A Guide To Doing Business With The UAE By Copernicus Consulng 0870 879 5326 hp://www.exporouae.com A GUIDE TO DOING BUSINESS IN The UAE CONTENTS Secon Pages 1.0 Introducon 3 1.1 Geography, climate, and transport 3 1.2 Major indigenous industries 5 1.3 Free market economy 5 1.4 UK and the UAE 5 2.0 Geng Started 7 2.1 A plan of campaign 7 2.2 Financial support 10 2.3 Legal requirements 11 2.4 Transport opons 12 2.5 Geng paid for your exports 14 3.0 Customs And Tax Regulaons 15 3.1 Customs dues 15 3.2 Tax regulaons in The UAE 15 4.0 Mergers And Acquisions 16 4.1Definions 16 4.2 Inial steps 16 4.3 Due diligence 17 4.4 The name of the new company 18 4.5 Trademarks 18 5.0 Labour Laws 19 5.1 Employees’ contracts and rights 19 6.0 Business Equee In the UAE 21 7.0 Useful Informaon 24 7.1 Telephone 24 7.2 Public holidays 24 7.3 Time 25 7.4 Rates of exchange (May 2011) 25 7.5 Useful contacts 26 2 1.0 Introducon This prospectus is a guide to opening a business in the United Arab Emirates (with special reference to Abu Dhabi and Dubai), and is especially relevant to UK investors. Firstly, we present an overview of the geography, economy and polical system of the featured countries. Before considering entering a foreign market, it is as well to know as much as possible about the background to the target country’s market. In certain areas covered in this guide there are reports of human rights and forced labour issues especially as regards immigrant blue collar workers. Potenal investors may wish to research the maer for themselves before proceeding. 1.1 Geography, climate, and transport Abu Dhabi (the city) is the capital and second largest city of the United Arab Emirates (UAE). The UAE is a federaon of seven states which also includes Dubai (see below). The city of Abu Dhabi is situated on an island just off the southern coast of the Persian Gulf. Its populaon is just under a million. The head offices of several UAE banks are situated in Abu Dhabi City, which has been designated by economists as “the richest city in the world”. It was of course ruling family member HH Sheikh Mansour bin Zayed Sultan Al Nahyan who bought English Premiership football club Manchester City, bankrolling the club’s current success. Abu Dhabi (the Emirate) is the largest country in the UAE, with a land area of 3 67,340 sq km/26,000 sq. mi. Its populaon is 1.6 million. Situated at the southern end of the Persian Gulf, it is bordered by Saudi Arabia to the south and west, and Oman to the north‐east. Polically, the Emirate is a constuonal monarchy. Its currency is the UAE dirham (AED). The climate is hot and arid, although relavely mild (12°C – 23°C) in winter. Major airports are Abu Dhabi Internaonal and Al Ain Internaonal, with frequent direct flights to and from Heathrow and Gatwick. Public transport within the Emirate is principally by bus. The country’s main cargo port is Mina Zayid. Dubai (the city) is situated on the south‐eastern coast of the Persian Gulf. A major financial and commercial centre, Dubai, like other neighbouring states, is diversifying its economy from the oil‐driven bonanza which it has enjoyed for the past 45 years or so. Tourism (helped by several high profile sports events) and financial services are sectors of increasing importance. Dubai (the Emirate) is the second largest state in the UAE federaon, with a land area of over 4,100 sq km/1600 sq mi. Its populaon is around 2.2 million. Its government is a constuonal monarchy, and its currency the UAE dirham (AED). The geography of the country is mostly desert, and the climate in summer is hot, windy and dry, with comparavely warm winters (14°C – 24°C). Although there is no long‐distance railway network in the Emirate, Dubai City has the only metro system on the Arabian Peninsula. Longer internal distances are usually taken by car or bus. Dubai Internaonal Airport has frequent Brish Airways flights to and from London Heathrow. 4 The Emirate’s two major cargo ports are Port Jebel Ali, the largest constructed harbour in the world, and Mina Rashid, where the QE2 liner is currently berthed. In theory, throughout the UAE human rights are legally protected by the federaon’s constuon. 1.2 Major indigenous industries UAE: Petroleum and petrochemicals, fishing, shipbuilding and repairs, construcon materials, texles, aluminium, ferlisers. (Dubai: IT, finance, tourism. Abu Dhabi: industry, retail, tourism, property.) 