H.E. Eng. Sultan bin Saeed Al Mansoori, UAE Minister of Economy, revealed that the UAE economy has achieved several developmental milestones in 2018, which have contributed to stimulating its growth, enhancing its competitiveness and ensuring the sustainable development of the economy.
H.E. added that the country has reinforced its regional and global reputation as an economic hub, thanks to the balanced and positive performance of the economy, as well as the concerted efforts made to deal with challenges and envision a comprehensive growth strategy based on diversification, sustainability, openness, effective engagement with global markets, forging partnerships and adopting prudent approaches to emerging socio-economic development trends.
He pointed out that in 2018, the country focused on consolidating its economic development and finalizing strategic plans and initiatives to fast track its national growth objectives, guided by the wise leadership of His Highness (H.H.) Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE; H.H Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, H.H. Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and their Highnesses the Supreme Council Members and Rulers of the Emirates.
H.E. Al Mansoori added: “Economic policies and plans are based on important elements such as stimulating the environment of innovation, technology, scientific research and intellectual property as engines of development and transformation into a globally competitive digital economy; developing business-friendly systems and legislation; attracting value-added sectors; enhancing the role of the private sector ; promoting entrepreneurship through supporting SME and startups; and developing national human resources.”
The Minister noted that the UAE continues to march ahead in its development path, based on integrated strategies for continuous development and modernization, most notably the National Agenda 2021, the UAE Centennial 2071, the post-oil economy plan, the consolidation of economic diversification, effective national strategies on innovation, envisioning the future, the Fourth Industrial Revolution, Artificial Intelligence (AI), space program, energy and renewable energy, green economy, Corporate Social Responsibility (CSR), as well as the implementation of other policies and initiatives related to strengthening the non-oil revenues of the country, increasing the Foreign Direct Investment (FDI) flow and expanding trade partnerships.
The country's gross domestic product (GDP) at current prices for 2017, according to the Federal Competitiveness and Statistics Authority, reached approximately AED 1405 billion, achieving a growth rate of about 7.2 per cent over 2016, while the non-oil GDP at current prices for 2017 amounted to about AED 1092 billion with an increase of 3.2 per cent over 2016, which makes the contribution of non-oil sectors in the GDP of the state achieved a rate of 77.7 per cent, according to current prices.
The real GDP of 2017 at constant prices (2010 is a base year) amounted to more than AED 1422 billion with an increase of 0.8 per cent compared to 2016, while the real non-oil GDP for the same year was about AED 1 trillion, achieving 2.5 per cent growth over 2016. Thus, the contribution of non-oil sectors to real GDP reached 70.5 per cent, which reflects a positive trend in fast tracking the economic diversification agenda of the State.
The International Monetary Fund (IMF) affirmed that the UAE economy has displayed flexibility and adaptability in the face of low and volatile oil price challenges over the past years and that the country has adopted effective fiscal and economic policies that have had the greatest impact on maintaining the strength of the economy. The country's current account surplus is expected to exceed 7 per cent of GDP this year as the momentum of non-oil economic activity increases, raising the real GDP growth estimate for the country in 2018 to 2.9 per cent, with a further rise expected during the coming year, at a rate of 3.7 per cent.
In terms of economic diversification, the (IMF) has predicted that the contribution of non-oil GDP will increase to 2.9 per cent by the end of 2018 and that it will continue to grow next year to about 4 per cent.
H.E. Eng. Sultan bin Saeed Al Mansoori said that the prospects for economic growth in the country include many positive indicators in the coming years, in view of the growth of its non-oil sectors, the continued investment spending on development projects, strategic initiatives and incentives to increase investment attractiveness, and accelerated investments associated with the hosting of Expo 2020 Dubai.
The Minister of Economy added that the structure of real GDP for 2017 reflects the increase in economic diversification and the development of non-oil sectors, where a group of vital and value-added sectors have witnessed good growth rates, notably the manufacturing sector, which grew by 3.4 per cent, and the ITC sector by 3.4 per cent, agriculture and fisheries by 3 per cent, transport and storage sector by 2.7 per cent, real estate sector by 2.8 per cent, health sector by 4.4 per cent and sectors related to tourism, such as arts, entertainment and service promotion, by 3.9 per cent.
