New law to help create more jobs for Emiratis

Broad incentives for SMEs aim to boost entrepreneurship

abu dhabi — The UAE has finalised a new law to boost entrepreneurship with broad incentives as part of a wider push to create jobs for a burgeoning young population, Minister of Economy Sultan bin Saeed Al Mansouri said on Sunday.

Addressing a news conference in Abu Dhabi, Al Mansouri said he expects the law will go into effect within the next three months after approv- al by the Federal Cabinet. The Federal law No. 2 of 2014, issued by the President, His Highness Shaikh Khalifa bin Zayed Al Nahyan, is aimed at encouraging job creation by helping Emiratis start small and medium-sized businesses.

Incentives offered to citizens will include access to finance, contracts with state-owned companies, land grants for industrial and agricultural purposes, as well as exemptions on customs duties for raw material and equipment.

The law will open avenues for Emiratis to venture into small and medium businesses to create livelihood for themselves and boost the economy. “The law will play a significant role in promoting sustainable economic development in the UAE, strengthening competitiveness and support further economic diversification and accelerate the country’s transformation to a knowledge-based economy,” Al Mansouri said.

In line with the government’s policy of creating jobs for Emiratis, Al Mansouri said the landmark law would encourage UAE nationals

to use their leadership skills and benefit from the incentives offered to them to create job opportunities.

Benefits include land grants for industrial or agricultural purposes and exemption in customs levies.

Emirati entrepreneurs falling under the ‘small and medium’ classification will benefit from credit and funding facilitation, financing, marketing and reduced licensing costs, the minister said.

The draft law also requires government agencies to contract at least 10 per cent of their needs with these firms. Companies in which the state owns more than a 25-per cent stake would have to contract at least five per cent of their purchasing, service and consulting needs with these firms.

This incentive will provide a substantial amount of business to the SMEs, who would not have to look for business.

The SMEs in the manufacturing sector will get extra incentives in the shape of exemptions in customs levies on importing plants and machinery, raw materials and intermediate goods, Al Mansouri said.

Exemption will be provided on bank guarantees that companies pay while recruiting a new worker.

In order to encourage Emiratis to enter into SMEs, the procedural bottlenecks would be removed by simplifying the rules for their businesses, in addition to reducing licensing cost.

According to the law, the ownership of the SME venture cannot be transferred without the approval of the competent authorities and those who will breach the law may be fined no less than Dh5,000 and no more than Dh500,000.

A SME Council will be estab- lished, he said and “the Cabinet will issue the executive regulations that will determine the frameworks and mechanism regarding the facilities and the incentives offered to owners of SMEs.

In addition, “a National Programme for SMEs will be announced later this year”, the minister said.

The backbone of any country’s economy small and medium enterprises contributed more than 60 per cent to the country’s GDP in 2011.

Today, however it represents almost 92 per cent of the total number of companies operating in the country.

As many as 300,000 UAEbased SMEs are currently providing over 86 per cent of employment opportunities in the private sector alone.