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Oman issues a new regulation regarding Electronic Transactions
  • Newsletter, Oman

Oman issues a new regulation regarding Electronic Transactions

As technology and internet are becoming imperative in running operations of an organization, or managing online and electronic transactions domestically and internationally, having a strong legal framework to protect the interests of stakeholders is very important.

Recently, the government of Oman has issued the Sultani Decree 69/2008, also known as “the Electronic Transactions Law” (“the Law”). This legislation has been passed because of ever-increasing electronic and online transactions, which also give rise to the many cases in Omani courts. Earlier there were not enough laws to take care of such issues.

Electronic Transactions Law

This Law is pursuant to Article 3 and applies to any electronic or online transactions, signatures or records, and also to electronic messages. But it does not apply to matters pertaining to personal status law, like marriage, wills and divorce. It is also not applicable to many court procedures, proclamations, judicial summons, arrest orders etc. Usually, the Law provisions apply to all the transactions between any persons who are transacting by any electronic mode and their consent may be inferred from their conduct. Any agreement to do any transaction electronically would not be obligatory on any of the parties to carry on other transactions by the same mode.

Electronic communications like messages would also have the same effect legally if all the guidelines under this Law and its implementation rules are strictly observed.

But there may be cases, where there is a particular requirement under any other legislation, for example, the Commerce and Employment Law requires the party in question to safeguard any information or document relating to a specific transaction or an employee. However, this requirement holds true if the following conditions are met:

  • The information, record, document or data are saved in their original form, electronically and should be able to prove that they are in its original form;
  • The information, record, document or data would have to be retained in a manner that render it retrievable and usable for any future reference; and
  • The information, record, document or data would be retained in a manner that helps to identify their beginning point and destination, and also the exact time and date when they were sent or received.

If any message is presented in a court for a legal proceeding, it will only have evidential weight depending on the following factors:

  • The trustworthiness in which the message was entered, performed, processed, stored or presented;
  • The steadfastness with which the information’s integrity was maintained;
  • The dependability of the source of information;
  • The reliability of how the originator of the information was identified; and
  • Any other pertinent factor.

Though this Law takes care of the services concerning the service providers into authentication in terms of certificates issuance into electronic authentication or any other services dealing with electronic signatures, the reality is that the number of authentication services providers who are licensed by the IT authority in Oman. The Law also covers the protection of any personal data that should not be shared or used for anything except the original purpose for which it was obtained.

In order to deal with the IT-related crimes, the Oman government has issued Sultani Decree 12/2011(“Combating of Information Technology Crimes Law”). This law criminalizes some specific acts that deal with the breach of safety and privacy of electronic information and also information systems, and also the misuses of IT means.

The government of Oman has put in place the basic legislations including the Law and the Combating of Information Technology Crimes Law, which controls the formation and functioning of electronic transactions and contracts. The Oman government has also created bodies such as ITA to ensure proper implementation of the Law provisions and their use and application by governmental agencies such as Ministry of Commerce and Industry and Royal Oman Police. This enactment has no doubt strengthened the use of IT in Oman and it also ensures extra protection to the users. However, recovering for any returns of goods or damages also pose a challenge that is needed to be regulated. There is a requirement to lay clear terms and conditions in case the law is executed in different territories.

All the individual users, companies and also governmental entities will have to develop a strong internal regulation system, which lays the criteria and regulations for their employees while doing any electronic transactions or starting verification process of the second contracting party, so that the protection of data and information processing and its proper applicability is guaranteed.

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ADGM and Plug and Play to step up start ups in the MENA region
  • Newsletter

ADGM and Plug and Play to step up start-ups in the MENA region

The Plug and Play ADGM programme set to launch in Q3 2018 aims to speed up the growth of FinTech start-ups and innovators.

The Abu Dhabi Global Market or ADGM is collaborating with the world’s innovation platform – Plug and Play. They have got together to launch ‘Plug and Play ADGM’ office. The good news is that they have announced the launch date for their FinTech innovation programme starting with Abu Dhabi, the wider Middle East and North Africa, MENA, region.

