A decision by Dubai and Abu Dhabi governments to exempt businesses from corporate fines is a further boost for UAE companies grappling with high operating costs and the sticky residues of a challenging economic period, analysts told The National.
Together with plans announced last week to relax foreign ownership laws and grant long-term residencies to some UAE expats, “the government is clearly sending a message that it is trying to help on all fronts,” said Mohamed Abu Basha, head of macroeconomic research at lender EFG Hermes.
A decree by Sheikh Mohammed bin Rashid, the Ruler of Dubai, on Tuesday said the Department for Economic Development is cancelling fines imposed on businesses whose licences have expired until the end of 2018. Abu Dhabi said it will exempt businesses whose licences have not been valid for more than 24 months.
“This decree is a positive step in promoting economic growth and consolidating Dubai’s position as one of the most important commercial and economic centres internationally,” said Omar Bushahab, chief executive of business registration and licensing at DED.
The DED levies multiple fines for commercial violations, some of which could be worth thousands of dirhams. The UAE’s economy is recovering from muted growth in the past two years due to sustained low oil prices. GDP growth is expected to gather speed in 2018 and 2019, rising to 2.7 per cent and 3.1 per cent respecitvely from 1.5 per cent in 2017, according to the Central Bank of the UAE. However, rising inflation from the introduction of VAT in January and gradually increasingly oil prices has added additional costs on businesses.
At the same time, a slowdown in global economic growth in the past few years has put a strain on businesses, forcing them to make efficiency savings and curb growth.
The move to suspend fines on its own is not especially significant, as it will only benefit those businesses who have failed to renew licences, but it's important given the context, Mr Abu Basha told The National.
“In the UAE, there has been a slowdown in credit growth for SMEs and registration of new businesses, and we’ve also seen an impact on the real estate market and rental yields,” he said. “Against this backdrop, businesses have been in the mood to try and reduce costs, so this decision to suspend fines is intended to encourage them to continue growing and remain in the UAE.”
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The UAE consistently ranks top in the Middle East in the World Bank’s annual Ease of Doing Business report and the government has introduced mechanisms recently to lower costs – such as encouraging free zones to reduce their registration fees, and providing support for start-ups and SMEs.
The corporate fines suspension is in line with initiatives by the government to bolster economic activity, and positive for the corporate sector, “which continues to face a number of challenges”, said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
The measures taken by the governments “are welcome at a time when everyone’s concerned about high operating expenses for SMEs in a slow market,” said Walid Shihabi, managing director of one of the UAE’s biggest holiday homes letting companies, Hometown Fund Management, based in Dubai. The degree of impact may vary depending on the type of industry or company, for example restaurant businesses may benefit more as they are typically exposed to more penalties and licensing requirements, he added.
However, obtaining visas for new staff is a bigger financial burden on small companies seeking to scale up, and Mr Shihabi would like to see those costs reduced.
Mr Bushahab from the DED urged companies to renew their licences before the end of the grace period.
“[The move] reaffirms to investors and businessmen around the world that Dubai effectively addresses various economic variables with a forward-looking vision by adopting best practices and regulations. It also helps to remove concerns among investors and entrepreneurs looking to expand their business,” he said.
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Company profile
Name: Thndr
Started: October 2020
Founders: Ahmad Hammouda and Seif Amr
Based: Cairo, Egypt
Sector: FinTech
Initial investment: pre-seed of $800,000
Funding stage: series A; $20 million
Investors: Tiger Global, Beco Capital, Prosus Ventures, Y Combinator, Global Ventures, Abdul Latif Jameel, Endure Capital, 4DX Ventures, Plus VC, Rabacap and MSA Capital
Find the right policy for you
Don’t wait until the week you fly to sign up for insurance – get it when you book your trip. Insurance covers you for cancellation and anything else that can go wrong before you leave.
Some insurers, such as World Nomads, allow you to book once you are travelling – but, as Mr Mohammed found out, pre-existing medical conditions are not covered.
Check your credit card before booking insurance to see if you have any travel insurance as a benefit – most UAE banks, such as Emirates NBD, First Abu Dhabi Bank and Abu Dhabi Islamic Bank, have cards that throw in insurance as part of their package. But read the fine print – they may only cover emergencies while you’re travelling, not cancellation before a trip.
Pre-existing medical conditions such as a heart condition, diabetes, epilepsy and even asthma may not be included as standard. Again, check the terms, exclusions and limitations of any insurance carefully.
If you want trip cancellation or curtailment, baggage loss or delay covered, you may need a higher-grade plan, says Ambareen Musa of Souqalmal.com. Decide how much coverage you need for emergency medical expenses or personal liability. Premium insurance packages give up to $1 million (Dh3.7m) in each category, Ms Musa adds.
Don’t wait for days to call your insurer if you need to make a claim. You may be required to notify them within 72 hours. Gather together all receipts, emails and reports to prove that you paid for something, that you didn’t use it and that you did not get reimbursed.
Finally, consider optional extras you may need, says Sarah Pickford of Travel Counsellors, such as a winter sports holiday. Also ensure all individuals can travel independently on that cover, she adds. And remember: “Cheap isn’t necessarily best.”
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Results
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UAE currency: the story behind the money in your pockets
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
Results:
2.15pm: Handicap (PA) Dh60,000 1,200m.
Winner: AZ Dhabyan, Adam McLean (jockey), Saleha Al Ghurair (trainer).
2.45pm: Maiden (PA) Dh60,000 1,200m.
Winner: Ashton Tourettes, Sam Hitchcott, Ibrahim Aseel.
3.15pm: Conditions (PA) Dh60,000 2,000m.
Winner: Hareer Al Reef, Gerald Avranche, Abdallah Al Hammadi.
3.45pm: Maiden (PA) Dh60,000 1,700m.
Winner: Kenz Al Reef, Gerald Avranche, Abdallah Al Hammadi.
4.15pm: Sheikh Ahmed bin Rashid Al Maktoum Cup (TB) Dh 200,000 1,700m.
Winner: Mystique Moon, Sam Hitchcott, Doug Watson.
4.45pm: The Crown Prince Of Sharjah Cup Prestige (PA) Dh200,000 1,200m.
Winner: ES Ajeeb, Sam Hitchcott, Ibrahim Aseel.
Essentials
The flights: You can fly from the UAE to Iceland with one stop in Europe with a variety of airlines. Return flights with Emirates from Dubai to Stockholm, then Icelandair to Reykjavik, cost from Dh4,153 return. The whole trip takes 11 hours. British Airways flies from Abu Dhabi and Dubai to Reykjavik, via London, with return flights taking 12 hours and costing from Dh2,490 return, including taxes.
The activities: A half-day Silfra snorkelling trip costs 14,990 Icelandic kronur (Dh544) with Dive.is. Inside the Volcano also takes half a day and costs 42,000 kronur (Dh1,524). The Jokulsarlon small-boat cruise lasts about an hour and costs 9,800 kronur (Dh356). Into the Glacier costs 19,500 kronur (Dh708). It lasts three to four hours.
The tours: It’s often better to book a tailor-made trip through a specialist operator. UK-based Discover the World offers seven nights, self-driving, across the island from £892 (Dh4,505) per person. This includes three nights’ accommodation at Hotel Husafell near Into the Glacier, two nights at Hotel Ranga and two nights at the Icelandair Hotel Klaustur. It includes car rental, plus an iPad with itinerary and tourist information pre-loaded onto it, while activities can be booked as optional extras. More information inspiredbyiceland.com
