Business confidence improves in Abu Dhabi

The survey showed especially healthy levels of optimism among construction companies. Pawan Singh / The National

Business confidence in Abu Dhabirose last year as companies put their faith in an improving economic outlook.

But business people in the emirate also raised concerns about obstacles to work, including difficulty in accessing industrial land and immigration fees, according to an official business confidence index.

The annual survey of business people is conducted by the Abu Dhabi Department of Economic Development (Added). It did not say how many people were surveyed or whether they worked in the private sector or for companies linked to the Government.

"Rising business confidence reinforces what we know and have been seeing elsewhere in Abu Dhabi," said Hasnain Malik of the independent research provider Frontier Alpha Research, which is not connected with producing the index.

"After a long period of reassessment, project spending plans have been prioritised. The banks, which were recapitalised after the financial crisis, are now growing loans, profits and most recently have surprised positively on dividends. The publicly listed real estate sector has also seen significant cash purchases by the Government, which has crystallised some of their value and addressed lingering solvency issues."

The survey registered an average reading of 52 points, four points higher than for 2011.

Respondents cited improved domestic demand compared with the previous year. The survey showed especially healthy levels of optimism among construction companies about growth in sales and investment over the next year.

Figures cited by Added from the Abu Dhabi Chamber of Commerce and Industry showed the private sector's contribution to the emirate's overall economy rose 33 per cent last year. Growth in the private sector advanced 6.4 per cent.

The Abu Dhabi Government is placing a renewed focus on improving the business climate as it strives to shift more of the burden for running the economy from the public to the private sector as part of its Economic Vision 2030.

In the past two months it has announced a series of reforms to boost enterprise, including cutting the cost of starting a business from 10 per cent of gross national income per capita to 6 per cent and opening a commercial business centre to cut the paperwork and time taken to start a business.

The Executive Council also announced last month that it would pump Dh330 billion (US$89.84bn) into the economy over the next five years.

The business confidence results showed some divergence between larger and smaller businesses. Slimmer marketing and administration budgets and costly government fees were among the reasons cited by smaller businesses for a lower confidence.

Across business sizes, the difficulty in accessing industrial land, the high cost of labour accommodation and immigration fees were cited as barriers to business. Trade licence fees, the costs of health insurance and waste collection as well as delays in dispatching shipments at ports were also raised as obstacles.

The Government has set a target to raise the contribution of the non-oil sector from the 2005 level of 40 per cent of the Abu Dhabi economy to 64 per cent by 2030.