03 November 2020
In recent years, the Middle East became attractive for entrepreneurs who seek new ways to grow their businesses. At the same time, the United Arab Emirates, one of the richest countries in the world, has been perceived as oil- and gas-based economy for a long time now. It’s worth taking into account, though, that the economic structure has undergone a significant transformation and, since recently, also becomes competitive in other market segments. These changes favour international investors, who can now benefit from doing business in the Emirates.Disable Third Party Ads
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The United Arab Emirates as a market – Characteristics
Not without reason, the UAE market is associated mainly with the oil and gas industry. The Emirates holds seventh place when it comes to the largest confirmed natural oil and gas reserves, and their processing is still significant for the economy. It’s worth mentioning, though, that contrary to common perception, oil represents now only 18% of the national GDP. Financial transactions, on the other hand, make up a substantial part of the national economy.
What do the Emirates owe the growth to? Apart from Abu Dhabi, which remains the main source of oil extraction, Dubai takes the lead. In the 90s, its natural resources were almost entirely exploited, which means that the emirate had to find a new way to grow. The decision was to focus on becoming a modern economy, with substantial investments in new technologies, improved educational standards, and the booming service sector. It had to be the right decision since Dubai quickly became one of the most important trades and finance hubs in the world.
UAE attractive to investors
The Persian Gulf, including the Emirates, imposes a specific business model, which relies on personal contacts. It means that when doing business in the Middle East, you should do so in person. If that is not possible, you should work with a trusted, local intermediary – a so-called “Sponsor”. This requires an actual business partnership with a UAE-citizen, who should hold a share of 51% of the company’s capital. There are even proper lists of professional sponsors, recommended by organizations that advise on choosing the right legal structure for a business. In this case, asking for help and partnering up may be necessary if you want to ensure the highest possible security and transparency of your venture.
Free zones for the entrepreneurs
Special economic zones called “free zones”, play a significant role when it comes to attracting both local and foreign investors. There are nearly 50 of them in the whole UAE, with 20 being located in Dubai alone. What’s interesting is that each of the free zones has its own administrative system, which, in turn, means different conditions for the registration process, rules for doing business, as well as any fees associated with it.
Nonetheless, all of the special economic zones offer attractive financial benefits and simplified procedures for those who want to start their businesses in the Emirates.
The United Arab Emirates on the web
The rapid development of modern technology influenced the visible presence of IT companies in many free zones. UAE are said to be one of the most Internet-dependent countries in MENA (the Middle East and North Africa). Because of that, there’s a high demand for web services and digital marketing. Recently, website creation, video production, mobile app development, as well as SEO/SEM became one of the most required services in the e-commerce industry.