? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ———————–[pic] At Current Prices)/ GDP Per Sector (Million DurhamsAs a portion of GDP, the largest contributors in 2003after oil (26 percent) were in descending order, manufacturing (15 percent), wholesale and retail trade (12 percent), government services (11 percent), business (10 percent), and construction (9.
2 percent).Government SystemThe government is a federation of the seven emirates of Abu Dhabi, Dubai, Sharjah, Ras Al-Khaimah, Ajman, Umm Al-Quwain, & Fujairah. Each has its own ruler, but are collectively headed by a president and a vice president.? HH Sheikh Zayed bin Sultan Al Nahyan, the ruler of Abu Dhabi, is the President.
? HH Sheikh Maktoum bin Rashid Al Maktoum, the ruler of Dubai, is the Vice President.? The rulers of each of the emirates belong to the supreme council, which is the UAEs highest legal authority and promulgates federal laws.? Each emirate has its own local government involved with municipal affairs and in some cases major public utilities like power and water.? Trade Barrier? The United Arab Emirates (UAE) maintains a free exchange and liberal trade system. and on January 1, 2003, the GCC states agreed to harmonize its import duties to five percent.? In advance of the GCC Customs Union agreement, the UAE government created the UAE Customs Authority. The Customs Authoritys main priority is to create a customs union within the UAE to unify Customs rules, regulations, procedures and documentation.? Only firms with the appropriate trade license can engage in importation.
? Documentation requirements follow international standards and delays in custom clearance have been infrequent.? The competition for business between the port facilities of the different emirates has kept user rates at a minimum and put a premium on services.? There are no duties on exports.? For religious and security reasons, there are various restrictions on import of alcohol, tobacco, firearms, and pork products.? The UAE maintains non-tariff barriers to trade and investment in the form of restrictive agency/sponsorship/distributorship requirements and restrictive shelf-life requirements for foodstuffs.
? Economic SituationLeading Sectors for InvestmentThe UAE has a fairly well developed and modern infrastructure. Land transportation is by road and an asphalt highway network links all major cities. Authorities in Abu Dhabi and Dubai are busily engaged in widening roads and replacing worn stretches. There is no rail system in the UAE — although Dubai is reviewing plans for metro system — nor any domestic air transportation network.? All of the emirates, however, with the exception of Ajman and Umm Al Quwain, have modern airports.? All emirates have modern seaports. The port of Jebel Ali in Dubai is the largest man-made port in the world.
Goods are imported by sea and distributed by truck within the UAE and to nearby locations in neighboring GCC countries. As part of its drive to diversify its economy away from oil to regional trade, Dubai has developed free zones at two main seaports and its international airport.? There are now 12 free trade zones in the UAE, half of which are located in Dubai.? Other ports in the region, including in the UAE, have noticed Dubais success and are seeking a share of the re-export business for themselves.? While they may never be able to match Dubai for volume, efficiency, and expertise, Khor Fakkan and Fujairah, both in the UAE, possess something Dubai does not — they are located on the Gulf of Oman outside the entrance to the Arabian Gulf.
? An international cargo ship can reduce sailing time by 24 hours from Europe to the Far East by not joining the queue to pass through the busy straits; bypassing the Gulf also means lower insurance rates.? UAE Energy SectorThe UAE has well-developed water and electricity utilities and is aggressively expanding output to keep up with increasing demand. ? Overall, the growth in water demand is greater than for power.? Both Abu Dhabi and Dubai expect to double electric power output between 1997 and 2010.? The commercial value of the UAEs planned water and power projects is more than US $10 billion.? Expansion projects, including Shuweihat in the Abu Dhabi Emirate, and a massive water and power project in Fujairah, managed by the UAE Offsets Group, are currently underway, and the government is considering additional projects.
? The UAE has the highest per capita consumption of desalinated water in the world.? Political System Established in 1971, the UAE is a federation of seven emirates, In accordance with the UAE Constitution, the seven emirate rulers comprise a Federal Supreme Council, the highest legislative and executive body.? The Council selects a President and Vice President from its membership; the President in turn appoints the Prime Minister and the Cabinet.? The Abu Dhabi Emirate ruler Sheikh Zayed Bin Sultan Al Nahyan has been President since the countrys founding.
? A consultative body, the Federal National Council (FNC), consisting of advisors appointed by the emirate rulers, has no legislative authority but questions government ministers in open sessions and makes policy recommendations to the Cabinet.? Each emirate retains control over its own oil and mineral wealth, some aspects of internal security, and some regulation of internal and external commerce. The Federal Government asserts primacy in matters of foreign and defense policy, some aspects of internal security, and increasingly in matters of law and the supply of some government services.
? The judiciary is generally independent, but its decisions are subject to review by the political leadership.|FOREIGN TRADE BY TARIFF CHAPTER |? (millions of || |DHS || |? ||? EXPORT |% |VALUE ||76. ALUMMINIUM AND ARTICLES THEREOF |30.6 |2,646 ||25. SALT, PLASTERING MATERIALS, LIME AND |10.6 |918 ||CEMENT | | ||39. PLASTIC AND ARTICLES THEREOF |7.
89 |682 ||62. ARTICLES OF APPAREL, NOT KNITTED OR |5.7 |494 ||CROCHETED | | ||27. MINERAL FUELS, OILS, WAXES AND |4.2 |361 ||BITUMINOUS SUBSTANCES | | ||73. ARTICLES OF IRON OR STEEL |3.
9 |341 ||69. CERAMIC PRODUCTS |3.7 |319 ||61. KNITTED OR CROCHETED ARTICLES OF |2.
6 |228 ||APPAREL | | ||72. IRON AND STEEL |2.6 |222 ||17. SUGARS AND SUGAR CONFECTIONERY |1.
9 |166 ||? | |? ||IMPORTS |% |? VALUE ||84. NUCLEAR REACTORS, BOILERS, MACHINARY &|14.3 |17,563 ||parts thereof | | ||71. PEARLS, PRECIOUS METAL, STONES & |14.1 |17,358 ||ARTICLES THEREOF | | ||85.
ELECTRICAL MACHINARY, SOUND RECORDERS |10 |12,241 ||AND PARTS | | ||87. VEHICLES OTHER THAN RAILWAY OR |9.9 |12,182 ||TRAMWAY, PARTS | | ||73. ARTICLES OF IRON OR STEEL |3.1 |3,820 ||39.