The Plug and Play ADGM programme is planned to go-live in quarter 3 of 2018 and its primary focus is on stepping up and encouraging the FinTech start-up companies and other innovators, who offer out-of-the-box solutions that take care of the ever-dynamic requirements of the region’s capital markets. The Plug and Play ADGM has its headquarters on the Al Maryah Island.

This will provide a tactical platform connecting the business partners of Plug and Play ADGM to the most appropriate and revolutionary solutions by FinTech start-up companies under the programme. The platform promises the benefits of ADGM’s internationally-aligned FinTech infrastructure and initiatives, for example, the ADGM Regulatory Laboratory, the ADGM FinTech Innovation Centre and ADGM’s network of local and global institutions, FinTech bridges and other industry partners.

The Plug and Play ADGM team’s primary aim is to develop and facilitate FinTech companies and innovators so that they could be ready for the market and function ably and efficiently as per the regulations and framework applicable in Abu Dhabi and this region. This also ensures that company formation in Abu Dhabi becomes easy.

Richard Teng, who is the CEO of Financial Services Regulatory Authority of ADGM said that AGDM and Plug and Play had common goals, such as finding out the requirements and then resolving the difficulties of the financial services sector in the region along with developing and encouraging the finest entrepreneurs, among others.

Omeed Mehrinfar, who is the Managing Partner at Plug and Play in Europe, the Middle East and Africa, said, “Through ADGM being a leading International Financial Centre, with resources such as their RegLab and Innovation Centre in place, we can augment our offerings towards local and international entrepreneurs that are looking to scale their FinTech solutions across the MENA region. The ADGM partnership is also an opportunity for both of our entities to evaluate expanding into other industries and fields as it pertains to the region’s innovation agenda. This mutual roadmap, as well as their team culture and ours were an automatic match.”

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A One stop Plan Launched to make the Business Flow Easy between the GCC Markets
  • Bahrain, Newsletter, Qatar, U.A.E

A One-stop Plan Launched to make the Business Flow Easybetween the GCC Markets

The officials say that there should be a single point between any two borders when it comes to customs and immigration.

Bahrain –It has been suggested that a reduction of border checkpoints will helps in easing the trade flow in the GCC markets. The GCC Customs Union draft that was made by the Federation of GCC Chambers had this as one of its 75 recommendations.

This draft is now being presented to the GCC Chambers with the help of workshops and the third session was recently at the BCCI or Bahrain Chamber of Commerce and Industry headquarters in Sanabis.

This draft paper is prepared after conducting a feasibility study done by Gulf Organisation for Industrial Consulting (GOIC). It is planned to be presented at the second Gulf Economic Forum, which is scheduled next month in Riyadh.

The secretary-general of the Federation of GCC Chambers, Abdulrahim Hassan Naqi said, The main objective is to help the goods to transit smoothly between the various markets in the GCC.A common market could be a solution, where there would be no checks done by the Customs.

The recommendation is to have a common point between the borders of two countries for immigration and also Customs. So if a vehicle has got a clearance in Bahrain, then there is no need for another check in UAE or Saudi Arabia.

This will reduce the time spent by the vehicles at the border, and also reduce the losses. The discussions with the Customs officials are underway and it is hoped that this plan would be implemented soon.

Mr. Naqi also said that the proposal is still under consideration across GCC. For this, the first workshop happened in Riyadh two weeks ago and the second happened in Bahrain.

The good news is that these after recommendations are implemented, it will improve the intra-GCC business and commerce flow and company formation in GCC will become more feasible and attractive.

The GOIC assistant secretary-general, Shmalan Hamoud Al Jeheidli said that having a Customs Union for GCC will help in reducing the challenges and limitations of moving goods and enhance the intra-GCC trade.

More Competition

This could also increase the competition, increase the production rates and the best utilization of resources at hand; and it could also reduce the consumer prices.

