The United Arab Emirates ranked 33rd globally in the 1st regionally according to the 2021 report of Global Innovation Index. As per the UAE Vision 2021, Innovation is considered an integral part of 'United in Knowledge, which primarily focuses on innovative Emiratis building a competitive economy. Also, several steps and initiatives have been embraced to advance and support development in the UAE, all aligned with Vision 2021, and are expected to make the UAE among the best nations globally by the golden jubilee of the union. Here in our study, we are going to discuss in detail the various Ideas that will help the UAE transform it's business and economy simultaneously.
What are the Ideas that will help the nation transform itself?
Let’s see the ideas that will transform the Nation-
Cryptocurrency expected by 2022
The advent of digitization has been playing the most important role in the establishment of Cryptocurrency businesses across the nation. Free zones in Dubai and Abu Dhabi have implemented a high-level structure to empower business visionaries in the crypto space to set up trades while spreading out rules to protect its consumers. Interest in cryptocurrency as a form of money and blockchain is gradually increasing in the region, particularly in the UAE, as consumers and investors are inclining themselves towards digital assets with digital payments also gaining a lot of traction lately. An increasing number of institutional investors and wealth managers in the UAE have also planned to build their exposure in cryptocurrencies by the year 2023. However, the licensing of cryptocurrency is yet to be done in the country although a number of cryptocurrency exchanges have been given permission to operate within the financial free zones as still the dirham is considered as a legal tender in the UAE now. However, in the coming years, the strong potential is anticipated in the crypto market in the UAE.
Number of SMEs to see lucrative growth
As per the statistics provided by the Ministry of Economy, SMEs represent approximately 94% of the total number of companies operating in the country and are supporting around 86% of jobs of the private sector workforce. Similarly, in Dubai, SMEs account for 95% of the total number of companies and are responsible for almost 42% workforce. Moreover, these contribute to around 40% of Dubai's GDP. The UAE’s government has several plans to boost the businesses in the nation, to get that going, by setting up a $272 million private equity fund to help SMEs in 2022, expecting to be home to 20 growing companies by 2031. Saudi Arabia is likewise looking at more fintech companies following declarations of new projects towards broadening its economy with digital solutions. Moreover, the government has played a significant role in bolstering the number of SMEs, which can be backed up by the fact that several initiatives and programs have been established which are aimed to enhance the contribution and performance of the SME sector. Some of them include:
- The Khalifa Fund
- Mohammed Bin Rashid Establishment for SME Development
Moreover, the Vision 2021 theme of Under the Vision 2021 theme of Competitive Knowledge-Economy, the UAE plans to boost the contribution of SMEs to non-oil GDP from 53 percent in 2018 to 60 percent by the end of 2021. The UAE believes that entrepreneurship is critical to unlocking nationals' potential and enabling them to be a driving force in the UAE's economic development through small and medium-sized private businesses. It aims to instill an entrepreneurial culture in schools and universities so that future generations would be able to lead, create, be responsible, and have ambition. The UAE will be among the best in the world in terms of ease of doing business, innovation, entrepreneurship, and R&D indices as a result of this.
Read More: Things to Know About GCC Retail Sector
Here are some steps by the government to boost the SMEs:
- Federal Law No. 2 of 2014 on Small and Medium Enterprises was passed to protect, promote, and regulate SMEs.
- The National SME Program was established to develop general frameworks and guidelines that will provide expertise, training, technical, and administrative support in various fields to promote and develop SMEs.
- Establishment of the UAE SME Council whose role is to develop strategic plans and policies for SMEs, as well as to establish the necessary rules and regulations to improve coordination between the National Programme for Small and Medium-Sized Enterprises and participating bodies, and to promote long-term economic development.
- Launched Operation 300bn, the UAE's industrial strategy – under which Emirates Development Bank will contribute to financing 13,500 SMEs launched Ministry of Possibilities – its Department of Government Procurement aims to make government procurement faster and more accessible, especially for SMEs.
A Significant Growth in NFT Owners
The United Arab Emirates has taken a positive stance on cryptocurrency. To honor National Day, the country's postal service is now releasing NFTs. To honor the federation's 50th National Day, the United Arab Emirates' postal service is releasing nonfungible token (NFT) stamps, adding to indications that digital collectibles are gaining public appeal around the world. Moreover, as per surveys, the number of NFT owners in the UAE is considerably higher than the global average. Also, the Emirates Post Group, revealed in November 2021 that it is the first postal body in the Middle East and North Africa to issue digital-collectible stamps. The new stamps are blockchain-based digital twins that will be marketed as digital collectibles linked to their physical counterparts and were unveiled on December 2nd, National Holiday. A total of four stamps were printed, each with a unique design based on a national subject.
Moreover, the United Arab Emirates has taken progressive steps on blockchain technology and digital assets, with local regulators pushing for a plethora of crypto-friendly policies. Local officials in Dubai's economic free zone adopted a new legislative framework in September that supported cryptocurrency trading and related activities, potentially paving the way for wider acceptance and innovation in the emirate.