PLASTICS AND ARTICLES THEREOF |2.5 |3,025 ||54. MAN-MADE FILAMENTS |2.4 |2,906 ||72. IRON AND STEEL |2.3 |2,873 ||88. AIRCRAFT, SPACECRAFT, AND PARTS |1.
9 |2,386 ||THEREOF | | ||10. CEREALS |1.7 |2,144 |? In order to do business in the UAE outside of one of the free zones (see below), a foreign business must have a UAE national sponsor, agent, or distributor.? Once chosen, sponsors, agents, or distributors have exclusive rights for non-food products only.? Agency law does not pertain to food products.? Agents and distributors cannot be easily replaced without their agreement.? To bid on federal projects, a supplier or contractor must either be a UAE national or a company in which UAE nationals own at least 51 percent of the share capital. ? Federal tenders must be accompanied by a bid bond in the form of an unconditional bank guarantee for five percent of the value of the bid.
? The UAE has no formal requirement that a portion of any government tender be subcontracted to local firms, but local companies clearly enjoy a competitive advantage. The UAE requires a company to be registered in order to be invited to receive government tender documents.? To be registered, a company must have 51 percent UAE ownership.? However, these rules do not apply to major project awards or defense contracts, where there is no local company that can provide the goods or services required.? Membership in the GCC UAE is a member of the Gulf Cooperation Council (GCC).
? In 1981, the GCC issued the Unified Economic Agreement, a plan for complete economic integration among the six member states (Saudi Arabia, Kuwait, UAE, Bahrain, Qatar and Oman).? As no time schedule for implementation was adopted in the original agreement, it seemed that the agreement was supported in principal only.? However, over the next 6-8 years, provisions of this agreement will be implemented.? For example, by 2006 the harmonized food schedule will be implemented and by 2008, an unified currency will be in place.
? Under the agreement, all agricultural, animal, industrial, and natural resource products from member states are exempt from duties and other charges when traded among member states.? To qualify as a GCC national product, the value added in a GCC member state must not be less than 40 percent of the final value and produced in a factory with at least 51 percent local ownership and licensed by the respective Ministry of Finance and Industry.? All intra-GCC shipments claiming this exemption must be accompanied by a duly authenticated certificate of origin.? The GCC has been conducting talks with the European Community about establishing a free trade agreement between the respective blocks for a number of years, but so far with little progress.? The GCC also conducts economic dialogues with Japan and the US.? Import LicensesImporters are allowed only to import goods which are related to the activities permitted by the Trade License, which is issued by the local government authority.? All food imports, including beef and poultry products, require a health certificate from the country of origin and a halal slaughter certificate issued by an approved Islamic center in the country of origin.? ? Import / Export DocumentationThe consignee/agent should obtain a delivery order from the Shipping Agent and submit original standard trade documentation, including certificates of origin, bills of lading, commercial invoice, export declaration and various government/embassy attestations.
These documents must be presented for all imports and exportsCustoms Valuation? Effective January 1, 2003, the UAE acceded to the GCC Customs Union that equalizes the duties paid upon entry of an item to any member state, regardless of the country of destination within the GCC. For example, an item imported into the UAE destined for the Qatar market is subject to the 5 percent duty once it enters the UAE proper.? the trader need not pay customs duties again to take the item across the border into Qatar? There have been some problems in the transition period and the GCC is working to resolve these problems.? Some items that were previously exempt from duty in Abu Dhabi emirate, for example, are no longer exempt under the new national/regional tariff scheme. The GCC has recently undertaken to review the exemption list, There has also been uneven implementation in the Gulf region.? Even when the duty has been paid upon entry to the UAE, some countries are continuing to charge duties based on pre-implementation rates, sometimes as high as 15 percent, in addition to the five percent already paid to the UAE.? StandardsThe UAE recently established a new standards organization responsible for formulating and enforcing UAE/GCC standards.
? This organization, the Emirates Standardization and Metrology Authority, is now an independent entity from the Federal Ministry of Finance and Industry.? ISO 9000 certification was first introduced and granted to a UAE company in 1993.? Since then, more have received the certification, and the EU is funding a standards center in the UAE to implement ISO 9000 certification.
Free Trade Zones/WarehousesThe first free trade zone in the UAE, the Jebel Ali Free Trade Zone, was established in 1985 in Dubai and located with the largest man-made seaport in the world. The UAE Free Zones today are home to approximately 5,000 companies with a total investment estimated at more than USD $4 billion.? Presently, 13 free trade zones operate in the UAE, and more are in the developmental stage.? ? In most instances, these zones have been co-located with either a seaport or airport.? The exceptions are the “Dubai Internet City” e-commerce free zone and the “Media City” free zone.? Every free trade zone offers incentives and exemptions ranging from tax holidays to assistance in recruiting labor. Since UAE tariffs are low and not levied against many imports, the chief attraction of the free zones is the waiver of the requirement for majority local ownership.? In the free zones, foreigners may own up to 100 percent of the equity in an enterpriseBanking System The UAE banking sector grew on average by about 15 percent in 2003? Banks in the UAE are broadly categorized in four categories: commercial banks, merchant or investment banks, Islamic Banks, and industrial banks.
