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CHAPTER 3
54 Investors Guide to the UAE
Business Options in the UAE
CHAPTER 3
The benefits of establishing a business in
the UAE include corporate tax holidays
for most sectors, no personal taxes
and the freedom to repatriate capital
and profits. There are no currency restrictions.
Foreign ownership is generally set at a ceiling
of 49 percent but at the Free Zones, for UAE
branch offices of foreign companies and forcertain professionals, there is no requirement for
a local partner.
Black and Decker, Colgate Palmolive, Daimler
Chrysler, HJ Heinz Company, Johnson & Johnson,
LG, Proctor & Gamble and Xerox are among
the Fortune 500 companies doing business at
Jebel Ali Free Zone, the first Free Zone to be
established in the UAE. Successful companies
from all over the world have taken advantage of
off-shore opportunities at the many Free Zones
now spread out across the nation.Top internationals have also joined hands with
the UAE for business projects that have direct
access to the UAE market. These relationships
are sometimes conducted through general
trading activities and specific joint ventures. In
many cases, partnerships with Emirati individuals
and companies taking at least the minimum
equity stake and then providing invaluable local
expertise have proved to be extremely rewarding.
There are now opportunities for companies of all
sizes and most market sectors who wish to be
part of the UAE business success story.
3.1 (a) UAE Company
(with maximum 49% foreign ownership)
Federal Company Law No. 8 of 1984 (the
Commercial Companies Law - CCL) regulates
the establishment of companies, both local and
foreign, outside the free zones. All companies
must have one or more national partners who
account for at least 51 percent of their capital.
The partners may mutually agree to share the
profits in proportions that differ from their own
capital share.
The Law also stipulates that management ofthe company may be undertaken by the foreign
partner. Since 2005, GCC nationals may own
100 percent of a companys capital. The CCL
is currently under review by the Federal
Supreme Council.
According to the provisions of Federal Law
No. 1 of 1979 (Organising Industrial Affairs),
the authorities may grant significant privileges
and exemptions to projects that meet certain
conditions. These include the assignment of
a building-site for the project, either free or ata token rent with optimal conditions and the
supply of utilities at preferential rates. Duty free
imports may be allowed in respect of machinery,
equipment and building materials required for the
project as well as raw materials and packaging
used during production. Tax exemptions for
a renewable period of five years from start of
production are guaranteed in respect of project
profits and re-investment reserves. Exports in
such cases are subsidised and there is some
3.1 Strategies for Market Entry
UAEs success story attracts the world
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55Investors Guide to the UAE
BUSINESS OPTIONS IN THE UAE
protection for locally produced products which,
when exported, would not attract duties. Priority
for the privileges and exemptions mentioned
applies to competitive, export-oriented orexport-substitution projects; projects using
local raw materials; projects established in
areas determined by the Government; and any
other projects that may be of specific economic
importance, and included, for this reason, in the
government development plan. The law applies
to most industrial projects except extraction or
refining of petroleum or other raw materials.
The UAEs hydrocarbon industry is specifically
excluded from the provisions of the CCL. It is
owned and controlled by the respective emirates,
and foreign participation must take the form of
joint-ventures. Similarly, electricity, gas, and
water utilities are supplied by state monopolies,
although the Emirate of Abu Dhabi has arranged
partial privatisation of several electricity and
water plants. Projects involving foreign
participation in these sub sectors are generally
majority state controlled and owned by the State
or by UAE nationals.
3.1 (b) UAE Branch Office
(with 100% foreign ownership)
Under the Commercial Companies Law, foreign
companies may also exercise their main activity in
the UAE by opening a branch or a representative
office. The representative office may promote
business for the products and services provided
by the parent company, and facilitate contacts
between the company and its UAE clients.
However, it is not licensed to conduct business
operations or marketing directly in any manner.Branches are registered at the Ministry of
Economy. A foreign branch or office can be 100
percent owned by the foreign company.
3.1 (c) Professionals
(with 100% foreign ownership)
Foreigners may form sole proprietorships to
practise certain professional activities. Sole
proprietorship is a simple business method
whereby an individual trades on his own account
pursuant to a trade licence issued in his own
name. This form of business entity is referred to
as an establishment rather than a company. A
foreign sole proprietor is also required to appoint
a local services agent.
Certain activities are reserved for UAE
nationals and for companies totally owned by
UAE nationals.
3.1 (d) UAE Free Zones
(with 100% foreign ownership)
Some 80 percent of the UAEs non-oil exports
originate from the Free Zones. These zones
are exempt from all the licensing, agency,
emiratisation, national ownership, and other
domestic regulations that apply to the customs
territory.
The UAEs first free zone was establishedat Jebel Ali in 1980. Its success in attracting
foreign investment and technological expertise,
and the growth of re-exports and transhipment
as a major commercial activity led the other
emirates to create such free zones to attract
inward investment, employment generation, and
significant economic development.
Following the success of the Jebel Ali Free
Trade Zone, the UAE currently boasts 36
established and upcoming Free Zones. Most of
these zones are located in Dubai, though the
other emirates are following the lead. Some of the
zones cater to service sectors (e.g. Dubai Internet
City, Dubai Media City, Dubai Health Care City,
Knowledge City, Dubai International Financial
Centre) while others are industrial zones (e.g.
Hamriyah Free Zone, Ajman Free Zone and the
Gold and Diamond Park).
The basic success formula in the different zones
is 100 percent foreign ownership, corporate tax
holidays, no personal taxes, freedom to repatriate
capital and profits, and no import duties or
currency restrictions.
Advantages of Free Zones
100% foreign ownership
100% repatriation of capital and goods
No minimum capital investmentA shareholders liability is limited to the
amount of paid-up share capital
No currency restrictions
No corporate taxes
No personal income taxes
Ready-made factories and warehouses
Excellent infrastructure, support services
and communications
Access to a consumer market of 1.4 billion
people
Ordinary
Company
Representative
Office
UAE
Branch Office
Trading
in
Securities
Services
and Industries
relating to
natural
resources
Under the Companies Law, fullforeign ownership is permittedprovided the company appoints aservice agent (a national) with nofinancial liability and no role inmanaging the company.(See3.1(b) UAE Branch Office)
According to Free Zone laws and
regulations (See UAE Free Zonespage 67)
Under the Commercial CompaniesLaw, full foreign ownership ispermitted to foreign companiesprovided the office does notconduct business in the countryand only serves as a base to dobusiness in the region.
According to an Agreement with the local
government of each Emirate(see 1.13(a) The constitution)
(stock market & commodities)Subject to special laws(See Financial IntermediationServices page 35)
Free Zones
According to Commercial Companies Law
(See 3.1(a) UAE Companyand 1.13(c)Company Law and its Update page 27)
UAE Business Structures
Investor
Source: Ministry of Economy
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CHAPTER 3
56 Investors Guide to the UAE
Aside from the advantages already available
to companies in the UAE customs territory (no
corporate or personal taxes, freedom to repatriate
capital and profits, low import duties except ontobacco and spirits, no exchange restrictions),
the free-zone regimes allow 100 percent foreign
ownership of companies, and hence a full control
over their activities. Comparative advantages
in each zone are based on individual locations,
facilities, areas of specialisation (e.g. motor
vehicles), and establishment and operating costs.
