ABU DHABI 13 December 2020: The UAE Central Bank estimates an expected growth of 3.6% in the country’s non-oil GDP by the end of 2021.
This was revealed during the second meeting of the committee responsible for the coordination and follow up of the implementation of the economic recovery plan, under the chairmanship of Abdulla Bin Touq Al Marri, Minister of Economy.
The committee reviewed the progress in implementing the 15 initiatives of the first phase, revealing that 46 per cent of their implementation has been completed so far.
Major initiatives implemented to date, include:
- Amendments to the bankruptcy law
- Allocation of grants and incentives to tourism establishments
- Promotion of foreign direct investment (FDI) through amendments to the commercial companies law,
- Amendments to the commercial transactions law and the
- Decriminalization of cheques without balance,
- Reduction of fees and taxes on the tourism sector,
- Enhancing flexibility of labor market,
- Comprehensive targeted economic support plan directed by the Central Bank to enhance liquidity in the financial and banking sector in the country
There are six tracks of the initiatives package, which include:
- Empowerment of the new economy and development of priority sectors;
- Opening of new markets locally and internationally;
- Provision of financing support and facilitation of lending;
- Tourism promotion;
- Attraction and retention of talent; and
- Stimulation of innovation
The committee underlined the importance of further enhancing the confidence of investors and business owners in the country’s markets and increasing the competitiveness of vital economic sectors. It noted that the initiatives implemented during the past weeks, including the amendments to the Commercial Transactions Law regarding the decriminalization of cheques without balance, amendments to the bankruptcy law as well as to the Commercial Companies Law, represent important and major steps towards the achievement of this development goal, and serve as key enablers for the country’s economic advancement, said official news agency Wam.
Bin Touq Al Marri said the total value of economic support packages and initiatives provided by the federal and local governments since the onset of the pandemic has reached more than Dh388 billion. These measures have contributed to business continuity, increased momentum of commercial activities, and have strengthened their ability to grow and compete in various vital sectors.
Labour Reforms
Nasser bin Thani Al Hameli, Minister of Human Resource and Emiratization, pointed to the implementation of two parallel tracks.
The first one is the reduction of operational cost of facilities to accommodate domestic foreign workers through cutting down the fees for the issuance of transfer permits of domestic foreign workers. Cancellation of fees for services to start doing business in the labour market; and reduction of fees for all work permit services for small enterprises that represent 65 per cent of the current market. As they are the most affected by the pandemic, the reduction percentage for these establishments reached about 75 per cent, while the percentage of reduction in work permits for medium and large establishments reached more than 25 per cent.
The second track is the facilitation of labour transfer procedures and enhancing the flexibility of the labour market by allowing establishments to reveal employment data and foreign surplus labour through the ‘Virtual Labor Market.’ He said that this move addresses the labour market needs of existing talents in the UAE and allows private sector establishments to issue transfer permits for labour, now that all their restrictions have been lifted according to specific regulations.
Al Hameli explained that within the framework of the support packages provided to employers, procedures for returning the bank guarantee for private sector establishments have been facilitated. These establishments have been refunded more than Dh5 billion in 2020, after the UAE Cabinet approved labour insurance system to replace bank guarantee for employees.
Support to SMEs
Dr. Ahmed Belhoul Al Falasi, Minister of State for Entrepreneurship and SMEs, explained that the tracks that are being worked on include provision of liquidity to support businesses and facilitation of lending to drive sustainable SME growth, and initiatives to support sales and commercial success for entrepreneurs. Initiatives have also been implemented to support the tourism sector as an engine for economic recovery and sustainable growth, as grants and incentives have been provided to tourism establishments that are committed to health and safety standards and support the continuity of their business, be it hotels, restaurants or other tourism facilities. Besides, a large number of fees and taxes related to the tourism sector have been eliminated to accelerate the revitalization of tourism in the country.”
Dr Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, said the subsidy plan aims to increase the flexibility of economic activities, attract global talents, further strengthen the capabilities of Emirati professionals in cooperation with the Ministry of Human Resources and Emiratization, improve the level of confidence to the local business environment, and support the presence of exports in global markets to enable them to reach new markets. The In-country value program is one of the important initiatives that support national products and increase its competitiveness in global markets.
Companies Law
The developments in terms of legislation that support the economy is also equally important, especially with the recent amendments to the Commercial Companies Law and the wide liberalization of commercial and investment activities available to foreign investors, allowing them 100 per cent ownership of projects and companies, in addition to abolishing the need for requiring a citizen partner as well as the citizen services agent for branches of foreign companies. These new laws aim to increase the transparency and flexibility for businesses and facilitate the procedures, thereby adds value to the ease of doing business and enhances the local investment environment, better positioning the country’s leadership and global competitiveness. We will continue to review the impact of the initiatives on economic activities in cooperation and coordination with various stakeholders to ensure that the packages deliver our desired outcomes.”
Digital Forefront
Omar Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy and Remote Work Applications, commented that the UAE’s leadership and forward-looking vision which focuses on developing digital and technological infrastructure have made the UAE one of the world’s most capable and prepared countries to face economic challenges, noting that it further strengthened the government’s readiness and ability to quickly recover from the impacts of the coronavirus pandemic.
He added: “The UAE government’s commitment to adopt advanced technologies, support national talents, and attract professionals and experts further enhance the country’s global competitiveness in strategic and future sectors. Undoubtedly, the economic recovery plan’s focus on digital economy reinforces the country’s transformation towards a ‘new economy’. In this respect, there is a growing need to continue our efforts to create an environment that stimulates business practices, as well as support the economic sectors in the short-term, medium-term and long-term.”
Bankruptcy Law
Younis Haji Al-Khoori, Undersecretary of the Ministry of Finance said the amendment of the bankruptcy law was one of the steps that the Ministry of Finance has worked on to enhance investor confidence in the local economy.
Saif Hadef Al-Shamsi, Deputy Governor at Central Bank of UAE, said: “We have successfully implemented the Central Bank’s comprehensive targeted economic support plan that helped the financial sector manage its liquidity and supported individual customers and companies affected by the repercussions of the Covid-19 pandemic.”
More than 310,000 individual clients, nearly 10,000 small and medium enterprises, and more than 1,500 private sector companies have benefited from the loan deferral program included in the support plan. The domestic credit growth during the year until the end of October grew by 2.6 per cent.
Al Shamsi added: “The Central Bank maintains its role in following up the measures taken by extending the implementation period of the main elements of the targeted Comprehensive Economic Support Scheme package for an additional six months until the end of June 2021. From January 1, 2021, banks and financing companies benefiting from the zero-cost central bank facilities will be able to grant new loans and facilities to their clients economically affected by the epidemic.”
Recovery Plan
The cabinet led by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister and Ruler of Dubai, approved on August 3, 2020 the launch of the economic recovery initiatives, including the creation of a committee that coordinates and follows up the implementation of the economic plan for recovery, work through the plan’s outputs to increase growth rates, create a stimulating environment for doing business, and provide new opportunities through developing emerging sectors and employing technology.