? The largest banks in terms of assets include the National Bank of Abu Dhabi, National Bank of Dubai, Emirates Bank International, Mashreqbank, and Abu Dhabi Commercial Bank.? There are 21 locally incorporated banks with 346 branches and pay offices in the UAE and 43 branches abroad, 25 foreign banks with 87 branches, one restricted license bank, two investment banks, and 49 representative offices.? ? Local banks are exempted from any type of taxation whereas foreign banks pay a 20 percent tax on their profit. Monetary indicators for UAE 2003 indicate banks total assets/ liabilities 366908 million AED , Foreign assets 111727 Million , Deposits 237557 Million Bank credits 192675 Million AED. The banking sector employees 17229 worker .? Trade Regulation & StandardsTax|2002 |2003* ||Debit |Credit |Debit |Credit || |25365 | |40628 |GOODS AND SERVICES (Net) || |34930 | |50953 |TRADE BALANCE || |191571 | |241784 |Total Exports: || |61254 | |81217 |- Crude Oil || |11905 | |12990 |-Petroleum Products || |12025 | |14363 |- Gas || |8649 | |9819 |- Other Exports || |30382 | |41338 |- Free Zone Exports || |67356 | |82057 |- Re-Exports ||156641 | |190831 | |- Total Imports ||122803 | |147522 | |- Emirates Imports ||33838 | |43309 | |- Free Zone Imports ||9565 | |10325 | |Services (Net): ||13410 |4890 |14530 |5280 |- Tourism ||4275 |3155 |4535 |3350 |- Transport ||1385 |1460 |1480 |1590 |- Direct Purchases by Gov. Abroud + Expenses of || | | | |Diplomatic Missions ||12748 | |16996 | |Property, Entrepreneurial Income and other || | | | |Transfers with World (Net) ||7659 |11161 |9297 |9421 |- Property, Entrepreneurial Income ||15200 | |16120 | |- Workers Remittances ||940 | |900 | |- Officail Grants ||110 | |100 | |- Other Current Transfers || |12617 | |23632 |CURRENT ACCOUNT BALANCE |Business InfrastructurePopulation|2002 |2003 * |SECTORS ||219201 |249426 |The Non-Financial Corporations Sectors: ||9105 |9359 |Agriculture, Live Stock and Fishing ||73277 |94134 |Mining and Quarrying ||72552 |93369 | * Crude Oil and Natural Gas ||725 |765 |* Quarrying ||36673 |40100 |Manufacturing Industries ||5274 |5513 |Electricity, Gas and Water ||17988 |18791 |Construction ||24361 |25774 |Wholesale, Retail Trade and Repairing Services||6025 |6345 |Restaurants and Hotels ||21742 |23629 |Transports, Storage and Communication ||20388 |21205 |Real Estate and Business Services ||4368 |4576 |Social and Personal Services ||17314 |18394 |The Financial Corporation Sector ||28525 |29272 |Government Services Sector ||2030 |2068 |Domestic Services of Households ||5700 |6039 |Less : Imputed Bank Services ||261370 |293121 |TOTAL ||188818 |199752 |Total of Non Crude Oil Sectors |The United Arab Emirates is located in the middle of the Arabian Gulf, north of the equator, between latitudes 22 , 26.
30, and longitudes 51 , 56.30 east of Greenwich mean time (GMT). It is bordered from the North by the Arabian Gulf, and from the West by the State of Qatar and the Kingdom of Saudi Arabia, and from the South by the Sultanate of Oman and the Kingdom of Saudi Arabia, and from the East by the Gulf of Oman. The strategic geographical location of U.A.E to the east of the Arab world is very important for the security and stability of this vital part of the Arab world.
The total area of the country is 83600 Sq.km. This includes and archipelago with an area about 5900 Sq.
km.Geographic LocationThe UAE is a model for digital readiness in the Middle East and has embraced the Internet age, as well as mobile phone technology.? The government has held programs to educate the business community and encourage understanding of the Internet and its capabilities. The Emirate of Dubai, which has capitalized on its strategic trading position between Central Asia, the former Soviet Union, the Middle East, and Africa for centuries, is in constant growth.? The emirate plans to attract international investment, companies and visitors with projects such as private housing developments; the ambitious man-made Palm islands that will include 80 hotels and a legion of private residences; Jebel Ali Free Zone (JAFZ) with 2400 companies and free trade zones with various sector specialties including Dubai Internet City and its sister Dubai Media City.? Plans are also under way for International Finance and Health Care centers that will draw professionals and companies from around the world.? Borrowing on the success of JAFZ, with the exception of Abu Dhabi, each emirate has at least one free zone.
? ? Most emirates have seaports (Dubai has two) and airports as well.? The UAEs only port outside the Straits of Hormuz is Fujairah on the Gulf of Oman, that leads to the Indian Ocean.? ? [pic]|FOREIGN TRADE BY COUNTRIES ||(millions of DHS |% |? VALUE ||EXPORTS | |8,649 ||BAHRAIN |7.89 |683 ||USA |7.05 |610 ||JAPAN |6.28 |543 ||INDIA |5.56 |481 ||KOREA S |4.
7 |407 ||SAUDI ARABIA |4.67 |404 ||KUWAIT |4.64 |402 ||CHINA |3.82 |331 ||U.
K |3.65 |316 ||IRAN |3.42 |295 ||REST OF THE WORLD |48.3 |4,179 ||? | |? ||IMPORTS |% |VALUE ||CHINA |9.1 |11,160 ||JAPAN |8.
28 |10,145 ||USA |7.84 |9,606 ||GERMANY |7.55 |9,254 ||U.K |6.45 |7,904 ||INDIA |6.25 |7,666 ||FRANCE |4.
83 |5,920 ||KOREA S |4.82 |5,915 ||ITALY |4.3 |5,274 ||SWITZERLAND |4.17 |5,114 ||REST OF THE WORLD |36.4 |44,625 |[pic]The population of the United Arab Emirates is estimated to be more than 4.0 million.? Major ethnic groups include Arab, Pakistani, Indian, Iranian, Afghan, Bangladeshi and Filipino.? The population growth rate at present is 5.
5 percent per year. 2003 2002Males 2746 2543Females 1296 1211Total (000) 4041 3754Work force 2002. 2003 2091 2191 4.78 %Language: The language of business is English and Arabic.
? Most taxi drivers understand sufficient English to get you where you want to go.Accommodation: Most major international hotel chains are in the UAE, including Hilton, Sheraton, Crowne Plaza, Intercontinental, Hyatt Regency, Holiday Inn, and JW Marriott.Transportation: Taxis are common and inexpensive.? Luxury radio taxis are available from the major hotels for triple the rate of street taxis, but are still a bargain.? In Dubai, not all taxis are metered,Housing: Housing rentals from US $28,000 to US $70,000 per annum, payable one year in advance.
? .? Apartments can be less expensive.Health: ? Public health services in Abu Dhabi and Dubai are adequate.? Major hospitals have modern equipment? Most western expatriates use private medical facilities and carry private health insurance.Working Hours : The regular working days for local government departments is from Saturday to Wednesday.? Working hours 7:30 – 2:30.? Commercial Offices from 8 ??“ 1 and from 4:00- 8:00 .
