In his opening remarks, Mr Ramkumar said, “There is a lot happening between India and UAE. UAE is the third largest trade partner with India, next to USA and China. UAE is a major exporter of crude oil to India. Recently, UAE has committed a lot of investments into India in the food sector, around 7 Bn$ and this is supposed to create 200,000 jobs. UAE is also ready to invest in more sectors like logistics, ports, airports, etc. There is a lot of FDI inflows from the UAE in recent times.”
He added, “About 3000 startups in UAE, which is roughly one third of all the startups there, have been started by Indians. This has been encouraged by the local government. There have been many relaxations by the UAE Government in terms of incentives and relaxation in citizenship guidelines.”
Mr Ramkumar highlighted the fact that the Dubai government has announced citizenship to innovators, artists, doctors and specialists. “This has made lot of people throng the UAE.”
He also stated that India and GCC were about to sign a FDA but it has not come through. “However, India and UAE have now decided to do a FDA and it is likely to happen soon. A great event is happening in Dubai from October this year which is Expo 2020 (rescheduled by a year due to Covid). India is participating in this in a big way,” he said.
Mr N Raman, Managing Director, Capitalcorp FZC, Dubai gave an overview of Dubai covering its location, area, demography, language, cultural and social factors, currency exchange and climate. He also explained why Dubai is an attractive destination for investors.
Key takeaways from his talk:
- Dubai is the gateway to Middle East and African markets. Singapore is 4 hours ahead of Dubai and London is 3 hours behind Dubai. So, sitting in Dubai, one can do transaction on the same day with someone in the Far East as well in the West.
- Dubai has 3900 sqkm compared to Delhi (1484 sqkm) and Mumbai (603 sqkm). But population density of Dubai is just 860 persons per sqkm compared to Delhi (11,320) and Mumbai (32,303). Being sparsely populated, social distancing has been happening there even before Covid. This has helped Dubai to contain Covid efficiently and is now a preferred destination for many rich people around the world.
- 8% of the population are local UAE nationals. 92% are expats. 50% of Dubai population is from India. The balance come from 102 nationalities.
- There is hardly any air or noise pollution.
- Dubai is the 7th safest country in the world among 376 cities.
- English is spoken as the main language.
- Dubai is melting pot of the world.
- Annual average temperature is 24 deg C. During summer, it gets very hot upto 45 deg C. Winters are very cool and pleasant.
- Currency used is UAE Dhiram. (AED). 1 AED is roughly Rs 20. UAE Dhiram is permanently locked to USD. 1 USD is 3.675 AED. This has been working very well for the past 40 years. This is one of the main factors for the long term stability of the economy. 70 to 80% international transactions are done in US dollars. This is a dollar economy.
In terms of ease of doing business, Dubai is ranked 23rd in the world as of 2019
- Dubai is culturally diverse and socially very tolerant. Enough freedom is given to the citizens and residents. It is a vibrant city which does not sleep. There are bars and night clubs which are open till 3 am.
- There are many hotels and restaurants. Some of the restaurants function 24 x 7. This is the style and quality of living that Dubai offers.
- In terms of ease of doing business, Dubai is ranked 23rd in the world as of 2019. With the measures taken by Government, it may move to top 10 in the near future.
- You can start business either in Dubai mainland or in the Free Trade Zones (FTZ). There are more than 20 FTZs each specialising in one particular sector.
In the Dubai mainland, to start business there are four options:
- Limited Liability Company (LLC): Minimum 2 shareholders and maximum 50. Till May of 2021, to start a business, 51% of the share capital had to be owned by a UAE national. From 1 June this year, this has been waived through a landmark amendment. Now expats can own 100% share in a long list of sectors. Minimum share capital is 300,000 AED.
- Branch office of a foreign company: They can do business only in the product or service dealt by the foreign company.
- Joint stock company, which is not quite prevalent.
- Sole proprietorship like how a doctor or auditor practises.
Free Trade Zones
- In Free Trade Zones, there is no tax. They offer a single window clearance for license. If you submit the business proposal with preferred name and passport copies of the shareholders, then you will get the license within 1 to 3 weeks, in most cases. Capital required ranges from 50,000 AED to 1 Mn AED depending on the free zone that you choose.
Dubai government has been very particular on rapidly expanding the alternate, non-oil economy. They have done so at very dynamic pace. This is where the Indian business people and entrepreneurs have huge scope.
- In Free Zones, there are two entities. One is, Free Zone establishment where a single shareholder has an establishment. The next one is the Free Zone Company with minimum two shareholders. Normally, there are 5 shareholders.