BCCI board member Abdulhakim Al Shemmari said that after 25 years of the announcement of GCC union of Customs, the private sector feels that the end result is way lesser than expected.In the last decade, many proposals have been sent, which aimed at reducing the number of barriers which lie between the nations when it comes to clearances, transportation and also for certification of products.

The Gulf Customs Union means to enhance the wealth and growth and in this, the private sector could replace the income from the oil industry.This union is aimed at growing the business and economic exchange between GCC countries. A GCC Union is surely going to have a big impact.

The one-stop measures at the border were initially announced in December, 2016 and could have taken 18 months for implementation. After it’s put in place, the vehicles will be stopped at only one post for border routine procedures, like passport control, clearance of car and customs. But someone going into Saudi Arabia would only have to go through the Saudi formalities; whereas if you are going to Bahrain, you will need only Bahraini clearance.

At present, it ends up in a chaos and congestion because the drivers have to comply with both Bahraini and Saudi formalities.

The Customs Affairs has shown an upward trend in e-payment transactions done for customs clearance. A 181 per cent rise was recorded in January, when a BD2,845,714 worth of transactions were registered.

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World Bank says that Gulf economies are set to improve this year
  • Newsletter

World Bank says that Gulf economies are set to improve this year

The GCC or Gulf Cooperation Council region has saw a year of inadequate economic performance in the year 2017.However,according to the World Bank’s biannual Gulf Economic Monitor, there is hope and the growth will take an upward turn in 2018 and 2019.

The economies of the GCC region saw a downward trend or a flat growth.The reasons for this were a tighter fiscal policy and lesser oil production, which affected the activity in the so-called non-oil sector. However, the external debt issuance spiked up to finance the huge fiscal deficits.

But the economic growth is now expected to go up gradually. The recent recovery in energy prices, though partial, and the termination of oil production cuts post 2018, and are duction of the fiscal austerity.

The World Bank’s estimate of growth comes to 2.1 percent in the current year, which is expected to rise even more to 2.7 percent in the year 2019. Growth in Saudi Arabia is also projected to bounce back to around 2 percent in 2018-19.

Nadir Mohammed, the World Bank’s country director for the GCC said, “Policy attention is shifting towards deeper structural reforms needed to sever the region’s longer-term fortunes from those of the energy sector.”

“While the recent increase in oil prices provides some breathing space, policy makers should guard against complacency and instead double down on reforms needed to breathe new life into sluggish domestic economies, to create jobs for young people and to diversify the economic base. Any slippage could negatively impact the credibility of the policy framework and dampen investor sentiment.”

Though the fiscal and current account balances have seen growth and improvement, this region is still facing some financing requirements and is still vulnerable to changes in the global risk sentiment and the funding cost.The implementation of the country’s reform plans needs to be robust to hold upall the benefits of better structural reforms and fiscal adjustment, which aim to expand their economies.

Over the long term, the lasting dominance of the hydrocarbon sector in the GCC economies battles for the dynamic implementation of the structural reforms. The structural reforms ideally should be focused on the following: development of the private sector, economic diversification, and labor market and the fiscal reforms. The long-term ambitions of the GCC states are expressed in various countries’ vision statements and their investment plans and aim to develop competitive economies that will utilize all the talents of their people, said the report.The implementation of these structural transformation guidelines or programs needs a continuous political commitment on part of the GCC governments.

Saudi Arabia has already come put with its 12 “vision realization plans” that are associated with its Vision 2030 aspirations. It aims to largely transform their economy in the coming 15 years by aiming to lift the private sector of the economy from current 40 to 65 percent.It also aims to take the small and medium enterprises’ contribution to GDP from the current 20 to 35 percent, said the World Bank report.

Kevin Carey, the practice manager at the World Bank said, “Transforming from an oil-dependent economy to a self-propelled, human capital-oriented one requires some fundamental changes in the mindset; some also call this a new social contract.”

“GCC countries do not need to discard their existing social contracts but rather to upgrade them to reflect new realities of low for long oil prices, increasing global competition and the long-term threats from technological and climate change.”

