A round-table discussion panel was organized today by Abu Dhabi Department of Economic Development Studies Directorate, to discuss business Climate...Key indicators and challenges, with participation of the Ministry of Economy, Ministry of Foreign Trade, and Khalifa Fund to support and Develop SMEs and Abu Dhabi Chamber of Commerce and Industry.The panel began with an opening speech delivered by Ms. Shorooq Abdullah Al Zaabi, Head of Development Indicators and Future studies Section of the Studies Directorate of the Department of Economic Development. Al Zaabi welcomed participants to the discussion panel, stating that it reflects the keenness of the Department strengthen communication and partnership between government sectors in order to help assess and heighten the business climate in the Emirate of Abu Dhabi, address the most important challenges facing investors, promote business climate in the Emirate and enhance Abu Dhabi's stance and position on the map of international investment. Ms Al Zaabi said that the holding of this discussion panel comes in the light of the growth and prosperity achieved by the economy of the Emirate of Abu Dhabi during the past few years, as a result of attractive business environment enjoyed by the emirate, where the emirate has many advantages and investment incentives offered to investors, including, but not limited to political stability, the growing partnership between public and private sectors, government support for small and medium enterprises, tax exemptions, availability of modern infrastructure , high degree of development as well as transparency. Shorooq confirmed that the Government of the Emirate of Abu Dhabi, is dedicated to providing full and continuing enhancement of the business climate, in order to build an attractive environment for investment, and keep pace with the global economy developments, where this comes among the top seven priorities of policy areas in stated by Abu Dhabi economic vision 2030. Ms Shorooq added that the emirate's economy, including the attributes of economic policies, diverse and competitive business environment, has proved its ability to confront and absorb shocks that might be subjected to. Thanks to the sagacious leadership of His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE; and continuous tracking of His Highness General Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces. As I take this opportunity to assure the success of the Emirate in overcoming the repercussions of the global financial crisis, credited to the astute government which has taken the necessary actions in high speed and flexibility, I would also like to emphasize that this episode serves as an excellent opportunity to strengthen the means of constructive communication and cooperation between representatives of government agencies . AL Zaabi said .The discussion panel proceedings began with the paper of the Department of Economic Development presented by Mr. Shiref Shabana, the Senior Economic Researcher at the Studies Directorate, which dealt with the most important indicators of the competitiveness of business environment from the global, regional and local level perspectives.Mr. Shabana stressed the that the importance of the topic comes out of concern of the Government of Abu Dhabi to promote a competitive business climate in the emirate, which is evident in its Abu Dhabi 2030 vision, which states: Building a business environment that is open, efficient, effective and integrated into the global economy, and which comprise an area of concern in the economic policy of the Emirate. Shabana added that the reviewing of the most important international and local indicators eyed by investors in all countries of the world is of great relevance to the panel's subject issue and its various dimensions. We are through to pinpoint the most important challenges that hamper the promotion of a competitive business climate in the emirate, Shabana said, pointing out that the main important global indexes include, the World Bank's Ease of Doing Business Index, the World Economic Forum's Global Competitiveness Index, the Heritage Foundation Index of Economic Freedom, the World Economic Forum Trade Enabling Index, the World Economic Forum Financial development Index, Nielsen Global Consumer Confidence Index, HSBC Trade Confidence Index ,the World Economic Forum Global Information Technology Network Readiness Index, in addition to UNCTAD's World Investment Prospects Survey 2009-2011.In his presentation, Mr. Shabana highlighted the most important development indicators being developed and released by the Directorate of Studies, which include the Confidence in the Business Climate Index, the Financial Sector Performance Index and the Labor Market Demand Trends Index. Shabana noted that according to the 'World Bank Doing Business Report 2010', the UAE has made remarkable progress when it climbed up 14 places in the report, ranking 33 among 183 countries in the current year, compared to last year when UAE ranked 47 among 181 countries. The UAE came this year within the first five countries in terms of reforms as reforms have been recorded in three main areas, which are: the start of the project, issuing of construction permits and cross-border trade.
