What you need to know about doing business in Dubai
December 1st, 2016
Dubai, with an area of 3,885 square kilometers, is the second largest and most populous city in the United Arab Emirates created 50 years ago. The city is situated on the eastern coast of the Arabian Peninsula, to the southwest end of the Arabian Gulf. Dubai's source of greatness lie in its thriving business landscape backed by government incentives and the smooth process of setting up a startup, making it an attracting challenge for any business-centric dreamer.
The hospitality setup is world class propped up by glittering beaches, fascinating deserts, year-round sunshine, luxury shopping malls and hotels, captivating heritage attractions and generous and welcoming people. This hospitality sector milestone enables Dubai to attract millions of business and leisure visitors every year. Dubai's local currency is the Dirham which trades at AED 3.67 to 1 US dollar.
Dubai's culture and religion
Hospitality and courtesy are the most valued virtues in Dubai and are protected at all costs. The ever increasing globalization as well as the many immigrant groups settling in have transformed the city into a melting pot of diverse nationalities, which has resulted in a cosmopolitan culture that is in tandem with global cities. However, Islam and traditional Arab are still the predominant cultures in the city. Almost every neighborhood has a mosque where faithfuls gather to pray five times each week. The Islam and traditional Arab cultures have also influenced cuisine, music, attire, lifestyle, and architecture.
Dubai has a sophisticated system of banking, and numerous international banking institutions have set up branches in the city. By law, opening a bank account in Dubai requires that you possess a residence permit via your employer or business. There is also an option of setting up an offshore account. Banking facilities are available through local or international banks, so a businessperson can look to acquire loans. The law in Dubai allows individual clients to borrow more than 20 times their monthly income or salary. The same law stipulates that repayment installment must not go above 50% of the clients income source or gross salary.
Regarding car loans, the repayment installment should not exceed 80% of the financed car value and this loan can only be granted with a pledge over the car, and should include a 60 month loan repayment period.
Mortgages are available for business people that want to purchase property, but the options are not plenty, plus the interest rates are quite high. However, the trend is gradually changing because local and international mortgage lenders are making it easy to borrow for property purchase.
The Central Bank of the United Arab Emirates is the main institution charged with managing currency, banking regulation and monetary policy in Dubai. The scope of the Central Bank of the United Arab Emirates includes foreign banks, domestic banks, finance house, and other financial institutions.
Dubai company registration
To be able to set up a business in Dubai, the law requires that you find a local partner. They must be a registered citizen of UAE and will essentially be a co-owner of the business. The partner is normally referred to as ''local'.
Your activities, conduct, and association with the local will be regulated by a signed and attested Memorandum of Association in a court of law. The local is not supposed to meddle with your business activities. Their main task is to represent your business entity in government institutions, for example, General Directorate of Residency, Ministry of Labor and Department of Foreign Affairs, which is referred to as immigration' in Dubai.
Nonetheless, you may not want your local to take the responsibility of being your conduit to the government agencies. For this to happen, you will need a Power of Attorney from him that will allow you to undertake all the relationship functions with these agencies.
A business person must be cautious when choosing a local; for instance, they may be representing numerous companies and if a glitch occurs in one of the companies represented, all the firms sponsored might be blocked, resulting in delays and problems for your business.
Company registration procedure in Dubai
1. Determine who your local will be
You must come up with an outline of the specific responsibilities you need the local or sponsor to perform. Determine if you need them to take care of your problems with government processes or if you only want a name on the license. Also, determine the amount you're prepared to pay for services rendered each year.
2. Obtain a license from the Department of Economic Development (DED)
Apply for this and do it on a standard application form and submit at the DED
3. Find a business premises followed by a tenancy contract
For any business to get registered, proof of business premises must be presented. The tenancy contract is the sure proof.
4. Draw up a Memorandum of Association with your local or sponsor and present it at the DED
Any business operating legally must present a Memorandum of Association which categorically points out the agreed arrangements and ownership stake between the parties.
5. Submit the License of Application and Memorandum of Association together with the tenancy contract and other legal documents to the Department of Economic Development.
This is the stage where all fees and charges must be paid. Your license will be out a week after completing this stage.