Some other Arab countries of the GCC states also have other challenges such as equity,sustainability and welfare related to the pension systems. Some of the solutions to improve pension outcomes could be improving the overall efficiency by bringing down the current fragmentation in many of the GCC pension systems.The access and contributions should be simplified and made more systematic by strengthening their ID and IT systems and also the capabilities of the pension administration bodies.The governance of pension institutions should also be strengthened.

If the GCC countries aim to attract all the global talent and think of company formation in GCC, they need to consider possible solutions for expatriates that would help them meet their pension and financial security needs, said the report.

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Dubai all Set to Gain as London Companies Decide to Move Many Jobs Overseas Brexit
  • Newsletter, U.A.E

Dubai all Set to Gain as London Companies Decide to Move Many Jobs Overseas: Brexit

Reuters released a survey recently that says that the total number of jobs in the finance sector that were to be migrated out of Britain or in other countries because Brexit has gone down by half, as compared to about six months ago.

However, Dubai Multi Commodities Centre or DMCC report said that British organizations, which were finding options overseas, had Dubai on their radar. Many UK-based firms had been showing interest in settling up their offices in the free zone since the Brexit had voted to go out of the European Union about a couple of years back.

The organizations that employ most of UK-based employees in their international finance department reported to Reuters in their last Brexit tracker that they plan to move about 5,000 finance jobs out of Britain by March 2019. However, in March beginning, the DMCC came out with its report named: ‘Brexit: the impact on British business and exploring new trade routes’. Though it nowhere mentioned the total number of British firms they surveyed, it just said that approximately 27 percent of survey respondents were of the view that they had a bigger demand and wish for expansion of international expansion after Brexit happened.About two-thirds of the people said that it was a big possible location for company formation in Dubai.

To state the facts, about 4,000 odd British firms are based out of Dubai today, and around 1,300 of them are located in DMCC. The report also said that the DMCC witnessed a 29 percent climb in the number of British companies, which are all set to open their offices in the free zone. Do you know that this interest shown by the British organizations in setting up their offices in Dubai has gone up to a whopping 192 percent? Therefore, DMCC company formations are on a high demand.

In the press release that came along the DMCC report, the Chairman of the consultancy firm Asia House, Lord Green, said that with the coming of Brexit, we have to accept that it brings along some complexities; therefore, there is a need to promote more British commerce and industries to find newer markets. The UAE in the Middle East is a great option as it provides exceptional business opportunities and hence company formation in Dubai is a good bet.

Lumina, corporate finance firm in Dubai announced that they had appointed Rick Pudner (former group CEO of Emirates NBD) to head their entry into this new zone – the U.K. market. Pudner said that the impacts of Brexit included major capital, financial and other trade consequences for UK mid-market and also for private companies that are working in the Middle East markets.

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DIFC Foundations Law 2018 is Effective Immediately
  • Newsletter, U.A.E

DIFC Foundations Law 2018 is Effective Immediately

The Dubai International Financial Centre (“DIFC”) is implementing its new foundation’s law with immediate effect from 21st March 2018. The foundations are used for the following objectives and many other purposes:

  1. As vehicles for family wealth/succession planning;
  2. In commercial transactions;
  3. For securitization structures;
  4. For long-term businesses holding; and
  5. As anti-hostile takeover instruments.

The DIFC Foundations are attune with the existing broad and sophisticated measures of the Free Zone.

Interested Parties:

The Foundations Regime is delightful news for an extensive range of international and national parties. These parties are inclusive of family businesses seeking continuance and succession planning solutions, family offices, entrepreneurs and business people who also have charitable and philanthropic aspirations. It also includes legal advisors and persons conducting commercial or wealth management activities in or from the DIFC.

