How to Do Business in UAE

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CHAPTER 3

54 Investors Guide to the UAE

Business Options in the UAE

CHAPTER 3

The benefits of establishing a business in

the UAE include corporate tax holidays

for most sectors, no personal taxes

and the freedom to repatriate capital

and profits. There are no currency restrictions.

Foreign ownership is generally set at a ceiling

of 49 percent but at the Free Zones, for UAE

branch offices of foreign companies and forcertain professionals, there is no requirement for

a local partner.

Black and Decker, Colgate Palmolive, Daimler

Chrysler, HJ Heinz Company, Johnson & Johnson,

LG, Proctor & Gamble and Xerox are among

the Fortune 500 companies doing business at

Jebel Ali Free Zone, the first Free Zone to be

established in the UAE. Successful companies

from all over the world have taken advantage of

off-shore opportunities at the many Free Zones

now spread out across the nation.Top internationals have also joined hands with

the UAE for business projects that have direct

access to the UAE market. These relationships

are sometimes conducted through general

trading activities and specific joint ventures. In

many cases, partnerships with Emirati individuals

and companies taking at least the minimum

equity stake and then providing invaluable local

expertise have proved to be extremely rewarding.

There are now opportunities for companies of all

sizes and most market sectors who wish to be

part of the UAE business success story.

3.1 (a) UAE Company

(with maximum 49% foreign ownership)

Federal Company Law No. 8 of 1984 (the

Commercial Companies Law - CCL) regulates

the establishment of companies, both local and

foreign, outside the free zones. All companies

must have one or more national partners who

account for at least 51 percent of their capital.

The partners may mutually agree to share the

profits in proportions that differ from their own

capital share.

The Law also stipulates that management ofthe company may be undertaken by the foreign

partner. Since 2005, GCC nationals may own

100 percent of a companys capital. The CCL

is currently under review by the Federal

Supreme Council.

According to the provisions of Federal Law

No. 1 of 1979 (Organising Industrial Affairs),

the authorities may grant significant privileges

and exemptions to projects that meet certain

conditions. These include the assignment of

a building-site for the project, either free or ata token rent with optimal conditions and the

supply of utilities at preferential rates. Duty free

imports may be allowed in respect of machinery,

equipment and building materials required for the

project as well as raw materials and packaging

used during production. Tax exemptions for

a renewable period of five years from start of

production are guaranteed in respect of project

profits and re-investment reserves. Exports in

such cases are subsidised and there is some

3.1 Strategies for Market Entry

UAEs success story attracts the world

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55Investors Guide to the UAE

BUSINESS OPTIONS IN THE UAE

protection for locally produced products which,

when exported, would not attract duties. Priority

for the privileges and exemptions mentioned

applies to competitive, export-oriented orexport-substitution projects; projects using

local raw materials; projects established in

areas determined by the Government; and any

other projects that may be of specific economic

importance, and included, for this reason, in the

government development plan. The law applies

to most industrial projects except extraction or

refining of petroleum or other raw materials.

The UAEs hydrocarbon industry is specifically

excluded from the provisions of the CCL. It is

owned and controlled by the respective emirates,

and foreign participation must take the form of

joint-ventures. Similarly, electricity, gas, and

water utilities are supplied by state monopolies,

although the Emirate of Abu Dhabi has arranged

partial privatisation of several electricity and

water plants. Projects involving foreign

participation in these sub sectors are generally

majority state controlled and owned by the State

or by UAE nationals.

3.1 (b) UAE Branch Office

(with 100% foreign ownership)

Under the Commercial Companies Law, foreign

companies may also exercise their main activity in

the UAE by opening a branch or a representative

office. The representative office may promote

business for the products and services provided

by the parent company, and facilitate contacts

between the company and its UAE clients.

However, it is not licensed to conduct business

operations or marketing directly in any manner.Branches are registered at the Ministry of

Economy. A foreign branch or office can be 100

percent owned by the foreign company.

3.1 (c) Professionals


Foreigners may form sole proprietorships to

practise certain professional activities. Sole

proprietorship is a simple business method

whereby an individual trades on his own account

pursuant to a trade licence issued in his own

name. This form of business entity is referred to

as an establishment rather than a company. A

foreign sole proprietor is also required to appoint

a local services agent.

Certain activities are reserved for UAE

nationals and for companies totally owned by

UAE nationals.

3.1 (d) UAE Free Zones


Some 80 percent of the UAEs non-oil exports

originate from the Free Zones. These zones

are exempt from all the licensing, agency,

emiratisation, national ownership, and other

domestic regulations that apply to the customs

territory.

The UAEs first free zone was establishedat Jebel Ali in 1980. Its success in attracting

foreign investment and technological expertise,

and the growth of re-exports and transhipment

as a major commercial activity led the other

emirates to create such free zones to attract

inward investment, employment generation, and

significant economic development.

Following the success of the Jebel Ali Free

Trade Zone, the UAE currently boasts 36

established and upcoming Free Zones. Most of

these zones are located in Dubai, though the

other emirates are following the lead. Some of the

zones cater to service sectors (e.g. Dubai Internet

City, Dubai Media City, Dubai Health Care City,

Knowledge City, Dubai International Financial

Centre) while others are industrial zones (e.g.

Hamriyah Free Zone, Ajman Free Zone and the

Gold and Diamond Park).

The basic success formula in the different zones

is 100 percent foreign ownership, corporate tax

holidays, no personal taxes, freedom to repatriate

capital and profits, and no import duties or

currency restrictions.

Advantages of Free Zones

100% foreign ownership

100% repatriation of capital and goods

No minimum capital investmentA shareholders liability is limited to the

amount of paid-up share capital

No currency restrictions

No corporate taxes

No personal income taxes

Ready-made factories and warehouses

Excellent infrastructure, support services

and communications

Access to a consumer market of 1.4 billion

people

Ordinary

Company

Representative

Office

UAE

Branch Office

Trading

in

Securities

Services

and Industries

relating to

natural

resources

Under the Companies Law, fullforeign ownership is permittedprovided the company appoints aservice agent (a national) with nofinancial liability and no role inmanaging the company.(See3.1(b) UAE Branch Office)

According to Free Zone laws and

regulations (See UAE Free Zonespage 67)

Under the Commercial CompaniesLaw, full foreign ownership ispermitted to foreign companiesprovided the office does notconduct business in the countryand only serves as a base to dobusiness in the region.

According to an Agreement with the local

government of each Emirate(see 1.13(a) The constitution)

(stock market & commodities)Subject to special laws(See Financial IntermediationServices page 35)

Free Zones

According to Commercial Companies Law

(See 3.1(a) UAE Companyand 1.13(c)Company Law and its Update page 27)

UAE Business Structures

Investor

Source: Ministry of Economy

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Aside from the advantages already available

to companies in the UAE customs territory (no

corporate or personal taxes, freedom to repatriate

capital and profits, low import duties except ontobacco and spirits, no exchange restrictions),

the free-zone regimes allow 100 percent foreign

ownership of companies, and hence a full control

over their activities. Comparative advantages

in each zone are based on individual locations,

facilities, areas of specialisation (e.g. motor

vehicles), and establishment and operating costs.

