Uae

United Arab Emirates

Krishnesh NayakVinay Raj

Introduction•Population – 4.5 Million•GDP(PPP)

$115.7 Billion8.5% growth in 2007$ 25,514 per capita

•Unemployment – 2.4% •Inflation (CPI) – 7.8%•FDI (Net Inflow) - $ 5.3 Billion•External Debt - $ 39.1 Billion•Exports - $117.2 billion

Primarily crude oil Natural gas, Re-exports, Dried fish, Dates

•Imports - $74.5 billionPrimarily machinery & Transport equipmentChemicals and Food

The United Arab Emirates is a federation of 7 Arab monarchies –Abu Dhabi AjmanDubai FujairahRas Al-Khaimah SharjahUmm al-Qaiwain.

Currency: DirhamLanguage: Arabic, English and others.

Abu Dhabi accounts for about 90 percent of UAE oil production and has taken a leading role in political and economic decision-making, but many economic policy decisions are made by the rulers of the individual emirates.

HistoryPrior to independence, the UAE was Trucial Oman.1892 – UK assumed responsibility for the defense and external relations.1952 – The Trucial Council, comprising the rulers of the seven sheikhdoms, was established.1958 – Petroleum was first discovered.1960 – Onshore Petroleum was found.1962 – Commercial exploitation of petroleum began.1968 – UK Announced its intention of withdrawing British military forces.1971 – UAE became independent.

1981 - UAE was a founder member of the GCC of the Gulf (generally known as the Gulf Co-operation Council).1987 - Full diplomatic relations were restored with Egypt for Commercial Links between them.

CultureHofstede’s Di

mension

s

•High PDI (80) and UAI (68).•Average MAS (52)•Low IDV (38)

•Arabs are an event-orientated people as opposed to time-orientated.

•Never refuse refreshments offered, as this will be taken as an insult to your host.

•No set business hours in UAE.• Work "straight" which is between 08hrs

and 17hrs.

• Work "shift" which is anytime between 08hrs and 13hrs, and then again between 16hrs and 21hrs or even 22hrs.

Political Outlook•UAE maintains an extensive 'cradle to grave' welfare system for its nationals.

•Provides many subsidized services, which also are extended to foreigners who form 80 percent of the total population.

•Law expelling all foreign laborers in violation of their visas - To curb the problem of illegal laborers.

Currency Valuation•Revaluation of the single currency by 2010.

•For a single currency is also a demonstration of political will and confidence in the future.

•Serious about economic growth and prosperity and creating a modern financial infrastructure.

The EconomyThe UAE economy grew by an estimated 9% in 2005. The rise was due to 1. The 20 percent increase in oil income, 2. The strong dollar and Strong economic growth in the non-oil sector.

Oil Sector

• 100 billion barrels of proven oil reserves.• 5.7 trillion cubic meters of proven gas reserves.

Non-Oil Sector (In descending order)

• Government services (12%), Trade (11%), Construction (10%), • Manufacturing (8.6%), Real estate (6.7%), Transportation, Storage &

Communication (6.2%)• Finance and Insurance (5.6%) http://www.infoprod.co.il/country/uae1c.htm

Public Finance34 percent of all exports were re-exported. Traditional re-export markets are the Gulf Co-operation Council (GCC) states and Iran.

Privatization

• All six members of GCC currently have privatization plans of some form as a means to reduce government expenditures and to turn around unprofitable state-owned businesses. • Further, Abu Dhabi's Crown Prince, Sheik Khalifa bin Zayed, has ordered, in

May 1997, the formation of a special committee to oversee the privatization of the power and water sectors in Abu Dhabi.

• Unlikely to ever be sold are government holdings in the oil sector. • Foreign companies Nestle and Statoil have formed a joint venture with Abu

Dhabi National Oil Company in the Ruwais project. • Giat Industries has proposed buying the Taweelah power and desalinization

complex as part of its offset obligations.

