Peninsula Business Solutions
Dubai: The Business Hub of the Middle East
In less than 40 years, Dubai has transformed itself from a local trading community into one of the most inspirational, exciting and successful cities in the world. Today it is an immensely attractive destination for tourists and businesses alike.
With an indigenous population of just 170,000, the number of Dubai expatriate residents now stands at 2 million, thanks to its lifestyle appeal and investment incentives.
Dubai’s strategic location gives easy access to 2.2 billion consumers, from a unique centralized time zone that combines East and West business hours. Dubai is the perfect gateway between East and West and the preferred hub for the region’s imports and exports market – one of the most lucrative in the world.
So let’s inspect the factors that makes Dubai an attractive business destination in the region.
1. Growing and Diverse Economy
In terms of its economic performance Dubai (and the UAE in general) has been the most successful economy within the GCC region for diversifying away from oil. After the set back during the recession in 2009, the economy of Dubai has come back strongly to post growth during the last two years. Trade, logistics, transportation and tourism accounted for almost 60 percent of Dubai’s GDP in 2011, which grew in total by 3.4 percent and by 4.6 percent by the end of 2012.
Highlights of economic performance of Dubai in 2011;
- Increase in trade revenue of 5.8 percent
- Increase in exports revenue of 44.3 percent
- Increase in manufacturing revenue of 11.7 percent
- Increase in transport and communications sector revenue of 2.7 percent
- Increase in hotels and restaurants revenue of 13.9 percent
Official reports show that the average annual inflation stood at a minimal 0.5 percent in 2011 compared to 2010 thanks mainly to a 3.3 percent drop in the prices of housing, water, electricity, gas and other fuels. And in the first quarter of 2012, the price of goods and services decreased by 1.4 percent, compared to the first three months of 2011. This was largely due to even more savings on housing, water, electricity, gas, and other fuels by around 6.2 percent.
2. Legal Framework
Investment laws, regulations and incentives are continuously improving to encourage further foreign investment. This includes the introduction of foreign ownership of land and stocks – Dubai became the first emirate within the UAE to open its property market to foreign ownership, followed by Abu Dhabi.
3. Physical Infrastructure
Dubai dominates the cargo and re-export markets thanks to the size and sophistication of its two ports, Port Rashid and Jebel Ali Port. The massive Jebel Ali facility is one of the most modern and busiest ports in the world and has 63 berths. Jebel Ali port facility includes an economic free zone (Jafza or Jebel Ali Free Zone Authority) which is part of the Economic Zones World. Despite being the second port in Dubai, Port Rashid is still one of the busiest in the Gulf region with 35 berths.
Dubai is also home to two major airline carriers, Emirates Airlines and flydubai. Emirates is the Arab world’s largest airline with more than 120 destinations and 160 aircraft in 2012, and plans to increase its fleet to up to 280 by 2020.
Fly Dubai is the world’s fastest growing start-up airline. In its first three years of operation, fly Dubai notched up 50 destinations and plans to double its fleet by 2016, focusing on route expansion in Russia, Central and Eastern Europe and the GCC.
4. Availability of Manpower
Due to its liberal labor policies, it is easy and cost-effective to recruit employees from almost any part of the world. UAE governments from across the seven emirates continue to invest heavily in training the national workforce to play a greater role as competitive members of the UAE economy – out of the 1.3 million people now employed in Dubai, just 53,000 are Emirati.
5. Investment Support and Promotion by the Government
Dubai’s Department of Economic Development (DED), which is tasked with setting and driving Dubai’s economic agenda, supports the emirate’s transformation into a diversified, innovative, service and knowledge-based economy to improve the business environment and increase productivity. The DED and its four agencies develop economic plans and policies, identify and support strategic sectors, and provide essential administration services to domestic and international investors and businesses.
6. Free Zones
Dubai is home to over 20 Free Zones catering to various industrial and business clusters where foreign investors can enjoy 100 percent foreign ownership of their companies.
The absence of income tax for both mainland registered companies and those registered in the free zones remains one of the biggest incentives for foreign companies establishing in Dubai.
7. Open Trading Hub
Dubai has free and open trade with more than three-quarters of goods entering the emirate duty free. The average tariff rate is just 4 per cent, while free trade zones offer added incentives including exemptions from taxes and duties. Dubai’s open-border foreign labor policy has also proved a major factor in the liberal trade regime, allowing private sector businesses to recruit expatriate workers at internationally competitive wages.
8. Quality Lifestyle and Culture of Excellence
Ranked as the top Middle Eastern city in Mercer’s Quality of Life Index, Dubai has become one of the world’s most preferred expatriate locations. Although it is recognized as the fastest growing city in the world, Dubai is also one of the safest. The emirate is home to the tallest building on the planet, the largest man-made marina, the most luxurious hotels, and with over 200 nationalities contributing to the city’s unique culture and community, it is one of the most vibrant global destinations.
Dubai’s many attractions and experiences combine a fascinating heritage with world-class shopping and entertainment facilities. Year-round sunshine also means plenty of opportunity to enjoy outdoor life.
The tourism infrastructure includes the widest variety of shopping experiences, including exclusive boutiques, value chain stores and the traditional gold and spice souks. Many of the world’s leading retailers choose Dubai as their first ventures in the Middle East. From Bloomingdales, Gucci and Prada to Marks and Spencer, Victoria’s Secret and Monsoon, international retailers have invested heavily in Dubai’s highly fashion-conscious residents.
9. Visionary Leadership
The extraordinary perception and vision of Dubai’s leaders have created one of the world’s most successful and vibrant cities. A belief in the potential and possibilities of the future has lifted this previously obscure trading town into a major player on a global stage. This vision continues, and with it, Dubai’s ambition expands.
10. General Advantages offered by UAE
Add the general business advantages offered by UAE to the above mix, and you have an excellent business destination worth considering. These advantages include;
- 0% Taxes
- Very Low Import Duty
- Double Taxation Agreements of UAE
- Free Trade Agreements of UAE
- Strong and Competitive Economy
- Strategic Location Advantages of UAE
- World-class Infrastructure of UAE