Each Free Zone is under the jurisdiction of the

Emirate in which it is located. Specific advantages

are therefore decided at emirate level.

Varied Licensing Options

The Trade Agencies Law, which regulates a part

of the domestic trade in the customs territory,

does not apply to the Free Zones. Various types

of licences allow operators to practise specified

activities in Free Zones. At the Jebel Ali Free

Zone, a general trading licence allows the

holder to import, export, distribute, and store any

items in accordance with the zones rules and

regulations; a trading licence gives the same

rights, but for specified items only. An industrial

licence allows the holder to import raw materials,

manufacture specified products, and export thefinished products. A national industrial licence

is reserved for manufacturing companies with at

least 51 percent GCC ownership; it allows duty-

free sales inside the UAE customs territory.

The value added by the free-zone company

must be at least 40 percent of the value of the

goods to qualify for duty-free sales. A service

licence allows the holder to carry out the services

specified in the licence within the zone. The type

of services supplied must be the same as the

services supplied by the parent company.

Another regulatory specificity of the Free Zones

is the absence of restrictions on hiring foreign

employees. There are currently few barriers to

the recruitment of foreign labour in the UAE,

1. Commercial Agencies: Practice of trade-

agency functions (registered exclusive

agency agreements with the Ministry

of Economy) within UAE is exclusively

reserved to UAE nationals, either

individuals or companies totally owned

by natural nationals.

Ref: Federal Law No 18 of 1984 concerning the organisation

of commercial agencies

2. Only UAE nationals and companies totally

owned by UAE nationals may supply:

Real Estate Services

Rental/Leasing Services relating to Cars

Services Incidental to Agriculture,

Hunting, and Forestry

Services Incidental to Fishing

Placement and Supply Services of

Personnel

Investigation and Security Services

Passenger and Freight RoadTransportation

Ref: Decision of the Ministerial Council Presidency regarding

the economic activities and professions excluded from the

Decision of the GCC High Council of 2002 / 23rd Session

3. Travel Agencies and Tour Opera tor

services are reserved to UAE nationals

or individuals or companies totally

owned by natural nationals.

Ref: Federal Law No 18 of 1984 concerning organisation of

commercial agencies.

4. Only the following services, among the

Audiovisual Services and Recreational,

Cultural and Sporting Services as

defined in the WTO List regarding

Services Sectoral Classification (MTN.

GNS/W/120: 10 July 1991) may be

supplied by foreign suppliers:

Studios for Artistic & Cinematographic

Production and Photography

Theatrical Troupes

Movie Halls

Theatres

Halls for Artistic Exhibitions

Sporting Activities

Ref: Decision of the Ministerial Council Presidency No 2/203

of 25 April 2005.

5. The ownership of Pharmacies,Warehouses of Medicaments and

Preventative Medicine Centres is limited

to UAE nationals, either individuals or

companies totally owned by natural

nations (Articles 19 & 35).

Ref: Federal Law No 4 of 1983 on the pharmaceutical

profession an d

pharmaceuti cal compan ies.

Services & Investment Activities reserved for UAE Nationals

The Free Zones offer full facilities

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The Free Zones

Full information on the UAE Free Zones can be obtained at www.emiratesfreezone.com

Abu Dhabi Industrial City of Abu Dhabi HCSEZ www.hcsez.ae

Dubai Jebel Ali Free Zone (JAFZA) www.jafza.co.ae

Dubai Gold and Diamond Park www.goldanddiamondpark.com

Dubai Maritime City www.dubaimaritimecity.ae

Dubai Aid City www.dubaiaidcity.ae

Techno Park www.tp.ae

Dubai Airport Free Zone www.dafza.gov.ae

Dubai Silicon Oasis www.dso.ae

Dubai Flower Centre www.dubaiflowercentre.com

Dubai Logistics City www.dubailogisticscity.net

Dubai Internet City www.dubaiinternetcity.com

Dubai Media City www.dubaimediacity.com

Dubai Knowledge Village www.kv.ae

Dubai Outsource Zone www.doz.ae

Dubai Biotechnology & Research Park www.dubiotech.com

Dubai Studio City www.dubaistudiocity.com

International Media Production Zone www.impz.ae

Dubai Healthcare City www.dhcc.ae

Dubai International Financial Centre www.difc.ae

Dubai Multi Commodity Centre www.dmcc.ae

Dubai Textile City upcoming

Dubai Carpet Free Zone upcoming

Dubai Auto Parts City upcoming

Heavy Equipment & Trucks Zone upcoming

Dubai Building Materials Zone upcoming

Dubai Cars and Automotive Zone upcoming

Dubai Design Centre (TCO) upcoming

Dubai Auto Zone (TCO) upcoming

Dubai Energy City (Dubai Holdings) upcoming

Dubai Academic City (Dubai Holdings) upcoming

Sharjah Sharjah Airport International Free Zone www.saif-zone.com Hamriyah Free Zone www.hamriyahfz.com

Ajman Ajman Free Zone ajmanfreezone.gov.ae

Umm al Quwain Ahmed Bin Rashid Free Zone

Ras Al-Khaimah RAK Free Zone www.rakftz.com

Fujairah Fujairah Free Zone www.fujairahfreezone.com

and foreign employment has been the source of

economic growth. However, action is being taken

to counter the problem of the unemployment

of nationals. Within the Free Zones, premisesmay be owned on leased land, and mortgaged.

Therefore, a company established in a Free Zone

that has built its own facility may mortgage its

premises to a bank or financing company to

finance its debts or obligations.

Operators register with the customs authority of

the emirate in which the Free Zone is located. The

relevant customs authority delivers import and

export permits. Products may be brought into free

zones and duty-free shops, and exported outside

the country or to other Free Zones and duty-free

shops, without being subject to customs duties.

Goods can remain indefinitely in Free Zones.

All exports from Free Zones are accounted for

through export declaration. Imports from Free

Zones and duty-free shops into the customs

territory are liable to all the normal customs

duties and taxes (except, as mentioned above,

the GCC-owned companies that meet the 40

percent rule of origin criterion).

Jebel Ali Free Zone (JAFZA)

Jebel Ali Free Zone Authority manages one of

the worlds largest and fastest growing export-

processing zones, and is a leading global trade

and trans-shipment centre. The zone is built

around Dubais Jebel Ali Port which is one of the

worlds largest ports. Upon completion of the

Jebel Ali Airport, in 2007, Jebel Ali Free Zone will

be the only one in the region with an airport and

a port on site. Of the thousands of businesses

from over 120 countries operating at JAFZA, 76percent are involved in trading, warehousing, and

distribution; 20 percent in manufacturing; and 4

percent in services.

