trade hubs in the region will be a major beneficiary and a growing number of Israeli investors will look for Jafza company formation to utilize the developed facilities in Jafza which has entered into a “strategic agreement” with the Federation of Israeli Chambers of Commerce (FICC) to promote businesses and trade.

Israeli Central Bureau of Statistics (CBS) data revealed bilateral trade between Israel and the UAE between January and June 2021 was approximately USD 610 million and more than half of which were from diamonds.

The Dubai Multi Commodities Center Authority (DMCC), home to the Dubai Diamond Exchange has already started a representative office in Tel Aviv inside the Israel Diamond Exchange (IDE) to extend support to Israeli businesses, across all industries and sectors who are interested in setting up a presence in Dubai through a DMCC company formation.

Bahrain, Newsletter, U.A.E

The UAE and Bahrain Exchanges Several MOUs for Bilateral Cooperation and Mutual Economic Development

December 12, 2021

The recently agreed MOUs reached between the UAE and Bahrain are intended to promote bilateral cooperation between the two countries in many important areas and pave the way for the effective realization of economic growth plans of both countries. A new executive programme has also been launched encompassing some key areas including investment and trade, higher education, teacher training and human resources.

The MOUs were signed during the official visit of His Royal Highness Prince Salman bin Hamad Al Khalifa, Crown Prince and Prime Minister of Bahrain to UAE in November 2021. Prince Salman met His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, during his visit.

HRH Prince Salman and HH Sheikh Mohammed were present during the signing of several agreements and MoUs including the new executive programme that spans over several areas such as climate change, higher education, teacher training, human resources, trade and investment, advanced technology, economic integration, food security, health care, artificial intelligence in oil and gas, transportation, technical support for upstream industries, cyber security, cyberspace technical cooperation, logistics, combating crime, and stock markets.

At the end of the visit, a joint statement was issued by the governments of the UAE and Bahrain wherein the two countries agreed to promote bilateral cooperation in key areas to attain mutual benefits and joint objectives of both countries. Each country agreed to encourage ministries and government authorities to cooperate and transform cooperation objectives into joint ventures.

Both the countries committed to addressing the pandemic and exchanging best practices and reinforcing scientific cooperation in medical research. Abdul Rahman bin Mohammed bin Nasser Al Owais, UAE Minister of Health and Prevention, and Faeqa bint Saeed AlSaleh, Bahraini Minister of Health, exchanged an MoU on health cooperation.

The two countries also committed to cooperating in employment, labour and localisation and exchange expertise and best practices in these areas. An MoU on labour and HRD was signed between Dr Abdulrahman Al Awar, UAE Minister of Human Resources and Emiratisation, and Jameel bin Mohammed Ali Humaidan, Bahraini Minister of Labour and Social Development.

An MOU on Cybersecurity Cooperation was exchanged between Mohamed Hamad Ak Kuwaiti, the Head of Cybersecurity of the UAE government and Sheikh Salman bin Mohammed Al Khalifa, CEO of National Cybersecurity Strategy of Bahrain.

The two countries agreed to work jointly to address the burning issue of climate change and an MoU on climate change and environmental cooperation were exchanged by Dr Sultan bin Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and UAE Special Envoy for Climate Change, and Dr Mohammed Mubarak bin Dainah, Chief Executive Officer of the Supreme Council for Environment of Bahrain.

Technological advancement was also on the agenda of two countries and an MoU on industry and advanced technology was exchanged between Dr Sultan bin Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology, and Zayed bin Rashid AlZayani, Bahraini Minister of Industry, Commerce and Tourism.

Two MoUs, one each on higher education and executive programme for cooperation in education for three years; 2021, 2022 and 2023 were exchanged between Sarah bint Yousif Al Amiri, UAE Minister of State for Advanced Technology, and Abdullatif bin Rashid Al Zayani, Minister of Foreign Affairs of Bahrain.

The two countries agreed on cooperation in trade and investment and an MoU was signed between Abdullah bin Touq Al Marri, UAE Minister of Economy and Zayed bin Rashid AlZayani, Bahraini Minister of Industry, Commerce and Tourism. Advancing the tourism industry was also the focus of both countries.

To recognize UAE as a partner in Bahrain Global Sea-Air Logistics Hub, an MoU was exchanged between Dr Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade, and Zayed bin Rashid AlZayani, Bahraini Minister of Industry, Commerce and Tourism to restore the aviation sector to the pre-pandemic level.

An MoU was reached between Abu Dhabi National Oil Company (ADNOC) and Gas Holding Company of Bahrain. Dr Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology and Managing Director and Group CEO of ADNOC, and Dr Mohammed Mubarak bin Dinah, Chief Executive Officer of the Supreme Council for Environment of Bahrain, also exchanged an MoU between Adnoc and Tatweer Petroleum.