Stock Exchange

No official stock exchange at the present time.

• The UAE stock market is believed to currently have a market capitalization of more than DH 67 billion, and the primary market is also expected to become very active in the future.

• The Emirates Bank group has currently established the Emirates Equity Index (Emnex), a composite of thirty-one actively traded UAE stocks.

FranchisingForeign businesses must work through a local partner as licensee or enter into a joint venture.

Franchisees usually prefer to own 100 percent of the franchise themselves.

The Legal SystemThe Supreme Council of the

Federation, composed of the 7 sheikhs of the seven Emirates, has the power to enact legislation, and to assume supreme supervision of

the Federation's affairs.

Decisions should be approved by a majority of five, which must include

the votes of the sheikhs of Abu-Dhabi and Dubai.

The President and Vice President of the Federation

are elected by the Supreme Council from among its members .

The Council of Ministers performs the function of a

cabinet. The Federal National Council

has advisory authority.

TradeAn increase in value of imports. Mainly attributable to 1. Population increase2. Higher demand for imports to meet re-export requirements3. Higher level of individual expenditure partly due to the increased commercial

activity associated with the shopping festivals held throughout the year.

http://www.uae.gov.ae/Government/trade.htm

Gold Trade

Slump in gold bullion imports

• Drop in value of the Indian rupee against the dollar affecting the Indian demand for gold bullion re-exported from Dubai.• Indian Government's new policy allowing local banks to directly import gold bullion from European countries such as Switzerland.• The Gold Festival held during the Abu Dhabi Festival of Sales in combination with bargain priced gold, also contributed to higher

consumer purchases.

Closed Economy•Economy of UAE is 62.8 % free •World's 63rd freest economy.•Scores above the world average in –

Fiscal freedomLabor freedomFreedom from corruption, Government sizeTrade freedom

•Average tariff rate is not high, but general import licenses are issued only to nationals.•Individual emirates impose their own corporate taxes, but there are no income or corporate taxes at the federal level.

http://www.heritage.org/Index/country.cfm?id=UnitedArabEmirates

Closed Economy


Business Freedom – 47.9%• Starting a

business takes an average of 62 days

• Bankruptcy proceedings are lengthy and cumbersome.

• Minimum capital requirement to launch a business is costly

Trade Freedom – 80.4%• Import restrictions.• Service market

access barriers.• Non-transparent

standards.• Sanitary

regulations.• And inconsistent

government procurement add to the cost of trade.

Fiscal Freedom – 99.9% Labor Freedom - 76.2%• No income tax and

no federal-level corporate tax

• No value-added tax or general sales tax.

• Number of work hours are not flexible. There is no minimum wage.

Investment Freedom - 30%• Foreign investors

do not receive national treatment.

• At least 51 percent of a business must be owned by a UAE national.

• Non–Gulf Cooperation Council nationals may not own land.

Closed Economy


Monetary Freedom - 70.9%• Inflation is high,

averaging 9.1 percent between 2004 and 2006.

• Government influences prices through regulation, subsidies, and numerous state-owned enterprises and utilities, including oil, gas, electricity, and telecommunications.

Financial Freedom - 40%• 21 Emirati

banks , 25 foreign bank entities, 2 investment & about 50 representative bank offices.

• Domestic banks offer a full range of services.

• Islamic banking systems are increasingly prominent.

Property Rights - 40%• Ruling families

exercise considerable influence on the judiciary.

• Incompetence and corruption are rarely challenged.

• All land in Abu Dhabi, is government-owned.

• The UAE leads the region in protecting intellectual property rights.

Freedom from Corruption - 62%• Ranks 31st out

of 163 countries in (2006) Transparency International's Corruption Perceptions Index.

• Established special anti-corruption sections to investigate and prosecute violators of bribery, nepotism, embezzlement, and abuse of power.

United Arab Emirates

Krishnesh NayakVinay Raj

Thank You

Uae

Business

Transcript of Uae