Dubai is a nation that can boast of a strong economic foundation and the role of the business sector in bestowing this status cannot be underrated. Even during the consistent economic recession that created great turbulence across the global economy, Dubai maintained its calm within the storm. Thanks to the Small and Medium Enterprises (SME) that has seen a gradual flourish from the onset of this millennium.
Recent economic surveys suggest that UAE is the home for more than 4 lakh SMEs that contribute to more than 50 percent of UAE’s GDP. What is more fascinating is the fact that over 90 percent of these Small and Medium Enterprises share their space in Dubai, amounting to 40 percent of their economy. All this statistical data finger points to one basic fact – SME’s are going to be a major determining factor in the Arab economy.
UAE has favored all forms of business activities throughout its history whether it belonged to the local community or a foreign investor. The laws and regulations in Dubai that govern the business sector are highly flexible and welcome those entrepreneurs who dream of a business formation in Dubai. It has various free trade zones apart from the mainland business zones that offer 100 percent tax exemption to foreign entrepreneurs along with complete company ownership.
With Expo 2020 just a few months away, Dubai is all set for a business revolution that will witness the participation of 192 delegate nations and millions of visitors. It is based on the theme ‘Connecting Minds, Creating the Future’, as it aims to provide a better future for not only Dubai, but the entire nations spread across the globe. It will serve to be an ideal platform for all business enterprises and budding entrepreneurs to connect with one another and form innovative and creative solutions that could transform the world.
As far as SMEs are concerned, the expo will turn out to be a great opportunity to increase their reach to customers and gradually improve their status to a large enterprise with a global reach. Expo 2020 has already committed to award 20 percent of the value of all contracts to small and medium enterprises apart from investing more than 2 billion AED in the SME sector. Further, government agencies and the private sector provide great support and financial assistance to SMEs.
The implementation of VAT has been highly beneficial for SMEs to obtain bank loans without a heavy burden. Dubai SME, an agency of the Department of Economic Development supports Small and Medium Enterprises by providing them easy installments, reasonable interest rates and flexible laws. The agency also provides consultation and training to SMEs in order to boost their contribution to the nation’s GDP, which is part of the Dubai plan 2021. The government aims to improve the GDP contribution rate of SMEs from its current 40 percent to 45 percent in 2021.
Recent reports suggest that Dubai’s Department of Finance has launched five new incentives to aid SMEs and promote partnerships between the private and public sectors. The first incentive is an initiative to make payments to the SME suppliers within a span of 30 days that gives SMEs additional liquidity of over 1.5 billion AED per year. The focus of the second incentive is to reduce the value of primary insurance for SMEs from 2-5 percent to 1-3 percent. According to the third incentive, performance insurance rate has been reduced from 10 to 5 percent on all supplies. The fourth incentive plans to allocate five percent of government’s capital projects to SMEs. The final incentive is to allocate one billion AED to projects with public and private partnerships.
All these above-mentioned facts about the economic support provided by the government of Dubai for SMEs are proof that they have really acknowledged the relevance of SMEs in their economy. It is a silent message to all budding entrepreneurs of diverse nationalities to invest in the SME sector of Dubai as it is the best option available for a business formation in Dubai.