UAE Minister of Energy and Infrastructure, Suhail bin Mohammed Al Mazrouei, and Kamal bin Ahmed Mohammed, Bahraini Minister of Transportation and Telecommunications, signed an MoU on transportation and communications.

An MoU was signed between Abu Dhabi Securities Exchange (ADX) and Bahrain Bourse and was represented by Saeed Hamad Al Dhaheri, ADX CEO, and Khalifa Ibrahim Al Khalifa, CEO of Bahrain Bourse.

Export promotion has already been an area of cooperation between the two countries as Export Bahrain and Dubai Industries and Exports signed an agreement in October 2021 to support Bahraini investors exploring the UAE market and Dubai company incorporation.

It was agreed that relevant national organisations from both countries will reinforce their economic ties. A centre will be established for UAE nationals looking for a company formation in Bahrain that would connect commercial registries in the two countries.

The Crown Princes of both the countries expressed their common and sincere desire to support bilateral relations moving forward for mutual development and progress of the two countries and contribute to building a prosperous future for their citizens.

Newsletter, Saudi Arabia, U.A.E

How are UAE and Saudi Arabia all Set to Propel the GCC Retail Market Growth?

December 12, 2021

Though the covid pandemic has slowed down all global economies, the GCC’s retail market is projected to grow by almost 22 per cent to approximately USD 308 billion in 2023 with the UAE and Saudi Arabia leading from the front and accounting for the major share of retail sales over the coming five years.

The GCC’s physical retail infrastructure has become highly developed and so has the consumer’s familiarity with online shopping portals. The two biggest economies in the Arab world, the UAE and Saudi Arabia, would contribute more than 75 percent of sales over the next five years, a forecast revealed.

An increase in per capita GDP along with population growth will be primarily responsible for the high growth rate. Tech-savvy young generations and higher consumer awareness are also facilitating a boost in the retail sector market and help these two countries to diversify their economies in the non-oil sector. As the tourism sector opens up, the retail sector will see further growth in revenues.

As the economy of UAE grows at a faster pace compared to its other GCC peers due to sound government policies such as easing of visa restrictions and renewed infrastructural spendings and economic stimulus packages, UAE is expected to lead the retail sector growth in the GCC. The yearly growth in retail sales is projected between 2.2 per cent to 5.1 per cent in the GCC in the next four to five years.

E-commerce in the UAE is also witnessing staggering growth and becoming the fastest-growing economic sector in the entire Middle East region on the back of improved digital connectivity, better infrastructure and substantial growth in demand in apparel, white goods and consumer electronics sectors. The recent Amazon annual White Friday Sales in UAE with a huge discount of 70 per cent bears testimony to how popular the e-commerce market is becoming in this country.

The Riyadh Chamber of Commerce also reported recently that the e-commerce sector in the Kingdom is growing at a faster pace and the transaction volume in the sector hit SR21.375 billion last year.

The statistics available with the Saudi Ministry of Commerce revealed that in comparison with 2019, there has been an increase in the number of licensed online stores in 2020 by almost 14 per cent. The online stores also registered an all-time high commercial record of 28,676. Electronic platforms have also registered considerable growth in recent times. While e-commerce in the UAE is 4.2 per cent of total retail, in KSA it is around 3.8 per cent.

The social restrictions imposed by the governments to mitigate the coronavirus pandemic has resulted in an increase in online spending in the GCC. The e-commerce space in the region is witnessing an annual growth rate of 25% and will touch USD 28.5 billion in 2022, a high-level official of Amazon commented.

Big e-commerce companies such as Amazon and JD.com have already decided to expand their operations in the KSA. Many GCC startups are also showing interest in company formation in Saudi Arabia for providing localized solutions and gaining access to the relatively nascent but fast-expanding market in the country.

To address its expansion strategy of doing business in Saudi Arabia, Amazon recently embarked on opening five new delivery stations in Saudi Arabia including cities of Jeddah, Mecca, Abha, and Dammam with a 36,000 sqm floor area in total.

There is an immense potential for employment generation in the e-commerce sector and the logistics and delivery service areas greatly promoting the economic environment in the GCC. As technology helps humans reach millions of products online sitting at the comfort of their homes, online retail both globally and in the GCC are all expected to grow leaps and bounds soon.

Newsletter, U.A.E

Why is the Post Covid Economy of Dubai-UAE on a Strong Growth Trajectory?

December 12, 2021

The UAE/ Dubai economy has started displaying signs of growth in key economic indicators after recovery from economic fallout and GDP contraction due to covid 19. International financial institutions e.g. the World Bank and IMF also sounded upbeat on the prospects of the country’s economy being on strong footing. “Over the medium term, the recovery will be bolstered by trade and tourism as health concerns wane and the authorities continue to work towards UAE’s long-run priority — diversification,” reported the World Bank in a recent update.

The country’s GDP will average 3.4 per cent between 2021 and 2023 with 2.7 per cent GDP for 2021, 4.6 per cent for 2022 and 2.9 per cent for 2023, the World Bank’s projection suggests.