? ReligionThe official religion is Islam, with a reported 80-90 percent of the total population (including expatriates) being Muslims.? The authorities permit worship of other religions, and a few Christian churches and Hindu temples exist in Abu Dhabi, Dubai and Sharjah.[pic]The JAFZ managing authority authorizes three types of licenses — a general license, a specific license, and a national industrial license.? The licenses are valid while a company holds a current lease from the free zone authority and are renewable annually as long as the lease is in force.? The special license is issued to companies incorporated, or otherwise legally established, within the free zone or outside the UAE.? In such cases, no other license is required, and the ownership of the company may be 100 percent foreign.
? The license is issued for any activity permitted by the free zone authority, including manufacturing.? A company with a special license can operate only in the JAFZ or outside the UAE, but business can be undertaken and sales made in the UAE through or to a company holding a valid Dubai Economic Department license.? A company with a special license, however, can itself purchase goods or services from within the UAE.
? A variety of innovative free zones in Dubai have been established since 2000, most notably the TECOM (Technology, Electronic Commerce and Media) free zone.? TECOM houses both Internet City and Media City, two subdivisions which cater, respectively, to the IT and media sectors.? TECOM offers a high bandwidth, state-of-the-art IT infrastructure.
? Current tenants of TECOM include prominent names such as Oracle, Reuters, CNN, Hewlett Packard and Microsoft.? Other Dubai free zones planned include Health Care City, specializing in medical products and services, and the Mohammed Bin Rashid Technology Park, which aims to promote scientific research and development, and to transfer technology throughout the region.UAE Economic Variables 2003|2001 |2002 |*2003 |ECONOMIC VARIABLES ||3488 |3754 |4041 |- Population (000) ||1929 |2091 |2191 |- Workers (000) ||254236 |261370 |293121 |- G.D.P.(mill.of Dh) ||179246 |188818 |199752 |- G.
D.P. Non Oil Sectors (mill.of Dh) ||221751 |226011 |241828 |- G.D.P. At Constant 1995 Prices (mill.
of Dh) ||63.8 |56.7 |59.2 |- Per Capital National Income (Th.of Dh) ||60178 |60552 |63070 |- Gross Fixed Capital Formation (mill.
of Dh) ||160363 |174572 |188713 |- Final Consumption Expenditure (mill.of Dh) ||177800 |191571 |241784 |- Commodity Exports (mill.of Dh) ||136961 |156641 |190831 |- Commodity Imports (mill.
of Dh) ||40839 |34930 |50953 |- Current Surplus Merchandise (mill.of Dh) ||2.7 |2.9 |3.
1 |- Inflation Rate(%) |* 1 US $ = 3.675 DHThe UAE is a member of the WTO and is bound as a developing nation by the General Agreement of Tariffs and Trade (GATT); the General Agreement on Trade in Service (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS).? The UAE government repealed previous copyright, trademark, and patent laws and issued improved legislation in 2002 in harmony with international standards and exceeding the UAEs TRIPs obligations.? The government is also a contracting party to the World Intellectual Property Organization (WIPO), and has signed the Paris Convention for the Protection of Industrial Property (patent, trademark and related industrial property).? A rapidly developing nation, the UAE has traditionally been, and continues to be, a leading trading center.
? Demand for training and technology transfers grows as the UAE approaches its 33 anniversary in December 2004 High product quality, reliability, training, and after sale service continue to be attractive features for world exportsAgriculturePrincipal Growth Sectors: Vegetable oils, beverage bases, breakfast cereals, poultry parts, fresh apples and pears, honey, frozen vegetables and snack foods.The Oil SectorThe UAE has nearly 98 billion barrels of proven oil reserves, or about 9.8 percent of total proven world oil reserves, and 5.8 trillion cubic meters of proven natural gas reserves, approximately 4.6 percent of total world proven natural gas reserves.
? The majority of the oil and gas reserves are located in the emirate of Abu Dhabi, which holds more than 90 percent of the UAEs total oil and gas reserves.? UAE oil production capacity is currently at 2.3 million barrels per day (mb/d) and the Abu Dhabi National Oil Company (ADNOC) plans to expand the UAEs capacity to 3.0 mb/d by 2006.
? The Abu Dhabi Company for Onshore Operations (ADCO) will increase production to 1.45 mb/d, Adma-Opco to 600,000 b/d and ZADCO to 600,000 b/d during the next three to five years.? The Non Oil SectorThe scarcity of oil and gas reserves in the UAEs northern emirates has led to continued attempts at economic diversification.? The non-oil sector of the UAEs economy actually accounts for more than twice the oil sectors direct contribution to GDP and this has helped insulate the country from the full effect of fluctuating oil prices.? Important non-oil sectors under development include tourism, manufacturing, air travel and cargo services.? Government investments in public utilities, development of financial services, strong demand for re-exports and an open economic system — free movement of capital, and financial stability — have contributed to the growth of the non-oil sector in recent years.
? ? Sector RankOil and Gas-Field Machinery & Services 1Pollution Control Equipment 2Medical Equipment and Supplies 3Architecture/Construction/Engineering 4Power and Water 5Sporting Goods/Recreation Equipment 6Air Conditioning & Refrigeration Rank 7Building Products 8Computer / peripherals 9Safety and Security Equipment 10Political EnvironmentOpportunities for foreign investment in the public utilities sector will increase.? In March 1998 the Abu Dhabi Water and Electricity Authority (ADWEA) awarded a contract for the UAEs first independent water and power project (IWPP), with an estimated value of US $750 million, to an American firm.? The Abu Dhabi government has announced that power generation (includes power and desalinated water production) and transmission will be privatized, while power distribution will remain under the control of Abu Dhabi authorities.? The estimated commercial value of planned power and water sector development projects in Abu Dhabi is US $10 billion.Agricultural Trade BarriersFood products face relatively minor trade barriers.
? GCC-mandated shelf life requirements for close to 100 products requires that all processed products carry both production and expiration dates on the original manufactured applied label.? In addition, all imported food products must have one-half or more of their shelf life in effect at the time of import in order for import clearance to be granted.? ? ? ? UAE citizens gets a boost from its position atop nearly one tenth of the worlds proven oil reserves, most of which lie in the largest emirate and seat of the capital, Abu Dhabi. The country is also an active participant and supporter of the Gulf Cooperative Council (GCC), which also includes the Gulf States of Saudi Arabia, Kuwait, Oman, Qatar and Bahrain. GCCs stated economic goal is to create a cohesive and seamless trading environment for organizations doing business between these nations.? With its inviting business environment, the UAE has transformed itself into a truly international center for commerce and trade.