H.E Al Mansoori said that the non-oil sectors witnessed significant progress over the past years, and continued its support and growth during 2018 particularly in the domains of physical and electronic infrastructure, space sector, logistic and transportation services, financial services including the merger of banks to form giant global financial entities, renewable, nuclear and clean energy sector, foreign trade and wholesale and retail trade including e-commerce, SME’s and start-ups sectors including development of support, financing and training systems, technology and ITC sector, manufacturing such as petrochemicals, building materials, metal industries, food and pharmaceutical industries, as well as tourism, which includes the development of facilities, resorts and strategic tourism-related projects.
The MOE has been keen on reinforcing the knowledge environment of the country through a series of publications, research and studies on various economic topics to assist decision makers and stakeholders. The Department of Economic Policies in the Ministry issued a series of reports and books in this regard, most notably the Annual Economic Report 2018 and the Annual Statistical Report 2018.
The Minister also stressed on the importance of the Ministry's efforts in building international partnerships through Joint Economic Committees. During this year, three joint economic committees were held with South Korea, Egypt and Italy. In addition, the state also concluded a new economic, trade and technical cooperation agreement with the Republic of Moldova.
Foreign Direct Investment (FDI)
H.E Al Mansoori said that the year 2018 witnessed a surge in efforts to develop the investment environment in the country, through the promulgation of Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI), which represents a qualitative leap in enhancing the incentives and advantages offered by the state to foreign investors and developing a safe and attractive investment environment. The most important aspect of this law is the granting of 100 per cent ownership of projects in specific sectors, facilitating investment protection guarantees, financial transfer options and the possibility of amending the partnership, mergers, acquisitions and transfer of ownership consistent with the investor interest, according to a set of controls and standards.
The Minister said that the law is a new and fresh start towards strengthening the globality of the national economy in line with future development trends, where it aims to enhance the confidence of foreign investors and motivate major international companies to invest in the country's markets, especially in the fields of innovation, technology, space, renewable energy and AI.
He explained that the new law will have a prominent role in the localization of knowledge, transfer of technology and building of national competencies characterized by efficiency and innovation, in the light of the requirements stipulated by Foreign Direct Investment projects in the state--the most important of which is optimizing the use of national human resources and working on training according to specific criteria and ratios.
Foreign Investment Intensives
UAE has a wide range of foreign investment intensives for doing business and signed 78 agreements to protect and encourage investment and 115 agreements to avoid double taxation of income with certain countries until 2017. It is also a member of the ‘Great Arab Free Trade Agreement’ (GAFTA) signed within the framework of the Free Trade Agreement (FTA) with Singapore.
The national investment environment has a host of incentives and advantages, such as political stability, modern infrastructure, effective economic policies, business-friendly legislation, strong economic relations with various countries and global markets, strategic geographical location that makes it a vital trade gateway to various regional markets, efficiency of government services and effectiveness of the judicial system, the quality of financial and tax and customs regulations conducive to investment, highly developed airports and ports, dynamic and integrated logistics sector, free zones with advanced infrastructure and diverse specializations, global civil aviation leadership and giant air carriers, an open and multicultural society embracing more than 200 nationalities and a modern lifestyle, as well as the widespread use of modern technology and communication techniques.
FDI flowing into the UAE in 2017 were recorded at around USD 10.4 billion, up 7.8 percent from 2016. In that year, the state accounted for 40 per cent of the total investments received in Arab and West Asian countries, and 23.3 per cent in the Middle East and North Africa (MENA) region in the same year as well.
The UAE ranked the first in the Arab world and 30 on the list of the best countries in the world in attracting FDI, advanced five ranks for the classification of 2016 according to the World Investment Report 2018 of the United Nations Conference on Trade and Development (UNCTAD). However, the UAE’s cumulative balance of FDI inflows until 2017 was about USD 130 billion, with a 9 per cent growth over 2016.
In addition, the UAE ranked 1st in the Arab region and 21st globally in terms of FDI outflows to the world, estimated at USD 14 billion during 2017, with a growth of 7.7 per cent over 2016.
Al Mansoori said that with the implementation of the law, it is expected that there would be a 15-20 per cent growth in the volume of FDI inflows to the UAE during 2019-– 2020 and that the state aims to increase the share of the contribution of FDI in current prices to 5 per cent by 2021, as compared to 3 per cent currently.
This year, the Ministry of Economy (MOE), represented by the Investment Department, implemented several initiatives and activities that contribute to upgrading services and simplifying procedures for investors.
