Bolstering The Future: The UAE's Permanent Residency Offering Bodes Well For Business In The Country It has never been a better time to be a man or a woman with a plan, the ambition, and the drive to succeed in the UAE.
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When the UAE government announced in May that it would grant some 6,800 investors permanent residency under its new "Golden Card" system, the news was welcomed by business professionals- a move that would largely stabilize the economy, and boost the property market. It's a historic development in the timeline of the UAE economy. What can it mean, long-term, for business owners and SMEs? I believe the permanent residency and long-term visas will help attract significant amounts of capital and skilled resources, if the policy is implemented properly.
FOR THE LONG HAUL
Traditionally, most expats have chosen to move to Dubai with a short-term plan- make lots of money, and then return home. Permanent residency allows them to think of life in the UAE as a long-term, rather than a short-term, solution.
Business owners and SMEs can also begin to strategize differently. After all, make no mistake about the current contribution of SMEs- a 2018 study revealed that 47% of the Emirate's GDP and 52% of its workforce comes via small to medium enterprises. Every savvy business owner knows the importance of short-term, mediumterm and long-term planning- the first facilitating immediate tracking of improvements, while the latter allows for evaluating progress towards eventual goals and targets. When investment and recruitment is long-term from the outset, it allows for long-term planning that encompasses major capital expenditure, such as purchasing equipment, property, and facilities.
What excites me in particular is the emphasis on permanent residency for "exceptional talent," and everybody who "positively contributes to the success story of the UAE," as H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, said in the tweet that broke the news in May. When a destination incentivizes itself by offering permanent residency to talented doctors, researchers, scientists, artists, and even students, we find ourselves overwhelmed by those who contribute to the knowledge economy. And we only have to look at South Korea to realize how worthwhile superior education and an environment that nurtures intelligence is. And the potential for the property market is huge. Permanent residency is bound to make people reconsider their housing options, if they are to stay in the country for longer periods of time.
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The 100% ownership for foreign businesses will help attract investment in the sector- stimulating small businesses already involved in property and housing, and ancillary agencies too that can take advantage of a more stable market. SMEs and entrepreneurs can afford to think long-term, and invest in new ideas and business models that center around property. If residency is longer, families and leisure time will now form a bigger part of what the UAE offers. While the area already has a reputation for worldclass amenities and lifestyle (and is thought to be home to more than 55,000 millionaires), the expansion of permanent residency can only mean more of the same.
BOLD AND TIMELY DECISIONS
All in all, the policies the UAE government has put in place are positive and encouraging news for entrepreneurs, and they will certainly go a long way in attracting talent and capital to the country. But the policies need to be followed through with an enabling environment for entrepreneurs that allows for fundraising, and the creation of an infrastructure which will help small businesses succeed.
What other moves will help? There needs to be a focus on long-term sustainability- perhaps through the expansion of the permanent residency scheme. We could look beyond investment and skills to include working and self-employment, which would support SMEs in the UAE. You see this in permanent residency schemes in the EU. Take the EU Blue Card or work permit scheme, where holders can apply for permanent residency once they have worked for 21 months in a host state, or five years in any of the EU member states. In Germany, self-employed expats who have an established business and a secure livelihood are able to take up permanent residency in the country after three years. Some 80% of residents in the UAE are expats, so widening the scope of permanent residency is bound to benefit our economy now and for years to come, attracting more people who want to set up small businesses.
In terms of the property market, the UAE government would be as well to take from the Singapore permanent residency model where holders can secure housing loans to buy property, and are able to buy resale government property managed by the country's Housing and Development Board. Investment in real estate would add longevity to the property market. Innovative mortgage schemes such as interest-only plans like the ones available in Europe and the US would also serve our country well. Because the outlay is low at the start, this allows affordable financing that both UAE nationals and expats can obtain easily. The next few years promise exciting times- it has never been a better time to be a man or a woman with a plan, the ambition, and the drive to succeed in the UAE. The government has put in place tools that prioritize long-term economic growth, where those with vision and daring have a real chance to succeed.
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