The UAE, long recognized as the commercial and business hub of the Arabian Gulf, has the 3rd busiest port in the world in terms of volume, with Dubais Jebel Ali port ranking behind Singapore and Hong Kong.. This Gulf powerhouse has no corporate taxes (with the exception of banks and foreign oil companies with equity in concessions), no income taxes, and a relatively low import duty of 5 percent (GCC Customs Union implemented in January 2003).? It has competitive labor coming from over 150 countries and a domestic market with a per capita income of around US $18,400 according to UAE Central Bank statistics. 2000 2001 2002 2003f 2004f 2005f 2006fProven oil reserves, bn barrels 97.8 97.8 97.8 97.
5 96.9 96.1 95.5Oil production, 000 b/d 2492 2429 2270 2300 2430 2550 2600Oil consumption, 000 b/d 243 245 248 260 272 293 305Oil cxports, 000 b/d 2249 2183 2022 2040 2158 2257 2295Oil exports, US$mn 18977 17532 18450 20477 18904 19771 20104Oil refinery capacity, 000 b/d 440 674 711 711 74 0 875 875Proven gas reserves, tcm 6.0 6.
0 6.0 6. 1 6.1 6.3 6.4Gas production, bcm 38.4 45.
0 46.0 48.4 49.
1 51.0 53.0Gas consumption, bcm 31.4 38.1 39.3 40.2 41.7 43.
4 45.0Gas exports bcm 7.0 6.9 6.
7 8.2 7.4 7.6 8.0Gas exports US$mn 952 893 985 1327 1045 1073 1130Petroleum exports US$mn 19929 18425 19436 21803 19949 20844 21234BMIForeign Direct Investment Statistics? The UAE Ministry of Planning reported that FDI inflows reached US $16.4 billion in 2002.? Principal foreign investors to the UAE were from the United Kingdom, the United States, France, India, Japan, and Germany.
? ? There are no restrictions or incentives with regard to the export of capital and outward direct investment, and UAE investment abroad is significant.? It is conservatively estimated that the Abu Dhabi Investment Authority (ADIA) manages an approximate US $150 billion in government assets in overseas markets — mostly in the United States, Europe, and Asia.The United Nations Conference on Trade and Development (UNCTAD) reports that net FDI flow for the UAE was $200 million during 2000, and net negative flow of $156 million in 2001.? ? The Customs duty for most items is calculated on CIF value at the rate of five percent.? Imports of liquor are subject to a 70 percent customs duty on their CIF value while imports of tobacco products face a 100 percent on their CIF value. Many essential items, including staple foodstuffs and pharmaceuticals are allowed duty free status.CIF value will normally be calculated by reference to the commercial invoices covering the relative shipment, but Customs is not bound to accept the figures shown therein and may set an estimated value on the goods, which shall be final, as far as duty is concerned.? ? Defense contractors interested To vestment in the UAE must negotiate directly with the UAE Offsets Group (UOG), and invest an amount that will generate a profit equal to an agreed upon portion of their contract in the UAE.
? UOG investment projects generally must show the required profit after seven years.? The contractor may not own more than 49 percent of the project, and UAE nationals must hold the remaining 51 percent.? There are currently more than 25 offset ventures; offset projects cover the full spectrum of economic activity, including, inter alia, advertising, fish farming, air conditioning, language centers, shipbuilding, aircraft maintenance, leasing, medical services, and even polo grounds.? Two of the largest offset ventures are an international gas pipeline project (Dolphin) and the Oasis International leasing company — a British Aerospace offsets venture.[pic][pic][pic][pic][pic]Investment laws and regulations are evolving in the United Arab Emirates (UAE) and are expected to become more conducive to foreign investment.? At present, the regulatory and legal framework favors local over foreign investors.? There is no national treatment for investors in the UAE, and foreign ownership of land and stocks is restricted.
? The Emirate of Dubai announced in 2002, however, that it would permit so-called “free hold” real estate ownership by non-GCC nationals within certain properties, though the exact legal status is still uncertain.? Because investment regulations vary from emirate to emirateThe UAE Government is opening up its trade sectors in line with the UAEs World Trade Organization (WTO) obligations, and is drafting a landmark law on foreign direct investment that should be approved later this year.? The law reportedly will include new tax exemptions and other incentives. The Government already has taken steps to cut red tape for foreign investors, and now exempts investors from obtaining a Ministry of Labor card in addition to an Immigration Department visa. Investors no longer need to appear in person to inquire about the status of business applications in Abu Dhabi.? A new automated service, offered in Arabic and English, allows investors to receive information about their business licenses over the phone.Regulation of the establishment and conduct of business in the UAE is shared at the federal and emirate levels.
? In general, foreign companies (except companies from GCC countries) that undertake business activities in the UAE or make their products available in the UAE have entered into a joint venture with UAE nationals for the establishment of limited liability companies, appointed commercial agents, or set up branch offices.? Except for companies located in the free zones, at least 51 percent of a business establishment must be owned by a UAE national.? A business engaged in importing and distributing a product must be either 100 percent UAE-owned agency/distributorship or a 51/49 percent (UAE/foreign) limited liability company.? Subsidies for manufacturing firms are available only to those companies with at least 51 percent local ownership.Temporary EntryAs a general rule, imports of goods into the UAE for the purpose of re-export within six months are exempt from customs duty.? However, a deposit or submission of a bank guarantee in lieu of duty is required by Customs. The deposit or bank guarantee is refunded/released by the local Custom authority on proof of re-export.
Goods remaining in the UAE after six months are liable for customs duty.? Goods may be imported duty free and stored in any of several free zones in the UAE.? Goods, which enter the UAE from these free zones, must pay the duty noted previously.? ? LabelingFood labels must contain product and brand names, production and expiry dates, country of origin, name of the manufacturer, net weight in metric units, and a list of ingredients and additives in descending order of proportion.? All fats and oils used, as ingredients must be specifically identified on the label.? Arabic labeling is now also officially required and can be applied by sticker.
? production and expiry dates must be printed on the original manufactured installed label.? Prohibited ImportsAll kind of illicit drugs are prohibited in the UAE, as is forged currency and pornography.? Publications, videos, photographs, oil paintings, cards, books, magazines and sculptures that do not adhere to religious morals and those that aim to cause corruption and disorder are also banned.