1.3 Free market economy Although oil and gas deposits in the region are expected to last for some me (100 years in the case of Abu Dhabi ) there is a general trend throughout the target economies to diversify into other business sectors. This planning for the future implies a need for investment, especially from interested pares overseas. Free Trade Zones have been launched throughout the region. Advantages to the foreign investor are reducon in red tape, easier access to financial services, exempon from all taxaon, possibility of 100% foreign ownership, and ease of movement of capital and profits in and out of the country. Diversificaon has been a signal success in Dubai, where 94% of revenue is currently derived from non‐gas and ‐oil related industries, especially IT, media and finance. The Free Trade Zone TECOM (Technology, Electronics, Commerce and Media) which includes Dubai Internet City and Dubai Media City, is home to mul‐naonals such as CNN, Reuters, Microso, and IBM. 1.4 UK and the core UAE economies English is almost universally used as a business lingua franca throughout the Gulf States. 5 The UAE is the UK’s largest Middle Eastern export market, with the value of goods exported averaging around £3.5 billion per annum. Major sectors have been ICT, power, and machinery. Dubai accounts for around 70% of this trade, and Abu Dhabi around 12%. There are well over 100,000 UK expatriates working in the UAE. Business opportunies include: financial and business services travel and transport tourism energy construcon educaon healthcare 6 2.0 Geng Started 2.1 A Plan of Campaign It is assumed that any UK business wishing to expand into the UAE market will fall into one of the following categories: a business just starng out, and seeking an area of demand in an economically amenable environment an already established company looking to fill a perceived gap in the market a business seeking merger or partnership with, or acquision of, a concern already in existence in the target country An inial informal reconnoitre may of course be made via a social or holiday visit to the country, where observaon and word of mouth exchange of informaon may give a useful street‐level view of the potenal market. A vital contact in any case is the United Kingdom Trade and Investment (UKTI) offices, to which all inial enquiries should be addressed: Tel: 020 7215 8000 E‐mail: [email protected] Those readers wishing to contact the UKTI team in the target economies direct are referred to the following: Abu Dhabi: Brish Embassy in Abu Dhabi PO Box 248 ABU DHABI Tel: 00 971 2 610 1111 E‐mail: [email protected] 7 Dubai: Brish Embassy in Dubai Al Seef Road PO Box 65 DUBAI Tel: 00 971 4 309 4444 E‐mail: [email protected] For a general overview of trade and investment in the Arab world, a useful membership‐based consorum is the Middle East Associaon. Networking, contacts, business opportunies, and themed meengs are some of the services offered. Contact details are at the end of this prospectus. There is a similar raonale to the Arab Brish Chamber of Commerce, details of which are also given below. Contact details for the Chamber of Commerce of the UAE are given at the end of this prospectus. Services and informaon supplied by these Chambers include those menoned in the preceding paragraph. General business advice for new companies (not specific to, but including, internaonal trade) may be found on the website www.businesslink.gov.uk . In pung together a plan of campaign, the following check list of self‐evaluaon quesons may prove useful: is your product or service well defined? who are your potenal customers likely to be? if a client company is involved, have you done the research on their reliability and financial track record? what sort of price will your potenal customers be prepared to pay? what would be an acceptable level of quality and service for these customers? do you have the resources to meet the needs of your customers? have you idenfied a definite area of demand, or do you have any competors already established in this market? 8 what can you offer in the area of quality, value or service that might persuade customers to switch allegiance? will you need to make any modificaons to the product or service before it is suitable for export? have you chosen the most cost‐effecve means of transportaon for your product? how will you manage your sales presence in the foreign country: through an agent or representave, or through premises obtained in the target country? where and how would any adversing campaign be best directed? Most UK adversing agencies will have established contacts in the Middle East, and most tradional media such as television, billboards, and magazines, are extensively used.