During the covid pandemic, the government approved 33 initiatives during August 2020 to support various sectors over three planned phases. The first phase of the recovery and economic advancement plan for providing immediate support to businesses has already been completed.

In August last year, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, in a Cabinet meeting approved the launch of the 33 initiatives to support various economic sectors. It also approved the formation of an interim committee was also formed to oversee measures for successful implementation of the 33 initiatives, creating stimulus for business and enhancing economic growth rates. Emerging business sectors will be provided with new opportunities for a resilient and sustainable future through the latest technologies and increased investments.

The committee is engaged in providing new opportunities by developing emerging sectors, harnessing technology, boosting investment in new sectors and enhancing the sustainability and resilience of the national economy. To this effect, the UAE Central Bank already announced a USD 27.2 billion package towards financing businesses.

Since the time of the deadly virus spread, Dubai- UAE authorities have introduced several post covid recovery plans and initiatives for speedy economic recovery and growth.

The government has been restructured with some federal entities merged into one and new ministers and CEOs appointed for specialized areas. The Ministry of Industry and Advanced Technology has been formed to specifically look after the industrial sector and a new Minister of State for Digital Economy and AI has been included in the cabinet. The UAE Government strategized and planned for all government services to be accessible from anywhere, any time by the year 2023 and appointed a Head of the UAE Digital Government for a digital transformation of the country.

A National COVID-19 Crisis Recovery Committee was also formed with several ministerial representations to steer the economic recovery post the pandemic.

A 10-year plan, ” Operation 300bn” has been launched to promote the industrial sector and provide all necessary support to 13,500 SMEs and generate 25,000 job opportunities. Easy and affordable financing to the priority sectors, SMEs and Startups including new business setup in Dubai has been kept on the top of the country’s economic growth strategy.

A new ‘Export Development Policy’ has been introduced to boost exports and explore new international markets for increasing the contribution of non-oil sectors in the GDP.

A Creative Economy Strategy has been planned to increase the contribution of creative industries to its GDP by two-fold, from 2.6 per cent in 2020 to 5 per cent by 2025. The country also implemented a strategy to attract and retain talents to lure foreign investments and company formation in Dubai.

As economic recovery and growth of a country is always intertwined with several other factors, six main areas have always been in the country’s focus including health, education, economy, food security, society and government restructuring.

While Europe and many other nations have witnessed a covid resurgence, the Dubai-UAE is relatively free of covid infection with 90 per cent population double vaccinated and high-risk categories provided with booster dose.

Lastly, the Dubai Expo, the booming realty sector and stable and higher oil prices have also helped Dubai- UAE to take its economy on a high growth trajectory.

Bahrain, Newsletter

What Could be the Potential Business Impacts of the VAT Rate Hike in Bahrain from 2022?

November 24, 2021

Bahrain, the smallest amongst the six GCC countries including Saudi Arabia, UAE, Oman, Qatar and Kuwait has announced during the last week of September 2021 to increase the VAT rate to 10% from the prevailing rate of 5% effective from 1st January 2022.

Sheikh Salman bin Khalifa Al Khalifa, the Finance and Economy Minister said in an official briefing “The Kingdom is emerging from the pandemic with reasons to be highly optimistic and the plan announced today aims to turbocharge the recovery.”

The Council of Ministers in Bahrain has approved the VAT rate hike to re-stabilise the Fiscal Balance Programme initiated during the end of 2018 however severely impacted by Covid 19.

VAT is a consumption tax and ultimately, the consumers bear the cost increase due to VAT rate hike. It is largely believed that the zero-rate would continue on essential supplies including basic food, healthcare, education, the oil and gas sector, the construction of new buildings, local and international transport. Metals and reality sectors are also expected to be out of this new tax structure and certain financial services might also enjoy an exemption.

What needs to be addressed by the Businesses in Bahrain?

Like every tax rate increase, the VAT rate hike shall also have implications on businesses who should first assess the impacts of the tax raise from their operational perspective considering both internal processes & systems and then critically review the legal requirements about charging of VAT and reporting the right amount of tax due to the National Bureau of Revenue (NBR), Bahrain.

As the recent pandemic has posed serious cash flow challenges to all businesses the world over making it difficult to get going, the businesses in Bahrain need to have sound and strategic plans in place to optimize the working capital cycles. Due to the difference in timing between the payment and recovery of VAT, the rate hike will have an impact on cash flow.

Concrete planning must also be in place for the smooth transition to the higher tax regime approximately in a month. Simply changing the VAT rate from 5% to 10% in their ERP systems would not suffice and all transitional provisions must be assessed with utmost care for every individual contract. It needs to be ascertained if contracts with customers and suppliers extend beyond 1st January 2022 and if any special VAT rules and regulations apply to them.

What needs to be the focus areas for Bahrain businesses?

