Saudi Consultancy Services (SCS)خدمات الاستشارات السعودية
مفتاح أعمالك الرئيسي لدول مجلس التعاون الخليجي
YOUR MASTER KEY TO GULF COOPERATION COUNTRIES (GCC) & MIDDLE EAST BUSINESSES   


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Your Subtitle text
Business in UAE (Dubai)

 
About United Arab Emirates

The United Arab Emirates (UAE) is a federation of seven emirates that was formed in December 2, 1971.

Country Name

Conventional Long Form: United Arab Emirates
Local Long Form (Arabic): Dawlat Al Imarat Al Arabiyya Al Muttahidah
Local Short Form (Arabic): Al Imarat
Abbreviation: UAE

Emirates

Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Qaiwain, Ras al-Khaimah and Fujairah

Capital

Abu Dhabi

National Day

Independence Day (from UK), 2 December (1971)

President

HH Sheikh Khalifa bin Zayed Al Nahyan (3 November 2004)

Vice-President & Prime Minister

HH Sheikh Mohammed bin Rashid Al Maktoum (5 January 2006)

Political System

A federation with specific areas of authority constitutionally assigned to the UAE Federal Government and other powers reserved for member emirates

Constitution

Adopted provisionally on 2 December 1971, made permanent in 1996

Area

83,600 square kilometers

Time

UAE Standard Time is 4 hours ahead of Greenwich Mean Time (GMT+4)

Daylight Saving Time

UAE Time does not operate Daylight-Saving Time

International Dialing Code

+971

Currency

Emirati Dirham (Dh or AED), divided into 100 Fills

Exchange Rate

US$1 = AED 3.6725
The UAE Dirham has been officially pegged to the US dollar since February 2002

Language

The official language is Arabic. English is widely understood and ranks alongside Arabic as the language of commerce

Religion

Islam. Practice of all religious beliefs is allowed

Population

4.106 million (December, 2005)

GDP

AED 485.5 billion (2005, Current Prices)

Real GDP Growth

8.2% (2005)

Non-Oil Sector Contribution to Nominal GDP

64% (2005)

Foreign Direct Investment

US$10 billion (2005)

Industries

Oil & Gas, Aluminum, Cement, Fertilizers, Commercial Ship Repair, Petrochemicals,
Construction Materials, Pharmaceuticals, Tourism

Oil Production

2.8 million barrels per day

Oil Proven Reserves

98.1 billion barrels

Natural Gas Production

65 billion cubic meters

Natural Gas Proven Reserves

6 trillion cubic meters

Fiscal Year

1 January to 31 December

Weekend

Friday and Saturday for government institutions. Many private companies operate a six-day week (with Friday as an off day)

Exports

AED 424 billion (2005)

Free-Zone Exports

AED 63.9 billion (2005)

Re-Exports

AED 139.5 billion (2005)

Imports

AED 261.2 billion (2005)

Cultivated Areas

260,000 hectares, 3.1% of total territory

Number of Date Palms

Over 40 million

Agriculture & Fisheries Products

Dates, Green Fodder, Vegetables and Fruit; Livestock, Poultry, Eggs, Dairy Products; Fish

Estimated Fisheries Catch

97,574 tons

Flag

Three equal horizontal bands of green (top), white, and black with a wider vertical red band on the hoist side

Incorporating a Business

Incorporating a Limited Liability Company

Under the Commercial Companies Law, foreign investors are permitted to hold up to 49 per cent equity ownership in UAE companies, 51 per cent of the equity must be held at all times by one or more UAE nationals.

Scs can help to establish your LTD company in UAE

Other commercial structures regulated by UAE company law are General Partnerships, Simple Limited Partnerships, Joint Participation, Public Joint Stock Company, Private Joint Stock Company and Partnerships Limited with Shares, most of which, except for the Private and Public Joint Stock Companies, are not readily used.

Establishing a Branch or Representative Office

A branch office, legally regarded as part of its parent company, is a full-fledged business, permitted to perform contracts or conduct other activities as specified in its license. A branch office may only be engaged in activities similar to those of its parent company and it is not permitted to carry on the business of importing the products of its parent company, a function reserved for local trade agents. A UAE national must be appointed as a 'service agent' for the branch or representative office.

