A newly approved law supporting Emirati-owned small and medium enterprises will play a significant role in promoting sustainable economic development, the Minister of Economy said yesterday.
Sheikh Khalifa, President of the UAE, has approved Federal Law No 2 of 2014, which will categorise SMEs, establish a dedicated council and determine incentives to be offered to small business owners.
The legislation grants SMEs exemptions from customs tax for equipment, raw materials and goods for production purposes. It also exempts them the payment of bank guarantees that companies must pay per new worker.
One of the goals of the legislation was to help raise the contribution of SMEs to the country’s economic output.
“My hope is that the contribution of small and medium-sized enterprises to [non-oil] GDP will jump from 60 per cent to 70 per cent by 2020,” said Sultan Al Mansouri, the Minister of Economy.
Under the legislation, federal authorities and ministries must contract at least 10 per cent of their procurement budget for purchasing, servicing and consulting to SMEs. Government-related firms, in which the federal government holds stakes of more than 25 per cent, must also ensure at least 5 per cent of their contracts are with SMEs.
“Emirati entrepreneurs falling under the small and medium classification will benefit from a number of incentives offered by the council, including credit and funding facilitation, financing, marketing and reduced licensing costs,” Mr Al Mansouri said.
The law’s funding provisions were among its most important aspects, said Abdul Basit Al Janahi, the chief executive of Dubai SME, a Dubai government agency aimed at supporting entrepreneurship.
“Today the loan portfolio of banks in relation to SMEs do not exceed three per cent,” he said. “Putting responsibility on the development bank is very good and there will be pressure on the banks through the Central Bank to do more to support SMEs.”
The Emirates Development Bank, a government lending body set up in 2011 with Dh10 billion of capital to help to promote economic growth, will have to ensure at least 10 per cent of its loans are directed to SMEs. Commercial banks will also be encouraged to lend more to SMEs through technical guidelines on lending to be issued by the Central Bank.
Emirati business owners will also benefit from land grants for industrial or agricultural purposes and receive support for promoting their companies at exhibitions around the world.
The law also includes additional benefits to inventors, patent owners and companies that invest in research and development.
The UAE has been striving to bolster support for SMEs, which represent almost 92 per cent of the total number of companies and provide more than 86 per cent of private-sector jobs.
Officials have been working on the law since the 2009 financial crisis after taking inspiration from the success of similar legislation in countries such as South Korea, Singapore and Sweden. The FNC approved the law in June.
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Another way to earn air miles
In addition to the Emirates and Etihad programmes, there is the Air Miles Middle East card, which offers members the ability to choose any airline, has no black-out dates and no restrictions on seat availability. Air Miles is linked up to HSBC credit cards and can also be earned through retail partners such as Spinneys, Sharaf DG and The Toy Store.
An Emirates Dubai-London round-trip ticket costs 180,000 miles on the Air Miles website. But customers earn these ‘miles’ at a much faster rate than airline miles. Adidas offers two air miles per Dh1 spent. Air Miles has partnerships with websites as well, so booking.com and agoda.com offer three miles per Dh1 spent.
“If you use your HSBC credit card when shopping at our partners, you are able to earn Air Miles twice which will mean you can get that flight reward faster and for less spend,” says Paul Lacey, the managing director for Europe, Middle East and India for Aimia, which owns and operates Air Miles Middle East.
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Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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Our family matters legal consultant
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