The DED issued 9,489 new licences during January-April 2019 as Dubai continued to accelerate in line with the emirate's strategic plan to evolve into a sustainable economy driven by productivity and innovation.
Dubai - Economy picks up speed in first four months of the year thanks to timely government measures
Dubai's economy will deliver a strong performance this year due to the government's timely actions and corrective measures such as visa reforms, permanent residency, stimulus packages and fee waivers to offset the impact of a slowdown in international financial markets, experts say.
Latest data released by Dubai's Department of Economic Development signalled growing investor confidence in the emirate as the department issued 35 per cent more business licences in the first four months of 2019.
It issued 9,489 new licences during January-April 2019 as Dubai continued to accelerate in line with the emirate's strategic plan to evolve into a sustainable economy driven by productivity and innovation.
The DED report on Saturday said that manufacturing and tourism sectors are expected to drive the emirate's growth at 2.1 per cent this year and 3.8 per cent in 2020. It attributed an increase in GDP growth to a host of initiatives being implemented as part of the stimulus package of the government of Dubai since the second quarter of 2018.
The report further said that Expo 2020 will add significant value to the economy with direct benefits to tourism, telecommunications, business, financial services, transportation, real estate and retail sectors. It said that government initiatives have contributed to reducing the cost of doing business in sectors such as aviation, real estate and education, which in turn continues to spur investments and growth.
"The DED has adopted new strategies and innovative approaches in line with the eight principles of the 50-year Charter of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai," said Sami Al Qamzi, director-general of the DED.
The Business Confidence Index in Dubai also climbed to 117.8 points in the first quarter of 2019 compared to 116.4 points during the same period of 2018, according to a DED survey.
Companies participating in the survey said they anticipated higher profits and selling prices in the second quarter of 2019, largely due to seasonal demand. The manufacturing sector was the most optimistic on volumes, profits and employment and overall, larger companies have stronger expectations for second quarter of 2019 compared to small and medium enterprises.
"The DED has already taken steps to implement the terms of the charter, specifically to strengthen Dubai's position as a global business and investment destination," Al Qamzi said. "The DED is currently finalising the project to establish the region's first-of-its-kind virtual commercial city where licences will be granted without requiring residency in Dubai and in accordance with the highest international legal standards."
Atik Munshi, senior partner at Crowe, said the better performance in the second quarter for Dubai's economy is indeed great news not only for the economy but also for the improvement of market sentiment. "The issuance of 35 per cent more licences by the DED is proof that investors hold Dubai in high regard," Munshi told Khaleej Times.
"It is apparent that the Dubai economy is moving slowly from traditional sectors like transshipments and real estate to more long-term sectors like manufacturing and services. It will make the Dubai economy more vibrant and attractive."
Andreea Danila, founder and managing director of Millennial Capital, said Dubai has emerged as a strong business and financial hub in the region. "Dubai has a promising outlook ahead due to consistent economic policies, government initiatives to stimulate economy and investors' trust in the economy," Danila told Khaleej Times on Saturday.
Shailesh Dash, an entrepreneur and financier, said this is good news and provides confidence to the government and residents of Dubai that things are in the right path. "The government has made some very positive changes to the economy and its laws and we can see as a result private sector participation and confidence in the economy is growing," Dash said.
FDI inflows surges
Data from the Dubai Investment and Development Agency's Dubai FDI Monitor indicated a total FDI inflow of Dh22.2 billion into Dubai as of the end of the first quarter of 2019 compared to Dh7.3 billion during the same period of 2018. A framework for a Foreign Direct Investment Committee is being developed and the DED, as a participant in the exercise, is developing a guide to implementing the new investment law, which will increase foreign ownership to 100 per cent in specific sectors and fields to attract inward FDI.
"The eight principles embody a pioneering vision for the future. The emphasis of the principles on launching modern projects that promote trade and civilisation and bring in new investment opportunities is beginning to bear fruit as evident in the number of new licenses issued by the Department of Economic Development and the accelerated growth in the emirate," Al Qamzi said.
Tourism, hospitality to grow
Tourism in Dubai is another key sector that has continued to grow with a 2.2 per cent increase seen in arrivals during the first quarter of 2019 compared to same quarter last year. The average occupancy rate of Dubai hotel rooms increased to 79 per cent in the January-March 2019 quarter compared to 77 per cent in the similar quarter last year.
Data from the Dubai Statistics Centre indicate that the general inflation rate in Dubai declined in the first quarter of 2019 to 3.72 per cent compared to a 2.27 per cent increase during the same period of 2018.
Jitendra Gianchandani, chairman and managing partner at Jitendra Consulting Group, expressed the hope that Expo 2020 and long-term visa initiatives will spur the confidence in the Dubai economy. "Dubai's economy remained sluggish in 2018 due to lacklustre international business sentiments, post-VAT impact, stringent banking effecting local and free zone companies in most of the sectors. However, it is a good omen that the economy picks up speed in 2019," he said.
Munshi said attracting over Dh22 billion FDI is a tall order and shows that the business community has full trust in Dubai and the UAE's economy and stability. He said the continuous and progressive initiatives by the government like long-term visa, permanent residency and reduction of business costs coupled with Expo 2020 has boosted the confidence of the residents, citizens and corporates alike.
"The government also needs to further strengthen the SME sector by opening up funding possibilities for such, as it will enhance both employment and economy further. The central bank can stipulate a minimum funding criteria for SMEs, which all banks need to follow," he added.