UAE ECONOMY CONTINUES TO GROW DESPITE REGIONAL AND GLOBAL ECONOMIC CHALLENGES

Abu Dhabi – The UAE witnessed significant economic progress in 2016, with many of its vital sectors accelerating at a substantial rate. The country also made major strides in achieving important socio-economic developments in line with the directives of H.H. Sheikh Khalifa bin Zayed Al Nahyan, UAE President; H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai; H.H. Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces; and Their Highnesses the Sheikhs, members of the Supreme Council and Rulers of the Emirates. These accomplishments were in line with UAE Vision 2021 designed to build a sustainable, diverse and globally competitive economy driven by UAE Nationals who are equipped with world-class knowledge and innovative skills.

H.E. Eng. Sultan bin Saeed Al Mansouri, Minister of Economy, said: “During this challenging year, the UAE economy has maintained its growth and high competitiveness thanks to the directives of our wise leaders and clear government vision under which goals, plans and initiatives were developed.  Accordingly, important efforts are continuously being launched to reach our targets within the framework of a world-class system designed specifically for economic and societal advancements and promotion of transparency, excellence and innovation in our institutions and among individuals.”

“The UAE has remained advanced thanks to its capability to reduce the effects of many economic variables such as the relatively low prices of crude oil, particularly in the Middle East, where oil export remains the backbone of several economies. The UAE has also shown resilience despite a major global economic slowdown, decline in the number of emerging economies, and trade and investment instability in some parts of the region. Statistics and collected data as well as national and international economic indicators have proven the country’s advancement, showing once again the soundness of our economic approach and the strong performance of our vital sectors,” the Minister added.

Additionally, the Minister noted that the government’s economic diversification policy is one of the core pillars of the UAE’s economic resilience, resulting in its increased capability to address economic difficulties and challenges. The country’s solid approach and diversification plans, he said, have led to the non-oil sector’s contributions to the gross domestic product (GDP) in 2015 rising at about 77 per cent at current prices and 70 per cent at constant prices. He revealed that the manufacturing, construction, retail, real estate, storage, transportation, telecommunications, and tourism industries, among others, recorded substantial GDP contributions, demonstrating the country’s steady and balanced steps towards a post-oil era coupled with well-informed policies and programs to guarantee sustainable development.

The financial control and the current rationalization of government spending policies adopted following the record decline in oil prices compared to mid-2014 did not prevent the government from implementing counter-financial policies and tapping the state’s cumulative cash reserves. Government spending on investment projects aimed to stimulate growth, bolster economic diversification activities, build human capacity and knowledge based on innovation and scientific research, and develop modern technology. These projects include the establishment of infrastructures in preparation for World Expo 2020, as well as the expansion of airports, the Etihad rail network, air and marine transport systems, and shipping and warehousing facilities, in addition to the building of roads and connectors, power systems, telecommunications and electronic infrastructures and the development of tourism and industrial structures. Other key projects include urban and real estate development programs, smart city transformation initiatives, fundamental financial service solutions, and the creation of new economic sectors such as the multifaceted Islamic economy. In 2015, government spending reached AED 179 billion, up 3.8 per cent from 2014 and by 4.5 to 6 per cent compared to levels prior to the emergence of significant oil price fluctuations. The country’s economic diversification plan has contributed to the non-oil sector’s growth and boosted sustainable development in the medium and long term.

Gross domestic product

According to H.E. Eng. Al Mansouri, the latest statistics and figures show the national economy’s important achievements despite regional and global economic challenges and difficulties facing both developed and developing nations. He noted that the UAE’s GDP tripled in the past 10 years, climbing from almost AED 511 billion in 2006 to AED 1.58 trillion in 2015. The figure is expected to reach AED 1.8 trillion by the end of 2016. The growth rate at constant prices reached 3.8 per cent last year compared to 3.1 per cent in 2014.

National and foreign investments

As for government and private domestic investments, the Minister of Economy is optimistic that these will pave the way for significant economic activities in preparation for a post-oil phase. Such preparations have already resulted in higher investments in various sectors and development projects from about AED 337 billion in 2014 to about AED 354.4 billion in 2015 at current prices and with a growth rate of up to 5.2 per cent. The share of government investments reached AED 145.8 billion, up 8 per cent over the previous year. The private sector’s contribution to gross domestic investment increased by 3.3 per cent from AED 201.9 billion in 2014 to AED 208.6 billion in 2015.

The government also puts a high premium on foreign direct investment (FDI), another pillar of a post-oil economic era. FDI plays a key role in pumping liquidity into the national economy, enhancing the country’s economic diversity and flexibility, fostering technology, knowledge and expertise exchange, upgrading national competencies, and improving quality production methods to enhance the country’s economic competitiveness and accelerate national efforts to build a knowledge and innovation-based economy.

