UAE to subsidise nationals

NATIONAL SUBSIDIES: The UAE is considering a plan to give its citizens discounts in a bit to ease impact of inflation. (Getty Images)

The UAE is considering a plan to give its citizens discounts on 14 food items, gasoline and cooking fuel to help offset inflation, the head of a consumer protection body said on Tuesday.

The plan would benefit only UAE nationals, who comprise only about a fifth of the 4.5 million people living in the Emirates.

The cabinet is studying the plan, which will allow UAE nationals to buy rice, bread, tea, sugar, milk, butter and other basic food items at cost, said Jamal Al-Saeedi, executive manager of the Emirates Society for Consumer Protection.

"There is too much inflation and it is hitting households," Al-Saeedi told newswire Reuters. "People cannot live without these items so we are looking for a way to reduce the costs."

Inflation in the second-largest Arab economy hit a 19-year peak of 9.3% in 2006 and probably accelerated to 10.9% last year, the National Bank of Abu Dhabi (NBAD) said last month. The UAE's economy grew 7.6% last year.

Food prices in the UAE, which pegs its dirham currency to the weak US dollar, will probably jump 40% this year after surging 30% in 2007, Al-Saeedi said last week.

Under the proposal, the Ministry of Social Affairs will provide nationals with cards they can use at 16 cooperative supermarkets to be eligible for the discounts, Al-Saeedi said.

Cooperative supermarkets are owned by UAE nationals and generally provide lower prices on some goods, Al-Saeedi said. For the 14 food items, the supermarkets would not be allowed to take profits on sales to cardholders, he said.

The proposal, drafted by the consumer protection body and Ministry of Economy, also calls for a discount on petrol and tanks of domestic cooking fuel for nationals, Al-Saeedi said.

Gulf Arab oil producers are trying to offset inflation by introducing price controls on rents, subsidising food and raising wages.

Earlier this week, the UAE's Economy Ministry set a ceiling on the maximum price retailers are allowed to charge for some basic food items to help stabilise prices.

Businesses in the UAE have been complaining about rising costs and migrant construction workers rioted in Dubai in November to demand pay rises to compensate for savings lost due to the dollar's slide.

That month, the Economy Ministry warned suppliers against raising prices of goods and services in an "unjustified" manner and said in a report that exchange-rate reform would be one of the ways to contain inflation.

The UAE Federal Government raised salaries of state civil and military employees by 70% from January 1, and both Dubai and Abu Dhabi have set caps on annual rental increases of 5%.

Food price inflation is partly driven by the dirham's link to the dollar, which hit record lows against the euro and a basket of major currencies this month, Al-Saeedi said. (Reuters)

UAE consumer rights body calls for subsidies
Gov't urged to raise subsidies on rice, sugar, bread, milk and other basic foods.

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READERS' COMMENTS

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Just one more point !!
Posted by natalie taylor, abu dhabi, united arab emirates on Wednesday 12 March 2008 at 19:57 UAE time


And what about the residents that have spent their whole life here who can not make ends meet - they don't count? How will this subsidy possibly help a national with inflation - Inflation is not an issue for a national it is an issue for everyone else - how does the government not see that?

Food4thought
Posted by Food4thought on Wednesday 12 March 2008 at 14:49 UAE time


Why wouldn’t inflation continue to rise when the locals are pampered with a 70% pay rise? Their spending power increases – fueling inflation further. And as if that’s too much to go through, they are awarded discounts on food prices…

I guess its time for a ‘Dubai Cares….for its expatriates’ fund raiser!

But I believe the worst is yet to come! And sure its time for many to pack up!

Unfair? Sure!
Posted by Rainigade, Dubai, UAE on Wednesday 12 March 2008 at 11:44 UAE time

Of course its unfair... just like the new DEWA tariff system that applies to everyone except locals, who are the biggest consumers of energy.

But yes, fact remains that if you don't like it - just leave. I wish more European countries would adopt this policy. Immigrants that arrive on their shores should follow the countries rules or simply go home, if they don't like it.

The UK itself wouldn't be facing half as many issues as it does now, if it followed this policy!

What a shame !
Posted by Old enough Expatriate on Wednesday 12 March 2008 at 11:03 UAE time


"People cannot live without these items so we are looking for a way to reduce the costs."
The sentence simply means Local=People, Non-Locals are not !!!

What an irony!!!
Posted by pratibha, Dubai, UAE on Wednesday 12 March 2008 at 09:32 UAE time


Incidentally, the main reason for the increase in inflation is the rising rents. Since the majority of properties are owned by UAE nationals, I doubt if the inflation would really have any great effect on them, anyways. Its only the expats who have to face the brunt of the rising costs. I guess it is high time to pack up and leave!!!!

UAE to subsidise nationals
Posted by GB, Dubai, UAE on Wednesday 12 March 2008 at 09:24 UAE time


This country never ceases to amaze me. Nationals are the ones struggling? After a 70% payrise?? The government is not tackling inflation, they are fuelling discontent and outcry. All they get is more underpaid workers on strike and are only widening the already huge gap between locals and expatriates.

Re. Welcome to Middle East
Posted by H.Nair, Dubai, UAE on Wednesday 12 March 2008 at 09:04 UAE time


Its time for the old rhetoric from the authorities....if you dont like, pack you bags and leave...and i am just one among those thousands who are planning to leave Dubai...

UAE nationals to be given basic food items at cost price
Posted by Alby C. Inya on Wednesday 12 March 2008 at 08:06 UAE time

How unfair is this? What about the poor underpaid construction workers who are building the 'new Dubai'? They also have to eat but are they to pay full price? Imagine if another country, for example the UK, tried to implement a system like this whereby only UK nationals benefited? There would be international outcry!

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