JAFZA is a commercial organisation but is

financially supported by its only shareholder, the

Government of Dubai.

In September 2006, a delegation from the

Chubu Economic Federation in Nagoya, Japan,

visited the Jebel Ali Free Zone. Talks focused

on the investment climate in the UAE and the

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CHAPTER 3


facilities offered by JAFZA to help expand

Japanese regional business within the Free Zone.

JAFZA is home to more than 100 major Japanese

companies engaged in various industrial, logisticsand electronics activities.

Knowledge Free Zones

As of November 2006, Tecom Investments, the

Dubai governments prime vehicle to spearhead

the ICT sector, had invested AED11 billion in

setting up seven knowledge free zones. Tecom,

which eight years ago launched the emirates

knowledge clusters, now manages Dubai

Internet City, Dubai Media City, Dubai Studio

City, Knowledge Village, DuBiotech, International

Media Production Zone and Dubai Outsourcing

Zone. It has so far attracted 2,400 companies

who together employ 30,000 professionals. The

ICT sector represents about 4 percent of the

UAEs GDP.

Dubai Media City (DMC) and the International

Media Production Zone (IMPZ) generated much

interest from the Asian business community at

the first UAE Asia Investment Exhibition & Forum

held in Singapore in late 2006. The delegation

met with the Singapore Media Development

Authority (MDA) to explore possibilities for

international collaboration on the development of

media clusters.

Industrial Zones

The emirate of Abu Dhabi is investing heavily in

industrial free zones and in 2004 established the

Higher Corporation for Specialised Economic

Zones (now renamed Zones Corp). Abu Dhabi

Industrial city (ICAD 1) is already completed andthe emirate plans to set up a further 30 industrial

zones over the next seven years.

Dubai Industrial City was launched by Dubai

Holding to concentrate both heavy and light

industry away from the urbanisations. Full project

leasing of the 560 square million foot project is

expected by 2010 and over 120 projects have

already been signed up in the development.

The plans include specialised areas for base

metal production, chemical, mineral, transport

equipment as well as food and beverage

manufacturing.

Sharjah is developing the Emirates Industrial

City and the Sharjah Investment Centre, both hugeindustrial areas providing warehousing, industrial

land, offices and labour accommodation.

Ajman, Ras Al Khaimah and Fujairah are also

developing their own specialised industrial free

zones in order to attract different industries to

their emirates.

For detailed information on Industrial Zones

please see Industrial Development of Each

Emirate on page 111.

Dubai Flower Centre

Dubai Flower Centre takes advantage of one of

the worlds fastest growing transit hubs. With

an understanding that the key to successful

perishables logistics is an unbroken, high quality

cool chain, DFC has dedicated itself to developing

and delivering the most advanced facilities in any

weather. Recently established and positioned at

Dubai International Airport 1, DFC has a waiting

list of international companies ready to move in.

DuBiotech

DuBiotech is the first fully regulated biotechnology

park in the Middle East. The development aims

to be the central hub for all life science industries

for the Middle East region and offers a vibrant

environment for key industry players to thrive

within their sphere of activity. The park offers

drug discovery, R&D, manufacturing companies

as well as industry-specific service providers.

In November 2006, Gezyme Corporation, one

of the worlds leading biotechnology companies,announced that it would open an office at

DuBiotech. Genzyme, with 2005 revenues of

US$2.7 billion, is a leader in the effort to develop

and apply the most advanced technologies in

the life sciences. Genzyme will join Amgen Inc.,

Richard-Wolff, Serono, Eppendorf and Cryo-Save

who are already residents of the park.

All DuBiotechs buildings are to be classified as

LEED certified Green buildings and the complex

includes a 500,000 square foot animal reserve.

Residents report on Dubai Internet City:

We were able to focus on market growth

without the distractions of organising

office fit out, telecom services, licences,

visas, and so on. We are convinced that

without this essential service, Hampson-

Russell would have taken weeks rather

than minutes to establish.

Adrian Smith,

Regional Manager,

Hampson-Russell Software Services

The environment in Dubai Internet City

has proven to be vibrant and active, with

its ever changing, cutting edge technology,

and melt ing pot of nat ionalities making it

a truly unique p lace to work.

David Michaux,

Chief Executive Officer,

Scanit: The Security Company

Dubai Internet City is a magnet for attracting

the very best the industry has to offer.

Stphane Rjasse,

Managing Director,

Fujitsu Siemens Middle East

Our market leadership is a direct result

of the conducive business environment

provided by Dubai Internet City.

Joseph Hanania,

Managing Director,Hewlett Packard Middle East

We would not have been able to grow as

fast as we have done, if we had stayed in

the UK or in Europe.

Jim Morrison,

Chief Executive Officer,

i-mate

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Several dynamics have contributed to a UAE market

that is vibrant, competitive and multicultural.In the thirty-five years since the formation of

the UAE, its leaders have worked assiduously to

reduce the legal and cultural barriers for foreign

enterprises operating in the Federation. This

means that the supply side of the UAE market

increasingly features traders and businesses

from all corners of the world.

Another dynamic in the UAEs brief history to

date has been the demographic change that has

created a burgeoning expatriate population. On

the night of December 6th 2005 when the UAE

conducted a census of all the people nationals

and non-nationals who were residing in the

country at that time, the total number of non-

nationals was 2,944,159 or 78.1 percent of the

total population. This means that the demand

side of the UAE market includes consumers and

businesses from across the globe.

But these recent dynamics are only the latest in

a string of factors in the UAEs history and culture

that have for centuries meant that the Emirates

welcome traders from foreign shores.

Dubai has been well known as an entrept for

centuries, but it is not the only emirate with a long

history of international trading. Some of Sharjahs

economic roots lie in trading links, especially

with the Far East. Archaeological excavations in

Ras Al-Khaimah meanwhile reveal that in ancient

times a settlement with an advanced civilisation

traded with the Indian sub-continent.

Traders in the UAE have therefore become

experienced in sourcing goods from across theworld. Prices are pressured downwards by re-

exporting, an important aspect of the economy,

especially in Dubai, and one that has resulted

in traders placing larger orders and obtaining

lower prices.

Todays multicultural UAE market is sophisti-

cated and value for money is considered very

important. This has created a demand for high

value, lower priced products. The UAEs high per

capita wealth meanwhile has fostered a tradition

of brand loyalty, observed by both local residents

and foreign residents alike.A relatively recent aspect of the UAEs

multicultural market is the slimming of the

price differentials that once separated higher

priced western goods from lower priced Asian

goods. Perceptions of the value and quality

of Asian goods in the market are improving,

thus once again making aspects of the market

more competitive.