The Senior Economic Researcher Mr. Shabana, added that by reading and analyzing the sub-indicators constituting the Ease of Doing Business Index in the emirate, the main strengths as well as the challenges facing investors in the UAE, could determined. He indicated that the strengths are evident in the issuing of building permits, registering property, trading across borders and paying taxes; whereas challenges lie in the Starting of business activity, employment, protection of investors' rights, access to credit and activating of contracts. Shabana said that the UAE has succeeded because of sagacious leadership, the abrupt effective economic actions taken in face the repercussions of the global economic crisis, whereby, the UAE went up 8 point higher in the Global Competitiveness Report 2009-2010 issued by the World Economic Forum in September 2009, to rank 23 among the 133 countries, compared to rank 31 in 2008/2009. The UAE came second to Qatar at the level of GCC countries. Senior Researcher Shabana said in his presentation that the UAE has achieved first place at the level of regional countries in the Middle East and North Africa, and came 16th globally among 125 countries, in the World Economic Forum Global Enabling Trade Report 2010, as it topped a number of advanced countries like the United States and the United Kingdom. Shabana added that the UAE excelled in many of the main areas of the index, and achieved an advanced rank, particularly with regard to business climate, border management, transport and communications. The report indicated that the main challenges faced by investors in trade activity lies in the easing of access to markets, locally and abroad, as a result of the high tariff rates, and the difficulty of customs procedures. In this regard, the Index revealed a number of strengths in the UAE. The first place in the number of mobile subscribers, and second place for government's use of advanced technology products; government encouragement of promoting Information and communication technologies (ICT), and the importance of ICT in the Government's vision and plans. Weaknesses cited in the report include, ranking 122 in exports of high-tech, ranking 91 on the E-government Service Index, ranking 35 in the quality of scientific research institutions, ranking 104 on the level of competition index, ranking 124 n the number of procedures required to activate contracts and the rank 61 for time required to activate the contracts.Shiref Shabana specified that the UAE has maintained its position as the first among Arab countries on the World Economic Forum (Davos) Index for Financial Development 2009, as it ranked 20 worldwide among 55 countries; and also ranked first globally in terms of the stability of the banking sector. The Economic Researcher pointed out that the report listed a number of aspects of strength, such as the advanced infrastructure, the confidence of individuals in political leaders, the efficiency of judiciary systems, the protection of intellectual property, freedom of movement of capital, the stability of the banking sector, attracting intellectuals, and skills to labor market, reduction of government procedures and reducing time and cost needed to register property. The report also cited a number of weaknesses the UAE's financial development, most importantly is the protection of the rights of investors, the time cost required to activate contracts, time and cost required for liquidation of business, the efficiency of corporate boards, the freedom of the domestic services sector and training. Shabana reviewed other important indicators which determining the position of the UAE on the map of the regional and international business climate' especially that UAE was ranked seventh worldwide among the most optimistic countries regarding economic recovery for the second quarter 2010, on the Nielsen Global Consumer Confidence Index. It was also ranked among the top 30 global destinations for foreign direct investment, according to UNCTAD's World Investment Prospects Survey 2009-2011, and it jumped up to the first place worldwide on the HSBC Trade Confidence Index for the first half of 2010 out of the 17 countries covered by the index. With regard to local indicators in Emirate of Abu Dhabi, Shiref Shabana, the Senior Economic Researcher at the Department of Economic development, said that the Directorate of Studies, started since April 2009 to develop calculate and release a set of development indicators, which aim at monitoring the movement of markets and perceiving the view of the main individuals and business community dealers in the markets. Hence, the Department of Economic Development launched 5 major development indicators, which are the Consumers Confidence in Economic Performance index (monthly), the Confidence in Business Climate Index (quarterly), the Financial Sector Performance Index, the index of demand trends in labor market and the National Family Observatory. Mr. Shabana added that the Confidence in Business Climate Index in the Emirate of Abu Dhabi -for the first quarter of 2010, revealed the continued positive outlook of investors and businessmen towards the current and future conditions, as a result of the achievements and developments in the business climate in the emirate during the preceding months. However, Shabana said that the obstacles facing investors include, the non availability of land for the establishing or expanding of activities, the difficulty of access to finance, the illegal competition, lack of support, and lack of skills needed in the labor market. As for the index of demand trends in labor market, according to Shabana, the value of index of total demand for labor scored 63.68 points during the current period (January-March 2010), above the level of neutrality and the score of 54.1 points recorded in 2009. This result clearly reflects that Abu Dhabi's economy has surpassed the repercussions of the global financial crisis and its effects; and the entering of the economy in the stage of strong economic growth, which required higher demand for labor in various economic activities.