Specific business licensing
1. If you want to set up a bank or financial institution in Dubai, the law requires you get approval from the United Arab Emirates Central Bank.
2.Getting a license for Setting up a manufacturing company requires ratification from the Finance and Industry Ministry.
3. License for starting up a firm related to insurance must get approval from the Ministry of Economy and Commerce.
4. For a medical and pharmaceutical products startup, you need ratification from the ministry of health.
5. For firms in gas and oil exploration and production, additional authentication from the central government is needed.
To add to these approvals, the Dubai Chamber of Commerce and Industry must be involved in any business registration.
Dubai Stock Exchange
The Dubai Stock Exchange was founded in 2005. Dubai Financial Markets own 66% of the shares while Borse Dubai owns 33%. The shareholders changed Dubai Stock Exchange to NASDAQ Dubai in 2008. NASDAQ Dubai is situated in the Dubai International Finance center and regulated by the Dubai Financial Services Authority.
The stock exchange lists both international and regional shares across the Middle East. Through the stock exchange, individuals or business entities issuing shares are accorded entry into regional and international investment. International share issuers are able to access investments in the region via a dual or primary listing.
NASDAQ Dubai's scope includes UAE, the Gulf Cooperation Council (GCC), the larger Middle East, Indian subcontinent, Turkey, and North Africa. Trading takes place from Sunday through Thursday from 10:00 am to 2:00 pm (06:00 am to 10:00 pm GMT)
Dubai Diamond Exchange
Since the founding of Dubai Diamond Exchange (DDE) in 2003, Dubai has grown to become a top diamond trading hub on the globe. Today, Dubai is considered a gold standard in regard to the rough and polished diamond trade. On top of that, it's a chief regional consumption center for diamond products like jewelry.
According to Dubai Multi-Commodities Center, the driving force of diamond trade in Dubai has been the Almas Tower. The Tower houses some of the biggest industry diamond traders ranging from mining sector players to retail shops.
Dubai has forged a strong alliance with diamond producing nations in Africa and chief processing hubs in China and India. Its major markets are in the United States and Europe. The main factor that has helped Dubai to rank high in the diamond world is its logistics infrastructure and support, which is well supported by the central government.
Dubai Infrastructure milestone
According to the Roads and Transport Authority (RTA), in the last 15 years Dubai has built a world class infrastructure. When people discuss the biggest artificial island, the tallest building or the largest shopping mall, Dubai definitely comes to mind. To add to that glamour, the city added another milestone: the busiest international airport. In 2014, Dubai leapfrogged London's Heathrow to rank as the globe's air travel hub, receiving well over 70 million travelers annually compared to Heathrow's 68.1 million.
RTA also reports a significant increase in roads in Dubai with the presence of 12, 403 lane km. This is a relative increase from the 1,300 lane km registered between 2010 and 2012. The institution pointed out that infrastructure development has played a significant role in the prosperity of Dubai. This development has seen the population of Dubai skyrocket. The Director of Population and Social Statistics reported that Dubai's population grew by 5% in the last 12 months and currently exceeds 2.1 million people.
A lot of money is plowed into the city infrastructure just to give and maintains its glamour. The Roads and Transport Authority has since spent AED 68 billion, equivalent to £12.19 billion, on road projects across Dubai.
Dubai's tourism is a vital aspect of government strategy to ensure foreign cash flows into the economy. Shopping is the cornerstone of Dubai's appeal, in addition to other modern and ancient attractions. The authorities in Dubai have transformed this former desert outpost to a vacation hotspot. People go to Dubai for the endless sunshine, family fun and sales bargains.
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Dubai is also renowned as a sightseeing magnet; for instance, the world's tallest building, Burj Khalifa, and shopping malls that come packed with indoor ski slopes and mammoth aquariums. Some of the cultural highlights and splendid modern add-ons can be experienced by wandering out to Bastakia district to witness the Old Dubai. You'll discover that there is more to the city than its flashy veneer when you cruise along Dubai Creek in a traditional dhow.
To succeed as a business person in Dubai, you have to immerse yourself in its culture and traditions. Plunge into the heat, learn a few Arabic words, live and demonstrate interest in the well-being of the local people, and enjoy the positive aspects the city offers. When you finally find your way around Dubai, success just comes calling.