Businesses need to focus upon a number of crucial areas including

Getting ready for Increased Audit frequency from NBR as the rate hike becomes the most crucial source of revenue for the government
Being aware of Increased compliance requirements as two-time penalties may be imposed on the tax due amount because of the higher tax rate
Correct understanding of transitional rules, especially for businesses involved in continuous and periodic supplies of goods and services and upgrading of IT Systems with automation
Strategic planning Cash flow in terms of VAT being due before payment is received from creditors. The cash flow impact may be higher for businesses in a constant refund position such as certain exporters.
Identifying needs to modify terms and conditions of existing contracts with suppliers and customers.

How can IMC help?

IMC is a cross border corporate service provider with a local presence in Bahrain and comes with extensive experience in VAT implementation and compliance systems. We successfully handled a smooth transition to a higher VAT regime in different businesses sectors in the UAE and Saudi Arabia.

We have a team of experts with proven experience in VAT-related challenges and how to mitigate them.

We are keenly monitoring all developments in this regard and looking for additional information on the rate increase and transitional rules.

As the time is limited, we strongly suggest that taxpayers must immediately start a 360-degree analysis on the potential impacts of the increased VAT rate on their operations, supply chain, invoices and contracts, cash flow, internal audit schedule and IT infrastructure.

Newsletter, U.A.E

Dubai Gets Back to Business with Renewed Vigour and Confidence

November 9, 2021

Dubai Expo 2020 being in full throttle and pandemic restrictions tapering off, Dubai gets back to business with renewed vigour, and enthusiasm. The overall sentiment and outlook markedly improved and business confidence hit a multi-year high as companies in the emirate witnessed a significantly improved business ambience before the start of the nation’s biggest event, Dubai Expo 2020.

While the entire world was grappling with the coronavirus pandemic, Dubai and UAE government authorities remained firm in their resolve and never took their eyes off the immediate needs of economic stimulus packages and wide-scale vaccination. Dubai recovered at a spectacular pace just before the inaugural ceremony of the country’s greatest event and started inviting the world for a new business setup in Dubai with its zeal and dynamism like before.

Dubai Chamber of Commerce and Industry in its July 2021 survey reported a high level of optimism amongst firms about future business activities in more than a year. ‘Business confidence in Dubai reached its third-highest level in 10 years as companies in the emirate begin to feel the positive impact of Expo 2020 Dubai’ the survey reported.

While 76% of respondents surveyed expected improved business confidence in the fourth quarter of 2021, 66% believed it to be in the third quarter and 48% in the second quarter of 2021, the quarterly Business Leaders’ Outlook Survey revealed.

All contributing factors towards improved expectations of business conditions showed positive bias in Q3 compared to Q2 2021 and mainly due to exceptional rise was seen in financial transactions.

Major factors for high levels of confidence and positive attitudes amongst business leaders were cited as proactive approaches of the government, growing domestic demand, economic stimulus and vaccination drives. As per the survey findings, the SMEs were more optimistic about the economic recovery of Dubai compared to big business houses.

Increase in input buying and inventories helped raise the purchasing activity at the fastest rate. “Expansions were also recorded in purchasing activity and inventories during August. Delivery times, meanwhile, lengthened for the seventh consecutive month, although the downturn was only marginal,” IHS Markit reported.

Most companies in Dubai also started hiring more employees and employment levels started growing at the fastest pace since November 2019. Many firms expanded their staff capacity expecting higher spending and growth that led to the highest rise in job creation.

In his comments on the survey findings, Hamad Buamim, President and CEO of Dubai Chamber remarked said, “The findings demonstrate Dubai’s success in minimising the impact of the COVID-19 pandemic through a series of policies, initiatives and measures that have ensured a favourable business environment and addressed new challenges created by the pandemic.”

He also emphasised, “Dubai Expo 2020 is expected to fast track Dubai’s economic recovery and boost the emirate’s appeal among foreign companies and investors.” As per him, various sectors including trade, tourism, hospitality and logistics are likely to see the most business activity during Expo.

The non-oil private sector registered the highest level of growth in business after being subdued for nearly two years. Businesses soared to record highs for the construction companies and travel and tourism sectors as the economy bounces back due to the recent boom in reality due to huge capital infusion and relaxation in travel. The seasonally adjusted PMI data of IHS Markit, covering services and manufacturing activities rose to more than 50 levels, 53.3 in September and 55.7 in October signifying reasonable economic expansion.

David Owen, an economist at IHS Markit remarked, “The Expo 2020 finally began in the UAE at the start of October and brought a highly welcome upsurge in growth across the non-oil private sector.”

A remarkable surge in business activities was also noticed in the aviation and hospitality sectors primarily driven by fewer travel restrictions and Dubai Expo. The hotels in Dubai recorded the highest level of occupancy in recent times.

The World Bank’s latest forecast on the UAE suggests that the country would grow 4.6% next year as many tourists visit the country for the Expo. The traditionally strong sectors of UAE including Trade tourism, hospitality and logistics are expected to see the most activity during the next six months.