Each Free Zone is under the jurisdiction of the
Emirate in which it is located. Specific advantages
are therefore decided at emirate level.
Varied Licensing Options
The Trade Agencies Law, which regulates a part
of the domestic trade in the customs territory,
does not apply to the Free Zones. Various types
of licences allow operators to practise specified
activities in Free Zones. At the Jebel Ali Free
Zone, a general trading licence allows the
holder to import, export, distribute, and store any
items in accordance with the zones rules and
regulations; a trading licence gives the same
rights, but for specified items only. An industrial
licence allows the holder to import raw materials,
manufacture specified products, and export thefinished products. A national industrial licence
is reserved for manufacturing companies with at
least 51 percent GCC ownership; it allows duty-
free sales inside the UAE customs territory.
The value added by the free-zone company
must be at least 40 percent of the value of the
goods to qualify for duty-free sales. A service
licence allows the holder to carry out the services
specified in the licence within the zone. The type
of services supplied must be the same as the
services supplied by the parent company.
Another regulatory specificity of the Free Zones
is the absence of restrictions on hiring foreign
employees. There are currently few barriers to
the recruitment of foreign labour in the UAE,
1. Commercial Agencies: Practice of trade-
agency functions (registered exclusive
agency agreements with the Ministry
of Economy) within UAE is exclusively
reserved to UAE nationals, either
individuals or companies totally owned
by natural nationals.
Ref: Federal Law No 18 of 1984 concerning the organisation
of commercial agencies
2. Only UAE nationals and companies totally
owned by UAE nationals may supply:
Real Estate Services
Rental/Leasing Services relating to Cars
Services Incidental to Agriculture,
Hunting, and Forestry
Services Incidental to Fishing
Placement and Supply Services of
Personnel
Investigation and Security Services
Passenger and Freight RoadTransportation
Ref: Decision of the Ministerial Council Presidency regarding
the economic activities and professions excluded from the
Decision of the GCC High Council of 2002 / 23rd Session
3. Travel Agencies and Tour Opera tor
services are reserved to UAE nationals
or individuals or companies totally
owned by natural nationals.
Ref: Federal Law No 18 of 1984 concerning organisation of
commercial agencies.
4. Only the following services, among the
Audiovisual Services and Recreational,
Cultural and Sporting Services as
defined in the WTO List regarding
Services Sectoral Classification (MTN.
GNS/W/120: 10 July 1991) may be
supplied by foreign suppliers:
Studios for Artistic & Cinematographic
Production and Photography
Theatrical Troupes
Movie Halls
Theatres
Halls for Artistic Exhibitions
Sporting Activities
Ref: Decision of the Ministerial Council Presidency No 2/203
of 25 April 2005.
5. The ownership of Pharmacies,Warehouses of Medicaments and
Preventative Medicine Centres is limited
to UAE nationals, either individuals or
companies totally owned by natural
nations (Articles 19 & 35).
Ref: Federal Law No 4 of 1983 on the pharmaceutical
profession an d
pharmaceuti cal compan ies.
Services & Investment Activities reserved for UAE Nationals
The Free Zones offer full facilities
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BUSINESS OPTIONS IN THE UAE
The Free Zones
Full information on the UAE Free Zones can be obtained at www.emiratesfreezone.com
Abu Dhabi Industrial City of Abu Dhabi HCSEZ www.hcsez.ae
Dubai Jebel Ali Free Zone (JAFZA) www.jafza.co.ae
Dubai Gold and Diamond Park www.goldanddiamondpark.com
Dubai Maritime City www.dubaimaritimecity.ae
Dubai Aid City www.dubaiaidcity.ae
Techno Park www.tp.ae
Dubai Airport Free Zone www.dafza.gov.ae
Dubai Silicon Oasis www.dso.ae
Dubai Flower Centre www.dubaiflowercentre.com
Dubai Logistics City www.dubailogisticscity.net
Dubai Internet City www.dubaiinternetcity.com
Dubai Media City www.dubaimediacity.com
Dubai Knowledge Village www.kv.ae
Dubai Outsource Zone www.doz.ae
Dubai Biotechnology & Research Park www.dubiotech.com
Dubai Studio City www.dubaistudiocity.com
International Media Production Zone www.impz.ae
Dubai Healthcare City www.dhcc.ae
Dubai International Financial Centre www.difc.ae
Dubai Multi Commodity Centre www.dmcc.ae
Dubai Textile City upcoming
Dubai Carpet Free Zone upcoming
Dubai Auto Parts City upcoming
Heavy Equipment & Trucks Zone upcoming
Dubai Building Materials Zone upcoming
Dubai Cars and Automotive Zone upcoming
Dubai Design Centre (TCO) upcoming
Dubai Auto Zone (TCO) upcoming
Dubai Energy City (Dubai Holdings) upcoming
Dubai Academic City (Dubai Holdings) upcoming
Sharjah Sharjah Airport International Free Zone www.saif-zone.com Hamriyah Free Zone www.hamriyahfz.com
Ajman Ajman Free Zone ajmanfreezone.gov.ae
Umm al Quwain Ahmed Bin Rashid Free Zone
Ras Al-Khaimah RAK Free Zone www.rakftz.com
Fujairah Fujairah Free Zone www.fujairahfreezone.com
and foreign employment has been the source of
economic growth. However, action is being taken
to counter the problem of the unemployment
of nationals. Within the Free Zones, premisesmay be owned on leased land, and mortgaged.
Therefore, a company established in a Free Zone
that has built its own facility may mortgage its
premises to a bank or financing company to
finance its debts or obligations.
Operators register with the customs authority of
the emirate in which the Free Zone is located. The
relevant customs authority delivers import and
export permits. Products may be brought into free
zones and duty-free shops, and exported outside
the country or to other Free Zones and duty-free
shops, without being subject to customs duties.
Goods can remain indefinitely in Free Zones.
All exports from Free Zones are accounted for
through export declaration. Imports from Free
Zones and duty-free shops into the customs
territory are liable to all the normal customs
duties and taxes (except, as mentioned above,
the GCC-owned companies that meet the 40
percent rule of origin criterion).
Jebel Ali Free Zone (JAFZA)
Jebel Ali Free Zone Authority manages one of
the worlds largest and fastest growing export-
processing zones, and is a leading global trade
and trans-shipment centre. The zone is built
around Dubais Jebel Ali Port which is one of the
worlds largest ports. Upon completion of the
Jebel Ali Airport, in 2007, Jebel Ali Free Zone will
be the only one in the region with an airport and
a port on site. Of the thousands of businesses
from over 120 countries operating at JAFZA, 76percent are involved in trading, warehousing, and
distribution; 20 percent in manufacturing; and 4
percent in services.
JAFZA is a commercial organisation but is
financially supported by its only shareholder, the
Government of Dubai.
In September 2006, a delegation from the
Chubu Economic Federation in Nagoya, Japan,
visited the Jebel Ali Free Zone. Talks focused
on the investment climate in the UAE and the
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CHAPTER 3
58 Investors Guide to the UAE
facilities offered by JAFZA to help expand
Japanese regional business within the Free Zone.
