Increasingly, international companies are recognizing that Dubai’s expanded business horizons cover many of the most interesting emerging markets for the future. The region has a combined population of 1.4 billion, and a large proportion of this total will enter the international consumer market for the first time in the 21st century. While oil has been crucial to Dubai’s development since the late 1960s, the non-oil sector currently contributes some 90% of total gross domestic product and is continuing to expand in importance. Manufacturing, tourism and services are all growing strongly, helping to create a well balanced and diversified economy. However, trade remains the lifeblood of Dubai’s business life, as it has for generations.
This long trading tradition, which earned Dubai the reputation within the Middle East as the city of merchants, remains an important consideration for foreign companies looking at opportunities in the region today. It is reflected not just in a regulatory environment, which is open and liberal, but also in the local business community’s thorough familiarity with international commercial practices and in the city’s cosmopolitan lifestyle.As a regional business base, Dubai is strategically located midway between the Far East and Europe on the east-west trading routes and between the former Soviet Union and Africa on the north-south axis. Its airport, which ranks as one of the worlds busiest in terms of transit passengers, is linked to more than 130 destinations via some 86 airlines and Dubai Ports Authority – the operator of Port Rashid and Jebel Ali Port – is unrivaled throughout the region in terms of both facilities and efficiency.
The second largest of the seven emirates which constitute the United Arab Emirates, Dubai is politically stable and is open to business with all countries of the world, excluding Israel.Dubai has no taxes on profits or incomes; it offers complete freedom of capital movement; it boasts a very sophisticated financial services sector; its communications facilities are excellent; and the cost structure for doing business is highly competitive. Apart from its attractions as a regional office location, Dubai also offers incoming companies excellent facilities for establishing manufacturing and distribution operations.
In the Jebel Ali Free Zone and the new Airport Free Zone, overseas companies are permitted to set up wholly-owned ventures and can enjoy an array of tax free incentives, including exemption from import duties, in addition to the favorable investment conditions which prevail elsewhere in Dubai. With these advantages and incentives in place, Dubai has not surprisingly attracted a massive inflow of investment in recent years.
The UAE is a constitutional federation of seven emirates; Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Qaiwain, RasAl Khaimah and Fujairah. The federation was formally established in December of 1971. The term of elected office for the Vice President is five years, with the current Vice President of the UAE being Sheikh Mohammed bin Rashid Al Maktoum. The UAEs political system, which is a unique combination of the traditional and the modern, has underpinned this political success, enabling the country to develop a modern administrative structure, whilst ensuring that traditions are maintained, adapted and preserved
Investment and business opportunities
There are many options open to international companies seeking to establish a business in the UAE. Apart from forming a trading relationship through commercial agencies, for many companies there are distinct advantages in having an on the spot presence. This makes it easier to research market prospects, make contacts, liaise with customers and see through the details of any transactions.
Setting up in Dubai – A Case Study
Having a presence is also important in the context of the commercial culture of the Middle East. Business owners and people in the region prefer to deal with someone they know and trust by building personal relationship. Another regional factor that adds to the importance of having a physical presence is that the buying patterns of some countries served by the UAE are unpredictable, creating a need for first class market intelligence and information.
International companies wanting to trade directly with the UAE by supplying goods and services from abroad should appoint a commercial agent who is already established in the market. The agent must be a UAE National, or a company solely owned by a UAE National. The foreign principal and the agent in the UAE are required to enter into a commercial agency agreement specifying the products and the territories to be covered by the contract. They should also comply with the relevant provisions of the Federal Commercial Agency Law and the procedures and conditions prescribed therein. It should be noted that a commercial agent can not carry out activities in the UAE unless the name is entered in the Commercial Agency Register maintained at the Ministry of Economy and Commerce.