FDI Law, Expo 2020 and restructuring of economic activities spur optimism
A record surge in the number of new trade licences issued in Dubai in 2019, in spite of a discernable regional and global downtrend, underscores the overriding confidence of investors and businesses in the remarkable resilient power of the economy, economists said.
The business community in the emirate continues to invest and expand, Dubai Economy - the emirate's Department of Economic Development - said on Sunday while reaffirming that the emirate's economic competitiveness and its ability to attract investors continue to grow in 2019 on the back of investor-friendly laws and reforms, preparations for Expo 2020
Dubai and restructuring of economic activities.
According to a recent report by the Business Registration & Licensing sector in Dubai Economy, 38,377 new licences have been issued in 2019, a record growth of 90 per cent compared to 2018 (20,129).
The past year also saw a decrease in the number of licences cancelled compared to 2018, from 5,037 to 4,949, reflecting the strong confidence in Dubai's amazing resilience.
Dubai Economy said in a statement that the Foreign Direct Investment Law (FDI Law) contributed to attracting and encouraging foreign direct investment to Dubai's economic sectors and targeted activities. "It allowed for an increase in the number of investors, which has led to more companies now setting up business in the emirate. The FDI Law also provides the framework for attracting foreign investment in various strategic sectors to build a globally competitive economy based on knowledge and innovation," according to the statement.
In 2019, Dubai Economy opened new horizons for businesses in Dubai by restructuring economic activities with 50 commercial activities and 35 light industrial activities converted into professional activities. "This, in turn, allowed investors to acquire 100 per cent ownership, and motivated new investors to choose professional licenses and Dubai as a destination for investment in the region. The introduction of the Instant Licence and the DED Trader licence were also part of the enhancements to attract new businesses," it added.
Sebastian Joseph, group CEO of Knowlton International, said the investment and business landscape of Dubai is undergoing a dramatic transformation thanks to a string of recent reforms and initiatives to ensure enhanced competitiveness and ease of doing business.
"The new FDI Law, various economic stimulus packages and other investor-focused initiatives by the government have helped trigger a rebound in business and investor optimism. This boost in confidence is reflected in the remarkable jump in the number of new licences issued in 2019," said Joseph.
Atik Munshi, senior partner at Crowe, said the growth in the new licences issued depicts the strong faith of that the business community has on Dubai. "Dubai has once again proved that the criticisers are wrong. The positive and phenomenal 90 per cent change would not have happened without the active role of the Dubai government and its FDI Centre," he said.
Munshi said numerous easements were thought of and implemented by the economic department ensuring that the investor does not face unnecessary challenges in the business. "The Rulers are making the continuous efforts that Dubai becomes and stays as the top place for doing business. New improvements in regulations and compliance further strengthen the economic structure both from the local and international perspective," he added.
"The year 2020 has just commenced; with Expo very near, the growth in businesses is expected to gain momentum. Such momentum can get a thrust if banking facilities are made easy for the SMEs and manufacturing sector is further encouraged," said Munshi.
Analysts said the expansionary budget for 2020 announced by Dubai recently would boost the economy. "We are encouraged by the signal that this new budget sends to the market, and believe effective deployment of the expanded budget will provide much-needed economic stimulus and help to reinvigorate the economy," said Zachary Cefaratti, CEO of Dalma Capital.
Vijay Valecha, chief investment officer of Century Financial, said the 16 per cent increase in budget expenditure will support not only Expo 2020-related activities but also Dubai Plan 2021.
"Overall, the budget conveys a very optimistic message with expansionary fiscal policy in full swing," he added.
The countdown to Expo 2020, which is expected to be visited by more than 25 million visitors, has contributed to attracting a large number of hospitality companies, restaurants, hotels and supply companies to invest in the city. The figures issued by the Business Map confirms the continuous support given by Dubai Economy to the emirate's ambitious journey towards excellence and reinforce Dubai's position in the global and regional economy as a centre of finance and business.
Overall, 324,773 business registration and licensing transactions were recorded in 2019, while the rental value of the units leased to companies in Dubai amounted to Dh26.2 billion as more businesses and investors gained from the emirate's competitiveness and increasing opportunities across diverse economic sectors.
The businessmen who secured new licences in 2019 included those from Britain, Saudi Arabia, India, China, Bangladesh, Pakistan, Egypt, Jordan and Sudan.
Some 58 per cent of the new licences issued in 2019 were professional (22,282 licences), 40 per cent commercial (15,282), 1.6 per cent related to tourism (613) and 0.4 per cent industry (200), and together, they created 184,437 jobs.