JAFZA is home to more than 100 major Japanese
companies engaged in various industrial, logisticsand electronics activities.
Knowledge Free Zones
As of November 2006, Tecom Investments, the
Dubai governments prime vehicle to spearhead
the ICT sector, had invested AED11 billion in
setting up seven knowledge free zones. Tecom,
which eight years ago launched the emirates
knowledge clusters, now manages Dubai
Internet City, Dubai Media City, Dubai Studio
City, Knowledge Village, DuBiotech, International
Media Production Zone and Dubai Outsourcing
Zone. It has so far attracted 2,400 companies
who together employ 30,000 professionals. The
ICT sector represents about 4 percent of the
UAEs GDP.
Dubai Media City (DMC) and the International
Media Production Zone (IMPZ) generated much
interest from the Asian business community at
the first UAE Asia Investment Exhibition & Forum
held in Singapore in late 2006. The delegation
met with the Singapore Media Development
Authority (MDA) to explore possibilities for
international collaboration on the development of
media clusters.
Industrial Zones
The emirate of Abu Dhabi is investing heavily in
industrial free zones and in 2004 established the
Higher Corporation for Specialised Economic
Zones (now renamed Zones Corp). Abu Dhabi
Industrial city (ICAD 1) is already completed andthe emirate plans to set up a further 30 industrial
zones over the next seven years.
Dubai Industrial City was launched by Dubai
Holding to concentrate both heavy and light
industry away from the urbanisations. Full project
leasing of the 560 square million foot project is
expected by 2010 and over 120 projects have
already been signed up in the development.
The plans include specialised areas for base
metal production, chemical, mineral, transport
equipment as well as food and beverage
manufacturing.
Sharjah is developing the Emirates Industrial
City and the Sharjah Investment Centre, both hugeindustrial areas providing warehousing, industrial
land, offices and labour accommodation.
Ajman, Ras Al Khaimah and Fujairah are also
developing their own specialised industrial free
zones in order to attract different industries to
their emirates.
For detailed information on Industrial Zones
please see Industrial Development of Each
Emirate on page 111.
Dubai Flower Centre
Dubai Flower Centre takes advantage of one of
the worlds fastest growing transit hubs. With
an understanding that the key to successful
perishables logistics is an unbroken, high quality
cool chain, DFC has dedicated itself to developing
and delivering the most advanced facilities in any
weather. Recently established and positioned at
Dubai International Airport 1, DFC has a waiting
list of international companies ready to move in.
DuBiotech
DuBiotech is the first fully regulated biotechnology
park in the Middle East. The development aims
to be the central hub for all life science industries
for the Middle East region and offers a vibrant
environment for key industry players to thrive
within their sphere of activity. The park offers
drug discovery, R&D, manufacturing companies
as well as industry-specific service providers.
In November 2006, Gezyme Corporation, one
of the worlds leading biotechnology companies,announced that it would open an office at
DuBiotech. Genzyme, with 2005 revenues of
US$2.7 billion, is a leader in the effort to develop
and apply the most advanced technologies in
the life sciences. Genzyme will join Amgen Inc.,
Richard-Wolff, Serono, Eppendorf and Cryo-Save
who are already residents of the park.
All DuBiotechs buildings are to be classified as
LEED certified Green buildings and the complex
includes a 500,000 square foot animal reserve.
Residents report on Dubai Internet City:
We were able to focus on market growth
without the distractions of organising
office fit out, telecom services, licences,
visas, and so on. We are convinced that
without this essential service, Hampson-
Russell would have taken weeks rather
than minutes to establish.
Adrian Smith,
Regional Manager,
Hampson-Russell Software Services
The environment in Dubai Internet City
has proven to be vibrant and active, with
its ever changing, cutting edge technology,
and melt ing pot of nat ionalities making it
a truly unique p lace to work.
David Michaux,
Chief Executive Officer,
Scanit: The Security Company
Dubai Internet City is a magnet for attracting
the very best the industry has to offer.
Stphane Rjasse,
Managing Director,
Fujitsu Siemens Middle East
Our market leadership is a direct result
of the conducive business environment
provided by Dubai Internet City.
Joseph Hanania,
Managing Director,Hewlett Packard Middle East
We would not have been able to grow as
fast as we have done, if we had stayed in
the UK or in Europe.
Jim Morrison,
Chief Executive Officer,
i-mate
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BUSINESS OPTIONS IN THE UAE
Several dynamics have contributed to a UAE market
that is vibrant, competitive and multicultural.In the thirty-five years since the formation of
the UAE, its leaders have worked assiduously to
reduce the legal and cultural barriers for foreign
enterprises operating in the Federation. This
means that the supply side of the UAE market
increasingly features traders and businesses
from all corners of the world.
Another dynamic in the UAEs brief history to
date has been the demographic change that has
created a burgeoning expatriate population. On
the night of December 6th 2005 when the UAE
conducted a census of all the people nationals
and non-nationals who were residing in the
country at that time, the total number of non-
nationals was 2,944,159 or 78.1 percent of the
total population. This means that the demand
side of the UAE market includes consumers and
businesses from across the globe.
But these recent dynamics are only the latest in
a string of factors in the UAEs history and culture
that have for centuries meant that the Emirates
welcome traders from foreign shores.
Dubai has been well known as an entrept for
centuries, but it is not the only emirate with a long
history of international trading. Some of Sharjahs
economic roots lie in trading links, especially
with the Far East. Archaeological excavations in
Ras Al-Khaimah meanwhile reveal that in ancient
times a settlement with an advanced civilisation
traded with the Indian sub-continent.
Traders in the UAE have therefore become
experienced in sourcing goods from across theworld. Prices are pressured downwards by re-
exporting, an important aspect of the economy,
especially in Dubai, and one that has resulted
in traders placing larger orders and obtaining
lower prices.
Todays multicultural UAE market is sophisti-
cated and value for money is considered very
important. This has created a demand for high
value, lower priced products. The UAEs high per
capita wealth meanwhile has fostered a tradition
of brand loyalty, observed by both local residents
and foreign residents alike.A relatively recent aspect of the UAEs
multicultural market is the slimming of the
price differentials that once separated higher
priced western goods from lower priced Asian
goods. Perceptions of the value and quality
of Asian goods in the market are improving,
thus once again making aspects of the market
more competitive.
Dubais Global Village epitomises the extent
to which the UAE market is multicultural. Now
an annual event on Dubais tourism calendar, it
started in 1996 as a small site along Dubai Creek
with kiosks selling products and handicrafts
from different countries. Today Global Village
is a substantial tourism attraction for UAE
nationals, resident expatriates and visitors from
across the world. At its twelfth extravaganza
from December 13th 2006 until February 9th
2007 there were exhibitors from 40 countries
selling produce at 75 retail outlets and
50 restaurants.
Best in Region Philosophy
Clearly UAE businesses have to differentiate, just
as the different emirates do in their own marketing
activities. While Dubai is focused on specific
sectors such as trading, financial services and
media, Abu Dhabi is focused on capital-intensive
industries and Sharjah has carved out its niche
for small- and medium-sized enterprises. Each
emirate meanwhile has its distinct tourism
offering. But a single message permeatesemirate-level marketing: the UAE is committed
to providing best in region facilities. This is
why international retail and leisure companies
and world-class investors continue to flock to
the UAE.