- Other than that, you can open a branch office or representative office in any of the free zones.
- In Dubai also, there is no income or corporate tax. They charge VAT. Products manufactured in mainland and exported to other GCC countries are exempt from customs duty, subject to a minimum value addition of 40%. They are also the preferred products in GCC countries.
- Products manufactured in Free Zones and exported to UAE or other GCC countries attract customs duty. It is similar to manufacturing done overseas.
- Most free trade zones are exempted from VAT. They are also exempted from import duty. Jebel Ali Free Trade Zone is one of the biggest in the world and the biggest in the entire region. It houses more than 8,000 companies, many of which are in manufacturing, logistics and shipping. There are two Free Zones exclusively for higher education.
- GDP per capita for UAE is 43,470 USD. Inflation rate from 2017 to 2019 is in the range of 2 to 1.5%
- Dubai’s oil reserves are not very high. Out of 97.8 Bn barrels of oil reserves in UAE, Dubai has got only 4 Bn reserves. Therefore, the Dubai government has been very particular on rapidly expanding the alternate, non-oil economy. They have done so at very dynamic pace. This is where the Indian business people and entrepreneurs have huge scope.
Popular sectors which offer opportunities
- Construction and infrastructure: Huge infrastructure plans and booming real estate are the key growth drivers of the construction sector. There has been an unprecedented growth in the past two decades, with real estate growth of 36% year-on-year and contributing to 7.6% of the GDP.
- For Expo 2020 alone, the investment in real estate sector has been in the order of 6.9 Bn$.
- There are two airports – Dubai International airport and Al Maktoum International airport. The Al Maktoum International airport and Jebel Ali port are undergoing major expansion plans. These will trigger a number of real estate / residential projects besides numerous hotels and other facilities.
- In real estate, Indian companies like Shoba Developers, Shapoorji Pallonji have made a big mark.
- Foreigners account for 32% of the transactions in Dubai.
- Other GCC nationals, Indians and Chinese use Dubai as their second home.
Indians rank first in real investment in Dubai. 5,246 Indian nationals have invested in Dubai real sector valuing AED 10.8 Bn in 2019 alone as per Economic Times report.
- Manufacturing: Process food and beverages, plastics and rubber, electrical machineries, minerals and products, base metals and precious stones, chemicals and products are some of the areas where Indians have big scope.
- From 13% of the GDP from manufacturing sector in 2015, it is expected to touch 25% in 2025.
- Tourism and Hospitality is another promising sector. There are many landmark tourist attractions like Burj Khalifa, Mall of the World, etc.
- There are about 542 Hotels completed in one decade. Taj and Oberoi Hotels from India have made a mark here and are doing well.
- Education and Healthcare is another important area and offers considerable scope for investments. Many reputed foreign universities from around the world including UK, USA, Australia, Canada and India have set up institutions for higher education here. Many students from Middle East, Africa and India study in Dubai. BITS Pilani and MAHE, Manipal are well known in Dubai.
- Healthcare is another priority area. All should have medical insurance. Dubai government has set up a separate Health City which encourages people from abroad to set up hospitals and research facilities and allied services.
- India, Turkey, South East, Switzerland and Oman are its 5 export destinations. India, USA, China, Germany and UK are its import origins.
- India imports from UAE petroleum products, crude oil, precious metals, stones and gems, jewellery. India exports to UAE food items, textiles, garments, engineering products and precious metals.
- Indians rank first in real investment in Dubai. 5,246 Indian nationals have invested in Dubai real sector valuing AED 10.8 Bn in 2019 alone as per Economic Times report.
- Indian companies such as L&T, Voltas, Shoba Developers, Shapoorji Pallonji, Ashok Leyland, TCS, Infosys, and restaurant chains like Saravana Bhavan, Sangeetha, Chappan Bhog and many others have been very successful in Dubai. Voltas MEP Division have set up their first roof top solar project in Dubai recently.
- Covid has enabled lot more millionaires and billionaires to have their homes in Dubai. People from several countries around the world have found Dubai to be very safe and secure during 2020 and even now. This number is increasing every month.
- There are 49 commercial banks in Dubai out of which 26 are foreign banks. They extend corporate facilities but there are certain limitations.
- VAT is 5% across all items and is levied on any company in Dubai mainland.
- Import duty is 5% but items such as food products, raw materials for manufacturing and making machinery, packaging, etc. are exempted from this
- All major international audit companies operate in Dubai.
- There is no income tax for individuals.
For more information contact Mr N Raman – raman@capitalcorpuae.com