• As part of its initiative to boost the investment climate and the diversification of innovative investment opportunities, the Ministry has prepared an integrated study on economic sectors classified according to the new Investment Law.
• Preparing and issuing guides and studies that serve the knowledge environment for investment, including the Investor Compass Guide, Investor Path Guide and Guide to Establishing Business in Free Zones, etc.
• Organizing the Annual Investment Meeting (AIM) for 2018 with the participation of 141 countries in the presence of heads of state, government and leaders in the investment sector, which discussed the future of investments in the light of economic changes and protectionism.
H.E. Eng. Sultan bin Saeed Al Mansoori said that the UAE continues its distinguished trade policy based on establishing an extensive network of commercial partnerships and developing world-class infrastructure to support business activities, while maintaining its trade liberalization policies and facilitating the movement of goods and services across borders.
H.E added that the UAE is one of the leading countries in the world today in terms of the facilitation of international trade—reaching advanced rankings in trade exchange. The country is currently ranked first in the Arab and regional markets in the import and export of goods and services, while it is ranked 15th globally in commodity exports, 18th globally in commodity imports, 21st globally in services exports, 17th globally in services exports according to World Trade Organization (WTO) statistics for 2017 and ranked third in the world in terms of re-export, accounting for about 13 per cent of the world's total re-exports in 2017.. However, the average export growth in the country is equivalent to 8 per cent and imports 7 per cent, as compared to the 2 per cent average growth in both exports and imports.
Trade Balance Deficit Decline
In the first half of 2018, the UAE's non-oil foreign trade reached AED 784 billion, including direct trade, free zones, of which about AED 463 billion were imports, AED 232 billion were re-exports and nearly AED 90 billion were exports. Total exports and re-exports in the first half of 2018 grew by 4 per cent compared to the same period in 2017, while the trade balance deficit declined by 23 per cent during the same period of comparison.
In 2017, the value of non-oil foreign trade, including free zone trade, amounted to AED 1.612 trillion, of which AED 979 billion were imports and AED 443 billion were re-exports. In 2017, the country witnessed exports in more than 100 regional and global markets.
Today, the UAE is the largest Arab trading partner for Asia, Europe, Africa and the Americas. It accounts for 44 per cent of total non-oil trade between Arab and Asian countries, 27 per cent from total trade with Europe and 37 per cent with North and South America.
A recent report by the World Economic Forum predicted that by 2020, the UAE’s e-commerce market will reach about USD 27 billion (AED 100 billion), a 100 per cent growth over 2016, as compared with about USD 69 billion in the total e-commerce market for Arab countries in the same year, which brings UAE to the top spot in the region, dominated by 39 per cent of the total value of electronic commerce cash to the Middle East.
H.E Al Mansoori stressed that the support and regulation of the e-commerce sector is one of the main priorities of the federal government, and that efforts are underway in cooperation with the various government and private partners within the framework of the annual meetings of the UAE Government for 2018, to launch new initiatives that organize and support the growth of the sector.
The MOE has been keen to support the strategic growth of the UAE Government towards expanding the scope of electronics and smart services. The Industrial and Information Management Analysis in the Ministry developed a number of applications and websites during the current year, which contribute towards enhancing the knowledge environment of foreign trade and foreign direct investment (FDI), most notably:
- Trade Relations Dashboard, which provides a smart platform for business relations with the world.
- Trade Map, which provides foreign trade figures in an interactive manner.
- Foreign Direct Investment Dashboard, which provides a large database of inflows and balances for FDI
The MOE has worked hard to identify the trade and investment opportunities in various sectors and to support UAE exports and investments in various regional and international markets. The Trade Promotion Department at the Ministry of Economy organized a number of business meetings and economic forums in the country till the end of October with China, Botswana, Mexico, Korea and Finland. The Ministry also organized a number of visits and events outside the country during the same period, which included 790 participants from various sectors and contributed to enhancing the map of the UAE's international trade cooperation, including KSA, USA, China, Japan, India, Italy, Russia, Malaysia, Singapore, Ghana, Nepal, Hong Kong and Serbia. This year, the Ministry organized the fifth edition of the Global Trade Development Week, in the presence of more than 100 key government and international organizations related to global trade and development, under the theme ‘Global Partnership to Counter Illegal Trade between the Borders’, and international partnerships to address cross-border illegal trade.