Businesses in the UAE also communicate
the best in region message. Rotana Hotels
philosophy is to be the leading Middle Eastern
hotel chain, says the Abu Dhabi-based hotel
management company. With 21 properties under
management throughout the Middle East and 21
additional operations and projects in the pipeline,the company founded in just 1992 is pursuing its
philosophy by leveraging international know-how
and local experience to provide hotel owners with
management services for fees consistently lower
than those of international competitors.
Similarly best in region focused enterprises
are found across the emirates, from the regions
first and only military and civilian ship builder
and repairer, Abu Dhabi Shipbuilding to RAK
Ceramics, which is now one of the worlds most
successful producers of ceramic and porcelain
tiles and sanitary ware.
3.2(a) Price Structure
With all the hallmarks of an open market economy
the UAE is committed to liberalised pricing in
most areas of the economy, a policy that is
underpinned by the Federations free trade policy
that allows the private sector to drive economic
growth with the government acting as regulator.
The authorities have made substantial moves
to open up UAE markets to foreign goods and
services which drives prices down and standards
up. The UAEs import duties are very low and the
Federation does not maintain foreign exchange
controls neither does it impose quantitative
restrictions on most imports.
Liberalisation of UAE markets is sharpening
companies approaches to pricing structures.
At the beginning of 2007 the UAEs only
telecoms operator, Etisalat, was preparing
for the market entry of its first competitor,Emirates Integrated Telecommunications
Company (EITC), by com-pletely reviewing its
pricing structure.
Etisalat said it would offer off-peak international
rates to business customers at a 35 percent
discount on current rates. Newcomer EITC
meanwhile said that said customers signing up
to its du telecoms services would introduce a
per second pricing strategy to differentiate its
offering from Etisalats.
3.2 A Multicultural Market
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In sectors where open competition is well
established, pricing strategies follow the
norms of an open market economy, and in few
industries are premium pricing strategies sofirmly embraced as the tourism sector. Hotel
prices routinely soar during major exhibitions
while Movenpick and Kempinski stand out a
mongst super-luxury international hotel
operators that have chosen UAE locations
for their premium priced offerings. Kempinski
operates the opulent Emirates Palace hotel in
Abu Dhabi but its UAE roots da te back to 1998
when a Kempinski five-star hotel opened its
doors in Ajman.
In few sectors are the tensions between price
points and the quality of service delivery more
noticeable than in the airline industry. Sharjah
capitalised on the opportunities for budget flights
when its government-owned Air Arabia took to
the skies.Air Arabia started operations in October 2003
and can safely claim to be the regions first
budget airline. Now it looks as if the budget
carrier will break new ground again by becoming
the first airline in the Gulf to go for an Initial
Public Offering if its application to convert into a
public shareholding company is approved by the
Ministry of Economy.
3.2(b) Advertising and Media
The UAE is the largest advertising market in the
region, according to figures for the first nine
months of 2006 issued by Pan Arab Studies and
Research Corporation (Parc). Advertisers in the
UAE spent US$736 million (AED2.7 billion) in
the first nine months of the year ahead of SaudiArabia where spending reached around US$717
million (AED2.6 billion) during the same period.
The UAEs advertising industry exceeded the
entire advertising spend of 2005 (US$630
million or AED2.3billion) during the first nine
months of 2006.
Due to the tremendous economic growth
achieved by the UAE and the advertising potential,
the country has also become the Middle East
home for many advertising agencies who have
developed advertising campaigns for both the
country and the region as a whole.
Table 2. Daily TV Viewing
Group Minutes per day
Nationals 200
Arab Expats 212
Indians 135
Other Asians 153
Westerners ENL* 107
Westerners NE** 126
Total 165
Table 6. Radio Listenership
Group Sample % listening 7days/wk
Nationals 232 44
Arab Expats 246 44
Indians 234 46
Other Asians 179 42
Westerners ENL* 113 48
Westerners NE** 111 60
Total 1115 47
Source: PARC
Table 1. Television Viewing
Group Sample % watching 7days/wk
Nationals 232 81%t
Arab Expats 246 89
Indians 234 78
Other Asians 179 71
Westerners ENL* 113 76
Westerners NE** 111 76
Total 1115 80
Table 4. Newspaper Readership
Group% reading newspaper
7days/wk
Mins/day
reading paperNationals 46 50
Arab Expats 48 45
Indians 53 35
Other Asians 60 29
Westerners ENL* 67 35
Westerners NE** 69 37
Total 53 40
Source: PARC
Marketing Survey
In late 2005 the UAE chapter of the International Advertising Association and Zayed University joined forces to conduct a survey of 1,115 UAE residents in all
seven Emirates. They enlisted the services of Dubai-based Pan Arab Research Centre (PARC), a media research leader and the Middle East partner of the Gallup
organisation to manage the field work for this ground-breaking study, which was conducted in September/October, 2005.
Each respondent was asked questions about media usage and attitudes. The survey covered such topics as media ownership, types of media used, language
of media used, media used for different types of entertainment and information, importance and satisfaction with the media used, and attitudes about advertising.
Excerpts from the survey are published on the following pages but the full survey can be downloaded at www.arabresearch.com
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BUSINESS OPTIONS IN THE UAE
Appliances Total sample Nationals Expat Arabs Indians Other Asians Native English
(N=1115) (N=232) (N=246) (N=234) (N=179) (N=113)
Other Television Sets 73.8 92.7 90.2 63.7 69.3 54.9
Flat Screen Television 41.2 47.8 24.8 37.6 31.8 40.7
Home Entertainment Centre 17.6 11.6 6.5 17.5 15.6 42.5
Digital Camera 42.3 44.8 30.1 32.5 31.8 73.5
Mobile Telephone 92.8 94.8 95.5 90.6 84.9 94.7
Mobile Telephone with Bluetooth 38.7 70.7 54.1 15.8 15.6 37.2
Laptop Computer 20.0 15.1 9.8 9.4 8.9 59.3
Desktop PC 61.9 77.2 69.9 58.5 39.7 65.5
Access to Internet 58.5 63.4 54.9 53.0 37.4 85.0
Number of Appliances Nationals Expat Arabs Indians Other Asians Native English
(N=232) (N=246) (N=234) (N=179) (N=113)
Flat Screen Television 1.35 1.10 1.02 1.05 1.25
Other TV sets 2.20 1.40 1.09 1.07 1.37
Free to Air Satellite TV 1.24 1.16 1.00 1.00 1.00
Free Cable 1.17 1.19 1.02 1.00 1.00
Desktop TV 1.08 1.01 1.01 1.04 1.03
Laptop Computers 1.09 1.04 1.00 1.00 1.04
Internet Connections 1.04 1.01 1.02 1.00 1.01
Digital Cameras 1.13 1.01 1.01 1.04 1.08
Home Theatre Systems 1.04 1.06 1.02 1.00 1.06
Mobile Phones 2.83 2.17 1.38 1.39 1.50
Mobile Phones with Bluetooth 2.26 1.77 1.32 1.82 1.17
Percentages of Households Owning Appliances
Average Number of Appliances per Household by Nationality
Source: PARC
Source: PARC
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62 Investors Guide to the UAE
Topic Nationals Expat Arabs Indians Other Asians Native English
UAE UAE TV Jazeera Papers A. dailies Papers
Arab Jazeera Jazeera Home TV Home TV Papers
Iraq Jazeera Jazeera Papers Papers Papers
Muslim world Jazeera Jazeera Papers Papers Intl. TVArab-Israeli conflict Jazeera Jazeera Papers Papers Papers
Asian topics UAE TV Jazeera Papers Papers Papers
European topics Jazeera Jazeera Papers Papers Papers
USA topics Jazeera Jazeera Papers Papers Papers
Social issues: UAE UAE TV UAE TV Papers Papers Papers
Social issues: Expat Arabs Jazeera Jazeera Papers Papers Papers
Social issues: Asian Expats Jazeera Jazeera Papers Papers Papers
Social issues: Expat Westerners UAE TV Jazeera Papers Papers Papers
UAE issues religion Jazeera Jazeera Papers Papers Papers
UAE issues education UAE TV Jazeera Papers Papers Internet
Regional business Jazeera Jazeera Papers Papers Papers
International business Jazeera Jazeera Papers Papers Papers
Stock market UAE TV A. dailies Papers Papers Internet
Daily = Arabic language dailies; Home TV = Home country television, Int. TV = International TV; Jazeera = Al Jazeera television; Papers = English-language Daily Newspapers; UAE TV = UAE-based television stations.