Limited Liability Companies - Branch and Representative Offices

Foreign entities wishing to establish a more formal commercial presence in the UAE usually do so by:

·      Incorporating a Limited Liability Company (LLC)

·      Establishing a Branch office or Representative office

·      Establishing a wholly owned entity in one of the UAE Free Trade Zones

By establishing a presence under one of these methods, a foreign entity is permitted to engage in all activities as licensed in the UAE.

Manage my Finance

Introduction
Developments in the financial services sector are designed to foster a properly regulated business environment in which economic development, especially diversification, can continue unabated.

Stock Markets
Efforts to establish an official stock exchange to regulate the informal market gathered momentum as the draft federal stock exchange law was approved by the federal Cabinet at the end of June 1999. The UAE has been working on setting up a formal bourse for some years. The draft law envisages the establishment of a Securities and Commodities Commission to be based in Abu Dhabi which will have the authority to license trading floors. The exchange is expected to have electronic trading based on two trading floors in Abu Dhabi and Dubai.

Stock Market Volatility
The UAE informal stock market witnessed a 26.74 percent surge in market capitalization in 1998, suggesting that investors had fared reasonably well despite the mid-year volatility and the prolonged downturn in the fourth quarter. Market capitalization on 1 January 1999 was Dh 116.42 billion, as compared with Dh 91.86 billion on 1 January 1998. It had, however, reached a peak of Dh 182 billion at the end of August 1998, at which point a correction occurred, sparking off the subsequent slide. In 1997 investors had witnessed a return of over 30 percent, while 1996 had seen a 5 percent dividend yield and a 20 percent surge in market capitalization. By late May 1999, the UNB Market Index had fallen to 111.4 points, 14.5 percent lower than it was at the beginning of 1999, despite the fact that corporate results for 1998 were generally good. Market capitalization stood at Dh 105.44 billion. However, stock values began to re c over towards the end of the summer and in the first week of September as many as 28 of the 43 stocks monitored recorded a rise. The UNB Market Index had also risen to 114.09 points, reflecting the improved market sentiment.

Stock Brokerage
 There was a significant increase in the number of applicants seeking licenses to operate brokerage houses following the approval of the stock exchange law by the Cabinet. More than 34 applications were forwarded to the office concerned within a day of Cabinet approval for the local stock exchange. The Central Bank issued around 20 new brokerage licenses at the beginning of 1999, which increased the total number of brokerages to 57. The requirements stipulated by the Central Bank for granting brokerage licenses are stringent and it is up to the Central Bank to decide whether the market can accommodate more brokers or not. It was announced in July 1999 that the UAE Securities and Commodities Commission (SCC) is likely to authorize some UAE banks to undertake trading in stocks. Many of these banks already have operational stock-trading departments. Investors in emirates other than Abu Dhabi and Dubai, which will have trading floors, could conduct deals through banks nominated by the SCC.

Saadiyat Financial Center
 

The official UAE stock exchange had yet to be formally established at the time of writing this review (October 1999), but the Saadiyat International Stock Exchange (SISE), a completely separate bourse, was due to open in Abu Dhabi towards the end of 1999, initially functioning from a temporary location. SISE is expected to become a fully electronic, order driven market with 'straight - through processing' capabilities should market participants require. SISE will be fully supervised by a regulatory commission.
Feasibility studies predict that the Saadiyat market, which will serve a consumer market of about 1.5 billion people in the Middle East, Central Asia and East and North Africa, could emerge as the world's fifth largest capital market after those of New York, London, Tokyo and Singapore. The Saadiyat market will open on Saturdays and Sundays and will also cover the time zone gap of about three to five hours between markets in London, Singapore and Hong Kong, thus offering 24-hour global trading. The issue date has not been set as yet for the IPO which will be open to both UAE national and foreign investors. The Japanese bank Nomura was appointed to manage the international listing while the First Gulf Bank (FGB) and the National Bank of Abu Dhabi (NBAD) are jointly handling the local issue. The Abu Dhabi Government will be one of the major shareholders and it has already committed US $400 million to the capital raising programme. With projected indirect re venues of US $170 billion over 25 years, the project is expected to play an important role in the UAE's strategy for economic diversification.