SMEs and Entrepreneurship
H.E Al Mansoori stressed that the SME and entrepreneurship sector forms a crucial part of the economic vision adopted by the UAE--serving as a cornerstone of modern economies and a vital engine for its further diversification while strengthening the foundations of being a knowledge economy. He added that the MOE continues its extensive efforts to support and encourage the model of SMEs and start-up companies and increase their contribution to the country's GDP.
The MOE has also introduced a number of national initiatives during the last phase, which was implemented with the help of various partners.
He pointed out that SMEs and start-ups in the UAE have achieved significant development across several vital sectors such as health care, wholesale and retail trade, ITC, financial services, manufacturing, education, transport and tourism. Several strategic memorandums of Understanding (MoUs) were also signed during the last period to strengthen national and international partnerships in support of this sector, including a memorandum with the Korean government for practical cooperation in the fields of technology, research and development between SMEs in the two countries, and cooperation with a number of the country's strategic partners in this field such as Finland, Sweden, Japan and China, for successful technology transfer and effective communication among entrepreneurs.
This year, the National Program for Small and Medium Enterprises has implemented a number of initiatives and partnerships, which have contributed to the expansion of business and investment opportunities for entrepreneurs, enhanced their experience and enabled them to achieve success and sustainability, including the establishment of more than 17 training courses aimed at raising the capacity of 1000 small and medium companies in the UAE, completing the electronic linkage between the program and the Ministry of Finance to enable SME owners to benefit from government tenders, as well as participating in a wide range of exhibitions and forums to support the SME sector.
Strengthening the Intellectual Property (IP) environment
The Minister of Economy pointed out that the development of the Intellectual Property (IP) framework is one of the main pillars of the country’s efforts to foster a culture of innovation, build a knowledge economy and enhance the competitiveness of the business sector. He added that the Ministry is making concerted efforts to create a nurturing environment for innovators and creative minds, while working on initiatives to bolster economic growth and progress.
The Intellectual Property sector of the Ministry of Economy implemented several steps until the end of the third quarter of 2018, including initiatives to develop a comprehensive physical and electronic structure, as well as institutional and regulatory frameworks related to the application of IP.
A total number of 1309 of applications were received by the International Center for Patent Registration at the Ministry of Economy during the above-mentioned period, 635 of which were submitted for examination until the end of September 2018, in cooperation with the Korean Intellectual Property Center.
Approximately 13556 trademark registration applications were received by the Ministry until the end of October 2018, while 16170 trademarks were registered, the registration of 6,741 marks renewed, 1391 trademark transfer applications processed, and 53 licenses issued for the use of a trademark. The number of applications for registration of intellectual works received by the Ministry during the same period reached 791, 414 of which were for government agencies and 377 for individuals.
leading role in business organization
The Commercial Affairs Sector of the Ministry of Economy continues its role in overseeing the implementation of legislations regulating local and foreign companies, development of corporate governance policies, consumer protection, ensuring the flow of goods to markets, reducing inflation, combating commercial fraud, regulating competition to enhance the capabilities of the commercial sector and reduce cost to the economy.
Competition and consumer protection
This year witnessed continuous efforts in the field of consumer protection and competition. As of October 2018, 95 per cent of the complaints received by the Ministry, amounting to a total of 11,802 complaints related to Consumer Protection Law, were resolved during this period. The Department of Competition and Consumer Protection implemented about 240,795 cases of recall of goods, including cars, bicycles and other vehicles.
In cooperation with relevant partners and within the framework of the meetings of the Supreme Committee for Consumer Protection, the Ministry focused on strengthening consumer protection mechanisms through the regulation of car purchase contracts and electronic purchase contracts, discussing the regulation of used car sales contracts and shipping companies' contracts, as well as developments in the application of Arabic language in the service sectors, this year.
341 agencies were registered for 2018 until the end of the third quarter across the UAE, while the total registered agencies in the country until the same period amounted to 6,200--belonging to more than 50 nationalities. The Dispute Settlement Committee of commercial agencies resolved 21 disputes until the same period.
Commercial Compliance Department
The MOE is always keen to enhance commercial activity by increasing its efficiency and protecting consumers. Therefore, it continued its efforts at activating commercial compliance legislation by conducting inspection visits and levying fines according to this legislation until the end of the third quarter of this year. During this period, a total of 22,186 surveillance rounds in the different markets of the country resulted in the levying of 1,354fines..
