Today, more than ever, you must walk the walk on trade
The UAE has led by establishing a number of free trade zones to encourage FDI and economic cooperation with international companies and governments.
Dubai - Countries need to advance free trade agenda by passing package of reforms that reinforce trade, bilateral relations
It is no secret that the world is currently experiencing an economic downturn. The reasons for that are numerous, but the one reason that seems to be raising eyebrows is the rising anti-trade sentiment. Protectionism and economic growth do not work well together and the only way to jumpstart the latter is if more trade, not less, takes place.
The UAE is a good example of a country that is always forward-looking when it comes to trade. The nation has led the way in the region by establishing a number of free trade zones, such as Jebel Ali Free Zone, the Dubai Multi Commodities Centre Authority, Khalifa Industrial Zone and Dubai Airport Free Zone to encourage foreign direct investment and economic cooperation with international companies and governments, leveraging the country's location at the crossroads of three continents. The UAE has also strategically participated in vital trade corridors with prominent trade partners such as China, India and the African continent.
Taking the UAE as an example, countries need to advance the free trade agenda by passing a package of reforms that reinforce trade and continue building bilateral trade relations in order to overcome current and future challenges.
Getting the fundamentals right
Business-friendly countries are usually the most ideal trade partners. The world took notice of the UAE back in the day thanks to the business-friendly environment that it offered.
The numbers do not lie, as the UAE ranks 11th worldwide, when it comes to ease of doing business, according to the World Bank's annual Doing Business 2019 report. Therefore, the UAE is not only the highest-ranking country in the GCC region, but it also beats industrialised countries such as Japan, France, and Germany.
The backbone of the UAE's economy
Small and medium enterprises make up 94 per cent of the companies who operate in the country. SMEs are a vital component for furthering trade as they generate excess production for trade partners. In recognition of this, the UAE has extended its support for SME's by putting in place a number of measures and industrial strategy to support their growth.
Additionally, Expo 2020 Dubai is also going to enable the expansion of SMEs in the region. According to the 2019 Agility Emerging Markets Logistics Index, the UAE's connectedness with the world is ranked first, as the most connected emerging economy in the region. Liquid banking institutions are also one of the components that enable trade and according to Moody's, the UAE's banking system is stable and it reflects a robust economy. What all this implies is that SMEs have the connectedness and funding needed to flourish and trade internationally.
The UAE already has robust trade relations with western countries, so advancing bilateral relationships means looking at strengthening relations with rapidly-developing countries in the East.
The Asian growth story is just beginning, and the UAE is looking to take a more prominent role in supporting this growth. Last year, President Xi Jinping's visit to the UAE represented the first by a Chinese leader to the UAE in over 28 years. The two parties discussed many issues resulting in 13 MoUs getting signed. Just recently, a UAE delegation attended India's Vibrant Gujarat Global Summit 2019, with expectations that the trade relations between both nations will well exceed $100 billion by 2020.
The UAE and Indonesia signed an agreement to increase the standards of halal products and increase bilateral trade to $5.5 billion. Just recently, His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, visited both Singapore and South Korea as part of his Asian tour and bilateral cooperation was, of course, part of his discussions with his counterparts.
The results of all these internal and external efforts have already paid off. The UAE has successfully furthered its goal of economic diversification through trade and by implementing regulatory frameworks, such as the creation of free zones and recently granting longer-term residency visas, that has created a business-friendly environment.
According to the International Monetary Fund, the UAE's GDP is set to grow by 3.7 per cent this year. The World Bank anticipates the growth to be 3 per cent in 2019 and 3.2 per cent in 2020 and 2021. All these numbers are a clear indication that UAE's economy is set to grow, and trade will play a big part in achieving it.
The writer is acting CEO at Commercial Bank International. Views expressed are his own and do not reflect the newspaper's policy.