Dubai must focus on increasing both domestic and foreign investment if it is to catch up to other innovation-driven economies like Hong Kong and Singapore and stay ahead of regional rivals, according to a new report.
A key area is the creation and growth of start-ups and SMEs, the Dubai Economic Council and Deloitte said yesterday. Advancing the SME sector will help to promote domestic and foreign investment into Dubai – a key contributor to economic activity and growth, according to the DEC/Deloitte report.
Dubai has a number of government initiatives supporting the sector, including the SME 100 programme, but it needs to help develop access to finance including allowing equipment to be used as collateral, enhance the role of the credit bureau and encourage more bank lending.
It should also develop more regulations protecting intellectual property rights and build up a database of information on SMEs.
The UAE was ranked 36th last year in a world innovation index by Insead, leading the region as its efforts in promoting education and R&D paid off. However, it still lags in creating a more competitive business environment, according to the study. Last year, Dubai said it would invest Dh4.5 billion to create an innovation hub.
New legislation for the SME sector is aimed at increasing its contribution to non-oil GDP to 70 per cent from the current 60 per cent level.
Foreign direct investment into the emirate was US$10 billion in 2013 compared to $8bn in 2012, the DEC/Deloitte report said. FDI into Hong Kong and Singapore in 2013 was around $70bn and $55bn respectively.
“World-class infrastructure and ports that have helped to reduce logistic costs and executing business compared to other economies in the region and ease of obtaining a trading licence compared to other countries in the region and business-friendly policies have also helped attract investors to Dubai,” the report said.
Other parts of the economy mentioned in the report include developing Dubai’s trading capability, financial services industry, capital market activity and regulatory framework.
Gulf region economies including Qatar, Kuwait and Saudi Arabia “are not very far behind …and could pose a challenge to Dubai’s regional dominance as a financial and trading hub”.
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