Popular Channels for Breaking News in the Middle East (Rank order)Channels Nationals Expat Arabs Indians Other Asians Native English
Abu Dhabi TV 2 3 8 7 5
Al Arabia 4 2 10 10 7
Al Jazeera 1 1 9 9 6
BBC World 6 6 1 1 1
CNN 5 5 2 2 2
Dubai TV 3 4 6 4 4
Euronews 8 7 7 7 3
Sahara TV 7 7 5 3 8
Star News 9 7 3 4 10
Zee News 10 10 4 4 8
Media Penetration Rates, (percentage of households having access)Group Free to Air Paid Cable Internet
Nationals 66.4 18.5 63.4
Expat Arabs 78.5 10.2 54.5Indians 44.4 27.4 53.0
Other Asians 47.5 21.2 37.4
Native English Speakers 21.2 46.9 84.1
Top Information Source
Source: PARC
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BUSINESS OPTIONS IN THE UAE
Abu Dhabi National Exhibition Centre
The decision to build a new exhibition centrefor the UAE was reached by the Government
of Abu Dhabi because demand from visitors
and exhibitors had expanded so dramatically.
Significant opportunities were seen to exist for
new international exhibitions and conferences.
In particular, Abu Dhabi is emerging as a
unique market and the massive developments
that are planned will support a range of
significant exhibitions.
The exhibition complex includes 57,000 square
metres of gross exhibition floor space, a massive
21,000 square metres visitor concourse and
7,500 square metres of multi-purpose halls. The
new centre also features dedicated conference
facilities for 1,200 people, banqueting areas and
more than 30 high-specification meeting rooms.
The project was completed in good time to
host the internationally recognised IDEX 2007
defence exhibition and conference. Built in the
U-shape that has proven so successful in the
best venues in the world, the Centre contains a
central landscaped plaza for outdoor events.
The focal feature of the complex is an iconic
soaring tower that curves above the centre and
looks out to the sea. Innovative in its design, the
tower is a bold architectural statement that reflects
ADNECs plans to become an internationally
recognisable venue. The tower will become the
brand that promotes the venue and Abu Dhabi
to the world. Quality exhibitions will play an
important role in creating international awareness
of Abu Dhabi, as well as in attracting investment,new industry and business tourism.
The location for this centre was carefully selected:
close to the major hotel developments and a short
distance from Abu Dhabi Airport. The site is only
45 minutes from Jebel Ali, Dubai. The surrounding
road network has been planned to allow for easy
access and exit to the centre and multi-storey
car parks provide ample capacity for visitors and
exhibitors. As part of the development, the existing
Sheikh Zayed Grandstand was refurbished and
linked to the new halls. Within it will be offices,
food courts and a range of companies servicingthe exhibition industry.
Dubai Exhibition City
Dubai World Trade Centre (DWTC) on December
4th 2006 unveiled two of Dubais most ambitious
and strategically important commercial projects
at Cityscape 2006, the International Property
Investment & Development Event. The Dubai
Trade Centre District and Dubai Exhibition City
were revealed for the first time, providing visitors
with the opportunity to see the extent and
ambition of these unique developments.
Designed to match the worlds highest
standards of architecture by internationally-
renowned Hopkins Architects, visitors were
shown the first phase of the AED16 bill ion master
plan to create the new Dubai Trade Centre District
at the heart of the city. The project will see the
generation of a new business district to rival the
centres of Singapore, London and New York.
Plans for Dubai Exhibition City the regions
first integrated business, event, trade and retail
destination were also revealed for the first
time. Dubai Exhibition City will provide a campus
style office park, a major retail destination, eight
international standard hotels, and a trade hub for
international companies to permanently showcase
their products. The development will be one of the
most strategically important commercial projects
in the Middle East and is designed to offer a
complete solution to business tourists, corporate
organisations and the event industry. Situated nextto Dubai World Central Airport and adjacent to
Dubai Exhibition World, Dubai Exhibition City will
drive business opportunities for the whole region.
Expo Centre Sharjah
The UAE is fast becoming a hub for meetings,
incentives, conventions, and exhibitions (MICE) in
the Middle East region. Excellent infrastructure,
superior hotel and conference facilities, tax-free
benefits, and its strategic regional and global
gateway position, are some of the reasons why
the UAE is preferred as a MICE host.Sharjah is one of the emirates at the forefront
in developing the MICE industry. This emirate
pioneered the exhibition industry in the Gulf
with the establishment of an Expo Centre in
1977 and continues to be one of the regions
leading organisers of B2B, B2C, and Solo
Country Shows.
The Middle East MICE sector received a
considerable boost in September 2002 when
Expo Centre Sharjah moved to a new state of the
art facility.
The new exhibition and meeting facility was
a spectacular tribute to the growing importance
of the UAE as the commercial hub of the Middle
East, and the Centre has since then established
itself as a prime meetings destination that offers
the perfect combination of sophisticated technical
facilities and professional services across a broad
spectrum of events.
In 2005, Expo Centre Sharjah hosted 19 events
attracting over 609,270 visitors including 10,000
from overseas. During this period, the exhibitions
generated AED180 million in revenues for the
hospitality and tourism sectors in Sharjah. Across
the UAE, exhibitions in Sharjah are estimated to
have generated sales of 825,000 room nights
during the year.
