“The pandemic outbreak had exacerbated the challenges faced by the global economy”, said Sheikh Hamdan Bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council of Dubai.
The package, he had asserted, was to realize Dubai’s ambitious development objectives by defusing any obstacle that hindered its progress. “Through such initiatives, we’re keen to ensure that Dubai maintains its leadership and its profile as the world’s best city to live and work,” the Crown Prince added in his statement to the media announcing the package.
Experts agree that Dubai’s government was successful in judging early the impending economic chaos that in the following months unraveled under the sweeping wings of the global pandemic.
“These have been ground-breaking initiatives. They really help businesses facing financial stress due to Covid-19. I’m sure these packages will immensely help Dubai in repositioning itself as a knowledge-based innovation hub,” said Sajithkumar P.K. CEO and MD, IBMC Financial Professionals Group, a financial services institution specializing in fintech development, investment and fund management.
The first stimulus package covered a wide spectrum of 15 initiatives. Of these, 9 initiatives focused on commercial and business sector including a freeze on the 2.5% market fees imposed on imported and locally sold products, waiving off of bank guarantees up to AED 50,000 (even new businesses eligible for this waiver) and 90% reduction of fees on companies’ customs documents.
Then, there was also the cancellation of the 25% down payment norm required for availing installment-based payment of government fees for obtaining and renewing licenses. These, according to Sajithkumar, eased the financial burden on SMEs.
“Also, now it is possible to renew commercial licenses without mandatory renewal of lease contracts. This ensures continuity of business,” says R.Padmanabhan, a consumer goods retail owner.
In an interview to ET NOW, Omar Khan, Director of International Offices, Dubai Chamber of Commerce and Industry urged companies to consider opening their bases in Dubai, “Incentives to come into Dubai now have been increased dramatically. A lot of the measures that the government has taken – such as the reduction in fuel costs, 11-15% reduction in rental costs, reduction in real estate and other operating costs – for the new entrants into the market are going to turbo boost their business.” Khan also highlighted the potential to expand to newer markets in Middle East, North Africa, South Asia and Europe among the natural advantages of establishing base in Dubai.
This stimulus package also had four initiatives for tourism sector including exemption of companies from payment of fees for postponement or cancellation of tourism events, freeze on fees for rating hotels, sale of tickets, issuance of permits and other mandatory levies on entertainment and business events.
As an add on, the latest stimulus package also aims to put more money into the baskets of hotels and restaurants since they would now be refunded 50% of the municipality fee on sales and half of the ‘Tourism Dirham Fee’ between July and December this year.
This is a huge relief, especially for people like Shabeer Mohammed, a restauranteur. A native of Kozhikode, Shabeer said, but for such a timely initiative his business that endured through the stringent lockdown would have run into choppy waters.
Industry players observe that the measures taken to protect the tourism sector from the Covid-19 shock are result-oriented. “Dubai saw a 5.1% increase in tourist traffic in 2019. It still ranks high for tourist destinations. So, it won’t take long to reach the targeted footfall,” thinks Thomas Mathew who works for a leading travel agency in Dubai.
The three stimulus packages aimed at reducing cost living and doing business have also introduced more concessions to citizens, expatriates and business community members. They get 10% reduction in water and electricity bills, 50% reduction in getting water and electricity connections and expedited payment of dues to contractors.
The latest package announced by the Crown Prince also confirms the return of financial guarantees for construction sector activities related to commercial licenses and replacing them with another system that guarantees all the rights of the involved parties.
Sheikh Hamdan while unveiling the third stimulus package had reiterated Dubai’s keenness in returning the business to normalcy. “We reaffirm our commitment to support all economic sectors in Dubai,” he wrote in his twitter handle.
Financial professionals believe that the stimulus packages announced so far would bring Dubai’s business back on track. The stimulus packages have been specifically targeted to the SMEs. SMEs account for 99% of all companies in Dubai, 46% of the GDP and 51% of the emirates workforce.
“70% of the SMEs are by owned Indians who are the key beneficiaries of these packages,” Sajithkumar noted.
The challenges posed by Covid-19 are indeed formidable and it demanded a proportionate government response. And, R.Pattabhiraman, a financial data analyst finds Dubai’s measured strategic response adequate. “Dubai has a proven track-record of overcoming challenges right from 1930s. It will surmount this too,” he summed up in a positive note.
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