Dubais Global Village epitomises the extent

to which the UAE market is multicultural. Now

an annual event on Dubais tourism calendar, it

started in 1996 as a small site along Dubai Creek

with kiosks selling products and handicrafts

from different countries. Today Global Village

is a substantial tourism attraction for UAE

nationals, resident expatriates and visitors from

across the world. At its twelfth extravaganza

from December 13th 2006 until February 9th

2007 there were exhibitors from 40 countries

selling produce at 75 retail outlets and

50 restaurants.

Best in Region Philosophy

Clearly UAE businesses have to differentiate, just

as the different emirates do in their own marketing

activities. While Dubai is focused on specific

sectors such as trading, financial services and

media, Abu Dhabi is focused on capital-intensive

industries and Sharjah has carved out its niche

for small- and medium-sized enterprises. Each

emirate meanwhile has its distinct tourism

offering. But a single message permeatesemirate-level marketing: the UAE is committed

to providing best in region facilities. This is

why international retail and leisure companies

and world-class investors continue to flock to

the UAE.

Businesses in the UAE also communicate

the best in region message. Rotana Hotels

philosophy is to be the leading Middle Eastern

hotel chain, says the Abu Dhabi-based hotel

management company. With 21 properties under

management throughout the Middle East and 21

additional operations and projects in the pipeline,the company founded in just 1992 is pursuing its

philosophy by leveraging international know-how

and local experience to provide hotel owners with

management services for fees consistently lower

than those of international competitors.

Similarly best in region focused enterprises

are found across the emirates, from the regions

first and only military and civilian ship builder

and repairer, Abu Dhabi Shipbuilding to RAK

Ceramics, which is now one of the worlds most

successful producers of ceramic and porcelain

tiles and sanitary ware.

3.2(a) Price Structure

With all the hallmarks of an open market economy

the UAE is committed to liberalised pricing in

most areas of the economy, a policy that is

underpinned by the Federations free trade policy

that allows the private sector to drive economic

growth with the government acting as regulator.

The authorities have made substantial moves

to open up UAE markets to foreign goods and

services which drives prices down and standards

up. The UAEs import duties are very low and the

Federation does not maintain foreign exchange

controls neither does it impose quantitative

restrictions on most imports.

Liberalisation of UAE markets is sharpening

companies approaches to pricing structures.

At the beginning of 2007 the UAEs only

telecoms operator, Etisalat, was preparing

for the market entry of its first competitor,Emirates Integrated Telecommunications

Company (EITC), by com-pletely reviewing its

pricing structure.

Etisalat said it would offer off-peak international

rates to business customers at a 35 percent

discount on current rates. Newcomer EITC

meanwhile said that said customers signing up

to its du telecoms services would introduce a

per second pricing strategy to differentiate its

offering from Etisalats.

3.2 A Multicultural Market

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In sectors where open competition is well

established, pricing strategies follow the

norms of an open market economy, and in few

industries are premium pricing strategies sofirmly embraced as the tourism sector. Hotel

prices routinely soar during major exhibitions

while Movenpick and Kempinski stand out a

mongst super-luxury international hotel

operators that have chosen UAE locations

for their premium priced offerings. Kempinski

operates the opulent Emirates Palace hotel in

Abu Dhabi but its UAE roots da te back to 1998

when a Kempinski five-star hotel opened its

doors in Ajman.

In few sectors are the tensions between price

points and the quality of service delivery more

noticeable than in the airline industry. Sharjah

capitalised on the opportunities for budget flights

when its government-owned Air Arabia took to

the skies.Air Arabia started operations in October 2003

and can safely claim to be the regions first

budget airline. Now it looks as if the budget

carrier will break new ground again by becoming

the first airline in the Gulf to go for an Initial

Public Offering if its application to convert into a

public shareholding company is approved by the

Ministry of Economy.

3.2(b) Advertising and Media

The UAE is the largest advertising market in the

region, according to figures for the first nine

months of 2006 issued by Pan Arab Studies and

Research Corporation (Parc). Advertisers in the

UAE spent US$736 million (AED2.7 billion) in

the first nine months of the year ahead of SaudiArabia where spending reached around US$717

million (AED2.6 billion) during the same period.

The UAEs advertising industry exceeded the

entire advertising spend of 2005 (US$630

million or AED2.3billion) during the first nine

months of 2006.

Due to the tremendous economic growth

achieved by the UAE and the advertising potential,

the country has also become the Middle East

home for many advertising agencies who have

developed advertising campaigns for both the

country and the region as a whole.

Table 2. Daily TV Viewing

Group Minutes per day

Nationals 200

Arab Expats 212

Indians 135

Other Asians 153

Westerners ENL* 107

Westerners NE** 126

Total 165

Table 6. Radio Listenership

Group Sample % listening 7days/wk

Nationals 232 44

Arab Expats 246 44

Indians 234 46

Other Asians 179 42

Westerners ENL* 113 48

Westerners NE** 111 60

Total 1115 47

Source: PARC

Table 1. Television Viewing

Group Sample % watching 7days/wk

Nationals 232 81%t

Arab Expats 246 89

Indians 234 78

Other Asians 179 71



Total 1115 80

Table 4. Newspaper Readership

Group% reading newspaper

7days/wk

Mins/day

reading paperNationals 46 50

Arab Expats 48 45

Indians 53 35

Other Asians 60 29



Total 53 40

Source: PARC

Marketing Survey

In late 2005 the UAE chapter of the International Advertising Association and Zayed University joined forces to conduct a survey of 1,115 UAE residents in all

seven Emirates. They enlisted the services of Dubai-based Pan Arab Research Centre (PARC), a media research leader and the Middle East partner of the Gallup

organisation to manage the field work for this ground-breaking study, which was conducted in September/October, 2005.

Each respondent was asked questions about media usage and attitudes. The survey covered such topics as media ownership, types of media used, language

of media used, media used for different types of entertainment and information, importance and satisfaction with the media used, and attitudes about advertising.