The UAE is becoming a hub for exhibitions
3.3 Exhibition Centres
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3.4 Trade Fairs
TEKNO
Janury 2007Dubai World Trade Centre
Arab Plast
January 2007
Dubai World Trade Centre
Small & Medium Enterprises Expo
January 2007
Dubai International Exhibition Centre
Dubai Property & Investment Exhibition
January 2007
Dubai World Trade Centre
The Wellbeing Show
January 2007
Dubai International Exhibition Centre
Police & Homeland Security
January 2007
Dubai International Exhibition Centre
Intersec Middle East
January 2007
Dubai International Exhibition Centre
Fire Middle East
January 2007
Dubai International Exhibition Centre
Commercial Security Middle East
January 2007
Dubai International Exhibition Centre
Safety & Health Middle East
January 2007
Dubai International Exhibition Centre
Environment
January 2007
Abu Dhabi International Exhibition Centre
Steel Fab
January 2007Expo Centre Sharjah
Arab Health
January 2007
Dubai International Exhibition Centre
Middle East Business Aviation (MEBA 2007)
January 2007
Airport Expo Dubai
Arab Wood
February 2007
Expo Centre Sharjah
Multiphase Pumping & Technologies (MPT 2007)
February 2007
Beach Rotana Hotel & Towers, Abu Dhabi
Architectura l Conservation
February 2007
Dubai International Exhibition Centre
Arab Lab
February 2007
Dubai International Exhibition Centre
Middle East Electricity
February 2007
Dubai International Exhibition Centre
International Real Estate & Investment Show
February 2007
Abu Dhabi International Exhibition Centre
Home Owner Dubai
February 2007
Madinat Arena, Dubai
IDEX
February 2007
Abu Dhabi International Exhibition Centre
Gulfood
February 2007Dubai International Exhibition Centre
The Perfect Wedding
February 2007
Expo Centre Sharjah
Fashion Jewellery & Accessories & Watch
& Clock Fair (IFJA & IWCF)
February 2007
Dubai International Exhibition Centre
IFEX UAE
February 2007
Abu Dhabi International Exhibition Centre
Dubai International Wood &
Wood Machinery Show
February 2007
Dubai World Trade Centre
Sign & Graphic Imaging
February 2007
Dubai International Exhibition Centre
Asian Lifestyle Dubai
February 2007
Airport Expo Dubai
Kioskcom Middle East
(Dual-Automation & Self-Service Show)
February 2007
Crown Plaza, Dubai
National Career Exhibition
March 2007
Expo Centre Sharjah
AJWEX (International Jewellery
and Watches Exhibitions)
March 2007
Celebration Land, Al-Ayn
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Franchising Middle East 2007 (FME 2007)
March 2007
Dubai International Exhibition Centre
International Spring Trade Fair
March 2007
Dubai International Exhibition Centre
Chem Middle East
March 2007
Sheikh Rashid Hall, Dubai
IPM Dubai
March 2007
Airport Expo Dubai
Vision X Dubai
March 2007
Dubai International Exhibition Centre
Dubai Anaesthesia
March 2007
Crown Plaza Hotel, Dubai
Cabsat
March 2007
Dubai International Exhibition Centre
Careers UAE
March 2007
Dubai World Trade Centre
Roadex
March 2007
Abu Dhabi International Exhibition Centre
Automotive Aftermarket Middle East
March 2007
Dubai International Exhibition Centre, Dubai
Dubai Boat Show
March 2007
Dubai International Marina Club
Water, Energy Tech. Environment Exhibition
March 2007
Dubai International Exhibition Centre
MOTEXHA Spring
March 2007
Dubai International Exhibition Centre
Aviation Procurement Expo
March 2007
Abu Dhabi International Exhibition Centre
Finance, Real Estates & Construction
March 2007
Expo Centre Sharjah
Dubai Pharmaceutical & Technologies Exhib.
March 2007
Dubai International Exhibition Centre
Cladding Middle East
March 2007
Expo Centre Sharjah
Roof and Cladding Middle East
March 2007
Expo Centre Sharjah
Front Middle East
March 2007
Expo Centre Sharjah
Ginex Expo
March 2007
Abu Dhabi International Exhibition Centre
Gulf Glass
March 2007
Expo Centre Sharjah
Gulf Incentive Business Travel & Meetings Exhib.
March 2007
Abu Dhabi International Exhibition Centre
Dubai Humanitarian Aid
& Re-development Exhib.
April 2007
Dubai International Exhibition Centre
Arabian Propert ies Exhibition
April 2007
Abu Dhabi International Exhibition Centre
Construct Abu Dhabi
April 2007
Abu Dhabi International Exhibition Centre
Gulf Print
April 2007Dubai Airport Expo
Gulf Pack
April 2007
Dubai Airport Expo
International Property Show-Dubai (IPS 2007)
April 2007
Dubai International Exhibition Centre
The Bride Show
April 2007
Dubai International Exhibition Centre
Ambiente Arabia
April 2007
Dubai International Exhibition Centre
Arabcom Expo
April 2007
The Emirates Towers Hotel, Dubai
Global Education & Training Exhibition (GETEX)
April 2007
Dubai International Exhibition Centre
Retail Middle East
April 2007
Expo Centre Sharjah
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Gulf Maritime
April 2007
Expo Centre Sharjah
Photo World Dubai
April 2007
Dubai World Trade Centre
Poultry & Livestock Exhibition
April 2007
Dubai World Trade Centre
Fishing & Aquaculture Exhibition-Middle East
April 2007
Dubai World Trade Centre
Agri Business Expo Middle East
April 2007
Dubai International Exhibition Centre
Dubai Derma
April 2007
Dubai International Exhibition Centre
Middle East Flower
& Garden Show
April 2007
Dubai World Trade Centre
Alumex Dubai
April 2007
Dubai World Trade Centre
Intl. Medical Care & Diagnostic Exhib.
(IMD-IHF)
April 2007
Dubai International Exhibition Centre
Dubai Entertainment Amusement
& Leisure show (DEAL 2007)
April 2007
Dubai World Trade Centre
Emergency Catastrophe Management Exhibition
April 2007
Dubai International Exhibition Centre
World Tobacco Middle East
April 2007
Dubai World Trade Centre, Dubai
APTS Middle East
April 2007
Grand Hyatt Dubai
MidEast Watch & Jewellery Show
April 2007
Expo Centre Sharjah
Arabian Travel Market
April 2007
Dubai International Exhibition Centre
Weddex
May 2007
Celebration Land, Al-Ain.