Investment Movements
UAE is ranked among the top 30 countries of the world that have attracted a plethora of investments in the coming years. The UAE was placed 27th globally in 2018 (up three places from 2017) in terms of its ability to attract foreign direct investment, according to the UAE's Economic Report 2019 (FDI). In 2018, FDI inflows totaled over USD 10.385 billion, up from USD 10.354 billion in 2017. In 2018, the UAE was rated first in the Arab world, accounting for 36% of total FDI inflow to Arab countries. With 35.5 percent of total FDI inflows to the region and around 22% of total yearly FDI inflows to the Middle East and North Africa region, it was placed second in West Asia.
FDI inflows to the UAE are concentrated in the following industries:
- Real estate activities
- Financial services and insurance
- Manufacturing
- Mining and quarry
The FDI Law
The Federal Law by Decree No. 19 of 2018 Regarding Foreign Direct Investment regulates foreign direct investment (FDI) in the UAE the law is intended to improve the investment environment, diversify and increase the manufacturing base, and attract foreign direct investment in sophisticated technology, expertise, and training. It permits foreign investors to own up to 100% of a company. Prior to the passage of this law, foreign investors could only own 49 percent of a company's stock, with its partners, who were UAE nationals, owning the remaining 51 percent. Other benefits and incentives include investment protection guarantees, financial transfer facilities, the ability to modify the partnership, merger, acquisition, and transfer of ownership in accordance with the investor's interests, and the ability to modify the partnership, merger, acquisition, and transfer of ownership in accordance with the investor's interest.
Big Tech
During the second half of the twentieth century, the population of the region grew faster than that of any other region globally. Many issues have arisen as a result, including how to provide appropriate housing, healthcare, education, literacy, jobs, infrastructure, and clean water. These obstacles, on the other hand, offered significant growth opportunities. Dubai has successfully transformed itself into a global city as well as a regional commercial and tourism powerhouse, primarily in the last two decades.
Dubai's technological adventure began in 1999 with the publication of its first ICT plan, which was followed by the establishment of Dubai Internet City, Dubai e-government, Dubai Smart Government, and the Smart Dubai initiative in 2014. Dubai, a city of 2.5 million people and one of the seven Emirates in the United Arab Emirates, now boasts one of the highest rates of ICT adoption in the region, both by the public and the government.
Also, in July 2021, the United Arab Emirates (UAE) launched the National Program for Coders, which aims to encourage entrepreneurs, project owners, and startups who specialize in programming, as well as the digital transformation process in a number of vital areas. The program, which was launched in collaboration with Google, Microsoft, Amazon, Cisco, IBM, HPE, LinkedIn, Nvidia, and Facebook, aims to train and attract 100,000 coders over the next five years, as well as increase startup investment from AED1.5 billion (US$410 million) to AED4 billion (US$1.09 billion). The program will support national initiatives and future strategies to capacitate national talents, attract digital skills from around the world, and provide the necessary infrastructure to establish and expand the number of innovation-based companies under the supervision of the UAE Artificial Intelligence Office.
Smart Dubai 2021
The government aims to take smart city transformation to the next level, where digital transformation has a major and positive impact on the city. Thus, offering a big opportunity for tech giants to enhance their investments as well.
Read More: Advantages of Hiring Business Setup Consultants in Dubai
Wealthy will declare self-sovereignty
Over the course of several years, the world's wealthiest people have been gradually breaking away from their nations of citizenship, with incremental rises in asset Offshore and worldwide travel. However, the pandemic and mounting geopolitical risks notably those related to taxation and cryptocurrency regulation are driving more people than ever to establish domicile abroad or acquire additional citizenships. This, in the context of UAE can also be supported by the fact that easy taxation policies and high return on investments have further attracted a significant number of expats. Moreover, as per the demographics, the expat population in UAE comprises of more than 80% of the total population and this number is anticipated to grow over the years. Thus, a movement of more citizens to the UAE will further expand the investments and also support the growth of businesses over the years.
Short Workweek, a step to improve productivity
The UAE government aimed to enhance the productivity of the workers. To accomplish this aim the Government of the United Arab Emirates (UAE) has just announced some significant modifications to its work schedule on 8th December 2021. The Gulf state has announced the implementation of a 4.5-day work week, with weekends consisting of Friday afternoon, Saturday, and Sunday.
This step was taken by the government keeping two crucial things in mind:
- Tt represented the care about the people around you. It seems conceivable that the UAE will be the first country to formally recognize a workweek of fewer than five days, bringing the country closer to Western time zones. Until, the UAE had a Friday-Saturday weekend, which is common in many Muslim-majority countries.
- The 40-hour workweek isn't cutting it anymore. Reduced productivity may be aided by reducing it.
Moreover, the extended weekend is part of the UAE government's attempts to improve work-life balance and social wellbeing while also improving performance to promote the UAE's economic competitiveness. Thus, enhanced productivity on the other hand will lead to the growth of businesses in the nation thereby expected to bring a change in the business and economy of the UAE.
Conclusion
The UAE is considered one of the most prominent nations which offer several lucrative growth opportunities for investors and may sound profitable for business owners over the coming years as these ideas will serve as an essential cushion to support the innovations and growth. Dhanguard will help in assisting you with sound financial, insurance, and investment advice. Also, the team of our experts will offer you guidance in the selection of loans, accounts, insurance, and investment products. f you require business setup services in the UAE, please contact us and we will gladly assist you.