Excerpts from the survey are published on the following pages but the full survey can be downloaded at www.arabresearch.com

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Appliances Total sample Nationals Expat Arabs Indians Other Asians Native English

(N=1115) (N=232) (N=246) (N=234) (N=179) (N=113)

Other Television Sets 73.8 92.7 90.2 63.7 69.3 54.9

Flat Screen Television 41.2 47.8 24.8 37.6 31.8 40.7

Home Entertainment Centre 17.6 11.6 6.5 17.5 15.6 42.5

Digital Camera 42.3 44.8 30.1 32.5 31.8 73.5

Mobile Telephone 92.8 94.8 95.5 90.6 84.9 94.7

Mobile Telephone with Bluetooth 38.7 70.7 54.1 15.8 15.6 37.2

Laptop Computer 20.0 15.1 9.8 9.4 8.9 59.3

Desktop PC 61.9 77.2 69.9 58.5 39.7 65.5

Access to Internet 58.5 63.4 54.9 53.0 37.4 85.0

Number of Appliances Nationals Expat Arabs Indians Other Asians Native English

(N=232) (N=246) (N=234) (N=179) (N=113)

Flat Screen Television 1.35 1.10 1.02 1.05 1.25

Other TV sets 2.20 1.40 1.09 1.07 1.37

Free to Air Satellite TV 1.24 1.16 1.00 1.00 1.00

Free Cable 1.17 1.19 1.02 1.00 1.00

Desktop TV 1.08 1.01 1.01 1.04 1.03

Laptop Computers 1.09 1.04 1.00 1.00 1.04

Internet Connections 1.04 1.01 1.02 1.00 1.01

Digital Cameras 1.13 1.01 1.01 1.04 1.08

Home Theatre Systems 1.04 1.06 1.02 1.00 1.06

Mobile Phones 2.83 2.17 1.38 1.39 1.50

Mobile Phones with Bluetooth 2.26 1.77 1.32 1.82 1.17

Percentages of Households Owning Appliances

Average Number of Appliances per Household by Nationality

Source: PARC

Source: PARC

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CHAPTER 3


Topic Nationals Expat Arabs Indians Other Asians Native English

UAE UAE TV Jazeera Papers A. dailies Papers

Arab Jazeera Jazeera Home TV Home TV Papers

Iraq Jazeera Jazeera Papers Papers Papers

Muslim world Jazeera Jazeera Papers Papers Intl. TVArab-Israeli conflict Jazeera Jazeera Papers Papers Papers

Asian topics UAE TV Jazeera Papers Papers Papers

European topics Jazeera Jazeera Papers Papers Papers

USA topics Jazeera Jazeera Papers Papers Papers

Social issues: UAE UAE TV UAE TV Papers Papers Papers

Social issues: Expat Arabs Jazeera Jazeera Papers Papers Papers

Social issues: Asian Expats Jazeera Jazeera Papers Papers Papers

Social issues: Expat Westerners UAE TV Jazeera Papers Papers Papers

UAE issues religion Jazeera Jazeera Papers Papers Papers

UAE issues education UAE TV Jazeera Papers Papers Internet

Regional business Jazeera Jazeera Papers Papers Papers

International business Jazeera Jazeera Papers Papers Papers

Stock market UAE TV A. dailies Papers Papers Internet

Daily = Arabic language dailies; Home TV = Home country television, Int. TV = International TV; Jazeera = Al Jazeera television; Papers = English-language Daily Newspapers; UAE TV = UAE-based television stations.

Popular Channels for Breaking News in the Middle East (Rank order)Channels Nationals Expat Arabs Indians Other Asians Native English

Abu Dhabi TV 2 3 8 7 5

Al Arabia 4 2 10 10 7

Al Jazeera 1 1 9 9 6

BBC World 6 6 1 1 1

CNN 5 5 2 2 2

Dubai TV 3 4 6 4 4

Euronews 8 7 7 7 3

Sahara TV 7 7 5 3 8

Star News 9 7 3 4 10

Zee News 10 10 4 4 8

Media Penetration Rates, (percentage of households having access)Group Free to Air Paid Cable Internet

Nationals 66.4 18.5 63.4

Expat Arabs 78.5 10.2 54.5Indians 44.4 27.4 53.0

Other Asians 47.5 21.2 37.4

Native English Speakers 21.2 46.9 84.1

Top Information Source

Source: PARC

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Abu Dhabi National Exhibition Centre

The decision to build a new exhibition centrefor the UAE was reached by the Government

of Abu Dhabi because demand from visitors

and exhibitors had expanded so dramatically.

Significant opportunities were seen to exist for

new international exhibitions and conferences.

In particular, Abu Dhabi is emerging as a

unique market and the massive developments

that are planned will support a range of

significant exhibitions.

The exhibition complex includes 57,000 square

metres of gross exhibition floor space, a massive

21,000 square metres visitor concourse and

7,500 square metres of multi-purpose halls. The

new centre also features dedicated conference

facilities for 1,200 people, banqueting areas and

more than 30 high-specification meeting rooms.

The project was completed in good time to

host the internationally recognised IDEX 2007

defence exhibition and conference. Built in the

U-shape that has proven so successful in the

best venues in the world, the Centre contains a

central landscaped plaza for outdoor events.

The focal feature of the complex is an iconic

soaring tower that curves above the centre and

looks out to the sea. Innovative in its design, the

tower is a bold architectural statement that reflects

ADNECs plans to become an internationally

recognisable venue. The tower will become the

brand that promotes the venue and Abu Dhabi

to the world. Quality exhibitions will play an

important role in creating international awareness

of Abu Dhabi, as well as in attracting investment,new industry and business tourism.

The location for this centre was carefully selected:

close to the major hotel developments and a short

distance from Abu Dhabi Airport. The site is only

45 minutes from Jebel Ali, Dubai. The surrounding

road network has been planned to allow for easy

access and exit to the centre and multi-storey

car parks provide ample capacity for visitors and

exhibitors. As part of the development, the existing

Sheikh Zayed Grandstand was refurbished and

linked to the new halls. Within it will be offices,

food courts and a range of companies servicingthe exhibition industry.

Dubai Exhibition City

Dubai World Trade Centre (DWTC) on December

4th 2006 unveiled two of Dubais most ambitious

and strategically important commercial projects

at Cityscape 2006, the International Property

Investment & Development Event. The Dubai

Trade Centre District and Dubai Exhibition City

were revealed for the first time, providing visitors

with the opportunity to see the extent and

ambition of these unique developments.

Designed to match the worlds highest

standards of architecture by internationally-

renowned Hopkins Architects, visitors were

shown the first phase of the AED16 bill ion master

plan to create the new Dubai Trade Centre District

at the heart of the city. The project will see the

generation of a new business district to rival the

centres of Singapore, London and New York.

Plans for Dubai Exhibition City the regions

first integrated business, event, trade and retail

destination were also revealed for the first

time. Dubai Exhibition City will provide a campus

style office park, a major retail destination, eight

international standard hotels, and a trade hub for

international companies to permanently showcase

their products. The development will be one of the

most strategically important commercial projects

in the Middle East and is designed to offer a

complete solution to business tourists, corporate

organisations and the event industry. Situated nextto Dubai World Central Airport and adjacent to

Dubai Exhibition World, Dubai Exhibition City will

drive business opportunities for the whole region.