? Irradiated food products are prohibited, while imports of alcohol and pork products are strictly regulated.World Trade Organization? The UAE was a member of GATT – the precursor of the World TradeOrganization (WTO) – and was grand fathered into the WTO when it was established in 1995.? Although the WTO prohibits discrimination in investments or shareholding between nationals and non-nationals, the UAE has been granted certain exemptions for its financial services, telecommunications, and other sectors. Nevertheless, WTO agreements may have a direct impact in the future on domestic services such as insurance, banking, property, brokerage, investment, construction, many of which will need to improve performance to be able to compete globally.
? Conversion and Transfer Policies? There are no restrictions or delays on the import or export of either the UAE Dirham or foreign currencies by foreigners or UAE nationals, The UAEG passed comprehensive anti-money laundering legislation following the attacks of September 11, 2001, which imposed strict documentary requirements on large wire transfers. Travelers entering or leaving the UAE must now declare currency amounts of more than 50,000 dirhams (approximately US $13,700) as part of these new measures.? ? The exchange rate is 3.67 UAE Dirhams per one US Dollar.? Dispute SettlementThere have been no significant investment disputes .
? Disputes generally are resolved by arbitration, by the parties themselves, or by recourse to the legal system.? ,a written arbitration agreement, independently or by nomination of arbitrators, or through a referral to an appointing authority without recourse to judicial proceedings.? Enforcing arbitration judgments can be difficult as they require court certification, and judicial proceedings may continue for several years.? The UAE constitution established a federal court system while acknowledging the right of the individual emirates to maintain a court system of their own.? Accordingly, each emirate applies federal law in its own court system that consists of courts of first instance, courts of appeal and a Supreme Court.? The court of first instance consists of civil, criminal, and sharia (Islamic law) courts.
? Sharia law is only applicable to Muslims and relates to family matters mentioned in the Koran.? Courts will interpret statutory law and legal precedent in deciding cases.? Commercial disputes involving foreign parties tend to come before the civil courts in the federal system; a panel of three judges ordinarily hears commercial disputes.? All cases involving banks and financial institutions are required to be heard by civil courts.? In Abu Dhabi, all non-arbitration commercial disputes are first brought to the Abu Dhabi Conciliation Department.? If the parties are unable to reach a settlement, they can begin legal proceedings in the court of first instance.? The UAE federal Supreme Court has held that a foreign arbitration clause in a registered commercial agency agreement is unenforceable because the Commercial Agency Law of 1981 states that UAE courts have jurisdiction over commercial agency disputes.
? No party in a dispute can file a court claim if such party already has agreed to refer the claim to arbitration.? The parties can move to arbitration at any stage during litigation.? The civil procedure code details rules governing the qualification of arbitrators and many other aspects of the arbitration process.? The venue of arbitration is required to be within the UAE, and if not, the resultant award is treated like a foreign judgment.
? ? The code contains comprehensive rules in connection with the various types of preventive and provisional remedies prior to litigation and the issuance of judgments, including the attachment of property, confiscation of the defendants passport and prohibitions on travel, as well as the detention of the defendant in certain instances.? However, the courts must certify all arbitration decisions, and though they do not review substantive claims, they can invalidate decisions based on procedural considerations.? Parties can also appeal certification decisions thus prolonging enforcement indefinitely.? ? General Financing Availability? Local banks finance most non-oil investment in the UAE.? Even so, banks lack sufficient lending opportunities for their funds, and consequently place many of them abroad.
? Most of the manufacturing sector operates with higher levels of debt than prescribed by the 60:40 debt to equity ratio, generally the norm for this sector.? Debt is almost entirely made up of bank borrowings.? Some three-fourths of gross fixed capital formation in manufacturing is directly or indirectly financed by the banking system.? Local banks invest in foreign stock markets to absorb excess liquidity.? The trade and building sectors receive a major share of bank loans.? Banks lend to the services, trade, and building sectors due to the scarcity of major investment scope in other productive sectors.
? The oil sector is the province of the government and is beyond the reach of the banks.? Islamic banking continues to grow at a rapid pace because of its value-orientated ethos that enables it to draw finances from both Muslims and non-Muslims alike.? Abu Dhabi- and Dubai-based Islamic banks are taking aggressive moves that help them notch up growth rates that match or exceed the best in the local banking sector.? In addition to the traditional and interactive consumer oriented services and project financing, UAE Islamic banks are involved in real estate development, home and car financing, and service leasing finance, a new tool that includes financing services such as education, health, travel and tourism.? Project Financing? The development in the GCC of projects seeking financing is growing ever broader.
? From power and desalination complexes through petrochemical plants, gas development, and transportation projects, the role of the private sector in large-scale projects is becoming more varied and important.? GCC project financing picked up dramatically in 2001 and stayed strong through 2002 and 2003 with over US $4 billion in project financing arranged in the last twelve months.? Major international and local banks are behind these projects advising and arranging for the major part of the financing, exceeding 75 percent on some of the independent water and power projects.
? The proportion of financing and the transaction leadership is steadily shifting towards local and regional banks, including in some cases, Islamic banks.? ? In mid-May 2003, the government of Dubai officially launched a US $408 million bond issue to be listed on the Dubai Financial Market (DFM).? The bond issue was a first in the UAE with the purpose of financing a variety of ongoing and new projects that Dubai has undertaken as part of its growth strategy.? The bond issue was arranged and underwritten by a pool of local and international banks.? ? Foreign Trade Zones/Free Ports? The UAE Free Zones today are home to approximately 5,000 companies with a total investment estimated at more than US $4 billion.? Presently, 13 free trade zones operate in the UAE, and more are in the developmental stage.? Overall, these free zones form a vital component of the local economy, and serve as major re-export centers to the Gulf region.
? Since UAE tariffs are low and not levied against many imports, the chief attraction of the free zones is the waiver of the requirement for majority local ownership.? In the free zones, foreigners may own up to 100 percent of the equity in an enterprise.? All free zones provide 100 percent import and export tax exemption, 100 percent exemption from commercial levies, 100 percent repatriation of capital and profits, multi-year leases, easy access to sea and airports, buildings for lease, energy connections (often at subsidized prices), and assistance in labor recruitment.? In addition, the free zone authorities provide significant support services, such as sponsorship, worker housing, dining facilities, recruitment, and security for a fee.? By far the largest and most successful of the free zones is the Jebel Ali Free Zone (JAFZ) in Dubai, located 20 kilometers south of Dubai city adjacent to the Jebel Ali Port.