Dubai is on the go with a positive sentiment and rising confidence. The economy looks bright and shining. Over the coming years, it promises to be more attractive to the global entrepreneurs and investors offering greater opportunities for Dubai company incorporation

Newsletter, Saudi Arabia

Saudi Arabia Eyes for Increased Investments from European Companies

November 9, 2021

Despite the cultural, political and economic dissimilarities, the largest Arab economy and biggest oil exporter Saudi Arabia has long enjoyed a close relationship with certain European countries including the UK, France and Germany. Even for Europe, the Gulf region has always remained crucial both for economic and political reasons. Saudi Arabia, among the seven Gulf countries, occupies a special place in the Gulf–EU relationship.

Saudi Arabia announced its Saudi Arabian Vision 2030 in April 2016 outlining a comprehensive economic reform plan for diversifying the country’s oil-based economy. Private sector participation (PSP) was initiated as a cornerstone of Vision 2030 with a strong focus on strengthening the private sectors, attracting foreign investments and facilitating foreign company registration in Saudi Arabia.

The global economic downturn caused by the pandemic and lower oil prices, however, have necessitated an immediate need to rapidly embark upon social and economic policy reforms to restructure the economy and spearhead a campaign to convince and woo foreign multinationals from Europe and other parts of the world to materialize the targeted plan of vision 2030 and take the private sector contribution to the country’s GDP from 40% to 65%.

Though there has been some important privatisation over the last few years including Saudi Telecom and Saudi Electricity companies, the real privatisation drive started post covid and as of now, 16 government-run organisations are undergoing privatisation process including agriculture, water, tourism, health, housing, labour, education, energy, information technology, social development, energy, environment, communication, municipalities, social development and transportation.

Saudi Arabia has long implemented Public-Private Partnerships (PPPs) and privatisation projects, however, there was no formal laws to govern PPPs. The long-awaited Private Sector Participation Law (PSP Law) was passed by the government on 17th March 2021 providing financial and regulatory support for privatisation schemes, including financial guarantees, tariff subsidies, land ownership rights, tax benefits, custom duty preferences, foreign exchange and interest rate protections and easily obtainable permits and approvals.

The country offers several business and financial incentives to lure foreign investors for doing business in Saudi Arabia which include Saudi Industrial Development Fund (SIDF) loan up to USD 320 million for green and brownfield manufacturing projects, Kafalah loan guarantee scheme to SMEs, Interest-free loan up to 0.8 million USD for small enterprise development, Loans and grants by Human Resources Development Fund (HDRF), 100% Foreign ownership of company, land and properties, Full repatriation of capital and profits, Indefinite carry forward of loss, No Value-added Tax and sales tax, Nil personal income tax, No property tax, import duty exemption on raw materials and spares, tax incentives on investments made in underdeveloped provinces for 10 years etc.

The work sponsorship regulation has also been relaxed and engaging and retaining foreign employees have become much easier now.

Seeking to attract foreign investment above USD 100 billion annually, a National Investment Strategy (NIS) was recently announced by Crown Prince Mohammed bin Salman on 11th October to further diversify the economy.

NIS rolled out comprehensive investment plans for several key sectors such as manufacturing, transport and logistics, tourism, digital infrastructure, health care and renewable energy and is expected to raise foreign direct investment of USD 103 billion annually. The strategy would also increase annual domestic investment to 1.7 trillion riyals by 2030, the Saudi Press Agency (SPA) reported.

The agency also quoted Prince Mohammed as saying, “Today, the kingdom embarks on a new investment era to empower Saudi and international private-sector investors with more and better opportunities.”

Prince Mohammed added “the NIS will draw up comprehensive investment plans for sectors, including manufacturing, renewable energy, transport and logistics, tourism, digital infrastructure, and health care,” SPA reported.

The fundamental strategy among the various measures lies in the formation of special economic zones with the competitive regulatory framework and attractive incentives; rebuilding strategic supply chains and providing innovative financing solutions to accelerate capital creation.

Saudi Arabia has planned for more than SAR 12 trillion capital injection into the country’s economy by 2030 through investment. While the Shareek programme initiatives are set to inject SAR 5 trillion; the Public Investment Fund, will contribute SAR3 trillion and an additional SAR 4 trillion will be mopped up through investments facilitated by the NIS, of which some SAR2 trillion is expected to be foreign investment.

Economic recovery is in sight with improved oil prices and remission of covid 19 infections and with aggressive policy reforms, there can be good business and investment prospects for European companies in Saudi Arabia. The GDP growth is expected to be 2.4% in 2021 and touch 3% in the medium term, as per the Gulf Economic Update of the World Bank.

The Kingdom focuses on increasing annual trade with Europe which is currently pegged at approximately 61 billion euros. It also aims to increase the number of Saudi students in European schools and universities for further enhancing the Saudi potential and capabilities, accelerating reforms & transformations and forging stronger & long-lasting ties with Europe.

