UAE support for economy continues ahead of future growth strategy roll-out
The Arab world's second-biggest economy laid out its economic vision for the next five decades on Saturday
As the UAE lays out its economic growth agenda for the next 50 years, the country continues to take concrete measures to support its economy through the Covid-19 tumult as it positions itself for post-pandemic growth.
The UAE, the second-biggest Arab economy, rolled out its vision for growth over the next five decades on Saturday. The plan aims to stimulate entrepreneurship and foreign trade; creating partnerships to attract investments and talent, while cultivating the skills of Emirati professionals to position them to lead the future economy.
While the drive to transform the country’s economy for the future generations picks up momentum, policymakers are equally focused on steering the country through the unprecedented economic turmoil in the wake of the Covid-19 pandemic.
The UAE aims to become the economy that will recover most quickly from the economic fallout of the pandemic, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said in August.
The recovery is being aided by fiscal and monetary initiatives undertaken by the Central Bank of the UAE and individual stimulus packages rolled out by different emirates.
Here are some of the measures taken to support the country's economy so far:
On March 16, the emirate laid out a 16-point plan to stimulate economic growth and support its private sector.
The measures included an allocation of Dh5 billion to subsidise water and electricity costs; reduced electricity connection fees for start-ups until the end of 2020; and an exemption in Tawtheeq (property registration) fees in 2020.
A further Dh3bn funded an SME credit guarantee scheme, keeping funds flowing to smaller businesses by guaranteeing 75 per cent of loans, while Dh1bn was used to set up a market-maker fund to support stock market liquidity. The government also pledged to settle all approved invoices within 15 working days and exempted start-ups from providing performance guarantees for projects worth up to Dh50m.
In May, a stimulus package for businesses using the emirate's ports for imports or as a transit gateway was added, with customs duties postponed for up to 90 days for importers.
In November the emirate announced rent rebates of up to 20 per cent for nurseries, dental clinics and hair salons, among others. Rental rebates were already in place for restaurants, entertainment and tourism outlets in the capital through the March stimulus.
On March 13, the emirate unveiled an initial Dh1.5bn stimulus package to support businesses in affected sectors –especially tourism, retail, external trade and logistics services.
Among the nine measures initially announced were a freeze on the 2.5 per cent market fees paid to the municipality for business licences, a refund of 20 per cent on customs fees imposed on imported products and a 10 per cent cut to water and electricity bills for three months.
These were followed by a second package worth Dh3.3bn on March 29 and a third worth Dh1.5bn on July 11.
The latest tranche of measures worth Dh500m brought the total so far to Dh6.8bn.
Earlier this month, Sharjah rolled out a second stimulus package worth Dh512m after introducing incentives worth Dh481m earlier this year.
The package includes waiving, reducing or cancelling fees related to utilities, rent, business procedures, property, education, ports and shipping, SMEs, transportation and civil aviation.
It allows splitting of Sharjah Electricity and Water Authority's utilities fees into instalments that could be extended for up to two years.
Fees paid on property purchases by non-GCC citizens were halved to 2 per cent of the sale value, from 4 per cent previously. Fees for attesting residential lease contracts were also cut to 2 per cent, from 4 per cent, until March 2021.
Ras Al Khaimah
The emirate has discounted administrative fees and waived fines as part of its stimulus package to support businesses.
Its other measures include extending the licence renewal period for 60 days, waiving the marketing fees for two months, and exempting businesses from penalties for late payment of fees, the emirate’s government said in a statement in May.
The emirate’s free zone, Ras Al Khaimah Economic Zone, has also rolled out incentives to support 15,000 companies. These include a three-month exemption from renewing commercial licenses, a 25 per cent discount on new residency visas for dependents, a waiver of cheque postponement fees and a further 25 per cent discount on workers housing applications among others.
In April, the emirate rolled out tax relief for businesses in retail and hospitality.
Fujairah exempted all hotels and resorts from “the prescribed local tax”, as part of the relief package.
It also exempted start-ups from performance guarantees for projects of up to Dh50m, reduced industrial land leasing fees by 25 per cent on new contracts, suspended real estate registration fees for the remainder of this year and waived current commercial and industrial fines.
The emirate in April lunched a support package for business to help boost foreign trade, tourism and real estate.
It initiatives to support the emirate’s foreign trade include option of paying customs duties in easy instalments within 90 days, extending the free period for storing containers and reducing container insurance fees by 50 per cent until the end of June 2020.
The package involves supporting the emirate’s real estate sector with 11 separate initiatives. It also exempted hotel and tourism establishments from registration fees until the end of 2020.
Umm Al Qaiwain
The emirate also introduced its economic stimulus package in April, which included a 50 per cent discount on new business licence fees and on renewal fees for commercial, industrial and professional licences.
The package allowed for the cancellation of fines for expired licences in the emirate and cut fees on activities related to the Umm Al Qaiwain Chamber of Commerce and Industry by half.
The Central Bank of the UAE
On March 14, the regulator introduced a Dh100bn Targeted Economic Support Scheme (Tess), which provided funding to banks and allowed them to delay principal and interest payments for up to six months on loans to all private sector and retail borrowers.
The package included Dh50bn from the Central Bank funds through collateralised loans at zero interest rates. A reduction in capital buffers also freed up an additional Dh50bn of banks’ funding.
Further loosening of capital and liquidity buffers later increased the size of this stimulus to Dh256bn.
Tess has benefited more than 320,000 customers, out of which 310,000 were retail customers, 10,000 SMEs and 1,500 private sector corporates, according to central bank data.
The CBUAE board reviewed the scheme earlier this month and said it will reassess it next year.
Updated: November 15, 2020 05:48 PM