The Financial Sector Performance Index in the Emirate of Abu Dhabi has witnessed a rise during 2009, achieving a significant improvement by recording 163 points in the fourth quarter of 2009, which reflected the success of the financial sector in overcoming the global financial crisis, alluding to the success of actions and measures taken by the Government in order to counter the global financial crisis and restore stability to the financial sector. Dr. Adeeb Al Afifi, Director of Foreign Trade and Export Support at Abu Dhabi's Department of Economic Development delivered a presentation entitled The Position of the Emirate of Abu Dhabi on the Investment and Export Promotion Map, in which he reviewed the strategic goals of the Department to support exports and, focusing on the provision of advisory services through research, studies, consulting services, export promotion and communication between the market exporters and importers, commercial missions and foreign exhibitions in addition to providing information through databases and publications.Dr. Al Afifi said that the Department of Economic Development is working to provide future support for the development of exports through the establishment of an exports and imports bank, and the establishment of an export development authority in addition to the activation of international relations of the Emirate of Abu Dhabi to develop trade and investment. Al Afifi pointed out that the DED has always been participating in many international events outside the country, through many of the major companies operating in the emirate. Dr. Al Afifi concluded his presentation by reviewing the Calendar of Events of the Sector of International Economic Relations of conferences, forums, exhibitions, workshops and field visits to advanced countries until December, which come under the Department's plan to promote and market the Emirate and its private sector, and to highlight the role of Abu Dhabi and its future projects, which will and expand the development exports during the coming years, according to the plans of the Government, and Abu Dhabi economic vision 2030.Mr. Ali Fahad Al Nuaimi, Director of Trade Relations at the Commercial Affairs Division of the Department, emphasized the role of the Department in promoting and facilitating the procedures of business licensing in the emirate, in order to create an ideal for investment climate in Abu Dhabi, and help building a sustainable and open economy, by simplifying procedures for all clients and businessmen, and paying full attention to customers' needs. Al Naimi Department's highlighted the Department of Economic Development strategy for the modernizing and facilitating business licensing procedures, through provision of world-class customer-focused licensing service for current and expected business in Abu Dhabi, to enable completing at least 95% of the requirements of new licenses in 5 working days, through the establishment of Abu Dhabi Business Center to work as an integrated center to eliminates obstacles and difficulties faced by clients;, save time and effort, and elevate the level of service.Ali Fahad Al Nuaimi, stated, that for the development and improvement of services in the Directorate of Licensing, the department of economic development, had opened a number of centers and branches to facilitate and simplify procedures for investors and save time and effort in key locations in the various regions, including in the Western Region. The pervious banking deposits certificates condition for LLC companies was cancelled. The comprehensive employee concept has been adopted and applied as well.Regarding procedures, Al Nuaimi also said that DED has worked on the application of electronic services so that the investor can do the transaction of commercial licensing through this service without coming to the headquarters of the department. DED has also contracted (Aramex) to deliver licenses to the investors all over the country.Al Nuaimi noted that despite the repercussions of the global financial crisis during 2008 and 2009, licenses issuing was on the rise during the period May 2008 - April 2009, compared to the same period in 2007-2008, registering an increasing of (11 870) transaction by 6.78%. Revenue as well increased during the same period by AED (37,950,315.40) rising by 17.22%. Business licenses issued in the Emirate of Abu Dhabi in the first quarter of 2010 amounted to 3253 new licenses, compared to 3009 new licenses during the same period last year, Al Nuaimi said.Khalifa Fund to support and Develop SMEs , presented a paper to the discussion panel entitled The business Environment in the Emirate of Abu Dhabi and its Role in Supporting Small and Medium Enterprises, by Dr. Nizar Shanior, Director of Business Development and Training. Dr. Shanior reviewed the significance of the small and medium enterprises in the economy of the Emirate of Abu Dhabi. He emphasized the business climate in the Emirate of Abu Dhabi and its role in stimulating the small and medium business sector. He also probed the constraints facing SMEs, and offered some recommendations. Dr. Shanior pointed out that the total SMEs projects in UAE amounted to 161 000 project, comprising 85% of the total establishments in the country, indicating that 77% of SMEs are sandwiched between Abu Dhabi and Dubai, and about 73% of them are engaged in wholesale and retail trade. Dr. Shanior explaining that SMEs also constitute 99% of the private sector establishments in Abu Dhabi, and commensurate with international standards. Dr. Shanior in his presentation stated that the contribution of SMEs to the GDP of the Emirate of Abu Dhabi reached 24% and amounted to 35% for the UAE. He considered that this contribution is very small in amount compared to World rates, and that there is need for substantial improvements in the productivity of SMEs in Abu Dhabi, to increase their contribution in GDP. In answer to the question: Is entrepreneurship a good substitute of professionalism, Dr Nizar Shanior reported that UAE had the highest score of 70% compared to the international economies, showing that for fear of failure among pioneers, UAE was among the lowest countries included, by 25%. The high confidence of entrepreneurs was due to the support provided by the UAE Government. In concluding his presentation, Dr Shanior stated that there are a number of constraints facing SMEs sector, notably, the absence of a legal linkage, the absence of a uniform definition of SMEs as well as the absence of a single unified organizing entity for this important sector in addition to the importance of establishing the single window service, and the need to consider reducing of costs of incorporation, and facilitation of access to finance. For its part, the Ministry of Economy delivered a briefing presentation on the most important draft laws on business climate and environment in UAE, in which Dr. Ahmed Mousa, the Legal Adviser in the ministry, reviewed the Strategic Plan of the Federal Government; strategic goals of the Ministry and the economic standing of the state in international reports.