Objectives and kinds of foundations:

The aim of the foundation is:

  1. to serve exclusively charitable objects, and
  2. one or more of:
    1. non-charitable purposes; and
    2. objects to benefit persons specified name, category, or class

Nevertheless, a foundation cannot carry out any profit-making activities, except those objectives which are ancillary or incidental to its goals. As per the law, the Foundation objectives must not be unlawful or against the public policy of the DIFC or the UAE.

The foundations might be subjected to particular governance protocols as per its objectives and activities. Also, they will be required to abide by the other regulatory provisions if engaging in those activities. 

Coverage of the Law:

The new law covers the following areas:

  1. The nature of a DIFC Foundation, including its objectives and the rights of heirs;
  2. How to establish a Foundation;
  3. The roles of the different members of the foundation, such as the Founder, Council and the types of property the Foundation can hold and in what circumstances;
  4. The administration requirements of the Foundation;
  5. The role of the Registrar;
  6. The effect of court and arbitral proceedings on the Foundation;
  7. How to continue a Foundation into or from another jurisdiction;
  8. How to dissolve a Foundation; and
  9. Fines and fees concerning the Foundation’s administrative obligations.

Our Assistance:

We at IMC are pleased in assisting our clients in registering and maintaining ongoing compliance with a Foundation by performing the following services:

  1. Incorporation process assistance,
  2. Providing valuable opinions on matters of Foundation goals and assets,
  3. Assisting on the issues of composition and powers of the foundation’s bodies,

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India once again becomes the fastest growing economy
  • Newsletter

India once again becomes the fastest growing economy

India has once again captured the status of being the world’s fastest growing economy in the October-December quarter. India has outdone China for the first time in the year as there was a rise in the government spending, manufacturing, and services.

India is Asia’s third-largest economy, and it grew by 7.2 percent in December quarter which is the fastest of five quarters as per the Ministry of Statistics. This data beats China’s 6.8 percent and has a forecast 6.9 percent by analysts surveyed by Reuters.

There was an early interest rate hike on the agenda which made India raise its 2017/18 GDP forecast to 6.6 percent from 6.5 percent. Indian manufacturers and service industries are still in a process to overcome interruptions from the launch of national sales tax in July.

In the December quarter, annual growth in the manufacturing sector climbed to 8.1 percent from 6.9 percent in the previous sector while financial and other sectors climbed to  7.2 percent from the previous 5.6 percent.

The expert’s view is that settling down of Goods and Services Tax (GST) reforms will boost growth in the next fiscal year, and the Reserve Bank of India is trying to balance inflation and growth. RBI can also present a hike in the interest rates after the policy meeting on April 5.

We expect a rate hike from RBI, most likely at the August review,” said Abhishek Upadhyay, economist, ICICI Securities Prime Dealership, citing inflationary pressures.

The Reserve bank has not changed its key rate since a 25 basis points cut in August. The impact of Retail inflation eased marginally to 5.1 percent in January from a 17-month high of 5.2 percent in December.

Urjit Patel, RBI governor, this month said the economic recovery was at a nascent stage and called for a cautious approach.

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Saudi’s recent Bankruptcy law clears the path for investments and large-scale projects
  • Newsletter

Saudi’s recent Bankruptcy law clears the path for investments and large-scale projects

The new bankruptcy law of Saudi Arabia has raised the expectations of the foreign and local investors for a reliable framework that will reduce risks of conducting business in the Kingdom. This law will help improve the appeal of Saudi Arabia among global investors and will raise significant economic activity in the region as per the view of the analysts.

The primary aim of the law is to allow a bankrupt debtor to resume activity mindful of the creditor’s rights. The Saudi Ministry of Commerce and Investment aims to raise the kingdom’s global ranking in settlement of bankruptcies.

Saudi ranks in the 168th place (out of 190 countries) in the World Bank’s Ease of Doing Business ratings for 2018 in regards to bankruptcy cases. The new law is expected to change the position of the country.

The neighboring country of Saudi Arabia, the UAE had implemented the bankruptcy law back in 2016. It came into effect in 2017, and the objective was to reduce the risk of conducting business in the country. In some cases, it was also the sparing of imprisonment for failure to pay the debt.

