New law is shot in the arm for small businesses

ABU DHABI // Emirati entrepreneurs are celebrating a new law that will boost their business and cut their costs.

The SME law for small and medium enterprises, several years in the making, was given final approval on Sunday by the President, Sheikh Khalifa.

The law requires federal authorities and ministries to ensure that at least 10 per cent of their procurement budgets for purchasing, servicing and consulting is contracted to SMEs. The clause was inserted by the Federal National Council before it approved the new law last June.

Companies in which the federal Government holds a stake of more than 25 per cent must also place at least 5 per cent of their contracts with SMEs.

Small businesses will also have reduced licensing costs and greater access to finance: at least 10 per cent of loans by the Emirates Development Bank, a government lending body, will go to small companies.

“This is great news. I have been holding the newspaper for the past three years waiting for this to happen,” said Abdulla Al Shamari, chairman of Cirta, an electro-mechanical contracting and maintenance company in Abu Dhabi.

“It is not only about money but when we are involved in government procurement we gain experience. We will become international companies.”

Mohammed Lashin, general manager of Al Wegdaniyah Transport Solutions, a small business in Dubai, said the law could more than double its sales growth by creating more contract opportunities.

“We have been fighting for some time for some formal way,” Mr Lashin said. “We are a member of Dubai SME 100 and whenever we approach government entities they say there is no law binding them, only guidelines to encourage them,” Mr Lashin said.

Abdul Salam Al Madani, chairman of Index Holding, a small business with diversified interests, hoped the law would encourage more multinationals to work with SMEs in joint ventures.

“The multiplier effects of this law are evident and inspiring and I am sure it will play a significant impact on the national economy.”

Sultan Al Mansouri, the Minister of Economy, said the new law would “improve the competitiveness of small and medium enterprises, create new job opportunities for UAE nationals and encourage them to work in this sector and contribute to the GDP of the country – promoting its position as a hub for entrepreneurship”.