Middle East Toy Fair
May 2007
Dubai International Exhibition Centre
Lightstyle Gulf Light
May 2007
Dubai World Trade Centre
Interior Lifestyle Middle East
May 2007
Dubai International Exhibition Centre
Hardware & Tools
May 2007
Dubai International Exhibition Centre
Housewares & Homestyle
ME Exhibition
May 2007
Dubai International Exhibition Centre
Light Middle East
May 2007
Dubai International Exhibition Centre
Hometech Middle East
May 2007
Dubai International Exhibition Centre
Garden, Landscaping & Outdoor Living
May 2007
Dubai International Exhibition Centre
ISH Kitchen + Bathroom Gulf
May 2007
Dubai International Exhibition Centre
Install Middle East
May 2007
Dubai International Exhibition Centre
Event 360
May 2007
Dubai International Exhibition Centre
Musac Expo
May 2007
Dubai International Exhibition Centre,
Dubai
Wellness & Spas Middle East
May 2007
Dubai International Exhibition Centre
PALME
May 2007
Dubai World Trade Centre
BeautyWorld Middle East Gulf
May 2007
Dubai International Convention
& Exhib. Centre
Automechanika Gulf
May 2007
Dubai International Exhibition Centre
Materials Handling
May 2007
Dubai World Trade Centre
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Airport Build & Supply Exhibition
May 2007
Airport Expo Dubai
Italian Lifestyle in the Emirates
May 2007
Expo Centre Sharjah
InRetail Expo
June 2007
Dubai International Exhibition Centre
The Hotel Show
June 2007
Dubai International Exhibition Centre
Retail City
June 2007
Dubai International Exhibition Centre
The Office Exhibition
June 2007
Dubai International Exhibition Centre
Hotel Show Dubai
June 2007
Dubai World Trade Centre
Domotex Middle East
June 2007
Dubai International Exhibition Centre
Paper Arabia
September 2007
Dubai World Trade Centre
Dubai Transexpo
September 2007
Dubai World Trade Centre
Arabian Adventure Show
October 2007
Abu Dhabi International Exhibition Centre
Arab Hunting Show
October 2007
Abu Dhabi International Exhibition Centre
Security & Safety Middle East
October 2007
Abu Dhabi International Exhibition Centre
Halal Dubai
October 2007
Crown Plaza, Dubai
Dubai International Seafood Expo
October 2007
Crown Plaza Hotel, Dubai
Dubai Air Show
November 2007
Dubai World Trade Centre
International Aerospace Exhibition
November 2007
Airport Expo Dubai,
Gitex-UAE
November 2007
Dubai World Trade Centre
3.5 Strategic Alliances
Whatever the size and reputation of the home
operation, a productive alliance with a national
company can help international business to be
more effective in the United Arab Emirates and
this is also true for all other countries of the
Middle East.
The Centre for Applied Research & Training
(CERT), headquartered in Abu Dhabi, is the
commercial arm of the Higher Colleges of
Technology and has been building a reputation
for excellence in education and innovation since
1996. Collaborating with the worlds leading
technology companies since its very earliest days,
CERT has been able to open doors for companies
such as Honeywell, Lucent Technologies, Intel
and IBM.
It is easy enough for large companies to
establish and staff a UAE office but to achieve
optimum business volumes they really do need to INTEL is a resident of CERTs Technology Park
Intel
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find a way to interface with the resident decision-makers in the country.
Multi-discoveries are occurring all the time
at organisations such as IBM. The companys
laboratories, which rival anything you would find
in the public sector, spend some US$10 billion
on research each year. And a good deal of this
intellectual property just slides and sits in an
inventory. This was the case with some IP that
would eventually be transformed into the biggest
telematics deal in history. CERT and IBM are now
working together to provide traffic management
solutions in the UAE. The vehicle smart box
that the companies developed jointly is a
born in the UAE product with regional and
global possibilities.
IBM first introduced their technology to the
UAE by promoting it directly to the government
and by visiting police departments and the
municipalities. Inevitably, there was interest in a
device that could make the countrys roads safer,
address problems in traffic and fleet management
and enhance driver convenience, but it was only
interest at that early stage. These organisations
are receptors, ready to deploy solutions but not
to build solutions and appropriate solutions for
the UAE in this area still needed to be formulated.
CERT was at the interface between the IP partner
and the end user and this resulted in a product
tailor-made for the UAE, a healthy initial order
from a fleet operator and many other opportunities
which are now in the pipeline.
There is no doubt that the reputation of
individual UAE business leaders influences buying
decisions in the UAE. There is also no doubt that
to team up with a well respected Emirati nationalhost company facilitates business. Long after the
expatriate managers have gone home the Emirati
nationals will still be in place a fact which inspires
confidence in potential business partners.
A local host company can be especially
important for small foreign companies that are
less well known in the UAE but still have intriguing
IP. Cathexis Innovations is one such company
and it is at the cutting edge of RFID technology.
Before CERT expressed interest in the
company, Cathexis made several visits to theUAE talking to people such as Microsoft and IBM.
Eventually the company came to understand that
what they really needed was the benefit of a
national company working on their behalf. In late
November 2006, CERT announced that it had
acquired an equity stake in Cathexis following an
investment of CAN$3 million.
The dynamic environment of the UAEs
specialised zones, allows people to get to know
eachother and share ideas.
These international relationships in the UAE,
which take various shapes, have stood the test of
time. Honeywell has been with CERT for the past
ten years and now have their systems integrated
at CERTs Abu Dhabi centre. The company
has announced that it is to expand its highly
successful UAE operation.
Agencies and Distributorships
The 2006 amendment to the Commercial Agencies
law will reassure potential investors. The UAE
government has demonstrated that it is happy to
allow foreign principals and their UAE agents to
agree the duration, dispute resolution procedures
and other terms of contract between themselves.
The independent judicial system of the country
will enforce contacts without government
interference in private business relationships.
Prior to this amendment, neither party could
terminate the agency contact except through
mutual agreement, a decision of the Commercial
Agencies Committee or by order of the courts.
This was the situation even if the commercial
agency contract had expired or the principal
and agent were in dispute. Under the law, goodswould be barred from entering the country
without the agents approval. This ban would
stay in place until the problem was fully resolved
and this could result in products being unable to
reach UAE shelves for a considerable time.
Let it be said that this level of protection to
the agent often brought positive benefits to both
sides and stability to the marketplace. Agents,
who had to be UAE nationals or companies,
had the confidence to invest heavily in their sole
agencies which quite often would be their mainor only source of income. No recognition or legal
protection would be given to a commercial agency
that had not been registered with the Ministry of
Economy. Both parties had incentives to actively
promote and distribute the goods in the UAE and
create successful brands. Clearly there was much
to be said for getting things right and maintaining
a good relationship between principal and agent.
And often the combination of an excellent and
well promoted product delivered to retailers by
people who could hardly know their market better
delivered the desired results.
Agents value the protection offered by the
Agencies Law because the consequences of
being unfairly dumped by a principal could be
catastrophic. On the other hand the principals
were concerned that they could not terminate
an agents appointment even if the agent were
in breach of agency terms, the contract or was
unable to support the product. Even if there was
justifiable cause for deregistration, the agent
could seek compensation for his investment in
setting up and developing the agency.
There had been very few occasions during the
previous ten years in which the courts had ordered
the termination of a commercial agency or its
deregistration by the Ministry of Economy. The
principal/agent relationship was like a marriage in
which there was very little possibility of divorce
except in the unlikely case that both parties
agreed. If both sides worked very hard to make
It is helpful to team up with a national host company
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BUSINESS OPTIONS IN THE UAE
a success of it, the rewards could be outstanding
but a hostile separation would put everything
on hold.
The amendment recognises the interests atstake but distances the Ministry of Economy
from issues agreed by the two parties. Nowadays
the commercial agency contract runs for the
duration of its term and then expires unless
renewed by the agreement of both principal
and agent. However contracts for unspecified
periods shall continue indefinitely unless both
parties agree to move over to a fixed period. The
courts now decide on deregistration questions
if the two sides are unable to agree. The right
to claim damages resulting from the terminationof an agency now applies to the principal as
well as to the agent. There is a further provision,
following a Cabinet decision, which stipulates
that even though an agency exists, certain
goods may be imported into the UAE whenever
necessary or whenever required to prevent
a monopoly. It is important to note that the
Agency Law relates only to exclusive agencies.