Bankruptcy law is meant to support confidence and to smooth up possible new investments needed to support the long list of giga-projects and expected IPOs,” as said by an economics and energy partner at a consultancy firm advising on investment risks in the Middle East.

“It is also a major step forward to increase confidence in Saudi Arabia for investors and operators, all in line with the Vision 2030 drive, and not to be forgotten the MSCI Emerging Market Index Listing,” he added.

The Kingdom has started to implement a motivating economic overhaul that will oversee the launch of major projects and allocate the state’s resources. This projects also includes the substantial 500 billion ‘NEOM’ business zone project. This project’s size is to be more than 33 times the size of New York City.

There was a need for a new, up-to-date bankruptcy law as international investors are apprehensive about issues related to recuperating funds and investments when involved with a Saudi entity over the past years.

The is a preparation of a regulated schedule which details the insolvent status of the debt-ridden companies. It is a combination of US (Chapter 11) and European bankruptcy provisions, and would allow involvement from all parties with interest in the process.

The stock market of the KSA is the Arab area’s most significant bourse and is now placed on the ‘watch list’ of the emerging market index by the global index supplier MSCI. This inclusion is the result of the decision taken in June. A positive result would guarantee the inflow of foreign funds and an increase of business set up in Saudi.

Providing Opportunities

“The adoption of the bankruptcy law is part of the development of the country’s economy and will open up opportunities for new projects to gain access to, and participate in, the market effectively while avoiding any loss that may result from the restructuring of the economy,” as said by Faisal Al Olayan, a Riyadh-based independent economic consultant.

“The bankruptcy law aims at enabling the debtor to recover and resume activity and also takes into account the rights of creditors. The current law in the kingdom does not include an easy way to liquidate the company’s activities,” he added.

Before the introduction of the Bankruptcy law, very scarce regulations were governing the process of declaring bankruptcy, the treatment of creditors and their claims, or the rights obligations of insolvent parties, according to a Saudi-based associate at law firm.

He said that the existing statute was highly reflective of traditional Islamic principles and cultural issues unique to the region, which largely seek to bring disputing parties together in an amicable agreement without forcing a judicially-imposed settlement against either party’s will.

Formal judicial insolvency and bankruptcy proceedings have been fairly uncommon occurrences in Saudi Arabia, and financially distressed parties and their creditors generally seek to work out their disputes and settlements on a private, one-to-one basis.

Long-term disputes

Many disputes are pending in the Kingdom due to the absence of proper bankruptcy laws.

According to a law firm founder “The lack of a formal bankruptcy system meant that restructuring companies often presented financial hurdles that were too difficult to overcome.

Liquidation was the only solution when the debt exceeded the value of the assets, which ends the work of the investor completely, though it could have been resolved by (methods other than) liquidation and balance between the rights of creditors and debtors.

The new Saudi bankruptcy law gives more clarity and transparency, and presents a higher chance of a business resuming activity under the supervision of specialist insolvency experts, he added, without disruption to creditors’ rights.

Enacting a more robust bankruptcy statute has added a level of certainty to the legal environment in Saudi, and clients and companies investing and doing business in Saudi Arabia will feel more comfortable doing so.”

The new bankruptcy law started to take shape in early 2015 when the Ministry of Commerce and Investment (MOCI) released a policy paper for public comment entitled “General Policies of Bankruptcy.” The article suggested a legal framework for bankruptcy and insolvency procedures that coexists with the international standards. The law has been derived from existing structures in the Czech Republic, England and Wales, France, Germany, Japan, Singapore, and the United States, Burns noted.

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JAFZA Food and Beverage sector grows at a steady pace
  • Newsletter, U.A.E

JAFZA Food and Beverage sector grows at a steady pace

The Jebel Ali Free Zone(JAFZA)’s Food and Beverage (F&B) sector which is a subsidiary of global trade enabler DP world witnessed a growth of 12 percent in 2017. The F&B sector companies rose from 507 to 570 in 2016 with 8,600 employees. This ascertained the attractiveness of company formation in JAFZA by entities seeking to launch and expand their business.