H.E. Eng. Al Mansouri said that in line with the country’s goals and efforts, the total FDI inflows into the UAE amounted to USD 11 billion at an annual growth rate of 9.3 per cent from 2011 to 2015, while the total volume of cumulative foreign investments in 2015 reached USD 126.6 billion in 2015 at a growth rate of 10.3 per cent during the same period. These achievements have made the UAE the top recipient of investment inflows, accounting for 27.5 per cent of the total investment inflows into the Arab region. The UAE’s investments abroad, on the other hand, increased to USD 9.3 billion in 2015 compared to USD 9 billion over the previous year, bringing the cumulative balance of these investments to USD 87.4 billion in 2015. The UAE is the largest Arab investor abroad.

Regional and global trade capital

H.E. Eng. Al Mansouri noted the UAE’s prestigious position in foreign trade as it is considered a regional and global capital of trade and an influential and important pillar of regional and international import, export and re-export activities. The state’s foreign non-oil trade volume in 2015 stood at about AED 1.75 trillion, up by 10 per cent from 2014. The growth rate was notable in light of oil price weakness and global economic slowdown.

The Ministry has made extensive and intensive efforts to support and upgrade the country’s leading commercial standing. The thriving foreign trade sector contributes significantly to the economy, particularly in the fields of innovation and entrepreneurship as well as in the growth of small and medium enterprises (SMEs) and other industries, as the state continuously establishes and develops its commercial and economic relations with various countries across the world.

As a result of the UAE’s stronger ties worldwide, 13 foreign events including nine official visits and four trade shows benefiting 439 people took place in the country. On the sidelines of these events, 11 forums and 150 business meetings were held, in addition to bilateral talks between the UAE and various countries such as Slovenia, Qatar, Hong Kong, Bulgaria, Greece, Mexico, and Cuba.  More than 900 local businessmen and investors took part in these meetings on top of numerous foreign visits to different nations, including India, the United States, and Finland, among others. These visits were organized to support entrepreneurs and SMEs and drive innovation.

The Ministry’s Department of AnalysisCommercial and Industrial Information conducted a set of analytical studies on foreign trade, issued bulletins on local export opportunities and files of the bilateral relations with other countries. The department seeks to support the Ministry’s plan to revitalize local foreign trade and provide a solid platform for the exchange of information and discussions of trends. These objectives contribute to the development of national industries, increase the country’s attractiveness for investments, enhance its competitiveness in foreign markets, and develop its relations and business interests with other nations.

The Ministry has sought to raise awareness of the local public and private sectors on the foreign trade policies of other countries through the issuance of reports on their respective trade procedures. This year, the Ministry prepared the third review report on the UAE’s trade policies and submitted the same to the World Trade Organization (WTO), as well as participated in various discussions with WTO member states to answer their queries.

Industry drives sustainability

The Minister of Economy said that the government’s economic policies give utmost importance to the industrial sector due to its vital role in the state’s economic development and diversification policy. The industrial sector is driving the national economy and supporting local prosperity and sustainable development in a post-oil stage.

According to H.E. Eng. Al Mansouri, the investment volume in the Transformative industries sector reached AED 130 billion by the end of September of this year compared to more than AED 127.6 billion in 2015. The figures were based on the Ministry of Economy’s industrial licenses e-system. The sector’s contribution to the national GDP amounted to nearly 16 per cent at fixed prices.

H.E. the Minister added that the state’s industrial sector has performed positively despite the economic challenges. As of the end of September 2016, the growing number of industrial facilities totaled 6,250, including 158 factories licensed until the end of the third quarter.

Food and beverages led the other industrial sectors in terms of size of investment at AED 40 billion, representing 30 per cent of the total. Basic metals ranked second at AED 32 billion or 25 per cent, followed by non-metallic raw minerals at third place at 15 per cent or AED 19 billion of investments.

As of the third quarter of 2016 the Ministry had issued around 316,000 certificates of origin for various export products, of which about 276,000 were for locally made products.

Anti-dumping efforts

The Ministry of Economy continues to fight harmful business practices targeting national exports abroad which conflict with the principles of fair competition endorsed by the WTO agreements. The Ministry aims to achieve its goals by supporting national industries and ensuring their easy access to foreign markets and high competitiveness. It encourages these industries to voluntarily submit themselves to anti-dumping investigations, clarifies cases involving UAE exports worldwide, and addresses allegations of dumping or import increases in UAE’s markets that disadvantage national products and local industry. The objective is to adopt established mechanisms in accordance with the WTO agreements.

