The UEA Commercial Guide  If your business targets the Gulf markets, either you are a manufacturer or an importer, you need to know some basic information about the Saudi economic environment, so SanedCert collected the most significant needed information about the United Arab Emirates market for you, as this is a part of our consultant role.

National and Emirate-level governments invest heavily in economic diversification and growth. With its oil reserves and sovereign wealth funds valued at approximately $1.3 trillion, the UAE has resources to help it navigate the volatility of the oil market and other challenges. The UAE aims to expand its role as a regional trade, logistics, and tourism hub.

 

The World Expo 2020 Dubai:

The World Expo (Expo 2020 Dubai) was postponed due to COVID-19 and will be held in Dubai from October 1, 2021, to March 31, 2022. Foreign companies have an opportunity to leverage this mega event to increase their exports to the region. Twenty million visitors are expected at the Expo, and there will be over 190 participating countries.

The UAE is home to world-class trade events and visiting or exhibiting at a trade event can be a great way to learn about and expand in the UAE and the region. However, some trade events may be postponed or be virtual due to the COVID-19 situation.

Market features:

Free Trade Zones (FTZs):

Free Trade Zones allow 100% foreign ownership, quick registration, advanced logistical support, and are often organized along sectoral lines. For example, the Dubai Multicommodity Centre (DMCC) caters to firms in the financial services sector. However, with few exceptions, companies in FTZs still must have 51% UAE-owned distributors “onshore” (outside the FTZ structure) to sell into the local UAE market.

Companies planning to use the UAE to sell regionally and not in the UAE can forgo this step. In July 2019, the UAE Cabinet approved outright foreign ownership across 13 additional economic sectors including information technology, manufacturing, renewable energy, space, and agriculture.

Competitive Positioning:

As a regional trade hub supporting significant international business activity, the UAE is a market where foreign firms can expect to face strong multinational competition. Successful firms often rely on technological and qualitative advantages to compete with foreign competition that may have lower price points.

Regional Approach:

Many international firms looking to do business in the Middle East often find practical advantages in a regional approach to their marketing activities in the Gulf. The members of the Gulf Cooperation Council (GGC – UAE, Kuwait, Qatar, Oman, Saudi Arabia, and Bahrain) have taken steps to harmonize standards and regulatory measures. The region is also one of the largest and fastest growing export markets.

Trade Shows:

The UAE is a regional commercial hub and hosts world-class trade exhibitions and conferences where international firms can meet buyers from the Middle East, Africa, South Asia, and around the world. Dubai supports a wide range of trade exhibitions and promotion events designed to help firms seeking to enter and expand in the UAE and regional markets.

Diverse Market:

The UAE offers a sophisticated, diverse market for foreign firms in many industries. Best prospect sectors include oil and gas; energy (nuclear and renewables); architecture, construction, and engineering (ACE); education; defense; safety and security; aerospace; healthcare and medical devices; automotive; and consumer electronics.

Customs and Standards:

Import Tariffs:

The UAE levies import duties on commercial goods depending on:

• Whether the business is registered on the mainland or in a free zone.
• Nature of goods being moved.
• Source and destination of the goods being moved.
• Trade agreements between the UAE and exporting country.
• Any other applicable laws.
• Import tariffs and rates

In general, the UAE has adopted a GCC common tariff, and customs duties are fixed at 5% of the CIF value of most products. However, alcoholic, carbonated, and sweetened beverages products have a 50% duty, and e-smoking devices (tools and liquids used in them) and tobacco products are assessed a 100% customs duty. Certain goods are exempt from customs duties, such as pharmaceuticals and agricultural products. For detailed tariffs, please visit the Unified Customs Tariff webpage.

The UAE has set up a number of free zones’, where customs duties are not payable. Any company registered in one of the free zones can import goods into that free zone without having to pay customs duties. Goods produced in countries that are party to the Greater Arab Free Trade Agreement 1998 are exempt from customs duty. For further information, visit the UAE Ministry of Economy and Dubai Customs.

Import Documentation:

To import goods into the UAE, companies must have the correct trade license from the Department of Economic Development (DED) from the Emirate. Foreign companies can either set up an office in the UAE or appoint a UAE national as a sponsor, agent, or distributor to do business in the UAE “mainland” which is not in the free zones.

Companies that set up in a free zone can also use their free zone trade license to import goods into that free zone the UAE.

To import goods, the UAE-based company should get a delivery order from the Shipping Agent and submit the following original standard trade documentation:

• Commercial invoice from the exporting company addressed to the importer with details about quantity, goods description, and the total value of each imported item.
• Certificate of origin, stating the country of origin and approved by the Chamber of Commerce in the country of origin.
• Detailed packing list including weight, method of packing, and HS code for each item.
• Import permit from the competent agencies in case of importing restricted goods or duty exempted goods.
• Bill of entry or airway bill.

Food products, also require the following certificates:

• Original health certificate issued by the appropriate government agency in the exporting country, attesting to the product’s fitness for human consumption.
• Original Halal slaughter certificate for meat and poultry products.

Standards for Trade:

The UAE established the Emirates Authority for Standardization and Metrology (ESMA):

On July 5, 2020, leaders of the UAE announced a major government reorganization, and ESMA was absorbed into a newly created Ministry of Industry & Advanced Technology.