? Over 2,200 companies representing 80 countries have set up shop in the JAFZ, including numerous Fortune 500 firms.? ? Performance Requirements/Incentives? There is no national treatment for investors in the UAE.? The UAE maintains non-tariff barriers to investment in the form of restrictive agency, sponsorship, and distributorship requirements.? In order to do business in the UAE outside one of the free zones, a foreign business in most cases must have a UAE national sponsor, agent or distributor.? Once chosen, sponsors, agents, or distributors have exclusive rights.? They cannot be replaced without their agreement.? To bid on federal projects, a supplier or contractor must be either a UAE national or a company in which UAE nationals own at least 51 percent of the capital.
? Federal tenders must be accompanied by a bid bond in the form of an unconditional bank guarantee for 5 percent of the value of the bid.? Incentives are given to foreign investors in the free zones.? Outside the free zones, no incentives are given, although the ability to purchase property as freehold in certain favored projects in Dubai — and promises that foreign owners of such property would be granted residence permits as long as they remained in possession of title — would appear to be incentives aimed at attracting foreign investment.? Visas, residence permits, and work permits are required of all foreigners in the UAE except nationals from GCC countriesProtection of Property Rights? The concept of a mortgage has just been introduced — but only for select Dubai-based five-star property developments.? Mortgages are generally unavailable beyond these limited exceptions.
? Title to all land in Abu Dhabi, the largest emirate, resides in the ruler.? Most construction, commercial and residential, is financed by a specialized agency of the government of Abu Dhabi, and commercial banks finance the remainder.? Their collateral traditionally has been access to the rent stream of the building or the personal guarantee of the developer.? ? The UAEG repealed previous copyright, trademark, and patent laws and issued improved legislation in 2002 in harmony with international standards and exceeding the UAEs TRIPs obligations.
? The new copyright law, enacted in July 2002, is the product of a prolonged dialog between the UAEG and international organizations such as WIPO and the WTO.? It grants protections to authors of creative works and expands the categories of protected works, to include computer programs, software, databases, and other digital works.? Efforts to combat computer software piracy in the UAE have been successful.? According to 2001 industry estimates, the rate of software piracy in the UAE is the lowest in the Middle East.
? The UAE is recognized as the regional leader in fighting computer software piracy.? The UAEs new Trademark Law, also issued in July 2002, confirms that the UAE will follow the International Classification System and that one trademark can be registered in a number of classes. The new law provides that the owner of the registration shall enjoy exclusive rights to the use of the trademark as registered and can prevent others from using an identical or similar mark on similar, identical or related products and services if it causes confusion among consumers.? ? Transparency? The fundamental instrument by which all of the emirates regulate business activity is the requirement that any place of business must acquire and maintain a proper license.
? The procedures for obtaining a license vary from emirate to emirate, but are straightforward and publicly available.? ? ? ? The Federal Companies Law applies to all commercial companies established in the UAE and to branch offices of foreign companies operating in the UAE. The following provisions are of particular importance to foreign investors:? A.? Companies established in the UAE are required to have a minimum of 51 percent UAE national ownership.? However, profits may be apportioned differently.? B.
? Branch offices of foreign companies are required to have a national agent unless the foreign company has established its office pursuant to an agreement with the federal or an emirate government.? C.? All general partnership interest must be owned by UAE nationals.? D.? Foreign shareholders may hold up to a 49 percent interest in limited liability companies.? ? The Commercial Agencies Law requires that foreign principals distribute their products in the UAE only through exclusive commercial agents that are either UAE nationals or companies wholly owned by UAE nationals.
? The foreign principal can appoint one agent for the entire UAE or for a particular emirate or group of emirates.? The law provides that an agent may be terminated only by mutual agreement of the foreign principal and the local agent, notwithstanding the expiration of the term of the agency agreement.? ? Efficient Capital Markets and Portfolio InvestmentThe UAE federal commercial code, promulgated in 1993, devotes an entire chapter to bankruptcy — the first comprehensive legislation in the UAE on the subject.
? Monetary judgments in bankruptcy cases are made in the local currency, and UAE courts enforce the judgments of foreign courts if there is reciprocity based on bilateral or international treaties.? In the judgment of Western legal experts, the commercial code chapter on bankruptcy governs the procedures and effects of bankruptcy in the UAE, but does not provide a mechanism for the orderly evaluation and distribution of assets of a bankrupt entity.? Credit is allocated on market terms.
? There are 21 UAE-owned banks with 344 branches in the UAE and abroad, 26 foreign banks with 109 branches, one restricted license bank, two investment banks, and 49 representative offices.? The Central Bank no longer issues licenses for new foreign banks to establish branches in the UAE.? Citibank is the only US bank in the UAE that offers full banking services.
? Bank of America has a representative office in Dubai, while Bank of New York has one in Abu Dhabi.? The largest banks in terms of assets include the National Bank of Abu Dhabi, National Bank of Dubai, Emirates Bank International, Mashreqbank, and Abu Dhabi Commercial Bank.The Central Bank prohibits lending an amount greater than 7 percent of a banks capital base to any single customer.? Foreign banks with branches in the UAE are not permitted to calculate loans as a percentage of their global capital, which may however be used to calculate the capital adequacy ratio.