The Ministry has worked in the framework of the implementation of ‘Federal Law No. 2 of 2015 On Commercial Companies,’ following up on the performance of private joint-stock companies, which amounted to 175 companies in various emirates of the UAE, including 15 companies registered during the first 10 months of 2018 with registered capital of AED 147.3 billion and fully paid up capital of AED 140 billion.
The total number of branches of foreign companies registered in the UAE by the end of October of this year was 2,928 registered and licensed branches of more than 50 nationalities, of which 1,490 branches were in Abu Dhabi and 1,225 branches in Dubai. British companies took first place, followed by US, Chinese, and EU companies.
The largest Corporate Social Responsibility initiative
The Ministry of Economy launched the world's largest e-platform for social responsibility in 2018, as part of its Corporate Social Responsibility (CSR) initiatives, which form a National Strategy for the "Year of Giving. The Smart Platform aims at organizing and implementing CSR policies at the national level, in terms of linking contribution of social companies to national entrepreneurs and initiatives. The national initiative targets more than 215,000 companies of various types registered in the country. Individual institutions and free zone companies were also allowed to contribute voluntarily through the platform.
Trade Remedies and Prevention of Harmful Trade Practices
H.E. Sultan bin Saeed Al-Mansoori, Minister of Economy, emphasized that the Ministry is keen to develop commercial treatment systems and issue certificates of origin according to best practices, enhancing the export procedures of national products to foreign markets, in addition to protect the UAE products and national industries, and enhancing the competitiveness of UAE exports in line within the framework of WTO agreements.
In 2018, the Ministry continued its efforts to activate mechanisms of protection for national products, where by the end of the third quarter this year, it approved an anti-dumping duty, followed-up with two cases of anti-dumping complaints, began investigation procedures into one case, and terminated the investigation in one case as well.
The Prevention of Harmful Practices of International Trade Department in the Ministry has also moved against fees and open investigations in 2018, including three anti-dumping investigations, five preventive measures, two charges in the United States under the National Security clause and the completion of three investigations this year. The ministry also raised for the first time since the country’s accession to the WTO, a dispute against the dumping duty imposed on State exports from polyethylene in Pakistan.
The Sector of Trade Remedies at the Ministry of Economy also supervised the implementation of a number of initiatives and activities aimed at supporting the business environment in the country, while enhancing the systems of innovation and increasing export capacity, most notably the launch of the national program to support young innovative companies and issuing 52 membership certificates as one of the initiatives of the Ministry of Economy in the third phase of government accelerators, to boost the innovation environment and improve the country’s ranking on the Global Innovation Index.
Tourism development efforts
H.E Al Mansoori said that the tourism sector is gaining significance as a vital part of the country’s growth plans and has been accorded top priority by the wise leadership for developing long-term strategies, enhancing its contribution to the national economy, fast tracking economic diversification and helping in the smooth transition to a post-oil economy.
The tourism and travel sector accounts for 11.3 per cent of the UAE’s GDP for 2017, which is equivalent to more than AED 154 billion, according to the results of a report from the World Travel and Tourism Council 2018. The report also shows that the percentage is expected to increase up to 4.9 per cent by the end of 2018, accompanied by a compounded annual growth rate (CAGR) of 3.9 per cent until 2028. The report also pointed out that the sector accounts for 9.5 per cent of the country’s labour market in 2017, with expectations of a 3.2 per cent increase this year or up to 604,500 jobs. Meanwhile, while the expected spend of visitors for this year is forecasted to increase by 5.3 per cent this year, surpassing the AED 123.5 billion posted in 2017. Tourism investments in the country reached AED 25.4 billion in 2017 or the equivalent of 8 per cent of the total investments in the country.
In 2018, the Ministry implemented a number of initiatives and activities that were aimed at promoting tourism development at the national level. These initiatives and activities, which were implemented in collaboration with various partners, included organizing roadshows in India, Russia and Scandinavia to introduce the UAE leading tourism destinations and raise its share in the world tourism markets.
In addition, the Ministry has launched the third edition of its Leaders Program in the Tourism Sector, a project organized in partnership with the World Tourism Organization (WTO). The 2018 edition focused on supporting the concepts of innovative approaches to tourism destinations.