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Abu Dhabi Department of Economic Development (ADDED), organized in cooperation with the Ministry of Labor and Abu Dhabi Chamber, a Seminar on Private Sector Regulatory and Legislative Obstacles

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Abu Dhabi Department of Economic Development (ADDED), organized in cooperation with the Ministry of Labor and Abu Dhabi Chamber, a Seminar on Private Sector Regulatory and Legislative Obstacles

Monday, November 12, 2012
The legislative and Regulatory Challenges and Contracting Procedures Constraints Facing the Private sector . The seminar was organized in cooperation with the Ministry of Labor and the Abu Dhabi Chamber, in participation of more than 80 people representing the private sector, stakeholders, experts, academics, consultants and specialists concerned with legislative and regulatory issues.The seminar was attended by HE Mubarak AL Dahiri Undersecretary of ministry of labor , HE Mohammed Omar Abdullah  Undersecretary of ADDED . In the opening speech of the seminar, HE Rashid Ali Al Zaabi, the Acting Executive Director of the Planning and Statistics Sector, said that this seminar came within the utmost keenness of Abu Dhabi Department of Economic Development to discuss and review with all concerned government agencies, private sector establishments, consultants and experts, the important initiatives and programs launches for the development of current economic legislation, to enhance and enrich the business environment in the emirate.Al Zaabi explained that the private sector in the Emirate of Abu Dhabi, is fully cared for by the sagacious leadership and the Government of the Emirate of Abu Dhabi, being considered as the active key player, which integrally complements the public sector in accelerating the move towards the sustainable knowledge-base economy, which constitutes the basic pillar of the Abu Dhabi Economic Vision 2030.HE Rashid al Zaabi noted the efforts made by the Government of the Emirate of Abu Dhabi through its various stakeholders, to overcome the difficulties and challenges faced by the private sector, according to the set of plans and programs timely consistent with the pillars of the economic vision.Al Zaabi added that the Department of Economic Development had prepared the “Industrial Strategy 2011 – 2015, and carried out several steps, which were crowned by the establishment of, the Competitiveness Office. He stated that further steps are underway, which include modifying of regulations and relevant legislation; and the establishment of the Business Center, and the Industry Office.Rashid Al Zaabi explained that the initial estimates of the Statistics Centre-Abu Dhabi showed that non-oil activities in Abu Dhabi constituted (41.5%) of total GDP in the Emirate of Abu Dhabi in 2011, in current prices, reaching more than AED 334 billion, despite the rise in oil prices in the same year.The Acting Executive Director of the Planning and Statistics Sector, Rashid Al Zaabi, said that ambitions would not stop at this point, in view of the positive performance of Abu Dhabi economy; as set by the Economic Vision 2003 to diversify the economic base, promote investments, provide capital, and adapt to the knowledge-based modern technology in various targeted economic sectors. HE Rashid Al Zaabi stressed that global changes and current developments in regional and international arenas, required keeping up with developments and working hard to exceed all current and anticipated future challenges, by strengthening the roles of society institutions, to provide high quality products and services.Al Zaabi called on strategic partners of ADDED in the government and the private sector, to participate together in laying sound foundations for the best set of laws and regulations, and to adopt procedures and legislation compatible with local, international and global environments, in order to contribute significantly to localization, attraction and sustainability of investments. This would enable realizing the aspirations of His Highness Sheikh Khalifa bin Zayed Al Nahyan, and His Highness Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces; and their insightful vision in building and strengthening all areas of economic, and social well-being of UAE nationals.Rashid Al Zaabi added that the seminar, came in harmony with efforts to accentuate partnership between the public and private sectors, expressing hope that the seminar would enrich the ongoing dialogue and exchange of ideas; and would shed light on the most important to help finding logical and practical solutions for all challenges associated with legislative and regulatory issues facing the private sector in the emirate. Al Zaabi pointed that the outcomes and recommendations would hopefully strengthen this partnership, and paves the way towards achieving sustainable economic development in the Emirate of Abu Dhabi. Dr. Ibrahim Al Abed, the Economic Specialist at the Studies Directorate of Abu Dhabi Department of Economic Development, gave a presentation in which he addressed the challenges facing the private sector, focusing on the most prominent legislative and regulatory constraints.Al Abed said that the priorities of the Abu Dhabi Economic Vision 2030, regarding the private sector, focus on the establishment of sustainable economic development, through a range of mechanisms aimed at diversification, broadening the base of business projects, achieving maximum competitiveness, developing national resources, empowering of women in the economy, attracting skilled labor, and accelerating the pace of development in remote areas.Dr. Al Abed added that the economic vision included a set of facts that constituted the general framework for the role of the private sector. These facts included the involvement and participation