Newsletter, U.A.E

The Newly Created Dubai Integrated Economic Zone (DIEZ) Now Offers 50 Years of Tax Exemption

November 9, 2021

A new law, Law No. (16) of 2021 was introduced by Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to create an independent legal entity called Dubai Integrated Economic Zones (DIEZ) Authority and bring the three separate free zones namely the Dubai Airport Free Zone, Dubai Silicon Oasis and Dubai Commerce City under one roof. The newly formed DIEZ will now collectively supervise and administer all these three zones and enjoy absolute administrative and financial autonomy.

Sheikh Ahmed bin Saeed Al Maktoum will act as the chairman of the DIEZ and Dr Mohammed Ahmed Al Zarouni, the Secretary-General of Dubai Free Zone Council (DFZC) will be the executive chairman, effective January 1, 2022.

On passing the new law, His Highness remarked, “The establishment of the Dubai Integrated Economic Zones Authority is a vital move to enhance Dubai’s global competitiveness and raise its investment attractiveness. The private sector is a major partner in our development journey over the next 50 years and the government continues to explore innovative initiatives to support their growth and success. Our objective is to make Dubai the destination of choice for global investors and a major focal point for global commerce.”

“The creation of the new Authority is one of our many strategic initiatives to raise the speed and efficiency of services for businesses and investors and enhance the ease of doing business. Our focus is on integrating government processes and facilitating greater access to global markets through an accelerated transition to a digital environment. We remain committed to strengthening our partnership with the private sector and making our business environment more attractive, both of which are key to sustained growth in our new phase of development.”

The enactment of the new law aims to promote Dubai as the leading business and investment hub in the world and provide an integrated & state of the art multimedia system in line with the highest global standards. DIEZ will have a wide global network and will offer comprehensive and innovative packages of business solutions satisfying the needs and expectations of customers across various industries.

Seamless cross-border business activities will be ensured by the DIEZ authority and a happy and conducive living and working environment will be created through various unique offerings for its existing and new customers.

The newly created authority will primarily focus on attracting both local and global companies for new business setup in Dubai free zone and establish their business headquarters in the DIEZ. It shall also enhance the business and economic competitiveness of Dubai and mainly in retail, technology, Islamic economy, e-commerce, industrial, logistics and shipping sectors. Moreover, it shall also provide all the required and necessary support to the SMEs to promote business growth and diversification through innovation and entrepreneurship across various sectors and improve ease of doing business.

DIEZ will act as the sole authority to create, develop and manage the infrastructure and administrative services and shall regulate all business activities and services including the import and storage of merchandise.

DIEZ will be home to more than 5,000 global firms hailing from 20 core economic sectors and 30,000 employees. Almost 5 per cent of Dubai’s GDP will now be generated by this authority.

50 years of tax exemption has been announced for all companies and individuals licensed under DIEZ and will be effective from the date of the enforcement of the new law. The tax exemption shall include all taxes including income tax and the exemption period can be extended for a similar period by a decision issued by the Dubai Ruler.

Once licensed under DIEZ jurisdiction, all companies, subsidiaries and individuals will be exempted from all restrictions related to the repatriation of capital, profits and salaries. The exemption will apply to all currencies and all destinations outside the DIEZ and will have a validity of 50 years renewable for a similar period. Besides, no nationalization or restriction of ownership will be applied to the funds of licensed companies, subsidiaries and their employees.

The activities of DIEZ and companies licensed under it will not be subjected to the regulations of Dubai Municipality or Dubai Economy unless the regulations relating to safety, security and food control, or any other regulations specifically applicable within free zones.

The creation of the DIEZ Authority complements the continuous effort of the government to introduce new frameworks for further improving services provided to businesses and investors to boost up business setup in Dubai and enhance the economic growth of the nation.

Newsletter, Saudi Arabia

Saudi Arabia Gears Up To Lead the Post-Covid Construction Sector Recovery in the GCC

November 9, 2021

The COVID pandemic has had a devastating impact on businesses, and economies all over the world and Saudi Arabia is no exception. In the construction sector, it has led to project cost escalation, supply chain disruption, and labour shortage. All the gulf nations witnessed a decline in their GDP growth.

However, as the gulf countries put their best foot forward towards sustainable long term development by diversifying economies into the non-oil sectors and bringing in social reforms, the construction sector in the gulf will begin to recover steadily and in all expectations, the post-covid construction sector growth will be led by the KSA with several foreign company formation in Saudi Arabia in real estate and construction space.

Amongst the GCC nations, Saudi Arabia currently holds the greatest potential for the construction sector with more than 5,000 capital projects worth well over USD 1.6 trillion in the pre-execution stage.

The construction sector is expected to expand by 2.9% in 2021 and as per forecast, would grow at an annual average growth rate of 4% during 2022-2025 on the back of the government’s housing development projects and infrastructure spending.

