UAE scraps costly worker de­posits for pri­vate busi­nesses

The Daily Star (Lebanon) - - BUSINESS -

The United Arab Emi­rates is on a blitz. In the past three weeks, the fed­eral govern­ment and re­gional sheikhdoms have an­nounced a slew of mea­sures de­signed to stim­u­late and di­ver­sify their oil-de­pen­dent economies. The lat­est: scrap­ping the bil­lions of dol­lars pri­vate busi­nesses have to lay out to hire the for­eign work­ers they de­pend on.

Busi­nesses will now pay an an­nual fee of 60 Emi­rati dirhams ($16.34) per worker in­stead of a de­posit of 3,000 dirhams, sta­te­owned WAM news agency re­ported. The oil-rich coun­try is also loos­en­ing visa rules for job seek­ers, tourists and stu­dents to en­cour­age peo­ple to come to the coun­try, stay longer and spend more.

The mea­sures should have an im­me­di­ate im­pact, said Abu Dhabi Com­mer­cial Bank’s chief econ­o­mist, Mon­ica Ma­lik. “The re­duc­tion in fees on com­pa­nies is a sign the govern­ment is look­ing to help busi­ness af­ter re­al­iz­ing they have come un­der pres­sure with lower de­mand and in­creased costs,” Ma­lik said.

Scrap­ping the 3,000-dirham de­posit frees up about $3.8 bil­lion for busi­nesses, WAM re­ported.

Lower oil rev­enue and weaker re­gional economies have hurt growth in the UAE, where ex­pa­tri­ates make up about 80 per­cent of the pop­u­la­tion. Last year, growth slumped to an in­fla­tion-ad­justed 0.5 per­cent af­ter OPEC na­tions agreed to pro­duc­tion cuts, down from 3 per­cent in 2016.

If ear­lier ef­forts to ad­dress eco­nomic ills fo­cused on belt-tight­en­ing, then since late May, gov­ern­ments have shifted gears and are look­ing to at­tract in­vest­ment and fur­ther di­ver­sify. The UAE kicked off the blitz with plans to ease re­stric­tions on full for­eign own­er­ship of busi­nesses, and to let some for­eign­ers stay longer to en­cour­age them to send a smaller por­tion of their earn­ings back home.

Abu Dhabi then un­veiled a three­year, $13.6 bil­lion eco­nomic stim­u­lus pro­gram that in­cludes en­cour­ag­ing new in­dus­tries and at­tract­ing for­eign in­vest­ment. And Dubai an­nounced plans to curb ris­ing costs that have re­duced the city’s ap­peal to ex­pa­tri­ates and in­vestors alike.

“These changes sig­nal that the govern­ment con­tin­ues to show flex­i­bil­ity and make it eas­ier to live and do busi­ness,” said Has­nain Ma­lik, Dubai-based global head of eq­uity re­search at Ex­otix Cap­i­tal. “But what is re­ally needed for the econ­omy to fly again is some com­bi­na­tion of much lower cost of liv­ing, sus­tained higher oil prices or suf­fi­cient peace to drive in­tra-re­gional higher trade.” – Bloomberg News

Busi­nesses will now pay an an­nual fee of 60 dirhams ($16.34) per worker in­stead of a de­posit of 3,000 dirhams.

Newspapers in English

Newspapers from Lebanon

© PressReader. All rights reserved.