of the private sector in attracting foreign and local investments in targeted sectors, the transfer of expertise from foreign to local investors, the move and surge towards non-oil sectors, the augmenting of private sector savings, promotion of individual investments, and expanding the base of SMEs and enhancing their productivity. Dr. Al Abed highlighted the characteristics and the composition of the local private sector, which currently employs about 55% of the total workers in the emirate, , noting that the sector is too weak to significantly contribute to the emiratization of labor. Al Abed explained that SMEs constituted more than 90% of the number of licenses issued, with projects concentrated mostly in certain sectors such as construction and related maintenance services; in addition to the large size of crafts and services activities, characterized by low productivity and weak competitiveness, while 95 % of SMEs are family owned. Dr. Ibrahim Al Abed added in his presentation that GDP average growth rate for the emirate of Abu Dhabi, for the period 2005-2011 (at constant prices) was (3.65%), as GDP jumped from AED 491.7 billion in 2005, to AED 606.6 billion in 2011 ( at constant prices), with an average annual growth rate of 6.83%. The non-oil GDP accounted for (47.6%) of total GDP in 2011, registering a growth rate of (6.32%).Dr. Al Abed, analyzed the determinants restricting business performance and competitiveness, derived from global competitiveness and business practicing reports, during the period 2012/2013, for UAE citing (sixteen determinants).On top of these, Dr. Abed named the restricting labor regulations, and access to finance, which came at close rates of (19.2%) (19.1%), respectively, followed by lack of technically qualified manpower at (16.4%).Al Abed cited a number of common challenges facing private sector establishments and activities in the Emirate of Abu Dhabi, notably the difficulties in obtaining financing, the severe competition faced in local and regional markets, the high cost of production, the shortage of technically qualified manpower. According to Dr. Al Abed, some of the obstacles are associated with procedures, communication, and coordination with concerned agencies in both sectors, coupled with regulatory and legislative constraints and contracts procedures which all constitute the core focus of the seminar. Dr. Abed pointed out that the prominent efforts and initiatives of Abu Dhabi Department of Economic Development to stimulate and activate the role of the private sector; include conducting surveys and questionnaires, and configuration of economic indicators, which are aimed at meeting the needs of the private sector; and assessing the business environment, with tools such as the confidence in business climate index for the Emirate of Abu Dhabi. Efforts envisaged adopting five-year economic plans, the first of which covered the period 2008 - 2012, and the second one was set for the period 2011-2015. The Industrial Strategy of the Emirate of Abu Dhabi was followed by the establishment of the Industry Office and the Business Center, which will soon be launched in Abu Dhabi.Al Abed noted a package of future initiatives, I including a proposal for providing a funding window, in coordination with concerned authorities, and a study on granting preference to local products; in addition to the intention to develop a strategy for the Department's role in supporting and encouraging the private sector and the SMEs in general; and a study concerned with the establishment of a credit rating mechanism.Dr. Ibrahim Al Abed added that the various stakeholders in the government sector in the emirate are currently meant with uniting efforts, to support and stimulate the private sector through the provision of integrated packages of support and incentives, concentrating mostly on technical and administrative support, facilitating promotion and external marketing channels, providing tax facilities and simplifying customs procedures, providing and sustaining of advanced infrastructure, reduction of production costs to give economic competitive advantages, such as preference in procurement contracts and privatization of some State enterprises; in addition to strengthening public-private partnerships or the so-called (PPP).In concluding his presentation, Dr. Ibrahim Al Abed called on the private sector to play supporting roles to complement government efforts and build effective partnership between the two sectors. He stressed the need to maintain the optimal use of available resources of capital and technology and integrated management. Al Abed advocated the building contractual relationships to achieve goals and realize the interests of all parties, within a framework of transparency and corporate governance, to bring about high value-added competitive products and services, and maximize benefits, without losing sight of the aspects of social responsibilities.For his part, Dr. Mohammed Haitham Salman – the Legal Expert at the Policy and Legislation Sector of Abu Dhabi Department of Economic Development, highlighted the role of the Department in reviewing economic legislation applied in the emirate, in coordination with the representatives of the business community; and proposing appropriate amendments, to contribute to the efforts exerted to overcome the challenges facing the private sector in the emirate and enhance its role.Dr. Mohammed Haitham noted that many initiatives are currently being implemented in coordination with relevant authorities expecting that they would significantly have positive impact on various economic aspects in the emirate, soon after the implementation of these proposals and the issuance of the package of draft Federal Economic laws, which are currently under review.The presentation given by Dr. Haitham at the seminar shed light on