Dubai

At a Glance

he Emirate of Dubai extends along the Arabian Gulf coast of the UAE for approximately 72 kilometres. Dubai has an area of 3,885 square kilometres, which is equivalent to 5 per cent of the country's total area, excluding the islands.

The major part of the Dubai emirate consists of rolling sand dunes lapping the foothills of the arid Hajar mountains in the east.

Dubai city is built along the edge of a narrow 10-kilometre long, winding creek which divides the southern section of Bur Dubai, the city's traditional heart, from the northern area of Deira. The Ruler's office, together with many head offices of major companies, Port Rashid, the Dubai World Trade Centre, customs, broadcasting stations and the postal authority are all situated in Bur Dubai.

Jebel Ali, home of a huge man-made port, has the largest free-trade zone in Arabia, housing an ever growing list of international corporations which use the zone for both manufacturing and as a redistribution point.

Dubai International Airport is second only to Tokyo in the number of daily transit passengers it handles and second only to Seattle as a sea-air hub. Its harbour is the most important port in the Middle East and is ranked among the world's top 15 in terms of container throughput.

In November 2005, in anticipation of a huge increase in the numbers of tourists, business travellers and rising trading volumes, the Dubai authorities announced the launch of a project to build the world's largest airport in the Jebel Ali Free Zone. Modern Dubai is the product of more than 20 years of intensive development. Prior to that, Dubai was a small trading port, clustered around the mouth of the Creek. It had grown gradually from a fishing village inhabited in the 18th century by members of the Bani Yas tribe. Its origins, however, go back into the far more distant past.

Population

The population has increased tenfold since the 1960s to more than 1.4 million, and now hundreds of hotels accommodate the expat workers and tourists who help run the economy. Indeed, only around 22% of the emirate’s population, at the last count, were actually ethnically Emirati in a population mixture that has to be one of the world’s most cosmopolitan. This diversity discourages any real ethnic tensions and while war and the threat of war might simmer further north, it creates far less tension in Dubai than many might imagine it would.

There are large groups of Indians, Pakistanis, Iranians and Southeast Asians. The population is, however, 95% Muslim. Arabic is of course the official language but English is widely spoken as are Urdu, Malayalam and from the Philippines, Tagalong.

Political Structures

There are no elections or legal political parties in the UAE. Power rests with the seven hereditary sheikhs, also known as emirs, and hence the area ruled by an emir is known as an emirate, who control the seven traditional sheikhdoms (Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Qaiwain, Ras al-Khaimah and Fujairah.

Each emirate is named after its principal town and chooses a president from among themselves.

The Supreme Commander of the Armed Forces is the President while the second in command (Deputy Supreme Commander) is the Crown Prince of Abu Dhabi. The parliament is known as the Federal National Council (FNC). It was established on 13th February 1972 and is considered a landmark in the country's constitutional and legislative process.

The FNC advises the Cabinet and the Supreme Council but cannot overrule them. According to the constitution, the FNC consists of 40 members who are drawn proportionately from each of the seven emirates. Each ruler appoints the members for his emirate.

The UAE was a founding member of the Gulf Cooperation Council (GCC) created at a summit conference in Abu Dhabi in 1981. The members of the GCC include Saudi Arabia, Kuwait, Bahrain, Qatar, the Sultanate of Oman as well as the UAE. The country is also a member of the League of Arab States, the Islamic Conference Organization, the United Nations.

Economy and Currency

Petroleum has traditionally dominated the economy of the UAE. The immense wealth has been invested in capital improvements and social services in all seven of the emirates. Petroleum production is centred in Abu Dhabi and Dubai. Industrial development is essentially petroleum related and is limited by a lack of trained personnel and raw materials.

The emirate of Dubai is strategically located between Africa and the Middle East and between the Far East and Europe, making it a gateway to over 1.5 billion consumers located in countries surrounding the Red Sea and the Gulf. It has a superb infrastructure with the consequence that it has become a key link in the global transport and distribution system.

Dubai is served by more than 170 shipping lines and more than 86 airlines offering links to over 100 cities worldwide. The strong shipping and transportation sector is composed of most of the leading regional and international freight forwarders, insurers and shipping agents. It has a rapidly developing high quality manufacturing sector and a buoyant and prosperous domestic market. In a nutshell its infrastructure and services match the highest international standards.

Despite a relatively small population, in 2004, total non-oil imports stood at AED149,046m. The reason is that Dubai is the major re-export centre for the region. Many of the economies of the region served by Dubai are still at a relatively early stage of development, so there is plenty of long term scope for diversification and expansion in the future. Another important consideration is Dubai's rapidly developing role as a supplier to such emerging markets as India, the CIS, Central Asia and South Africa.

There are no foreign exchange controls, quotas or trade barriers. Import duties are extremely low, and many products are exempt. The UAE dirham is freely convertible and is linked to the US dollar.