Expo Centre Sharjah

The UAE is fast becoming a hub for meetings,

incentives, conventions, and exhibitions (MICE) in

the Middle East region. Excellent infrastructure,

superior hotel and conference facilities, tax-free

benefits, and its strategic regional and global

gateway position, are some of the reasons why

the UAE is preferred as a MICE host.Sharjah is one of the emirates at the forefront

in developing the MICE industry. This emirate

pioneered the exhibition industry in the Gulf

with the establishment of an Expo Centre in

1977 and continues to be one of the regions

leading organisers of B2B, B2C, and Solo

Country Shows.

The Middle East MICE sector received a

considerable boost in September 2002 when

Expo Centre Sharjah moved to a new state of the

art facility.

The new exhibition and meeting facility was

a spectacular tribute to the growing importance

of the UAE as the commercial hub of the Middle

East, and the Centre has since then established

itself as a prime meetings destination that offers

the perfect combination of sophisticated technical

facilities and professional services across a broad

spectrum of events.

In 2005, Expo Centre Sharjah hosted 19 events

attracting over 609,270 visitors including 10,000

from overseas. During this period, the exhibitions

generated AED180 million in revenues for the

hospitality and tourism sectors in Sharjah. Across

the UAE, exhibitions in Sharjah are estimated to

have generated sales of 825,000 room nights

during the year.

The UAE is becoming a hub for exhibitions

3.3 Exhibition Centres

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CHAPTER 3


3.4 Trade Fairs

TEKNO

Janury 2007Dubai World Trade Centre

Arab Plast

January 2007

Dubai World Trade Centre

Small & Medium Enterprises Expo

January 2007

Dubai International Exhibition Centre

Dubai Property & Investment Exhibition

January 2007


The Wellbeing Show

January 2007


Police & Homeland Security

January 2007


Intersec Middle East

January 2007


Fire Middle East

January 2007


Commercial Security Middle East

January 2007


Safety & Health Middle East

January 2007


Environment

January 2007

Abu Dhabi International Exhibition Centre

Steel Fab

January 2007Expo Centre Sharjah

Arab Health

January 2007


Middle East Business Aviation (MEBA 2007)

January 2007

Airport Expo Dubai

Arab Wood

February 2007

Expo Centre Sharjah

Multiphase Pumping & Technologies (MPT 2007)

February 2007

Beach Rotana Hotel & Towers, Abu Dhabi

Architectura l Conservation

February 2007


Arab Lab

February 2007


Middle East Electricity

February 2007


International Real Estate & Investment Show

February 2007


Home Owner Dubai

February 2007

Madinat Arena, Dubai

IDEX

February 2007


Gulfood

February 2007Dubai International Exhibition Centre

The Perfect Wedding

February 2007

Expo Centre Sharjah

Fashion Jewellery & Accessories & Watch

& Clock Fair (IFJA & IWCF)

February 2007


IFEX UAE

February 2007


Dubai International Wood &

Wood Machinery Show

February 2007


Sign & Graphic Imaging

February 2007


Asian Lifestyle Dubai

February 2007

Airport Expo Dubai

Kioskcom Middle East

(Dual-Automation & Self-Service Show)

February 2007

Crown Plaza, Dubai

National Career Exhibition

March 2007

Expo Centre Sharjah

AJWEX (International Jewellery

and Watches Exhibitions)

March 2007

Celebration Land, Al-Ayn

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Franchising Middle East 2007 (FME 2007)

March 2007


International Spring Trade Fair

March 2007


Chem Middle East

March 2007

Sheikh Rashid Hall, Dubai

IPM Dubai

March 2007

Airport Expo Dubai

Vision X Dubai

March 2007


Dubai Anaesthesia

March 2007

Crown Plaza Hotel, Dubai

Cabsat

March 2007


Careers UAE

March 2007


Roadex

March 2007


Automotive Aftermarket Middle East

March 2007

Dubai International Exhibition Centre, Dubai

Dubai Boat Show

March 2007

Dubai International Marina Club

Water, Energy Tech. Environment Exhibition

March 2007


MOTEXHA Spring

March 2007


Aviation Procurement Expo

March 2007


Finance, Real Estates & Construction

March 2007

Expo Centre Sharjah

Dubai Pharmaceutical & Technologies Exhib.

March 2007


Cladding Middle East

March 2007

Expo Centre Sharjah

Roof and Cladding Middle East

March 2007

Expo Centre Sharjah

Front Middle East

March 2007

Expo Centre Sharjah

Ginex Expo

March 2007


Gulf Glass

March 2007

Expo Centre Sharjah

Gulf Incentive Business Travel & Meetings Exhib.

March 2007


Dubai Humanitarian Aid

& Re-development Exhib.

April 2007


Arabian Propert ies Exhibition

April 2007


Construct Abu Dhabi

April 2007


Gulf Print

April 2007Dubai Airport Expo

Gulf Pack

April 2007

Dubai Airport Expo

International Property Show-Dubai (IPS 2007)

April 2007


The Bride Show

April 2007


Ambiente Arabia

April 2007


Arabcom Expo

April 2007

The Emirates Towers Hotel, Dubai

Global Education & Training Exhibition (GETEX)

April 2007


Retail Middle East

April 2007

Expo Centre Sharjah

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CHAPTER 3


Gulf Maritime

April 2007

Expo Centre Sharjah

Photo World Dubai

April 2007


Poultry & Livestock Exhibition

April 2007


Fishing & Aquaculture Exhibition-Middle East

April 2007


Agri Business Expo Middle East

April 2007


Dubai Derma

April 2007


Middle East Flower

& Garden Show

April 2007


Alumex Dubai

April 2007


Intl. Medical Care & Diagnostic Exhib.

(IMD-IHF)

April 2007


Dubai Entertainment Amusement

& Leisure show (DEAL 2007)

April 2007


Emergency Catastrophe Management Exhibition

April 2007


World Tobacco Middle East

April 2007

Dubai World Trade Centre, Dubai

APTS Middle East

April 2007

Grand Hyatt Dubai

MidEast Watch & Jewellery Show

April 2007

Expo Centre Sharjah

Arabian Travel Market

April 2007


Weddex

May 2007

Celebration Land, Al-Ain.

