Joint interview with Dr Thani Bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade and Abdulla Bin Touq, UAE Minister of Economy
What is UAE’s vision towards strengthening trade relations with India?
The UAE and India have a longstanding and mutually beneficial relationship. India is currently our second largest trading partner, accounting for nine per cent of UAE’s total foreign trade and 13 per cent of non-oil exports. We have a shared ambition to use trade as a catalyst for economic growth and prosperity, and we believe our Comprehensive Economic Partnership Agreement (CEPA) will facilitate the frictionless movement of goods, foreign direct investment, startups and SMEs. We believe it will also unlock the immense potential of a south-south trade corridor to accelerate regional prosperity and help drive a global economic recovery.
Kindly elaborate on the ‘Projects of the 50’ and how will it help in attracting new talent and investments in the UAE?
‘Projects of the 50’ is a package of developmental projects designed to transform the UAE into a leading trade and economic hub and establish its status as an ideal destination for investment and skilled professionals. Its various programs and initiatives focus on deepening trade ties with key markets, accelerating the use of advanced technologies in the industrial sector, supporting emerging Emirati companies and attracting the best and the brightest people to UAE.
To enhance the country’s global attractiveness, new residency and visa pathways have been introduced to make it easier for investors, innovators, entrepreneurs, highly skilled professionals and ambitious university graduates to live and work in the UAE. We are further strengthening our visa system and introducing new green and freelance visas, while simultaneously expanding the eligibility criteria for golden visas, extending the ability of parents to sponsor their children up to the age of 25, and implementing many other reforms to make it easier for expatriates to host their families here.
High calibre talent is one of many ways in which we will attract foreign direct investment. ‘Projects of the 50’ provides a comprehensive roadmap for our transition to a knowledge-driven economy, where new ideas, technologies and industries thrive. All of the programs launched to achieve it will contribute to our status as a preferred destination for the global investment community and enhance the UAE’s position as a global trade and talent hub.
What are your views on global trade with China’s prominence in the same?
Building stronger trade ties with key markets is one of the many strategic initiatives taking place as we move from the first 50 years of our nation’s development into the next 50. We are transforming our development model to consolidate our strategic advantages as a regional and global business and investment hub, where trade plays a vital role in providing prosperity, opportunity and stability. We see great potential in a south-south trade corridor and see ourselves as a gateway to the rapidly expanding opportunities of Africa, the Middle East and beyond. China is already one of our largest trading partners and we have strong political and economic ties. We welcome dialogue and collaboration with like-minded international partners who share the same goals as us. Initially, the UAE economy was primarily focused on fossil fuels such as crude oil.
How are you diversifying into other areas and non-fossil fuel segments to accelerate growth?
Our programme to diversify the economy has been ongoing for several decades, and our successes are clear. Oil and fossil fuels contribute only 30 per cent of our GDP today and this figure has been in steady decline for more than 30 years. However, the UAE’s oil industry remains an important sector and resource as it continues to create economic growth through power generation, petrochemical industries and manufacturing. Additionally, revenue from our oil industry provides the UAE with the ability to transform into a knowledge-based economy and pursue a strategy of diversification concentrating on high growth sectors. Thanks to the vision of our leadership and the tenacity and talent in the private sector, the UAE economy has robust logistics, manufacturing, ICT, retail, construction, finance, tourism and hospitality sectors. ‘Projects of the 50’ will accelerate this further as we invest in and champion an innovation-based economy in which the tools of the fourth industrial revolution will enhance our existing industries and create entirely new ones.
What will the forthcoming economic partnership agreement with India entail?
Thedetails of the agreement are still being finalised, but we see the end result being a stronger trade relationship in which we can accelerate growth and foster innovation. The CEPA will be designed to deliver greater market access and facilitate the flow of goods and services, with Indian exporters being able to leverage UAE’s strategic geographic location and modern logistics infrastructure to access some of the world’s fastest-growing markets in the Middle East and Africa. The CEPA will also increase two-way investment in strategically important sectors such as services, sea transport, power, infrastructure, real estate, healthcare, logistics and telecommunications, with potential to explore new ones in agri-tech, artificial intelligence, green infrastructure and renewable energy. The UAE-India High Level Joint Task Force has continued to explore areas to promote economic activity between both countries.
How has been the growth rate in the UAE economy and what are the kind of incentives you are offering to investors in your country?
Being a traditionally open economy that has welcomed traders and merchants from foreign lands since the early days of the Gulf history, the UAE has always been a strategic hub for business and investments. Today, the UAE is a highly dynamic economy and the fastest growing economic hub in the region with a distinguished location, strong financial reserves, large sovereign wealth funds, robust spending on development projects; a solid, stable and flexible economy; a global talent pool and an attractive and flexible tax policy. Besides, the country is known for political stability, a safe and open environment and a tolerant and multicultural society. Although the UAE has always welcomed businesses and investors from around the world, we are constantly working to enhance the country’s business climate to make it more conducive to growth and investments, instill changes in economic laws and policies to implement even more open and resilient regulations for our markets. New regulations and policies were launched to enhance the resilience of our economy and support the transition into a new economic model. Some of the most important examples include amendments to the commercial companies law allowing for 100 percent foreign ownership and providing more freedom to business owners and foreign investors across sectors to establish their companies.
