By Ed Attwood
The head of Dubai's leading trade body speaks out on labour laws, bankruptcy protection and why the emirate is still the best place to do business
From his vantage point in an office high above Dubai Creek, Hamad Buamim has a grandstand view of the entrepot that has both made the emirate’s name, and on which the fortunes of its future rest. As director general of the Dubai Chamber of Commerce and Industry, he is effectively in charge of overseeing the interests of the private sector in the city. And for those who are questioning the ease of doing business in the UAE, not to mention the red tape that can be associated with certain processes — rest assured, because Buamim is definitely fighting your corner. It’s always refreshing to see local officials maintain a realistic outlook, and the director general’s view of Dubai’s business prospects manages to be candid yet diplomatic, at the same time.
Take — for example — the issue of labour card licences. In December, the UAE’s Ministry of Labour announced that it would be lowering the validity of labour cards from three years to two, effectively shortening residency visa periods by the same length of time. Cue uproar from the local business community, many of whom asserted that the move would lead to greater expense and more paperwork. Behind the scenes, however, Dubai Chamber was already acting, and has since met with chambers in the other emirates in a bid to bring the issue back before the relevant bodies.
“As the private sector, we would like it [labour card validity] to be extended rather than shortened. If it will be shortened, the cost of visas shouldn’t go up, and the cost of administrative issues shouldn’t go up,” Buamim points out. “It should be easier, or done electronically, for example. As the private sector, the position is that we are not that happy with this change and we would like to see a change back to the old times.”
Such comments will be music to the local business community’s ears. Dubai Chamber has already put a paper to the Ministry of Labour, and Buamim says he will meet the minister soon to discuss the situation, adding that it adds “an extra cost and burden on business”. But does he believe that change can be achieved?
“All the governments in the UAE listen quite well,” he says. “HH Sheikh Mohammed [Bin Rashid Al Maktoum] said once that even if there is a law that we pass today; if it is wrong, we are ready to relook at it tomorrow. So I believe that the prime minister stated this clearly, and it empowers us, as one of the entities responsible for the private sector to challenge such laws.”
Although the Chamber isn’t the final arbiter on legislation at either the federal or the Dubai level, it is often called upon to provide comment and advice. As such, it is also a useful indicator as to the content and likely approval date of any new laws. With regard to the now-long-awaited companies law, Buamim says he is optimistic that this could be approved as early as the second quarter of this year — with the caveat that the Minister of Economy has already indicated a number of times its impending completion.
“The new companies law is very advanced compared to the earlier one and has a lot of very positive steps to cover a lot of the gaps, whether it’s with regard to investor protection or even the structure of businesses,” says Buamim. “Still, as the Chamber and as the private sector, we are looking for some regulations with regard to insolvency, bankruptcy and even with the protections with financing and so on. The companies law itself has some articles, however, we believe that an insolvency law or bankruptcy law will give more details for businesses to support things like Chapter 11 or closing businesses.”
Elsewhere, the Chamber is also working hard to streamline through which businesses must jump in order to obtain certain licences. According to the World Bank’s Doing Business report, the UAE ranked 40th in the world in 2011, three places down from the year before. Set against the performance of Saudi Arabia — which rose one place to 11th in the report — it would appear that the UAE may be resting on its laurels to a certain extent. But Buamim, who also sits on the UAE’s competitive council, confirms that the World Bank’s guidance is being taken on board, and admits that there are certain areas where more work needs to be done.
“We dropped three ranks last year and we believe that the reason behind that is that others work harder and they grow more,” he muses. “We grow and we trade across borders — for that we rank number three in the world. And for registration of real estate, right now we are ranked number four in the world. We think these are quite good positions.”
The director general points out that some of the country’s major challenges lie with construction permits and starting businesses. But changes are afoot; the Dubai Department for Economic Development (DED) is already, he says, changing the procedures with regard to registering businesses from fifteen steps to six. Moreover, Dubai Municipality is bringing down the number of steps required for construction permits from an eye-watering 62 procedures to just nine.
“The other aspects [mentioned in the report] — investor protections, and ease of credit and so on — these sorts of things are at the level of the federal government, and I know that there are laws and regulations that are kind of already in place, that hopefully will deal with this,” Buamim adds. “But we are also ranked quite low when it comes to enforcing contracts and closing businesses and these are big, big areas of improvement.”
Even there, the director general says, officials with Dubai will be sitting down with the World Bank in an attempt to clarify exactly what is required. In addition, Buamim also cites moves by Dubai’s many free zones to streamline processes and add value to businesses from overseas.
“I know that economies around us are ahead of the game, but we believe that doing business in Dubai is not necessarily about ranks or numbers, but it’s also a reality,” he adds. “When it gets to cost, we have taken a lot of steps to keep Dubai competitive — in fact there is continuous dialogue with the government over this. I also know they are reviewing a number of overlapping steps and fees, and I hope that when these are reviewed it will reduce the cost of business going forward.”
Also in the pipeline are stronger incentives for small and medium-sized enterprises (SMEs), which make up more than 90 percent of Dubai Chamber’s membership. The director general says that the Dubai government has already dedicated part of the government procurement for SMEs, which tend to make up the majority of every economy, not just in the UAE. And Buamim’s candid approach has seen the Chamber’s membership mushroom, growing by nine percent in 2010 alone to almost 120,000, with more joining in the first two months of this year. Most of that number hail from the services or trading sector, but the Chamber is also seeing a rise in the percentage of professional firms – lawyers, auditors and so on — taking up the services it has to offer.
But Dubai Chamber’s activities are not just limited to the emirate. During March, it conducted a major event held in Dubai that focused on positioning the city as a potential gateway to Africa for emerging economies in Asia. “We believe that we can connect countries like China and India with Africa, particularly given the infrastructure that we have, so airports, airlines and so on,” Buamim points out. “We study most of these economies and we notice that some of them have a certain competitive advantage when it comes to issues like agriculture.”
The director general cites Kenya — one of the world’s biggest tea-exporting countries — as an example. Currently, Kenya exports tea as a raw material, while packaging and processing is carried out elsewhere in the world. Buamim hopes that by working with Kenya to establish packaging and marketing facilities here in the UAE before the tea is re-exported elsewhere will result in the African nation taking home a bigger slice of the profits.
Other than Africa, which is providing around ten percent (from three percent) of Dubai’s re-exports, Saudi Arabia, India, Iraq and the rest of the Gulf countries make up the bulk of the emirate’s commercial flows. So far, the regional unrest — especially in Yemen, Libya and Egypt — has affected Dubai’s trades, but Buamim says that these countries make up less than five percent of the city’s total re-export business. In all, February’s results show that trade actually increased by 8.5 percent in comparison to last year.
“We believe that this is temporary, and that it will recover after the unrest has settled down,” Buamim says. “Take Egypt, for example. It went down in February, and so far in March we’ve seen that whatever was lost has been largely recovered. We re-export items that are vital for day-to-day living, so we believe that Dubai will continue to be a source for these products.”
But on the other hand, the Dubai Chamber chief also believes that regional fallout – however distressing that may be — will also enhance the emirate’s reputation as a safe place in which to conduct business.
“Right now people recognise the importance of Dubai,” he adds. “We are always marketing Dubai as stable, as a safe haven for investments and businesses, and so far we think we have proved this fact.”