The country has a grand plan to rejuvenate the rail, airport, port and other logistics infrastructure including healthcare and tourism facilities.

On 29th October 2021, Saudi Arabia announced the capital city of Riyadh’s intention to bid for hosting the World Expo 2030 to the Bureau International des Expositions (BIE), World Expo organising body. A new airport for Riyadh for a cost of USD 147 billion has already been planned by the government.

Eight new cities have been planned along the Red Sea coast on the western side of the country and USD 575 billion has been budgeted for this project to build 100,000 hotel rooms, 1.3 million new homes and three million square meters of world-class office space.

A promising development plan has been laid out for Riyadh to solidify its status as the commercial centre of the Kingdom and USD 63 billion has been earmarked for creating more than 100,000 new homes expected to be completed by the end of 2023. There is also a plan to add 12,000 hotel rooms and around three million square meters of new office spaces.

Large-scale construction schemes called ‘giga-projects’ have been planned for promoting the country’s overall economy as part of Vision 2030. The most notable giga projects include NEOM Smart City, Six Flags Qiddiya Theme Park, Red Sea Resort Project and Amaala Red Sea Riviera.

Saudi Arabia’s Property Technology, PropTech market is expected to boost up with the roll-out of ‘giga projects’ like NEOM. Almost USD 2 million initial funding has been set aside for home maintenance services startups including FalconViz, Ajeer, Muqawiloon, B8ak.

The traditional ecosystem in the reality sector is all set to get disrupted and improved in property transactions, tendering and procurement due to smart technology adoption. The country plans to extensively use AI, robotics and 3D printing in the construction sector to improve productivity.

The Saudi government is actively working towards investing in green buildings and standardising the building rating system towards meeting sustainable development goals. A new standard called Mostadam Standard has been developed by the Ministry of Housing for rating buildings and launched in 2019 to validate the sustainability of constructions and avoid re-construction and CO2 emissions in future.

With giga-projects incorporating a mix of technology and sustainable development elements, the government is trying to build a better future for the younger generations and empower the country to build a new era driven by digital transformation and innovative technology. The real estate company called “Roshn” launched by Public Investment Fund specializes in integrated urban neighbourhood development incorporating the latest technologies in construction. The Sakani housing program also reaffirms the country’s commitment to development using smart tech.

Adopting Construction delivery Technology is instrumental in transforming the construction sector in the Kingdom. The government is already on a move towards the widespread introduction of prefabricated building techniques including those developed by the Ministry of Housing with 3D printing to reduce the construction time, standardise designs and operations, improve quality and productivity.

Exponential growth is on the cards in the transport and logistics sectors as the country recovers from the pandemic and restrictions ease. In July 2021, His Royal Highness Prince Mohammad bin Salman bin Abdulaziz Al-Saud proposed USD 147 billion capital infusion into the transport and logistics sectors over the next ten years. Once implemented, these sectors would contribute 10% of the country’s GDP by 2030, an increase over 4% from the current level.

An agreement has been signed between Maersk, a global integrator of container logistics and Saudi Ports Authority (Mawani) for an investment of USD 136 million over 25 years for an integrated logistics park set up at the Jeddah Islamic Port.

The huge infrastructure spending planned for reshaping the economy and future of the Kingdom will attract many foreign talents and institutions for doing business in Saudi Arabia.

Newsletter, U.A.E

Demand Surge from the World’s Wealthiest Sets Dubai’s Luxury Real Estate Price on Fire

November 9, 2021

[vc_row][vc_column][vc_column_text]”Rare Jumeirah Bay plot sells for almost double the price at AED 61 million” the August 2001 report from Luxhabitat Sotheby’s suggests that the high paced luxury property market in Dubai is on an exponentially upward trajectory. The city is witnessing an unprecedented rise in sales of high-end luxury real estate properties as the ultra-rich across the world set on a journey to find new homes in Dubai. Increasing demand is driving the prices higher for centrally located properties especially in the high-end luxury villas and apartment segments.

On the manmade marvel Palm, a Super-Penthouse, an epitome of luxury recently sold for AED 86 Million making it one the costliest penthouses ever sold in the metropolis. According to Alexander von Sayn-Wittgenstein, Managing Director of Luxhabitat Sotheby’s International Realty the penthouse prices would normally remain stable over time.

“The luxury segment is more stable than the mass market since supply here is limited and owners are wealthy and wouldn’t just sell for any given price,” he said.

[/vc_column_text][/vc_column][/vc_row][vc_row css=”.vc_custom_1636460379636{background-color: #f7f7f7 !important;}”][vc_column][vc_column_text]Dubai’s real estate market is witnessing continuous growth and increased investment, reports Dubai Land Department (DLD). As per the 18th edition of Mo’asher, Dubai’s official sales price index, launched by DLD, August 2021 scored the second-highest rank since December 2013 and best August in the last twelve months in terms of the number of monthly sales transactions with 5,780 sales amounting to a staggering AED 14.97 billion.