Middle East Toy Fair

May 2007


Lightstyle Gulf Light

May 2007


Interior Lifestyle Middle East

May 2007


Hardware & Tools

May 2007


Housewares & Homestyle

ME Exhibition

May 2007


Light Middle East

May 2007


Hometech Middle East

May 2007


Garden, Landscaping & Outdoor Living

May 2007


ISH Kitchen + Bathroom Gulf

May 2007


Install Middle East

May 2007


Event 360

May 2007


Musac Expo

May 2007

Dubai International Exhibition Centre,

Dubai

Wellness & Spas Middle East

May 2007


PALME

May 2007


BeautyWorld Middle East Gulf

May 2007

Dubai International Convention

& Exhib. Centre

Automechanika Gulf

May 2007


Materials Handling

May 2007


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Airport Build & Supply Exhibition

May 2007

Airport Expo Dubai

Italian Lifestyle in the Emirates

May 2007

Expo Centre Sharjah

InRetail Expo

June 2007


The Hotel Show

June 2007


Retail City

June 2007


The Office Exhibition

June 2007


Hotel Show Dubai

June 2007


Domotex Middle East

June 2007


Paper Arabia

September 2007


Dubai Transexpo

September 2007


Arabian Adventure Show

October 2007


Arab Hunting Show

October 2007


Security & Safety Middle East

October 2007


Halal Dubai

October 2007

Crown Plaza, Dubai

Dubai International Seafood Expo

October 2007

Crown Plaza Hotel, Dubai

Dubai Air Show

November 2007


International Aerospace Exhibition

November 2007

Airport Expo Dubai,

Gitex-UAE

November 2007


3.5 Strategic Alliances

Whatever the size and reputation of the home

operation, a productive alliance with a national

company can help international business to be

more effective in the United Arab Emirates and

this is also true for all other countries of the

Middle East.

The Centre for Applied Research & Training

(CERT), headquartered in Abu Dhabi, is the

commercial arm of the Higher Colleges of

Technology and has been building a reputation

for excellence in education and innovation since

1996. Collaborating with the worlds leading

technology companies since its very earliest days,

CERT has been able to open doors for companies

such as Honeywell, Lucent Technologies, Intel

and IBM.

It is easy enough for large companies to

establish and staff a UAE office but to achieve

optimum business volumes they really do need to INTEL is a resident of CERTs Technology Park

Intel

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CHAPTER 3


find a way to interface with the resident decision-makers in the country.

Multi-discoveries are occurring all the time

at organisations such as IBM. The companys

laboratories, which rival anything you would find

in the public sector, spend some US$10 billion

on research each year. And a good deal of this

intellectual property just slides and sits in an

inventory. This was the case with some IP that

would eventually be transformed into the biggest

telematics deal in history. CERT and IBM are now

working together to provide traffic management

solutions in the UAE. The vehicle smart box

that the companies developed jointly is a

born in the UAE product with regional and

global possibilities.

IBM first introduced their technology to the

UAE by promoting it directly to the government

and by visiting police departments and the

municipalities. Inevitably, there was interest in a

device that could make the countrys roads safer,

address problems in traffic and fleet management

and enhance driver convenience, but it was only

interest at that early stage. These organisations

are receptors, ready to deploy solutions but not

to build solutions and appropriate solutions for

the UAE in this area still needed to be formulated.

CERT was at the interface between the IP partner

and the end user and this resulted in a product

tailor-made for the UAE, a healthy initial order

from a fleet operator and many other opportunities

which are now in the pipeline.

There is no doubt that the reputation of

individual UAE business leaders influences buying

decisions in the UAE. There is also no doubt that

to team up with a well respected Emirati nationalhost company facilitates business. Long after the

expatriate managers have gone home the Emirati

nationals will still be in place a fact which inspires

confidence in potential business partners.

A local host company can be especially

important for small foreign companies that are

less well known in the UAE but still have intriguing

IP. Cathexis Innovations is one such company

and it is at the cutting edge of RFID technology.

Before CERT expressed interest in the

company, Cathexis made several visits to theUAE talking to people such as Microsoft and IBM.

Eventually the company came to understand that

what they really needed was the benefit of a

national company working on their behalf. In late

November 2006, CERT announced that it had

acquired an equity stake in Cathexis following an

investment of CAN$3 million.

The dynamic environment of the UAEs

specialised zones, allows people to get to know

eachother and share ideas.

These international relationships in the UAE,

which take various shapes, have stood the test of

time. Honeywell has been with CERT for the past

ten years and now have their systems integrated

at CERTs Abu Dhabi centre. The company

has announced that it is to expand its highly

successful UAE operation.

Agencies and Distributorships

The 2006 amendment to the Commercial Agencies

law will reassure potential investors. The UAE

government has demonstrated that it is happy to

allow foreign principals and their UAE agents to

agree the duration, dispute resolution procedures

and other terms of contract between themselves.

The independent judicial system of the country

will enforce contacts without government

interference in private business relationships.

Prior to this amendment, neither party could

terminate the agency contact except through

mutual agreement, a decision of the Commercial

Agencies Committee or by order of the courts.

This was the situation even if the commercial

agency contract had expired or the principal

and agent were in dispute. Under the law, goodswould be barred from entering the country

without the agents approval. This ban would

stay in place until the problem was fully resolved

and this could result in products being unable to

reach UAE shelves for a considerable time.

Let it be said that this level of protection to

the agent often brought positive benefits to both

sides and stability to the marketplace. Agents,

who had to be UAE nationals or companies,

had the confidence to invest heavily in their sole

agencies which quite often would be their mainor only source of income. No recognition or legal

protection would be given to a commercial agency

that had not been registered with the Ministry of

Economy. Both parties had incentives to actively

promote and distribute the goods in the UAE and

create successful brands. Clearly there was much

to be said for getting things right and maintaining

a good relationship between principal and agent.

And often the combination of an excellent and

well promoted product delivered to retailers by

people who could hardly know their market better

delivered the desired results.

Agents value the protection offered by the

Agencies Law because the consequences of

being unfairly dumped by a principal could be

catastrophic. On the other hand the principals

were concerned that they could not terminate

an agents appointment even if the agent were

in breach of agency terms, the contract or was

unable to support the product. Even if there was

justifiable cause for deregistration, the agent

could seek compensation for his investment in

setting up and developing the agency.

There had been very few occasions during the

previous ten years in which the courts had ordered

the termination of a commercial agency or its

deregistration by the Ministry of Economy. The

principal/agent relationship was like a marriage in

which there was very little possibility of divorce

except in the unlikely case that both parties

agreed. If both sides worked very hard to make

It is helpful to team up with a national host company

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a success of it, the rewards could be outstanding

but a hostile separation would put everything

on hold.

The amendment recognises the interests atstake but distances the Ministry of Economy

from issues agreed by the two parties. Nowadays

the commercial agency contract runs for the

duration of its term and then expires unless

renewed by the agreement of both principal

and agent. However contracts for unspecified

periods shall continue indefinitely unless both

parties agree to move over to a fixed period. The

courts now decide on deregistration questions

if the two sides are unable to agree. The right

to claim damages resulting from the terminationof an agency now applies to the principal as

well as to the agent. There is a further provision,

following a Cabinet decision, which stipulates

that even though an agency exists, certain

goods may be imported into the UAE whenever

necessary or whenever required to prevent

a monopoly. It is important to note that the

Agency Law relates only to exclusive agencies.

Furthermore, a foreign principal could appoint

an exclusive agent but not have the agreement

registered at the Ministry. A few UAE companiesmay want to see an Agency certificate as part

of pre-qualification formalities but usually it is

enough to show evidence that a bond between

principal and agent exists and that someone in

the UAE can be held accountable.

