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Discuss this article (6 Comments)One small step
by This email address is being protected from spam bots, you need Javascript enabled to view it on Monday, 10 August 2009
For years the mantra of the UAE, and Dubai in particular, has been the bigger, the better.
You don’t have to look far to see examples of this – the Burj Dubai, the world’s tallest tower, Dubai Mall, the biggest shopping centre, and Palm Jumeirah, the largest man-made island.
To be a big success in this land of dreams, you needed to be a big shot with big plans.
While this ambition undoubtedly played a part in the emirate’s rise in global consciousness, the obsession with all things gigantic was wearing thin, especially during the global economic meltdown.
The sheer size of Dubai’s master plan could make you, the individual, feel tiny and insignificant and while you saw thousands of people like yourself lose their jobs amid the financial crisis you could be forgiven for thinking "just what has Dubai got left to offer me?"
That’s why the the decree issued by President Sheikh Khalifa which effectively scraps the minimum amount needed to set up a new business in the country is so timely.
At last here is a piece of legislation aimed directly at you and me, the little guy – an amendment to corporate law that says you don’t have to be a high roller to be survive in Dubai.
Gone is the $40,000 minimum capital requirement and what a great move that is. While Dubai has long sold itself as a land of dreams where expats can earn good money and pay no taxes, a large number of those same people do not have $40,000 stashed away and their hopes and dreams of running their own company has remained just that.
Now, that deterrent to go it alone has been removed and the whole business landscape of the UAE could change.
It should spark a glut of new small and medium sized enterprises (SME) being created, it should encourage innovation, in short it should give the whole economy a big shot in the arm.
Of course, the problems seen in the UAE’s economy will not be solved overnight but this is definitely a promising first step and perhaps gives us all hope that the country is finally over its obsession that size matters.
Of the 260,000 trading and industrial companies in the UAE, 208,000 – or 80 percent of them – are SMEs so it is only right that the future should be planned with more of them at the heart of the economy.
As astronaut Neil Armstrong might say: "That's one small step for UAE corporate law, that's one giant leap for the UAE economic outlook!"
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
What's the optimism for?
Posted by Mushtaq, Dubai on Thursday 13 August 2009 at 11:58 UAE time
Though the capital requirement is scrapped, all good it does is reduce the bureaucracy of withholding funds and producing a bank certificate, which takes around 3-5 days. If a person had no funds to show, there were business services offering these deposits at nominal fee.
I am not sure if it will help start-ups, because they still need money to open and run their business. In dubai, the minimum amount for a C-grade set up is 75k, and a A-grade requires at least 120k. This is only for set-up, minus the staff, warehousing, transport, housing, running expense etc.
For the solo's, free zones/e-offices are still the best option with investment of 40k.
Posted by Mushtaq, Dubai on Thursday 13 August 2009 at 11:58 UAE time
Though the capital requirement is scrapped, all good it does is reduce the bureaucracy of withholding funds and producing a bank certificate, which takes around 3-5 days. If a person had no funds to show, there were business services offering these deposits at nominal fee.
I am not sure if it will help start-ups, because they still need money to open and run their business. In dubai, the minimum amount for a C-grade set up is 75k, and a A-grade requires at least 120k. This is only for set-up, minus the staff, warehousing, transport, housing, running expense etc.
For the solo's, free zones/e-offices are still the best option with investment of 40k.
DUBAI CAPITAL
Posted by kar, CASABLANCA on Wednesday 12 August 2009 at 14:30 UAE time
the problem is not amount the capital but the obligation of the sponsor to work free within the emirates is much better for investor.
Posted by kar, CASABLANCA on Wednesday 12 August 2009 at 14:30 UAE time
the problem is not amount the capital but the obligation of the sponsor to work free within the emirates is much better for investor.
costs
Posted by paul, Dubai, UAE on Wednesday 12 August 2009 at 13:27 UAE time
In plenty of countries, one can setup a business with virtually zero minimum capital and fees of just a hundred dollars or so. But it is the other costs that really determine whether a business is viable (rent, salaries, license fees, etc.).
The UAE is heading in the right direction, but still has some way to go before office rents and staff salaries are back to levels that would really make the UAE impossible to ignore as a business choice.
Before anyone points out that the UAE has no tax, one should understand that tax only applies on profits. So before you pay tax (or save it in the UAE) you must have a viable, profitable business.
Reducing startup costs is a good move, but more needs to be done to reduce bureaucracy, speed up the visa/license procedures and reduce rents in free zones to reflect market realities.
As any business person knows, it is far cheaper to retain an existing customer than it is to win a new one. The UAE needs to concentrate on keeping existing businesses here as a priority before it can hope to benefit significantly from new ones.
Posted by paul, Dubai, UAE on Wednesday 12 August 2009 at 13:27 UAE time
In plenty of countries, one can setup a business with virtually zero minimum capital and fees of just a hundred dollars or so. But it is the other costs that really determine whether a business is viable (rent, salaries, license fees, etc.).
The UAE is heading in the right direction, but still has some way to go before office rents and staff salaries are back to levels that would really make the UAE impossible to ignore as a business choice.
Before anyone points out that the UAE has no tax, one should understand that tax only applies on profits. So before you pay tax (or save it in the UAE) you must have a viable, profitable business.
Reducing startup costs is a good move, but more needs to be done to reduce bureaucracy, speed up the visa/license procedures and reduce rents in free zones to reflect market realities.
As any business person knows, it is far cheaper to retain an existing customer than it is to win a new one. The UAE needs to concentrate on keeping existing businesses here as a priority before it can hope to benefit significantly from new ones.
Not a Significant CHANGE
Posted by Aminu, Duabai on Tuesday 11 August 2009 at 17:08 UAE time
I do believe this law will not make a significant change to small business. I might actually do some damage. Even with the minimum capital, people always find a way to bypass the system and is not a huge diffirence anyways since you can take the money back as soon as you got your license. If you can not raise 150K to start a business then there most be something wrong with your idea in dubai, because setting up business here is very expensive affair compare to other part of the world.
What will make a huge difference in my opinion is cheaper office space. If government wants to make a difference, then they should bring the price of commercial space esp. those run by the govt in free zones, or subsidize it.
They should also encourage small enterpreneurs and youngsters to establish they own business at the comfort of there homes. We all know this most successful economies and companies started developing their idea in there tiny little studios and garages without govt hassling them that it's illegal. We should all be able to run our business in our house, ofcourse with a mechanism system monitored by the govt. But i dont want to have to rent an office for AED100k to be able to run a business. i believe this will help the economy and prevent exploitation.
Posted by Aminu, Duabai on Tuesday 11 August 2009 at 17:08 UAE time
I do believe this law will not make a significant change to small business. I might actually do some damage. Even with the minimum capital, people always find a way to bypass the system and is not a huge diffirence anyways since you can take the money back as soon as you got your license. If you can not raise 150K to start a business then there most be something wrong with your idea in dubai, because setting up business here is very expensive affair compare to other part of the world.
What will make a huge difference in my opinion is cheaper office space. If government wants to make a difference, then they should bring the price of commercial space esp. those run by the govt in free zones, or subsidize it.
They should also encourage small enterpreneurs and youngsters to establish they own business at the comfort of there homes. We all know this most successful economies and companies started developing their idea in there tiny little studios and garages without govt hassling them that it's illegal. We should all be able to run our business in our house, ofcourse with a mechanism system monitored by the govt. But i dont want to have to rent an office for AED100k to be able to run a business. i believe this will help the economy and prevent exploitation.
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