Rise in new trade licences shows dynamism in Dubai economy

by Carol on August 3, 2012

in Business

High number of new trade licences reflect regulatory and tax environments which help new businesses

The Dubai Department of Economic Department (DED) issued 1,298 new trade licences during June 2012, indicating a growing interest in commercial and professional activities among businessmen and investors in Dubai.

Commercial licences accounted for 72 per cent of the total licenses issued, followed by professional (25 per cent), industrial (one per cent) and tourism (two per cent).

The month of June also saw 4,998 being amended, while 7,647 licences were renewed. The total number of business registration and licensing (BRL) transactions reached 48,053, compared to 43,631 in June 2011, an increase of 10 per cent.

The DED figures reflect the dynamism in both the Dubai economy and the wider UAE economy which is dominated by the emirate.

Competitive economy

A recent study from the Dubai Chamber of Commerce and Industry ranked the UAE as the third-most competitive economy in the region after Qatar and Saudi Arabia.

One of the reasons for the region’s growing competitiveness was that general legal standards have improved immensely over the last few years, and the UAE’s regulatory quality is also improving fast.

In addition, the Chamber of Commerce study indicated that the UAE government is highly efficient and the overall freedom to conduct business is well-protected under the existing regulatory environment. This is largely because the UAE tax regime, which is a major attraction for foreign investors, strengthens Foreign Direct Investment (FDI) inflows.

Attractive investment destination

The study also points out that the UAE has long been an attractive investment destination. But it says there are still a number of challenges that need to be addressed. According to the World Bank’s Doing Business 2012 report, there are aspects of the business regulatory environment that needs immediate attention, including resolving insolvency (ranked 155), contract enforcement (134), protecting investors (122) and getting credit (78). The inadequacies of the bankruptcy legislation remain a major challenge for the UAE.

The UAE still ranks highly in the World Economic Forum’s Global Competitiveness Report 2011/12. It comes in at 27th out of 142 countries, below Switzerland (in the 1st place), United States (5th), Qatar (14th) and Saudi Arabia (17th), but higher than other regional peers, such as Oman (32nd), Kuwait (34th), Bahrain (37th) and Egypt (94th).

The UAE, however, recorded the first place globally in the field of efficiency of governmental fiscal policy issued by the International Institute of Management Development (IMD) in Switzerland.

Interest in hotel developments

Dubai’s growth in all areas of the economy is great news for investors in the emirate. It is further evidence that Dubai has bounced back strongly from the financial crisis of 2008, and that its property market will continue to be stable and dynamic.

This should spark interest in the many new hotel developments, such as The First Group’s two luxury hotel apartment projects in Tecom, Metro Central and Grand Central, which are situated in the bustling business district of Tecom in the heart of “New Dubai”. The luxury end of the market did particularly well in 2011, soaring 17.6 per cent.

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