The August 21 sales took the yearly volume to 37,537 sales transactions worth AED 88.12 billion. The value of real estate sales transactions also rose by 22.61% in just eight months compared to 2020 which had 35,401 sales worth AED 71.87 billion. While secondary ready market sales contributed to 55% of total transactions, primary market sales stood at 45% registering a growth of 5% on a month on month basis and witnessing the highest amount of money infusion in the last 11 years.

The Arabian Ranches 3, Dubai Land, Dubai South, Tilal al Ghaf and Damac Hills 2 were the areas where villa sales took place in August while Business Bay, Jumeirah Village Circle, Dubai Harbour, Mohammed bin Rashid City and Downtown Dubai were the main areas of attractions for apartments.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]In 2021, Dubai real estate sector witnessed the best Q3 in its history in sales transaction value and the best Q3 ‬in sales volume since 2009.‬ In comparison to Q32020, Q32021 ‬showed an 85.36 % increase in sales transaction volume and an increase of 135.42 % in transaction value. Both the volume and value of sales transactions also rose considerably from that of precovid level and by 64.5 % and 138.8 % respectively.

Luxhabitat Sotheby’s, one of the famous global reality sector players, reported more than 8 million USD sales transactions by ultra-high net worth individuals since 2020. “The average value of the transaction has gone up in comparison to the last couple of years due to many UHNWIs moving to Dubai with a net worth of above $30 million,” Rohal Kohyar, Marketing Director at Luxhabitat Sotheby’s International Realty. Some big deals struck with clients who belong to Forbes’ billionaire list. As per Kohyar, a huge surge in demand helped them achieve an almost 300% jump in annual sales revenue.[/vc_column_text][/vc_column][/vc_row][vc_row css=”.vc_custom_1636460415460{background-color: #f7f7f7 !important;}”][vc_column][vc_column_text]Alluring sunshine, mesmerising skylines, attractive beaches, sprawling shopping malls, high-end dining facilities and a world-class healthcare system are some of Dubai’s tempting appeal to the growing number of millionaires moving to the emirate over the past several months. The ultra-rich retiring to Dubai are inspired and encouraged by the new visas, the handling of the pandemic and the quality of life.

The covid impact on traditional office work environments has also accelerated the trend in remote working from home further encouraging many international business persons to relocate their businesses to Dubai and take advantage of a relatively normal lifestyle. Dubai has scenic and mind-blowing beaches promising a sunny romantic waterfront lifestyle that attracts HNWIs from across Europe, Russia, and other cold countries to Dubai as their second home during cold winters.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Dubai has always remained friendly to foreign workers from across the world and only 10% of its population are UAE Nationals. This puts a global tag on Dubai and helps attract foreign nationals as tourists, businesses, and investment destinations.

Dubai is the gateway between the east and the west and due to its geographically central location, has made Dubai International Airport one of the busiest airports in the world. More than 15 million people visit this airport every year.

Around 2,000 high-net-worth individuals (HNWIs) relocated to Dubai from January to June 2021 and their population rose by 3.8% from 52,000 in December 2020, as reported by New World Wealth, a global wealth intelligence firm based in RSA and tracks the movements and spending habits of the world’s wealthiest people.[/vc_column_text][/vc_column][/vc_row][vc_row css=”.vc_custom_1636460426689{background-color: #f7f7f7 !important;}”][vc_column][vc_column_text]There has been an unprecedented rise in sales transactions in the luxury upscale residential space in Dubai surging 230% during Q12021, compared to Q12000. Prices have also increased in some top-end sought after locations and as much as 40%, highlighted Property Finder, the country’s largest real-estate website.

“Tons of people are coming in and buying multimillion-dollar properties on the spot, with no due diligence time whatsoever,” noted Matthew Cooke, a partner at consultancy Knight Frank, penthouse sales manager on man-made Palm Jumeirah artificial archipelago in Dubai.

Only a few prime locations are presently available in Dubai and high-end real estate developers are competing heavily for their future projects in the primary market. The secondary market doesn’t offer many options either as they are mostly owned by end-users. Presently a limited number of ultra-high-end real estate projects are on offer in the city and consequently carrying a hugely inflated price tag, 100% higher in some cases, on them. Effectively, the demand-supply gap is driving the luxury home prices higher in Dubai.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]As the ultra-high-end properties have seen the highest price surge during this year, it follows suit with the growing trend of UHNWI clients relocating to Dubai as their second home destination.

The residential prices in Dubai remained moderate over the last few years and have made the Dubai luxury real estate market amongst the most attractive and affordable in the region. The high-end residential property prices are still much lower compared to those in London, New York and Hong Kong. Being one of the safest cities in the world today, the luxury ultra-high-end real estate market in Dubai is expected to move further upwards in the coming days.[/vc_column_text][/vc_column][/vc_row]

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