Besides that, there are changes in bankruptcy measures and decriminalization of cheques part of amendments to the commercial transactions law. Besides that, establishing a new anti-money Laundering system. Also there have been comprehensive measures to support family-owned businesses.
Apart from these, measures were also introduced to cut the red tape, enhance the ease of doing business, reduce cost of doing business, open new markets and expand trade; support SMEs and FDI; create opportunities in new sectors and most importantly, attract talent.
In addition, we have introduced long term residency visas for talented professionals, investors and outstanding students in order to enable these individuals to envision their long-term future in the UAE and make bigger contributions to its sustainable development. Meanwhile the introduction of various new categories of visas supports the easy movement of tourists in and out of the country, contributing to the sector’s growth.
What kind of recovery are you expecting in the UAE economy in the next few quarters?
While 2020 had been a difficult year for the UAE economy, like most economies around the world, 2021 has witnessed an important change supported by a successful vaccine roll out and agile government policies and economic reforms. Several initiatives that were launched to enhance the resilience of our economy and support the transition into a new economic model began with the implementation of the flexible packages with more than 40 initiatives to ensure the functioning of the markets, the continuity of businesses and the early economic recovery. Now with one of the highest vaccination rates globally, the country’s infection rates have begun to decline, followed by the opening of the World Expo in Dubai. Our expectations are that real GDP growth will be above 3 percent this year and we will be able to go back to pre-Covid- 19 GDP levels early in 2022. Our ambitions for the next ten years include a fast acceleration of economic growth and significant pick up on trade and investment.
How is your government creating job opportunities? Are you giving preference to local talent over outsiders–your views on these? What is the future of the foreign workforce in UAE?
As we prepare for the next 50 years and enhance the resilience of the national economy by investing in the future and investing in talent and creative minds, this transition is opening up an array of opportunities, particularly in the new economic sectors. For instance, our transition to the circular, green and digital economies are unlocking new sustainable economic opportunities, which includes employment opportunities. With world-class infrastructure and advanced digital capabilities, we are ready to support innovators and inventors, by helping them transform their ideas into profitable ventures. The UAE has the most active startup ecosystem in the Middle East as 33 of the 50 most-funded startups named by Forbes are headquartered here. Tailored measures to support the private sector, including startups and SMEs are also enhancing their contributions to the GDP, in addition to enabling them to contribute to creating more job opportunities.
Our approach to economic diversification and transformation is a 360-degree, comprehensive one aimed at identifying the gaps and strengthening each component of the whole ecosystem simultaneously. To answer the second part of the question, while we focus on the empowerment of UAE citizens and encourage them to take up bigger roles in the country’s sustainable development through integration into the private sector, this does not mean that we are biased to outsiders. In fact, the UAE has always been known for its openness to the outside world and has been a melting pot for cultures and nationalities from around the world, who contribute to our economy in meaningful ways.
Clearly, the UAE has taken concrete steps to develop its position as an innovation and brain hub. Talent is a game changer right now for economic development, and we are keen to attract and retain talents into the UAE.
Of late, the world economy as well as the UAE economy has faced challenges owing to the pandemic. How has your economy recovered and what have been the growth drivers?
The outbreak of the pandemic did upend the global economy and changed our personal and professional lifestyles for good, and the UAE’s case was not any different. However, our response to this unprecedented global crisis was a unique story, as we turned the pandemic into an opportunity to set the stage for the transition into a flexible, far more sustainable economic model. As far as the UAE is concerned, the outbreak of the pandemic in early 2020 not only accelerated its economic transformation, but also paved the way for some landmark policy reforms and legislative amendments that ensure long-term sustainable development. Guaranteeing economic continuity was a key objective since the beginning of the pandemic and the total of economic stimulus package launched by the government to alleviate Covid-19’s economic impact on the private sector exceeded more than US $100 billion. This policy yielded positive results and by late 2020 we saw signs of strong recovery, with economic activities picking up in UAE in some of the most affected sectors like retail and hospitality.
It resulted in 115 per cent growth in government revenues related to the economic movement in Q4 2020 compared to the Q3. At the same time revenues continued to rise during the Q1 2021 by 13 percent. The number of new companies registered in the country increased by 4 percent during 2020 compared to 2019. 43.3 percent during the first four months of 2021 compared to the same period in 2019. At the same time there was issuance of more than one million work permits in 2020.
What kind of employment opportunities have been created in the UAE as many non-Emiratis have left the country due to the slowdown and subsequent instances of growing unemployment?
Once again, even when world economy shrank by four per cent, global trade declined 20 per cent and the world lost millions of jobs in 2020, the UAE had a different story to tell. For one, the swiftness with which we responded to the pandemic through strategic and phased measures, without causing much disruption to the business continuity, stood out in the region and the world as one of a kind. In fact, new work permits increased reached 1.04 million from Jan-Aug 2021, a 69 percent increase over the same period in 2020. The UAE had launched its ‘National Program to Support the Stability of the Labor Market in the Private Sector’ to ensure the continuity of the performance of businesses in wake of the preventive and precautionary measures taken to curb the spread of Covid-19 at the national level. The programme included a package of measures to support employers and workers whether nationals or expatriate residents in the private sector. It also includes a set of precautionary measures to protect workers in the private sector from contracting infection in the course of their work. It is a combination of various factors, supportive economic packages, world class digital infrastructure, advanced health care plans that played a positive role in limiting the pandemic’s impact on various vital sectors and economic activity and worked to advance out national economy.