Furthermore, a foreign principal could appoint
an exclusive agent but not have the agreement
registered at the Ministry. A few UAE companiesmay want to see an Agency certificate as part
of pre-qualification formalities but usually it is
enough to show evidence that a bond between
principal and agent exists and that someone in
the UAE can be held accountable.
The foreign company may also appoint a non-
exclusive agency and any number of distributors.
Then there is the possibility of the company
setting up a branch to distribute i ts own products
without the need for an agent. Of course in such
cases conflict resolution would be outside thescope of the Agency Law.
The Agency Law provides an option for
the registration of contracts with the UAE
government and brings certain benefits including
predictable dispute settlement. However there
are other proven options for conducting business
successfully in the UAE.Dubai Internet City attracts key technology companies
DIC
3.6 Imports and Exports
It takes just six documents, three signatures
and 18 days to move imported goods from the
UAE ports to warehouse. According to the latest
World Bank report, this makes the country one
of the most competitive in the Middle East.
The Doing Business in 2006 report (released in
September) also shows that it takes a business
just 12 hours to comply with all tax regulations
in the UAE. The cost of obtaining a licence
at just 2.1 percent of the countrys per capita
income is the lowest in the world. With the new
berths created at Jebel Ali port the average time
taken to load now is just 17 hours versus six
days in 2005.
Imports by the UAE, the Arab worlds second
biggest economy, grew 12 percent in 2005 to
US$80.7 billion representing 25.1 percent of the
Middle Easts total of US$322.1 billion.
Among Middle East exporters, the UAE ranked
second after Saudi Arabia in 2005 with a 27 percent
growth in exports to US$115.5 billion, which is
21.5 percent of the Middle Easts total exports.
The Middle Easts merchandise exports
jumped 35 percent to US$538 billion in 2005,
more than twice the level recorded only three
years earlier, according to the latest International
Trade Statistics 2006, report released in late
November.
As the Middle Easts merchandise exports
consist largely of fuels (69 per cent), it is not always
realised that the regions exports of manufactured
goods are also growing rapidly. The UAE has
become a large trading hub and its exports
(including re-exports) exceeded US$48 billion.
Higher fuel prices contributed to changes
in regional trade flows, boosting oil exporting
economies and stimulating their import growth
of goods and services. World exports of fuels
rose by 41 percent to US$1.4 trillion in 2005.
This sectors share in world merchandise exports
reached 13.8 per cent, its highest level in almost
two decades.
A prerequisite for doing business in the UAE is
having the appropriate licences. In particular, all
entities carrying out trade must be in possession
of a trading licence. An importer obtains this
licence from the economic department of the
emirate in which business is to take place;
licensing procedures and regulations vary from
emirate to emirate. The trading licence is valid
only for the emirate in which it is issued; it
specifies the products that may be imported, as
well as the activity of the licensee (e.g. importer
or construction company).
The licensee is responsible before the court
for any liability resulting from consumption of the
product in the UAE, for example where products are
found to be faulty or dangerous. Clearing agents,
who must be GCC nationals, can clear imports
only on behalf of the licensed importers, and only
those products mentioned on the licence.
Under the Commercial Companies Law, the
trading licence can be obtained by either majority-
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owned UAE companies or by 100 percent foreign-
owned branches of foreign companies. However,
a large percentage of imports take place under
the Trade Agencies Law, whereby the tradinglicence is held by exclusive commercial agents.
Under the Trade Agencies Law, importing
activities, and wholesale and retail distribution
services, as well as the sale, display or rendering
of a commodity or service in the UAE, are
reserved for exclusive agents. An agent must
be a UAE national, or a company owned by
UAE nationals; must purchase products or
services from foreign companies according to
independent sale agreements and then resell to
its clients as per other agreements, in its ownname. The agency agreement/contract specifies
the agent, the principal (owner of the trade
mark or manufacturer of the brand), the area of
coverage (one or several emirates), and the brand
and models of the product that can be imported
and sold exclusively by the agent.
In order to benefit from exclusive import and
distribution rights, the agency agreement must
be registered with the Ministry of Economy.
The registration costs Dh5,000 (US$1,360),
and is renewable annually against payment of
Dh2,000 (US$545). A foreign company may
appoint an agent that is not registered in the
Ministry of Economy; in this case, the contract
cannot be defended in the court under the Trade
Agencies Law.
Import Prohibitions, Licensing and
Controls
The GCC Common Customs Law distinguishes
absolute import prohibitions from restricted
imports. Each GCC state determines its own list
of prohibited or restricted products, although
GCC members are currently working on the
development of a common list. Imports that are
prohibited in some member states and permitted
in others must not transit through the member
states in which they are prohibited.
In the UAE, absolute import prohibitions
are maintained for various reasons, including
international conventions, environmental pro-
tection, health and safety, and religious and moral
considerations. They cover all kind of drugs;
asbestos; used pneumatic tyres; industrial waste;
forged and duplicate currency; Habara falcons;ivory and rhinoceros horn; live camels; any
printed material that does not adhere to religion
or morals or that is aimed at causing corruption
and disorder; or materials prohibited under any
law in force in the country. All imports from Israel
are prohibited.
Registration and Documentation
To export goods of UAE origin, shippers are
required to provide Customs with an original
invoice and a completed export declaration.
Export Prohibitions and Restrictions
The UAE may restrict oil exports as a result of
its membership in the Organisation of Petroleum
Exporting Countries (OPEC).
In addition, the UAE maintains export controls
(through permits) on certain products for safety,
security, and environmental reasons, and to
ensure compliance with international obligations
under treaties and conventions (e.g. the Basel
Convention, CITES, the Convention on Chemical
Weapons, the Treaty on Nuclear Non-Proliferation)
to which it is a signatory. It restricts in particular
exports of dual-use goods that might be used in
weapons of mass destruction programmes, as
well as conventional weapons. Permits are alsorequired to export animals and animal products, as
well as narcotic drugs, psychotropic substances,
and precursors.
Export Subsidies, Finance and
Insurance
The UAE does not grant or maintain any export
subsidy within the meaning of the WTO Agreement
on Subsidies and Countervailing Measures. At
federal level, the Emirate Industrial Bank, 51
percent owned by the Federal Government,provides financing at reasonable terms for the
industrial sector. This includes export credits
and equity financing. To be eligible, the project
should have a minimum of 51 percent UAE or
GCC ownership, should be located in the UAE
and should have an industrial licence issued by
the Ministry of Finance and Industry.
Export Promotion
Each emirate is responsible for its own promotional
activities which are coordinated by the relevant
Departments of Economy or Tourism.
Source: Ministry of Economy
Commodity Export Structure 2006
Crude oil 36%
Oil by products 4%
Gas 5%
Other exports 6%
Free zone exports 16%
Re-export 33%
36%
4%
16%
33%
5%
6%
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71Investors Guide to the UAE
BUSINESS OPTIONS IN THE UAE
Abu Dhabis new exhibition centre has a central plaza for outdoor eventsADNEC
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