? In a revision to the rule, the Central Bank in 1993 said it would exclude from the requirement non-funded exposures, such as letters of credit and guarantees.? The Central Bank also announced implementation of internationally recognized and accepted accounting principles.? ? ? Anti-Money Laundering System? The UAE Central Bank established the Anti-Money Laundering and Suspicious Cases Unit (AMLSCU) in 1998 to perform the functions of a financial intelligence unit (FIU).? The AMLSCU joined the prestigious Egmont Group of FIUs — the first Arab country to do so — at the Groups June 2002 conference in Monaco.? This membership was the basis of a number of Memoranda Of Understanding the AMLSCUThe UAEG implemented a body of anti-money laundering legislation at the end of 2001, which included stringent reporting requirements for wire transfers exceeding US $545 and currency importation/exportation of amounts exceeding approximately US $13,700.? The law imposes stiff criminal penalties (jail time and fines) for money laundering and also provides safe harbor provisions for those who report such crimes.? Banks and other financial institutions are required to follow strict “know your customer” guidelines; all financial transactions more than US $54,000, regardless of their nature, must be reported to the UAE Central Bank.? Banks and other financial institutions supervised by the Central Bank (exchange houses, investment companies, and brokerages) are required to maintain records on all transactions for at least five years.? signed with other countries FIUs in 2002 to facilitate information sharing and case processing.? The AMLSCU participated in seminars, consultative meetings, and training with Washington-based agencies in 2002, including the Department of Treasurys FinCEN.? Banks, customs officials, and other relevant personnel are required to file suspicious transaction reports with the unit.There is no income tax in the UAE.? Foreign oil companies with equity in concessions pay taxes and royalties on their proceeds.? There are no consumption taxes, and the GCC states formally implemented a single import tariff of 5 percent on most goods January 1, 2003.|Forign Trade |2003 |2002 |2001 ||Imports (mill. Of Dh) |190831 |156641 |136961 ||Exports (mill. Of Dh) |241784 |191571 |177800 ||Surplus of Merch trade |50953 |34930 |40839 |Foreign Trade Structure[pic][pic][pic][pic]CURRENT ACCOUNT BALANCE million Dhs[pic]The UAE has a mixed economy, with the most productive assets owned by the governments of the individual emirates. While considerable scope is given to private enterprise? UAE federal government steps toward privatization have been tentative. Abu Dhabi Emirate, however, has initiated and maintained an ambitious program to privatize the emirates power and water sector. In April 1997 the Abu Dhabi government gave the go-ahead for power and desalination projects to be carried out as Independent Power Projects (IPP), which have significantly widened investment opportunities for domestic and foreign investors.? Federal commercial laws promote national ownership of business throughout the country.? Foreign businesses, except those seeking to sell to the UAE Armed Forces, must have a UAE national sponsor.? Agency and distributorship laws require that a business engaged in importing and distributing a foreign-made product must be owned 100 percent by a UAE national.? Other businesses must be at least 51 percent owned by nationals.? Companies located within the UAEs twelve free zones are exempted from agency/distributorship, sponsorship, and national ownership requirements.? However, if they lack 51 percent national ownership, they are treated as foreign firms and subjected to these requirements if they market products in the UAE.? The UAE Federal Government is attempting to establish a legal framework covering all aspects of doing business in the UAE as part of its development into a regional trading center.? ? ? ? InfrastructureThe UAEG published the official and final version in November 2002 of the long-awaited Patent Law.? Specifically, the Patent Law provides for — in accordance with the UAEs TRIPs obligations — national treatment for IP owners in other WTO Member States, both product and process patent protection, and enforcement of IPR whereby civil and criminal procedures and remedies may be employed.? The Federal Industry Law stipulates that industrial projects must have 51 percent UAE national ownership.? The law also requires that projects either be managed by a UAE national or have a board of directors with a majority of UAE nationals.? Exemptions from the law are provided for projects relating to extraction and refining of oil, natural gas, and other raw materials.? Additionally, projects with a small capital investment or special projects governed by special laws or agreements are exempt from the industry law.? The Government Tenders Law stipulates that a supplier, contractor, or tenderer with respect to federal projects must either be a UAE national or a company in which UAE nationals own at least 51 percent of the share capital.? Foreign companies wishing to bid for a federal project must, therefore, enter into a joint venture or agency arrangement with a UAE national or company.? Federal tenders must accompany a bid bond in the form of an unconditional bank guarantee for 5 percent of the value of the bid.Stock exchangeAbu Dhabi and Dubai each have a stock exchange, but only one stock currently is open to foreign investors, and it is capped at 20 percent total foreign ownership.? Limited participation by foreigners in a few mutual funds is permitted.48 company listed in the MarketGovernment Role in the EconomyArbitrationIn 1993 the Abu Dhabi Chamber of Commerce and Industry formed the Abu Dhabi Commercial Conciliation and Arbitration Center in an effort to accelerate commercial dispute resolution.? The Center has jurisdiction to conciliate or arbitrate commercial disputes.? The Dubai Chamber of Commerce and Industry has promulgated similar commercial conciliation and arbitration rules that permit parties to have conciliation or arbitration proceedings under the auspices of the Chamber.? ? The UAE is a member of the International Center for the Settlement of Investment Disputes.? In May 2003, the UAE Cabinet approved entry into the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.? The UAEG is likely to implement the legislation enacting the Convention by the end of the year.? |LABORS |INVEST |NO. of |ACTIVITY || |(million) |EST | ||21 |102 |1 |Tobacco Products ||634 |4187 |68 |Wearing ||260 |27886 |151 |Ready- Made Garments ||233 |5613 |75 |Timber & Wood Products ||862 |4653 |87 |Paper & Paper Products ||668 |8213 |112 |Publication & Printing ||291 |4303 |69 |Machinery & Equipment ||11 |39 |2 |Office & Accounting Machines & || | | |Equipment ||1 |12 |1 |Audio Visual ||150 |2017 |38 |Vehicles & Trailers ||325 |3440 |46 |Other Transport Equipment ||3 |43 |5 |Recycling ||232 |4285 |86 |Electrical Appliances & Accessories ||22983 |8924 |255 |Foodstuff & Beverages ||27886 |260 |151 |Hides & Leather Products ||2853 |7779 |34 |M. Of Refined Petroleum Products ||11035 |5147 |229 |Chemicals & Associated Products ||15624 |1547 |244 |Rubber & Plastic Products ||33606 |6790 |382 |Non- Metallic Mining Products ||6874 |6936 |59 |M. Of Basic Metals ||38830 |2245 |460 |M. Of Fabricated Metal Products ||34 |1886 |66 |Vocational Industries ||13332 |473 |302 |Furniture & Other Processing Industries|436292126972795Total4693659M. Of Basic Metals388302245460M. Of Fabricated Metal Products34188666Vocational Industries13332473302Furniture & Other Processing Industries|43629 |212697 |2795 |Total |Industrial Development 2003???Abu Dhabi Chamber of Commerce & Industry Information CenterTel : 00971-2-6214000 , Fax: [email protected] www.adcci.gov.ae[pic]Tourism Industry The travel and tourism industry in the UAE is expected to generate economic activity amounting to Dh63.2 billion during the year 2