The foreign company may also appoint a non-

exclusive agency and any number of distributors.

Then there is the possibility of the company

setting up a branch to distribute i ts own products

without the need for an agent. Of course in such

cases conflict resolution would be outside thescope of the Agency Law.

The Agency Law provides an option for

the registration of contracts with the UAE

government and brings certain benefits including

predictable dispute settlement. However there

are other proven options for conducting business

successfully in the UAE.Dubai Internet City attracts key technology companies

DIC

3.6 Imports and Exports

It takes just six documents, three signatures

and 18 days to move imported goods from the

UAE ports to warehouse. According to the latest

World Bank report, this makes the country one

of the most competitive in the Middle East.

The Doing Business in 2006 report (released in

September) also shows that it takes a business

just 12 hours to comply with all tax regulations

in the UAE. The cost of obtaining a licence

at just 2.1 percent of the countrys per capita

income is the lowest in the world. With the new

berths created at Jebel Ali port the average time

taken to load now is just 17 hours versus six

days in 2005.

Imports by the UAE, the Arab worlds second

biggest economy, grew 12 percent in 2005 to

US$80.7 billion representing 25.1 percent of the

Middle Easts total of US$322.1 billion.

Among Middle East exporters, the UAE ranked

second after Saudi Arabia in 2005 with a 27 percent

growth in exports to US$115.5 billion, which is

21.5 percent of the Middle Easts total exports.

The Middle Easts merchandise exports

jumped 35 percent to US$538 billion in 2005,

more than twice the level recorded only three

years earlier, according to the latest International

Trade Statistics 2006, report released in late

November.

As the Middle Easts merchandise exports

consist largely of fuels (69 per cent), it is not always

realised that the regions exports of manufactured

goods are also growing rapidly. The UAE has

become a large trading hub and its exports

(including re-exports) exceeded US$48 billion.

Higher fuel prices contributed to changes

in regional trade flows, boosting oil exporting

economies and stimulating their import growth

of goods and services. World exports of fuels

rose by 41 percent to US$1.4 trillion in 2005.

This sectors share in world merchandise exports

reached 13.8 per cent, its highest level in almost

two decades.

A prerequisite for doing business in the UAE is

having the appropriate licences. In particular, all

entities carrying out trade must be in possession

of a trading licence. An importer obtains this

licence from the economic department of the

emirate in which business is to take place;

licensing procedures and regulations vary from

emirate to emirate. The trading licence is valid

only for the emirate in which it is issued; it

specifies the products that may be imported, as

well as the activity of the licensee (e.g. importer

or construction company).

The licensee is responsible before the court

for any liability resulting from consumption of the

product in the UAE, for example where products are

found to be faulty or dangerous. Clearing agents,

who must be GCC nationals, can clear imports

only on behalf of the licensed importers, and only

those products mentioned on the licence.

Under the Commercial Companies Law, the

trading licence can be obtained by either majority-

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CHAPTER 3


owned UAE companies or by 100 percent foreign-

owned branches of foreign companies. However,

a large percentage of imports take place under

the Trade Agencies Law, whereby the tradinglicence is held by exclusive commercial agents.

Under the Trade Agencies Law, importing

activities, and wholesale and retail distribution

services, as well as the sale, display or rendering

of a commodity or service in the UAE, are

reserved for exclusive agents. An agent must

be a UAE national, or a company owned by

UAE nationals; must purchase products or

services from foreign companies according to

independent sale agreements and then resell to

its clients as per other agreements, in its ownname. The agency agreement/contract specifies

the agent, the principal (owner of the trade

mark or manufacturer of the brand), the area of

coverage (one or several emirates), and the brand

and models of the product that can be imported

and sold exclusively by the agent.

In order to benefit from exclusive import and

distribution rights, the agency agreement must

be registered with the Ministry of Economy.

The registration costs Dh5,000 (US$1,360),

and is renewable annually against payment of

Dh2,000 (US$545). A foreign company may

appoint an agent that is not registered in the

Ministry of Economy; in this case, the contract

cannot be defended in the court under the Trade

Agencies Law.

Import Prohibitions, Licensing and

Controls

The GCC Common Customs Law distinguishes

absolute import prohibitions from restricted

imports. Each GCC state determines its own list

of prohibited or restricted products, although

GCC members are currently working on the

development of a common list. Imports that are

prohibited in some member states and permitted

in others must not transit through the member

states in which they are prohibited.

In the UAE, absolute import prohibitions

are maintained for various reasons, including

international conventions, environmental pro-

tection, health and safety, and religious and moral

considerations. They cover all kind of drugs;

asbestos; used pneumatic tyres; industrial waste;

forged and duplicate currency; Habara falcons;ivory and rhinoceros horn; live camels; any

printed material that does not adhere to religion

or morals or that is aimed at causing corruption

and disorder; or materials prohibited under any

law in force in the country. All imports from Israel

are prohibited.

Registration and Documentation

To export goods of UAE origin, shippers are

required to provide Customs with an original

invoice and a completed export declaration.

Export Prohibitions and Restrictions

The UAE may restrict oil exports as a result of

its membership in the Organisation of Petroleum

Exporting Countries (OPEC).

In addition, the UAE maintains export controls

(through permits) on certain products for safety,

security, and environmental reasons, and to

ensure compliance with international obligations

under treaties and conventions (e.g. the Basel

Convention, CITES, the Convention on Chemical

Weapons, the Treaty on Nuclear Non-Proliferation)

to which it is a signatory. It restricts in particular

exports of dual-use goods that might be used in

weapons of mass destruction programmes, as

well as conventional weapons. Permits are alsorequired to export animals and animal products, as

well as narcotic drugs, psychotropic substances,

and precursors.

Export Subsidies, Finance and

Insurance

The UAE does not grant or maintain any export

subsidy within the meaning of the WTO Agreement

on Subsidies and Countervailing Measures. At

federal level, the Emirate Industrial Bank, 51

percent owned by the Federal Government,provides financing at reasonable terms for the

industrial sector. This includes export credits

and equity financing. To be eligible, the project

should have a minimum of 51 percent UAE or

GCC ownership, should be located in the UAE

and should have an industrial licence issued by

the Ministry of Finance and Industry.

Export Promotion

Each emirate is responsible for its own promotional

activities which are coordinated by the relevant

Departments of Economy or Tourism.

Source: Ministry of Economy

Commodity Export Structure 2006

Crude oil 36%

Oil by products 4%

Gas 5%

Other exports 6%

Free zone exports 16%

Re-export 33%

36%

4%

16%

33%

5%

6%

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Abu Dhabis new exhibition centre has a central plaza for outdoor eventsADNEC

54-71MOE Chap3.indd 71 10/24/07 3:50:44 PM

Documents

How to Do Business in UAE