Sultan Ahmed Bin Sulayem, Group Chairman and Chief Executive Officer, DP World, said: “Jafza is building on its track record as the region’s hub for this key sector of the economy, in line with U.A.E. Vision 2021 launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the U.A.E. and Ruler of Dubai. The growth reflects our continued focus on developing this industry and attracting more F&B manufacturing businesses to establish themselves here.”

“We are committed to building on our infrastructure, providing a world-class business environment for F&B companies and this event provides a major platform to showcase our business-friendly services and our capacity to support Dubai and the UAE’s economic diversification strategy.”

“The vision of our leadership to establish Dubai as the global Islamic economic capital provides a major boost to our economy by attracting foreign investment, especially those that are Halal food related. The Dubai Industrial Strategy also complements the competitiveness of the food industry where local companies can partner global counterparts to increase exports. We are also focused on research and development in the industry to develop new products and commodities that will suit different tastes and attract consumers.”

JAFZA has F&B business from 75 countries that have a reach of more than 2.5 Billion consumers in the countries of Middle East, Africa, South and East Asia and the CIS. This F&B sector also includes international brands like the AGC, Unilever, Mars, Food Specialities Limited (FSL), Gulf Food Industries, Hunter Foods, and many others. The percentage of F&B companies in the JAFZA; 37 percent are from the Middle East,24 percent from Asia,19 percent from Europe and 10 percent each from Africa and America.

The reason as to why the entities prefer company formation in JAFZA is the high occupancy rate of facilities like land, warehouses, showroom, and offices. These spaces are spread over 1.85 million square meters and accelerate the growth of the F&B industry. JAFZA also featured its F&B track record during the Annual Gulfood 2018 event from February 18 to 22nd.

The Business Monitor International (BMI) research recent reports conclude that the food sales in the region of the Middle East and North Africa will increase by 6.3 percent annually between 2015 and 2020. It will also witness a 7.1 percent annual growth till 2020 due to the factors of robust retail sector investment, the rise of tourists and expatriate population in the coming years.

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Historic Direct Trade Agreement between India and UAE
  • Newsletter

Historic Direct Trade Agreement between India and UAE

U.A.E. and India have made history made entering into an agreement which lets them conduct businesses on both sides by bypassing the US Dollar or any other currency. This agreement enables both the countries to trade directly in their currencies.

The agreement will ensure substantial savings on both sides, and the trade between the two countries will reach a new high. The Indian ambassador to U.A.E. Mr.Navdeep Suri said that this agreement is in addition to the other significant agreements and MOU’s signed by the Prime Minister Narendra Modi’s recently concluded two-day visit to Abu Dhabi and Dubai.

The other agreement finalized is the Currency Swap where the Central Banks of UAE and India will be able to trade in Rupees and Dirhams and not have to go through US Dollars which means that there is a considerable saving for the business community.

Even though the UAE Dirham has a fixed peg to the US Dollar, the currency swap agreement between the UAE and India could favorably impact trade between the two countries as the Trump Administration in the US fortifies the expansionary fiscal policy and the US Federal Reserve is considering rate hikes.

The effect of the US fiscal policies on the Indian Rupee would be significant. It is profitable to trade in with the U.A.E. since the Indian currency value does not depend on the Dollar but is determined by a collection of currencies. The reason behind this agreement is evident from the statistics of the UAE-Indian trade figures.

The Bilateral trade figures started from a mere $182 million in the year 1982 and had now reached USD 53 Billion. This information was released in a joint statement issued at the end of Mr. Modi’s visit.

The other agreement is between the Financial Intelligence Units and will commit U.A.E. and India to work together more closely in the area of money laundering and prevention of money laundering. The Joint statement also reported that “the two sides welcomed the finalization of  the MOU on cooperation and the exchange of financial intelligence related to money laundering, associated predicate offenses, and terrorist financing.”

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