UAE finance ministry's new projects 'to boost country's economic environment'

Five projects, covering local supply strategies and reporting of climate spending data, will drive future growth, executives say

The UAE Ministry of Finance said the projects are aimed at supporting the country's long-term vision. Victor Besa / The National
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The five “transformational” projects announced by the UAE Ministry of Finance will enhance the country's economic environment and boost investments in the Emirates, executives have said.

The projects, announced on Tuesday, are aimed at improving government financial work to ensure future readiness, the ministry said.

They include local supply strategies, transparency in climate data, corporate tax, public-private partnership and an e-billing system.

“Each of these initiatives showcases the government's commitment to innovation, sustainability and economic diversification,” said Damian Hitchen, chief executive of Saxo Bank Mena.

The projects align with the UAE's long-term vision and digital government strategy, promoting future readiness and ensuring the country's sustained growth and development, added Vijay Valecha, chief investment officer at Century Financial.

“They are holistic initiatives meant to safeguard the country's national interest and adopt progressive changes to meet sustainability goals and build a business-friendly ecosystem,” he said.

As part of one of the projects, the ministry is planning to add new categories of suppliers for the federal government.

The move is hoped to ensure higher adoption of the National In-Country Value Programme’s standards, the ministry said.

The National ICV Programme, launched in 2021, redirects spending into the UAE economy. Last year, the programme redirected Dh53 billion ($14.4 billion) into the economy – a 25 per cent annual increase.

“The focus on developing a local supply strategy for the federal government is a strategic move that will not only support national economic growth but also foster a diverse supplier base,” Mr Hitchen said.

“By incorporating this strategy, the UAE is promoting the competitiveness of its products in regional and international markets while stimulating the economy.”

Meanwhile, another project will see the ministry submit data related to state-level government expenditure on the climate and environment to the International Monetary Fund.

The data will also be published on the Climate Change Indicators Dashboard, which measures the impact of national climate policies and spending on macroeconomic sustainability and transparency.

“The emphasis on transparency in climate and environment spending data is commendable. Through this initiative, the UAE is setting an example of accountability and sustainability,” said Mr Hitchen.

It will enable stakeholders to assess the impact of government policies on climate change and make informed decisions regarding environmental issues, he added.

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“Firms are beginning in earnest to address climate risks, so the ministry’s initiative is … well timed,” said Kareem Refaay, managing director at the London Institute of Banking & Finance Mena.

In a report earlier this year, the institute stressed that banks in the Mena region would benefit from keeping pace with global best practices on climate risk reporting if they want to avoid losing ground to international counterparts.

It is essential for the financial services industry to make use of the opportunities that the new projects provide, Mr Refaay said.

“If we get it right, we can have a financial services industry that not only considers environmental factors now and for the long-term future, but that aligns with international standards and ensures the sustainable economic development of our region,” he said.

Among the ministry's projects is also the establishment of a platform to focus on boosting public-private partnerships. The project is scheduled to be completed in December 2025.

“This initiative will attract private sector investment and expertise, fostering collaboration and innovation in various sectors, ultimately driving economic growth,” said Mr Valecha.

The ministry's projects related to corporate tax and setting up an e-billing system that will automate the procedures for filing tax returns will also support the country's competitiveness, he said.

The UAE introduced corporate tax this year at a headline 9 per cent rate on the income of certain businesses that exceeds Dh375,000.

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The move reflects the UAE's efforts to pursue non-oil growth, diversify its economy, boost its revenue base and reinvest funds in strategic projects, Younis Al Khoori, undersecretary of the Ministry of Finance, told reporters last month.

“Implementing the 9 per cent corporate tax is a crucial project that will help the government propel the country's growth even further,” Mr Valecha said.

“The ministry's focus on drawing tax policies, facilitating tax returns, and establishing the corporate tax regime demonstrates a commitment to strengthening the tax legislative structure in the country.

“The automation of procedures for filing tax returns through the e-billing system will improve compliance and reduce cases of tax evasion. This will enhance the transparency and effectiveness of the tax system, leading to increased revenue collection for the government.”

Overall, the projects will “enhance the competitiveness of the economic environment, attract foreign investment, and broaden the revenue base, supporting the overall economic growth of the UAE”, he added.

Updated: July 12, 2023, 6:14 AM