Why, Thanks To New Laws, Now Is The Best Time To Be An Entrepreneur In The UAE
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I have witnessed all kinds of business cycles during my 15 years in the UAE. Those were the days when prices of commercial properties and offices were skyrocketing. Areas around Dubai’s Sheikh Zayed Road crossed AED350 per square foot. The cost of setting up businesses was high when compared to other leading economies, especially for startups, and on top of that, the long circuitous, and hence bureaucratic procedures, tested the patience of entrepreneurs.
However, things have changed dramatically within a decade. Today, I say with utmost confidence that it now takes less than a day to start a company in the UAE. All you need are requisite documents, and a reasonable budget to get started. You don’t even have to be in the country to get it completed.
As a business that is involved in the early stages of a startup’s incorporation, I can see first-hand how business sentiment is changing for the better for entrepreneurs– with the ease of establishing a company today being the easiest and the least difficult thing an entrepreneur has to deal with.
Why the UAE
Today, the UAE ranks 21st in the ease of doing business by the World Bank– a number that has been going up year on year. Regionally, the UAE has always been one of the most favored countries for entrepreneurs as well as for international companies looking to spread their wings across the region. The country provides an ideal business environment and address for many reasons.
It is in a geographical location connecting major business destinations and markets within few hours of flying distance. The country has two of the best international airlines, which can take us to literally any part of the world. Then there is the top-class infrastructure that any business could dream of. So, distances, logistics, transportation, and security are not a nightmare for those operating in the UAE.
There are no corporate taxes. So, whatever your company earns is all yours. This is an ideal situation in a world where taxation could be a major impediment to business and growth. More importantly, all of this could start as simply as ordering your meal- literally just a click away. With increased digitization of complex manual processes, setting up a trade license is so much easier. That takes away the hassle of running around agents, and queuing up in offices.
New residence and business laws
In May 2018, the UAE announced that it will allow full foreign ownership in companies and grant long-term visas to select investors and professionals. This is an extremely timely intervention, which will have positive ramifications for the startup and entrepreneurial climate in the UAE. Once in place, this law will not only attract more global entrepreneurs to start their businesses in the country but will also be a welcome signal to most of the “wantrepreneurs” in the UAE- these are professionals, home makers, or recently unemployed professionals who have always dreamt of starting their own business.
The new law will not only encourage entrepreneurship as a career path to pursue for graduates to be their own boss and start their own businesses, but they will also reinforce the UAE’s position as a land of opportunities. Despite all the benefits of globalization, it is still rare to find countries like the UAE where setting up a business is easy, and where a level playing field exists alongside meritocracy. The reaction to the new laws was immediate– as soon as the series of laws were announced, we have been experiencing a steady rise in the number of calls from expatriates already in the UAE inquiring about establishing a business.
The UAE has been a regional pioneer when it comes to free zones, and has already set a benchmark over the years. As many as 45 free zones already exist in the country, and they are geared to encourage foreign investment with easier startup processes, labor and immigration procedures, 100% ownership for all nationalities, and other legal services.
Aligning ourselves with this vision, we created Creative Zone in 2010 with a simple yet revolutionary model for the UAE marketplace; to serve as a one-stop-shop. We provide business support services that entrepreneurs and SMEs require, and hence, become their partner and guide in their journey to success. We started in Fujairah Creative City Free Zone, and within a matter of years, we now offer a wider range of options. We also facilitate local Dubai Department of Economic Development (DED) formations for those looking to set up permanent offices in Dubai and trade actively onshore.
So far, Creative Zone has set up over 12,000 companies- roughly 1,680 every year. In other words, 125 new SMEs join the big world of business every month with our support, and with collective financial turnover of AED5 billion every year. On an average, each company is making AED500,000 annually.
For some, these numbers could be too good to be true, and I am often quizzed about the sustainability of thousands of companies that open their offices with Creative Zone. People are often shocked when I tell them that more than 70% of our clients are renewing their licenses and running their startups successfully, year on year. Moreover, they come from very diverse backgrounds and sectors. From general trading to technology and e-commerce to service consultancy, there is no set formula to ongoing success when it comes to the type of business you set up.
We are also proud of the fact that among these thousands of companies, more than 30% are run by women. With the announcement of new laws, women are now even more confident about establishing their startups with greater ease and with accessible resources. We have received hundreds of calls from potential women entrepreneurs not just from the UAE, but across the globe. From influencers to e-commerce and general trading, the entrepreneurial landscape of the UAE is set to witness more empowered women taking the lead.
They have talent, commitment, and now they have the opportunity and a level playing field. We are proud that one of our most successful and well known Creative Zone clients is Donna Benton, founder of The Entertainer. A woman whose business acumen and leadership certainly stands as a powerful incentive to other would-be entrepreneurs.
Investing in people
If I were to highlight my favorite part of the proposed laws, it has to be the elimination of the employee security deposit, and introducing compulsory health insurance for the staff. Earlier, companies had to deposit security money of AED12,000 against each employee while hiring them. This understandably increased financial burden on the startup, especially those starting with low seed capital.
Moreover, this money neither helped the employees nor the employer. On the contrary, it often discouraged employers from investing more in their people- the engine of a business. Today, companies can invest this amount on welfare schemes such as health insurance for their employees and their families.
There is a conservative average of three staff employed at each of our customers’ companies. This means around 36,000 employees will benefit from the newly introduced compulsory health insurance. I have overheard people say that it is easier to establish a business in the UAE than to find a job.
I often tell them, at Creative Zone, we can establish your company in a day, but finding a job in that time, I cannot guarantee that.