THE COMPETITION

Similar to any well-established startup, the UAE has also started to see other countries in the region contending to attract the same group of entrepreneurs. GCC states such as Saudi Arabia and Qatar have announced massive initiatives and campaigns to lure startups and establish themselves as entrepreneurial hubs.

“The thing with competition is that we don’t like it at the time, but competition raises your standards, and we know that Saudi Arabia, in particular with NEOM, is looking at trying to create an Estonian type smart-city set-up.

For me this is a huge opportunity for the UAE because while people [internationally] are not going to jump at the prospect of going on a holiday to Saudi Arabia – they might do in five years – what they will do now is come to Dubai and then look at doing some business in the kingdom,” states Petch.

Also, the UAE has already established itself as the region’s leading startup hub, whereas the other GCC states have yet to build such a reputation, says Rapp. According to research by Magnitt, the UAE led the regional venture capital investment growth in the first half of the year by number of deals and funding, acquiring 61 per cent of all MENA investments. “Furthermore, the UAE’s business climate continuously improves over time, with policies and regulations designed to provide more favourable conditions for foreign businesses and entrepreneurs. The UAE’s highly advantageous corporate

tax policy (at zero per cent) gives it another edge.

Saudi has a corporate income tax of 20 per cent, while Qatar levies a 10 per cent corporate tax, with exemption only granted to corporate entities wholly owned by Qatari and GCC nationals,” he says.

However, Petch also stresses that to stay ahead, the UAE, with support from the private sector, must aggressively market itself as a destination that can attract the rising number of digital nomads or those who work remotely. The digital nomad trend gained significant traction during the Covid-19 pandemic; an oft quoted report by US-based MBO Partners found that 10.9 million American workers currently describe themselves as digital nomads, an increase of 49 per cent from 7.6 million in 2019. The report also found that independent or self-employed workers are much more likely to continue as digital nomads for at least the next two years (62 per cent) compared to traditional workers. Looking ahead, among adult Americans who aren’t currently digital nomads, 19 million said they plan to embark on the opportunity over the next 2-3 years and 64 million said that they “may” explore it.

To cater to this market, Dubai launched a virtual working programme last October – the remote work visa, which enables global citizens to live and work remotely from the city for one year. Earlier this year, the programme, which was designed to attract professionals, entrepreneurs and those working in startups, was also extended to cover the entire UAE.

But more needs to be done to attract these nomads. “Firstly, we have to create the environment that can both be as open to them [digital nomads] as they are used to. Secondly, we need to go and market it to their friends and compatriots so that they come as well. If we do that, then the first thing that will happen is more people will come – as is already happening, but the next stage is that the people will come, set up a little business here and then they’ll [potentially look at] creating a trust or a foundation type structure here [which will include inheritance planning],” says Petch.

Another area which will help the UAE improve its competency is improving its banking structure for startups. “What we have seen is that it can still be a huge challenge for new entrepreneurs to open a bank account in the UAE. One solution we are seeing is the rise of digital and neobanks in the country. These neobanks remove the traditional lengthy processes for new businesses and entrepreneurs to open a bank account, and anyone can do the process from anywhere in the world. They also generally have fewer requirements, which lessens the burden on new entrepreneurs, while easing the way for them to start growing their businesses. This year, we have already seen the launch of YAP, the UAE’s first independent digital banking platform. Emaar has also announced they will be creating their own digital banking app, Zand, and Abu Dhabi’s ADQ is also entering the neobanking arena, with an initial capital of Dhs2bn backing the project,” says Rapp.

“WHAT WE HAVE SEEN IS THAT IT CAN STILL BE A HUGE CHALLENGE FOR NEW ENTREPRENEURS TO OPEN A BANK ACCOUNT IN THE UAE. ONE SOLUTION WE ARE SEEING IS THE RISE OF DIGITAL AND NEOBANKS IN THE COUNTRY”