Dubai is one of the most open economies in the world with a strategic location between Asia, Africa, and Europe. Even at a time when the pandemic gripped the world in 2020, Dubai witnessed USD 3.26 billion FDI during the first half of 2020 and ranked fourth globally with several new business setups in Dubai.
To fuel entrepreneurship and grow the country’s SME sector, a special position of Minister of State for Entrepreneurship and SMEs was created during the July 2020 cabinet reshuffle. The Dubai government also initiated several support services to enhance the non-oil private sector’s contribution to economic growth and in line with the Dubai Vision 2021.
The Dubai government is leading from the front to mitigate the adverse effects of the covid pandemic and regulatory authorities are relentlessly striving to develop and ease regulatory and legal frameworks for Dubai company incorporation besides the identification of alternative funding routes and providing additional government support.
“We find a paradigm shift in the thought process of investors. The freedom to do business and safety are the key drivers of growth in the SME sector. The paperless e-governance added to the transparency and precision in administrative matters. Over the past decade, the UAE has evolved as the most sought-after destination for investors to set up their establishment so that they can cater to clients in MENA, and South Asia,” highlighted Syam Panayickal Prabhu, Founder and Managing Director, Aurion.
Dubai’s 50 free zones reverberate at the core of its startup ecosystem comprising some of the world’s leading free zones including Dubai Silicon Oasis (DSOA) or IFZA, Dubai International Financial Centre (DIFC), Jebel Ali Free Zone (JAFZA), and Dubai Multi Commodities Centre (DMCC) and offer numerous advantages to new businesses including 100% foreign ownership, zero corporate tax, nil import-export duties, 100 percent repatriation of revenues and profits, minimum documentation requirements and easier startup, easy recruitment and visa processes.
Saud Salim Al Mazrouei, Director, Hamriyah Free Zone Authority added, “Free zones are a driving force in the growth of the economy in the UAE. They help stimulate economic development, create jobs, boost and diversify exports, and expedite the industrialization process of an economy at lower costs for the government. Incidents like the Covid-19 pandemic with a sudden drop in oil price can serve as a catalyst for long-term sustainable economic reform.
There are also 6 business accelerators and 5 incubators in Dubai to support startups and SMEs including DIFC’s FinTech Hive and Dtec at DSOA providing support through startup incubation and venture capital funding. The Dubai Future Accelerators program facilitates partnerships between public and private sector organizations and startups in Dubai.
Dubai has long been eyeing a leading world position in innovation and technology, and financial technology acronymed as FinTech playing the most pivotal role in accelerating the business growth of Dubai startups during the covid pandemic. DIFC FinTech Hive is offering accelerator programs for FinTech startups with a total of USD 100 million funding support that has already benefited four companies.
Most important for the growth of the SMEs and startups is the availability of funds and Dubai is continuing its efforts to look for additional and alternative funding for addressing economic diversification strategy. Venture capital and crowdfunding are being encouraged by the Dubai government for sustaining startups and SMEs even with lower assets and proven and credible track records. As per a survey conducted by Dubai SMEs, almost 9 percent of SMEs received additional funding through the venture capital route.
Dubai also offers abundant diverse and talented human capital and secured top global ranking in terms of employee training and workforce motivation.
Though the IMF and World Bank have lowered the economic recovery forecast for all major economies, Dubai expects a fast V-shaped recovery in 2021 facilitated by Dubai Expo 2020 which promises to add USD 33.4 billion to the UAE economy by 2031.
As the consequences of the Covid-19 pandemic becoming severe, the Dubai government has started firing its arsenals on all cylinders to boost the economic diversification program and focusing on some strategic sectors including commercial trade, tourism, renewable energy, manufacturing, media, financial services, aviation and healthcare, and all SMEs and startups in general.
The increased economic contribution of private sectors to the national GDP is at the top of Dubai’s agenda as per the UAE’s Vision 2021 which was 70% some two years ago and is now expected to reach 80 percent by 2021.
In Dubai, almost 99 percent of companies from the private sector belong to the SME and Startup category and are projected to contribute nearly 46 percent of Dubai’s GDP.
“As always, the UAE is doing a fantastic job at attracting international interest on all levels of business and lifestyle, and therefore, it remains a top-ranked international destination to do business and to live”, commented Karl Hougaard, Founder and Managing Partner, Trade License Zone in a recent interview.