Dr. Ahmed Mousa highlighted the stages of legislative procedures in UAE, from the preparation of proposed draft laws by the Ministry, or the competent authority, through the submitting of the proposal to the Council of Ministers for approval, and referral to the Legislative Ministerial Committee for reviewing and discussing with the Legal Department, up to the approval by HH, the President of the State.The Legal Adviser at the Ministry of Economy, Dr. Ahmed Mousa, reviewed the laws concerning business climate, that lie within the jurisdiction of the Ministry; and which are federal laws concerning foreign investment, competition, arbitration, combating deception and fraud in commercial transactions, and control of trafficking in valuable stones and precious metals, combating commercial concealment, amendments of some provisions of the Federal Law number (18) for the year 1981 Concerning Regulating Commercial Agencies, and consumer protection, and the Law Amending the Federal Law No. (17) For the year in 2002, as amended, Concerning the Organizing and Protection of Industrial Property of patents and industrial designs and practical knowledge and contractual licenses and the law regulating the profession of auditors. Abu Dhabi Chamber of Commerce and industry, paper focused on the challenges facing investors and the private sector in practicing activity in the emirate Mr. Mohamed Ahmed Al Nuaimi, Executive Director of the Members Services Sector, noted that challenges consist of two sides. The first concerns policies and laws, and comprises the major role of the concerned government bodies, in this context; the Chamber coordinates, and supports and mediates between the relevant authorities. The second part, relates to the administrative procedures and ease of doing business, which is the core subject of the discussion panel. Mohamed Al Nuaimi said. Mr. Mohamed Al Naimi reviewed the approach adopted by the Chamber in detecting the problems faced by investors, through field visits conducted by working teams to investors companies and business locations; and the formation of working groups to communicate with members of the Chamber. Mohamed Al Nuaimi explained that many studies showed that the most important challenges facing investors in Abu Dhabi, include the high cost of doing business, especially for SMEs, whereas rentals account for 36% of the total expenditure in the Emirate of Abu Dhabi, and accounts also for 20% of the value added in domestic trade sector in Abu Dhabi, while the percentage in many countries of the world is in the range 10% to 12%. Executive Director of the Members Services Sector, Mohamed Ahmed Al Nuaimi added that among the high cost and multiple governmental charges through different procedures, is among challenges, and that there is no uniform policy for the charges; and no coordination between the government entities to create the required balance in fees through principles and specific criteria. He added that the multiplicity of fees levy a burden on business, noting in this context to higher prices of fuel and the impact on the increased cost of doing business in more fuel- consuming establishments. He also mentioned the non-availability of incentives policy and for encouraging the industrial sector, with respect to the cost of electricity consumption as well as the high cost of bringing employment. Mohamed Al Naimi said that the most important challenges facing investors in Abu Dhabi and the UAE in general, is the issue of financing and the associated strict financing policies adopted by banks; and the difficulty of access to long-and medium-term finance for investments, in addition to the lack of financial institutions and funds to finance investment, as well as the absence of investment banks specializing in investment, except for the Emirates Industrial Bank.