As of the third quarter of 2016 the Ministry has acted on 59 inquiries and fees imposed abroad, of which 32 cases were resolved or where fees were withdrawn; 20 cases where the fees were approved, and seven still under investigation. The Ministry continues to contest the remaining fees and push for the closure of the ongoing investigations.

Small and medium-sized enterprises sector

H.E. Eng. Al Mansouri said that the SME sector counts among the main priorities of the state due to its vital role in promoting sustained growth, economic diversification, and the transformation to an innovative knowledge-based economy in line with UAE Vision 2021. He emphasized that the country has recently taken several successful steps to create a supportive environment for the growth of SMEs, which he said stimulates the development of national entrepreneurship and improves local competitive capabilities based on innovative practices and creative solutions.

The Ministry of Economy remains fully committed to promoting this vital sector in cognizance of its importance in supporting the national economy and regional and international competitiveness. Integrated parallel tracks have been launched to achieve the desired development for this sector. The first of these tracks involves the development and modernization of legislative and regulatory infrastructure supporting the sector, particularly the issuance of Federal Law No. 2 of 2014 on projects and SMEs drafted in accordance with the highest international legal standards. Another track was the establishment of the Council of Projects and Small and Medium-sized Enterprises in 2015 to coordinate nationwide efforts to develop the sector and adopt a unified definition of SMEs in order to provide the necessary facilities and support. This includes sourcing 10 percent of the products and services purchased by federal authorities from domestic SMEs, as well as financing facilities, employment, and consultancy, among others.

The Ministry also organizes a major annual conference on SMEs, the seventh session of which was held in 2016. The conference gathers national and international leaders and experts in the field of SMEs and entrepreneurship to discuss the best ways to accelerate development and consequently maximize the contribution of SMEs to the GDP.  The event also provides participating SMEs with access to the latest and best international management practices and stimulates organization and development through innovative solutions driven by cooperation between government agencies and the private sector.

In addition, The Ministry of Economy has signed several local and international agreements and memoranda of understanding with a number of leading countries in this field, most notably South Korea, Germany, Italy, Sweden and Canada. There are plans to sign 15 more agreements and memoranda of understanding by 2021, with the aim of promoting cooperation and the transfer of knowledge and technology in the various fields SMEs are engaged in.

Moreover, the Ministry is committed to facilitating the inclusion of SMEs and entrepreneurs in the foreign visits it organizes. The Ministry provides them with the opportunity to participate in international exhibitions supportive of the sector and enter new markets by holding meetings with joint economic commissions. This contributes to the exchange of experiences and the facilitation of procedures, financing, and the building of trade relations and investment partnerships stimulating the growth of this sector which currently accounts for more than 60 per cent of the national GDP. The country aims to bring this figure up further to 70 per cent in 2021.

Sectorial performance at the Ministry of Economy

H.E. Eng. Al Mansouri emphasized that the Ministry of Economy’s efforts in 2016 have had a major influence on the highly positive performance of the national economy. He noted that the Ministry’s various sectors and departments have worked harmoniously to carry out their duties and functions per Ministry’s vision and values and in line with its strategic objectives.

Representing the state in Arab and international forums

The Ministry of Economy has represented the UAE in a number of regional and international meetings related to trade, economic and tourism affairs throughout this year. Some of these meetings are initiated by the Gulf Cooperation Council, the Arab League, the UN Economic and Social Commission for Western Asia, and the Organization of Islamic Cooperation.

The Ministry has also held and participated in a number of meetings for joint economic commissions involving Korea, Canada, Colombia, Thailand, Qatar, Vietnam, Russia, Belarus, and Tanzania.

Auditing guarantees optimal protection of shareholders and strengthens economic environment

The Minister of Economy said that it guarantees the highest levels of protection for shareholders and the UAE’s economic environment and resilience against financial distress by efficiently registering and controlling auditing work in the country and ensuring the commitment of company shareholders to transparency and the application of international accounting standards. His Excellency added that the Ministry fully supports Emiratization and efforts to train Emirati personnel in auditing due to its sensitivity and importance in controlling the financial and administrative performance of corporations. Emirati auditors presently comprise nearly 60 per cent of the country’s total registered auditors, while registered and subscribed capital for Private Shareholding Companies amounted to about AED 160 billion as of the end of October 2016 covering 162 companies.

The Ministry’s Auditing Department has successfully performed its duties from the beginning of this year until the end of October, with the number of newly registered auditors totaling 29 and new national companies related to the enrolled auditors numbering 29. The number of practicing auditors who had their licenses renewed stood at 565, while companies that had their licenses renewed stood at 70. A total of 24 foreign companies had their licenses renewed as well.

