Liam Mooney highlights what he sees as the most serious issues facing SMEs in the UAE...
As the owner of a HR and Business Consultancy in the UAE, we are seeing a big increase in demand for our services and as such we will have to hire our own staff.
This, of course, is a positive situation but has focused my attention on where our company should be actually based. At times we find the UAE inflexible and expensive to do business.
Whilst on the surface the UAE has zero corporation tax, the hidden charges, red tape and inflexibility in the labour force actually make the UAE far less appealing than it should be.
The SME market is the lifeblood of the UAE economy and a huge contributor. The simple answer for some would be ‘if you don’t like it move to another country!’ However, our response is ‘why would the UAE want a company to move to another country when it’s contributing towards the GDP and having a positive effect?’
The UAE should be nurturing these companies and look at ways they can help.
I want to raise awareness of some of the difficulties that SME’s in the UAE face in the hope that many of them can be addressed.
The first issue is that of direct costs versus indirect costs
• Trade licence - Minimum AED15,000
• Salik (road fees)
• Visa costs
• UAE ID cards
• Labour cards
• Health cards (annual renewal with late fees applied from one day over)
• Enforced trademark (includes advertising in local papers)
• Forced property rental (regardless if required by operations of business)
• Branch licences (each Emirate is its own mini country with no linked government)
• Deposit (probably loosest term I have ever seen – when do you get it back?)
• Sponsorship of onshore company which means that 51 per cent will be owned by an Emirati as well as an annual trade license fee.
• Vehicle wrap renewals
• Vehicle registration and passing
• ‘Typing’ (can be AED500 for a single piece of paper. Endless documents required for every process)
• Company stamps
• RERA charges
• Bank charges
• Rising rent charges
• Rising water and electricity charges.
Overpriced services & monopolies
No competition means no value. Take Etisalat or du, for example. Services provided are extremely expensive and the quality can be poor.
Recently the government has announced a fourteen to fifteen percent rise in electricity and water to boost the green economy. I beg to differ on this. Water and electricity are essential when you live in a desert and perhaps something needs to be done more about car use. I don’t believe increasing electricity and water prices will make any difference on the green economy.
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