the project for reviewing economic legislation currently in effect the emirate. He noted that the Department of Economic Development assumed this role in consultation with all government agencies with relevance to economic affairs on the local and federal levels, engaging representatives of the various segments of the private sector and foreign business councils based in the emirate, with the aim of identifying shortcomings in economic legislation and benchmarking according to international best practices.Dr Haitham explained that the reviewing process resulted in several recommendations for proposed amendments of legislative and regulatory issues. He added that five challenges face the private sector, namely, the administrative procedures, financial burdens on investors, business licensing procedures, the need to enhance transparency, and boost coordination with dealers during the decision-making process. A comprehensive review of regulations was proposed, to ease procedures, minimize requirements and save time.Dr. Haitham said that the Department had prepared a draft of new regulations for commercial business licensing, which determines in details all requirements and licensing procedures; and the time frame set for the issuance of licenses. Coordination already started for the adoption of a proposal to join the Hague Convention of 1961 on the abolition of the requirement of ratifications for Foreign Public Documents; and the preparation of an integrated administrative mechanism to make decisions that directly affect the interests of dealers with the Department.Dr Haitham explained that the second challenge concerns funding and, where a proposal was presented to mitigate risk and enhance funding opportunities, most importantly preparing the regulatory and administrative industrial mortgage framework in the emirate, and establishing a legal framework to regulate Diminishing Musharaka MMP in accordance with the provisions of Islamic law. Moreover, the drafting of a legal framework to regulate leasing in accordance with the provisions of Islamic law, and replace long leases entered into by the government, with Musataha contracts , governing the relationship between the land owner and Alumsateh and taking into account the rights of the financier (the Bank). Dr. Mohammad Haytham emphasized the third challenge facing the private sector as the marketing obstacles, indicating that a number of recommendations were proposed, to contribute to enhancing the competitiveness and efficiency of the private sector in the emirate, such as, establishing a legal framework to regulate the franchise (Franchise) and establishing a legal framework and guiding principles for the organization of participation between the public and private sectors; and developing guidelines to determine the terms and conditions in contracts for the sale of goods and services, that are considered unfair for consumer rights; as well as joining the Convention on Contracts for the sale of international goods, thus easing conflicts between exporters and suppliers and encouraging import and export operations to and from the emirate.The fourth challenge facing the private sector, according to The Legal Expert, Dr. Haitham, concerns the obstacles hampering the development of SMEs, as he added that a proposal an integrated initiative was put forward to support small and medium enterprises across the emirate, including the development of a regulatory framework for the allocation of a certain annual percentage of government procurements to the SMEs sector; and giving incentives for projects that include mechanisms for research and development. This would contribute to product and management development; and develop a regulatory framework for the licensing of some professional home businesses and crafts, in addition to the setting of a regulatory framework for the licensing of business incubators.The fifth challenge faced by the private sector, indicated by Dr. Haitham, include a set of different organizational challenges which require comprehensive reviewing and updating of the legal, professional and regulatory set up of the vocational sector, within an integrated institutional framework. This would contribute to the improvement of the role of the professional sector in the emirate.Dr. Haitham mentioned that the Department of Economic development, is currently working on the preparation of a legal framework governing free zones in the emirate of Abu Dhabi; and the development of an integrated legislative framework, for organizing the generation of renewable energy in the emirate. Moreover, the regulations on contracts and government procurement, are under review, including bids evaluation mechanisms, and discrimination in conditions and efficiency between national and foreign companies, or companies registered in the free zones; in addition to government procurement contracts in general, and the possibility of the application of special conditions for compensation for the delay in the implementation of commitments on both sides, and developing a regulatory framework for the management of government procurement contracts.The Legal Expert Dr. Haytham, also reviewed in his presentation some Federal economic draft Laws, which are currently, awaiting issuance. Dr Haytham stressed that the legislative environment of the emirate will change radically and positively with the issuance of these laws and the implementation of the proposed legislative amendments.At the end of the legal presentation, Dr. Haitham emphasized the need for coordination and periodic communication with the various segments of the business community, to determine the requirements for reviewing of legislation and laws, to further and enhance efficiency in private sector and strengthening its role in the emirate.
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