Quality achievements for trade control

H.E. Eng. Al Mansouri said that the Commercial Control Department is vital to the monitoring and detection of fraudulent operations in all the UAE markets and implements anti-counterfeiting measures to preserve intellectual property rights and withdraw goods that offend the beliefs and values of the country. Among the Department’s most significant achievements from the beginning of this year up to the end of October are undertaking 9,369 consumer protection inspections which resulted in the identification of 505 irregularities; 1,476 inspections yielding 50 irregularities; 673 trademark inspections resulting in the detection of 14 irregularities; 44 inspections of commercial agencies resulting in 33 irregularities; 43 copyright and authorship inspections resulting in a single violation; and an inspection of 25 factories that did not yield any irregularity. The commercial Control Department carried out a total of 11,630 inspections for the period resulting in 603 irregularities.

Consumer protection

The Ministry of Economy considers consumer protection of major significance and strictly enforced the implementation of Federal Law No. 24 of the Year 2006 on consumer protection. It also conducts meetings, launches initiatives, and signs agreements that help ensure the price stability of basic items, maintains market balance, and protects consumers from improper business practices such as monopolies and unjustified increases in prices.

The Ministry’s Consumer Protection Complaints Center received 13,007 complaints from the beginning of 2016 up to the third quarter 95 per cent of which have been resolved. Administrative requests to retrieve 157,000 item were received during the first 10 months as well.

The Consumer Protection Higher Committee also held three meetings during the same period, the most important outcomes of which were the removal of the 2 per cent sales commission on credit cards and the setting of price stability policies for about 1,000 items in the UAE’s markets. Standard contracts were approved for sales of automobiles and electronics.

Intellectual property

H.E. Eng. Al Mansouri said that the development of the intellectual property system and the protection of creator and inventor rights are main pillars in the UAE’s efforts to enhance the environment of innovation and create a knowledge-based economy because of their importance in preventing fraud and preserving the rights of institutions, companies and individuals. He explained that such initiatives encourage inventors and provide the appropriate environment for transforming creative ideas into applications and coming up with innovative solutions that can spur economic growth and improve the competitiveness of the UAE.

The Ministry’s most prominent achievements in this sector for 2016 were the opening of the International Centre for Patents Registration (ICPR), the culmination of a series of efforts made by the Ministry to develop the Industrial Property Department and turn it into this center. Plans for the Centre included several stages involving the inception, development and operation of the center within the Ministry. Training, advisory and other pertinent aspects were undertaken in collaboration with the Korean Intellectual Property Office as well.

The most significant achievements of the Intellectual Property Sector during the first 10 months of 2016 was the reception and registration of 1,368 patent applications, with the evaluation of 837 applications completed and resulting in the granting of 185 patents. In addition, the Ministry received 700 request for Industrial Design certificates, 251 of which were granted. There were also 500 requests for the registration of Intellectual Property Rights, 346 of which were granted. Trademark registration applications filed at the Ministry totaled 16,464 applications as of mid-November 2016, with 15,377 applications completed.

Tourism … a dynamic contributor to the national economy

The Minister of Economy said that the tourism sector is one of the major focal points of the economic policies of the UAE. He said that the sector is critical to the diversification of the national economy and is among the primary bridges for the transition to a post-oil era due to its importance, dynamism, and ability to supplement the national income.

Since the tourism sector joined the Ministry of Economy this current year, the ministry has adopted a clear agenda for the development of a unified strategy for tourism in the UAE. For one, the industry is being promoted with due consideration to the diversity and privacy of each emirate. The Ministry is also working towards supporting projects for the sector, the development of facilities and services, and the activation of the role of innovation and new technologies in proposing tourist strategies for maximizing the country’s numerous tourism potentials to raise global awareness to new levels of excellence.

For 2016 the Ministry’s tourism sector successfully launched several initiatives and activities to sustain progress in national tourism which grew 3.3 per cent in 2015 over the previous year. It has also been focusing on the development of UAE Nationals involved in the leading sector through international knowledgeable and innovative solutions. The most prominent of these initiatives were the launching of the Emirates Hospitality Center and hosting preparation programs for leaders of the tourism sector in cooperation with the World Tourism Organization as well as the convening and organizing of forums and exhibitions aimed at exchanging experiences and identifying tourism services in the country.

Smart services in the ministry … 100 per cent transformation and satisfaction at the highest levels

H.E. Eng. Al Mansouri said that the Ministry of Economy is eager to meet the requirements for smart government, noting that the electronic and smart transformation of the government services provided by the Ministry has reached 100 percent so far in2015, inclusive of 18 priority services with a usage rate of around 86 percent. He added that customer satisfaction with the services rendered by the Ministry reached nearly 74 percent, with satisfaction with the Ministry’s website at 89 percent.