In total, 1990 economies were assessed in the report. Among the four reforms introduced last year, the UAE made starting a business less expensive by reducing the fee for business incorporation; dealing with construction permits was also made easier by using a risk-based approach to reduce the number of inspections; increased minority investor protections were introduced by providing for qualification of directors in case of prejudicial conflicts of interest; and trading across borders was made easier by reducing the time to export by fully digesting certificates of origin and the cost to import by issuing certificates of conformity that cover multiple shipments.
The World Bank also said that business regulatory reforms across the Gulf economies have been on a steady rise. “Successful reforms in neighboring states, such as the UAE, have also served as inspiration. Saudi Arabia is the most improved economy in Doing Business 2020, with total of eight reforms”, the report said. “It is a year of records for economies in Mena… The next generation of reforms should focus on transparency, fair competition and good governance to make Mena open for business and attract investments needed to create jobs for youth and women,” said Ferid Belhaj, regional vice-president for the Mena region at World Bank.
Sarah Kadhum, Associate at BSA Ahmad Bin Hezeem & Associates, said that non-GCC companies and individuals looking to enter the UAE market have faced steep barriers to entry in the form of minimum local ownership requirements and a high cost of business. “The requirement to register 51 per cent ownership of your company with a UAE partner is daunting for many, especially for entities that have limited prior experience with the region. Moreover, it creates difficulties for many multinational corporate groups to align this ownership structure with the group’s overall ownership structure and governance requirements. Therefore, the option for foreign entities to own more than 51 percent of their UAE company removes a critical hurdle to doing business in the UAE (although it should be noted that this option only applies to select industries),” she said.
Kadhum also said that a closer integration between freezones and onshore UAE further promotes the ease of doing business in the UAE, particularly for non-GCC companies, many of which prefer a freezone set-up. “Another area of difficulty for companies in the UAE is attracting and retaining talent, and the high cost of sponsoring visas. The UAE has introduced a long-term residency visa, which is aimed at attracting and keeping key talent. However, the eligibility criteria are high, and only a limited group of individuals will be able to benefit from the policy,” she added. “The decision to allow 100 per cent foreign ownership of onshore companies is expected to make the UAE more attractive for those investors who want to maintain full ownership of their businesses, increasing job opportunities and economic growth. This will in turn increase demand for all sectors of the real estate market, in terms of office space, housing, hospitality for business travelers and retail spending,” says Faraz Ahmed, research manager for Mena at JLL. “The new law is also expected to provide a boost to FDI, with a number of new overseas businesses looking to establish operations in the UAE.”
Regionally, Saudi Arabia, Bahrain, and Kuwait were among the top 10 reformers. The reforms helped Saudi Arabia – the most improved economy globally in the past 12 months with eight reforms – jump from the 92nd position to the 62nd position to the 43rd ranking. Kuwait also jumped from the 97th position to the 83rd. Regionally, the UAE is followed by Bahrain, Saudi Arabia, Oman, Jordan, Qatar, and Kuwait.
Globally, the top 10 economies scoring the highest on the ease of doing business rankings were New Zealand, Singapore, Hong Kong, Denmark, South Korea, US, Georgia, UK Norway, and Sweden. Top performers typically had online business incorporation process, electronic tax filing platforms, and online procedures for property transfers.
India and Pakistan were also bracketed among the top reformers, with the former introducing four reforms, while the latter brought in six new reforms in its legislation. The reforms helped India to improve its ranking from the 77th position to the 63rd while Pakistan saw its position jumping from the 136th to 108th.
Published by the Khaleej Times.