Historically, ESMA’s tasks have included:

• Develop, provide, and adopt national standards prepared by its technical committees at the request of the government, industry, and consumers.
• Ensure consumers’ safety and environmental protection through the implementation of UAE standards.
• Provide up-to-date information on standardization and relevant activities and stakeholders at the national, regional, and international levels.
• Run the Emirates Conformity Assessment Scheme (ECAS) which determines whether imports meet national or international standards for products.
• Run the Emirates National Accreditation Scheme (ENAS) which accredits conformity assessment bodies.
• Monitor the implementation of approved UAE standards.
• Grant the Emirates Quality Mark (EQM) to national products.
• Issue certificates of conformity.

ESMA’s conformity assessment department is responsible for implementing UAE regulations according to product certification schemes defined in ISO 17067. Certificates of Conformity are issued for products that comply with regulations and national or GSO standards. Whenever these standards are not available, ESMA uses international or foreign standards suitable to the UAE.

In 2004, UAE introduced a mandatory regulatory program, the Emirates Conformity Assessment Scheme (ECAS), under which ESMA monitors industry compliance with UAE standards for goods to be sold in the country, both imported and domestic. Initially, ECAS only applied to items such as textiles and building materials. In June 2018, the UAE expanded the scope of ECAS to include agricultural products, such as dairy and juice products.

ESMA supervises and manages the scheme in addition to monitoring the laboratory performance to support all the scheme’s requirements. The approved laboratories are those:

• Accredited by national recognized organizations.
• Approved by the authority based on evaluating their capabilities.
• Accredited by the national accreditation body.
• Other laboratories nominated by the manufacturers.

Trade Agreements:

In 2012 the UAE, as a member of the Gulf Cooperation Council (GCC), became a party to the U.S.-GCC Framework Agreement for Trade, Economic, Investment, and Technical Cooperation. In 2014, the UAE ratified this agreement via Federal Decree No. 86. Since 2012, the United States and the UAE have held several iterations of the U.S.–UAE Economic Policy Dialogue, which provides a platform to collaborate on economic issues and address irritants to the bilateral commercial relationship.

The UAE is a party to several multilateral and bilateral trade agreements, including with partner countries in the GCC. As part of the GCC, the UAE has strong economic ties with Saudi Arabia, Kuwait, Bahrain, and Oman, meaning the UAE shares a common market and a customs union with these nations.

Under the Greater Arab Free Trade Area Agreement (GAFTA), the UAE has free trade access to Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Jordan, Egypt, Iraq, Lebanon, Morocco, Tunisia, Palestine, Syria, Libya, and Yemen.

Economic Indicators:

GDP Growth:

The United Arab Emirates registered subdued economic performance in recent years, partly due to cuts in oil output as part of OPEC agreements, continued corporate restructuring, reduced government investment, and declining real estate prices. External factors also include a slowing global economy, geopolitical tensions, and weaker energy demand. Due to the COVID-19 pandemic, GDP growth contract ed by -6.6% in 2020 (after reaching 1.7% in 2019), and is expect ed to pick up to 1.3% in 2021 and 2.2% in 2022 (IMF), subject to the post-pandemic global economic recovery, the conclusion of rising business optimism, fiscal stimulus and higher government and private sector investments related to the postponement of Dubai’s Expo 2020.

The Standard of living:

The UAE has one of the highest per capita income levels in the world and a highly developed welfare system. It also has one of the lowest rates of unemployment in the Middle East (while Dubai enjoys the lowest unemployment level in the world, at around 0.5%) and depends heavily on foreign labor (more than 85% of the workforce).

A policy of ‘Emiratization’ has been launch ed to encourage employment of the local workforce. Nevertheless, unemployment rate among nationals continues to be considerably high compar ed to the rate among non-nationals (it varies according to emirate and is the highest in Abu Dhabi).

Main Sectors of Industry:

Agriculture:

According to the latest figures from the World Bank, agriculture contributes to 0.7% of GDP and employs a mere 1% of the workforce, as most of the country is unsuitable for agriculture and animal husbandry. Hence, around 85% of UAE’s food is import ed. Fishing and date-growing are among the main agricultural activities. This sector was the most resilient to the COVID-19 pandemic.

Manufacturing:

Manufacturing activities have seen unprecedented growth in recent years, particularly in sectors such as metal processing, furniture, industrial preparation of foodstuffs, aluminum production, construction materials, fertilizers, the petrochemical industry, fiberglass, and real estate. The industry now comprises 46.2% of GDP and employs 34% of the workforce.

oil and gas sector:

The portion of GDP from the oil and gas sector has declined gradually (30% of GDP according to the latest estimates) owing to a successful economic diversification policy. The United Arab Emirates is the world’s 8th largest oil producer with significant reserves. Its oil and gas reserves are estimat ed to last approximately 100 years at the current rate of consumption. In 2020 this sector was hit by the impacts of the COVID-19 pandemic, OPEC+ oil production cuts, lower oil prices, reduc ed global oil demand, and disruption in global supply chains (World Bank).

The tertiary sector:

The tertiary sector contributes 53,1% of GDP and employs 64% of the workforce.

The main sub-sectors are international trade, air transport, financial activities, and tourism.

The travel and tourism sector, in particular, has a total contribution of around 12% of

GDP, mainly driven by the emirate of Dubai (UAE Official Portal).

Due to the COVID-19 pandemic, this sector contracted in 2020, as tourism and international

transport and trade decreased sharply.

To know more about the Gulf market, don’t hesitate to contact SanedCert, for more consultancy services, and further help.