Bank and Insurance
 

The UAE's banking and monetary system has made significant progress in recent years due to the Central Bank's increasingly strict control of financial institutions. In particular, 1998 was a year of impressive growth in the banking sector, attributable to some extent to adherence to the guidelines laid down by the Central Bank. In the last ten years, the Central Bank has played an important role in supervising the banking industry and has contributed in a measurable way to improving the quality of services and performance of a number of banks.

The number of locally incorporated banks increased to 20 in 1998 from 19 the previous year following the licensing of the Abu Dhabi Islamic Bank. Bank branches and cash offices rose from 262 (223 branches and 39 cash offices) in 1997 to 284 (243 branches and 41cash offices) in 1998.

In 1998 there were 27 foreign banks in the UAE, the same as the previous year, with branches and cash offices of these banks also remaining unchanged at 110 (109 branches and one cash office). Banca Commercial Italian continued to be the only restricted-license bank and the number of investment banks was unchanged at two.

The number of foreign bank representative offices in the UAE has risen steadily over the last couple of years, a trend ascribed to the flotation of a number of new companies and to the UAE's membership of the WTO. The Central Bank issued eight licenses for new representative offices in 1998, bringing the total of licensed representative offices of foreign banks and other financial institutions to 38, compared with 30 in 1997. The new representative offices licensed in 1998 we re Bank Gesellschaft Berlin AG, Qatar Islamic Bank, MID-MED Bank Plc, Abbey National Plc, Unit Trust of India, Prudential Bache International Ltd, Natexis Banque-BFCE and Union Bancaire Privee (CBI-TDB).

New administrative and accounting systems National banks are now required to adopt a new administrative structure which stipulates specific functions for top executives and in which top-level appointments will be subject to Central Bank approval. All banks and financial and investment companies in the UAE have also been directed by the UAE Central Bank to prepare their financial results in accordance with the International Accounting Standards (IAS) with effect from 1 January 1999. Considered to be a major initiative with far-reaching implications for the financial markets in the country, this move will bring about a quantum leap in the area of public disclosures by banks and financial and investment companies. IAS implementation in the banking sector is believed to be essential to ensure fiscal transparency and consistency and to enhance the sector's potential for integration with global financial institutions. The Central Bank will also implement IAS by the end of 1999. Bank regulations for Saadiyat Free Zone New regulations governing banks and financial institutions in the Saadiyat Free Zone have been adopted by Saadiyat Free Trade Zone Authority. Although functioning as offshore units, all banks will require a license to operate in the free zone. The general regulations and requirements for financial institutions reflect standards operating in international markets such as North America and Europe, while the code of conduct sets out the general controls which the Authority requires participants in its market to adopt in the course of their transactions.

Abu Dhabi Islamic Bank
 

The Abu Dhabi Islamic Bank (ADIB), the world's biggest Islamic banking institution, was officially opened in the capital by Sheikh Abdulla bin Zayed Al Nahyan, Minister for Information and Culture, in April 1999. The bank is fully committed to becoming a major contributor to the social and economic development of the UAE. A team of professional, experienced bankers with a thorough knowledge and understanding of Islamic banking will manage the bank in accordance with international banking standards. In contributing to the local economy through Islamic financing, the bank provides opportunities for both commercial investment and service projects, there by improving the returns on investment for its customers.

 

Diversification of the economy away from dependence on oil has led to rapid industrial development. First class facilities, low labor and energy costs, favorable tax laws and political stability have also contributed to the growth of manufacturing.. Major products include cement, building materials, aluminum, fertilisers, foodstuffs, garments, furniture, plastics, fiberglass and processed metals. In December 1999, there were 1,695 factories employing more than 145,000 people, with investment of over US $3.8 billion. The largest number of factories, mainly for light industry, is in Sharjah, followed by Dubai, Abu Dhabi and Ras Al Khaimah. Smaller units include numerous garment factories in Ajman. Cement production is one of the oldest industries, with Ras Al Khaimah being a major producer. Fertilizers are produced by Ruwais Fertilizer Industries, FERTIL, in Abu Dhabi and in the Jebel Ali Free Zone. The Ras al-Khaimah-based Gulf Pharmaceutical Company (Julphar) exports throughout the region. Projects established under the innovative UAE Offsets Programme, linked to purchases of military equipment, include a shipyard, agri-business projects and manufacture of air-conditioning units.