Not long ago, a video about the prospects for the development of the global economy appeared on Youtube – “How to prepare for the next economic downturn.” According to the authors of this video, the experts from the respected magazine “The Economist,” the global prospects do not look bright, especially for developing countries. The problems that their governments will face within the coming years will be global, and the recession that we witnessed during the last economic crisis may occur once again, and growing public debt will only worsen the situation.
As a rule, the country's leadership takes standard steps to get out of this problematic situation, for example, reduces the interest rates of the central bank, issues additional currency to buy bonds, increases government spending, etc.
The UAE, as one of the leaders of the region in terms of economic growth, went the other way. Here, the number of preventive measures have already been taken to stimulate the growth and development of the local economy to avoid the negative impact of a possible crisis. So let's consider why the UAE is so attractive for investors.
- One of the measures to stimulate the local economy is unprecedented funds allocated for education and social development. Almost 60% of the total federal budget of 180 billion dirhams (about 50 billion dollars), will be spent on these needs. Practice shows that investing in education, science and the social sphere gives the result for the future and creates the foundation for the development of all sectors of the economy.
- Another reason to invest in the country's economy is a specially designed plan for reforming and modernizing the economy with a huge budget of $13.6 billion, which is designed to accelerate economic growth over the coming years. The plan was developed by the Crown Prince of Abu Dhabi, Sheikh Mohammed Bin Zayed Al Nahyan, and approved in June 2018.
- A new insurance system for people who have lower average income can also be called a significant factor in favor of investment in the UAE. It is designed to replace the old system of monetary guarantees of 3,000 dirhams per person. Thus, according to the new scheme, each employee is provided with a comprehensive insurance plan with the comverage of up to 60 thousand dirhams. The insurance covers vacation payment, unpaid salary, severance payment, overtime payment, work injury cases and even purchase of airline tickets. Thus, the new insurance system can significantly reduce the burden on employers and at the same time ensure the rights of employees in the private sector. This will allow the released capital to be re-invested.
- We cannot ignore the government housing plan. Thus, the UAE government, headed by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, developed a plan according to which $1.9 billion from the country's budget will be spent on building new housing for the citizens of the country during the next three years. On the one hand, this will support the construction sector, and on the other, it will raise the level of satisfaction of the UAE population. For the next three years, it is planned to build 7270 residential units under this initiative.
- The fifth reason for investing in this country is innovations in the field of business promotion in the Emirates of Dubai and Abu Dhabi. Innovations are in the balance with the new concept of “The economy of free earnings,” or “GigEconomy.” Thus, according to this concept, the traditional relationship between the employer and the employee, to which we are accustomed, is gradually becoming a thing of the past. GigEconomy involves temporary employment, active work in teams on projects, which can be seen in the example of startups. For example, in Dubai, a special license is issued for the self-employed – “GoFreelancer,” which allows a freelancer to obtain a work permit. Abu Dhabi has introduced a special license for startups, which is issued by the state organization "Global Market Abu Dhabi" (ADGM, "AbuDhabiGlobalMarket").
- Finally, the sixth reason for foreign investors to consider the UAE as a place for profitable investment is the gradual elimination of barriers to business. Until the end of this year, the government plans to allow 100% ownership of companies by foreigners outside the free zones (at the moment there is a requirement that a foreigner can own no more than 49% of a local company’s shares, the remaining 51% should be the property of a UAE citizen or a local company). As expected, this will provide the even greater inflow of investments and will give a new impetus to the development of the economy in order to level out possible fluctuations in the market of petroleum products and diversify the country's economy.
In conclusion, we should note that the UAE is a very promising market for the region of the Middle East and North Africa, which has shown steady growth and development for several years in a row.