Dubai has emerged as a leading regional commercial hub with state-of-the art infrastructure and a world class business environment. It has now become the logical place to do business in the Middle East, providing investors with a unique and comprehensive value added platform.
Since the formation of the UAE in 1971, Dubai has transformed itself from an oil and gas dependent state to a broadly diversified economy based on international trade, banking, tourism, real estate and manufacturing.
Oil has played a progressively diminishing role in the Emirate’s economic profile. In 1985, the oil sector contributed to just under half of Dubai’s GDP. By 1993 that figure had fallen to 24 percent, and by 2006, to 5 percent.
Dubai is at the centre of a region that is emerging as a major force in the global economy. Stretching from North Africa to South Asia and the Caspian to South Africa, this region comprises of 42 countries, some of which are the world’s fastest growing emerging markets.
The Gulf Cooperation Council (GCC), one of the most prosperous and fast-growing areas within this region, has had an average annual real GDP growth of approximately 7.8% in 2008, one of the highest in the world. The GCC is home to some of the largest Sovereign Wealth Funds, including the UAE’s Abu Dhabi Investment Council, Saudi Arabia’s SAMA Foreign Holdings and Kuwait Investment Authority.
Dubai is part of the UAE, which has established a reputation for being a low-crime and politically stable country. The ability of the UAE to withstand the impact of the global financial crisis demonstrates the UAE‘s financial and monetary stability.
Several steps taken by the government to promote recovery from the crisis have resulted in deposit growth and capital inflows, increased activity in the markets and a rise in indexes. Dubai’s well-developed banking system ensures extensive credit facilities and ample liquidity. The state has shown consistent commitment to business friendly and liberal economic policies.
Dubai’s open economic policy, minimal government control and private sector regulation have played an instrumental role in attracting vast foreign direct investment (FDI).
Businesses in Dubai do not pay direct taxes on corporate profits or personal income (except for oil companies that pay a flat rate of 55% and branches of foreign banks that pay a flat rate of 20% on net profit generated within Dubai). Customs duties are low at 4% with many exemptions. Businesses can avail of 100% repatriation of capital and profits. There are no foreign exchange controls, trade quotas or barriers. A stable exchange rate exists between the US Dollar and the UAE Dirham (US$1.00=AED 3.678). Liberal visa policies permit easy import of expatriate labour of various skill levels from almost anywhere in the world.
Dubai’s policy of investing heavily in its transport, telecommunications, energy and industrial infrastructure has significantly enhanced its attractiveness to international business.
The Emirate has seven industrial areas, one business park and three highly successful specialised free zones, two world class seaports, a major international airport and cargo village, a modern highway network, state-of-the-art telecommunications, a recently launched Rapid Transit System (Dubai Metro) and reliable power and utilities, all of which deliver efficiency, flexibility, reliability and cost efficiency.
Apart from a favourable tax environment, companies in Dubai can obtain significant cost advantages due to the absence of foreign exchange controls and trade barriers or quotas.
Similarly costs in other areas like import duties, labour, energy and financing are competitive by international standards. Historically high real estate costs have undergone a correction and are currently competitive.
Dubai boasts an extensive foreign trade network, giving the investors an extensive choice of potential global marketing outlets for a diverse portfolio of goods and services. As a city within the UAE, Dubai is also part of the world’s third-largest export and re-export centre, after Hong Kong and Singapore.
Expatriates comprise over 80 percent of Dubai’s population, with over 150 nationalities working and living harmoniously in a safe, almost entirely crime-free environment.
Dubai attracts a highly skilled workforce, which is absorbed by the growing number of international companies, professional service firms and financial institutions. Expatriates enjoy tax-free salaries, schools accredited to international standards, a high standard of health care and excellent recreational facilities - including eight championship golf courses.
The asset boom and the vast increase in private and institutional wealth in the region have created a huge demand for specialist financial services.
Dubai is the perfect base to target opportunities in a market that is hungry for new financial products tailored to regional investor preferences and risk requirements. International and regional players who establish themselves in Dubai now are perfectly placed to take advantage of the regional market’s vast long-term potential for financial services market growth.