Following the success of the Jebel Ali free zone, the government has developed Dubai Internet City (DIC), which has a highly developed technical infrastructure. The DIC occupies 3,200 hectares in the South of Dubai, near the Jebel Ali Free Zone. It offers state of the art facilities and sites for manufacturing, offices, housing, and academic, research, distributions and logistics institutions.

During 2002, Dubai developed plans for the Dubai International Financial Centre (DIFC), which is proving to be a major financial entrepot. The DIFC fills what was once a significant gap in the market for international Shariah banking, fund management and life assurance. One of its biggest selling points is that it appeals to both Arab money looking for a local centre of excellence and Western cash seeking sophistication and safety.

Deutsche Bank, HSBC and Standard Chartered Bank were among the many international financial sector firms which signed up to be among the first residents of DIFC. By November 2008, the number of firms licensed by the Dubai Financial Services Authority (DFSA) to operate in the DIFC had reached the 300 mark, comprising 235 authorised firms, 49 ancillary service providers.

In January, 2004, the Dubai Financial Services Authority (DFSA) announced 12 new laws relating to operations within the Dubai International Finance Centre (DIFC), providing a wide-ranging corporate legal envelope. In 2006, the Companies Law contained in the 2004 package was updated.

In July, 2004, Sheikh Mohammed bin Rashid Al Maktoum acted decisively to guarantee the independence of the Dubai Financial Services Authority (DFSA), giving his personal commitment to the independence of the DFSA and declared that this will be formally enshrined in the Dubai Law which will signal the launch of the DIFC.

Finally, in September 2004, His Highness Sheikh Maktoum bin Rashid Al Maktoum, Prime Minister of the United Arab Emirates and Ruler of Dubai signed a decree formally establishing the Dubai International Finance Centre.

In addition to confirming the appointment of General Sheikh Mohammed bin Rashid Al Maktoum, UAE Defence Minister and Crown Prince of Dubai as the President of the DIFC, the decree officially created the DIFC Financial Services Authority, the DIFC Judicial Establishments and the DIFC Registrar of Companies.

In April 2007, the Dubai International Financial Centre (DIFC) held an official inauguration ceremony for the DIFC Courts, an independent judicial system which will deal with matters arising from and within the DIFC, and which is expected to raise the bar of legal standards within the region. The Real Property Law, enacted in June 2007, guarantees ownership of freehold land and buildings, and other interest in land, within the DIFC. The Law is based on the underlying principles of English common law, but also incorporates the Torrens system of land registration, well known in countries such as Australia, New Zealand, Canada and Singapore.

Under the Real Property Law, land transactions are registered in a central register administered in the DIFC. Once registered, the Law certifies them to be fully effective. Unlike some other systems of land registration, title interests registered under the Real Property Law are “indefeasible”. In practical terms, this means that persons buying real estate in the DIFC, lending on the security of real estate in the DIFC, or taking a lease of real estate in the DIFC, can be assured that their investment is backed by the full protection of the Law.

Entry and Residence

The Naturalization and Immigration Department at the Ministry of Interior is the only administrative authority responsible for issuing visas to foreigners wishing to enter the UAE. The visas issued by the Department differ in accordance with the purpose of the visit of the foreign visitor.

Citizens of GCC countries (Gulf Cooperation Council: Saudi Arabia, Kuwait, Bahrain, Qatar and the Sultanate of Oman) and British nationals with the right of abode in the UK do not need visas to enter the UAE. GCC nationals can stay more or less as long as they like. Britons can stay for a month and can then apply for a visa for a further two months. The Dubai Naturalization & Residency Department (DNRD) issues different types of visas.

Whatever kind of visa you request, it will be deposited at the airport for you to collect upon arrival, but there is a charge for this service. If your passport shows any sign of travel to Israel, you will be denied entry to the UAE.

A Residence Visa stamped on a passport proves the legal residence of an expatriate in the country. This visa is given to workers who have obtained work permits or for relatives living with them permanently, and additional documentation is required.

In June, 2004, the Dubai government unveiled plans to enshrine in law rules governing foreign freehold ownership of property. In March 2006, the long-awaited Dubai property law was issued, but Law No.7 of 2006 stipulated that freehold is limited to UAE and GCC citizens and companies wholly owned by them, as well as public shareholding companies. However, the law also stipulated that upon approval of Dubai's ruler, non-UAE nationals may be given the right to own properties in some parts of Dubai.

In August 2006, the Dubai International Financial Centre Authority (DIFCA) published draft legislation that would allow foreign freehold ownership of property in the DIFC. The laws included the DIFC Real Property Law 2006 and the Strata Title Law 2006. These laws, enacted in June 2007, allow for foreign companies and individuals to hold freehold ownership of real estate within the Dubai International Financial Centre.

Business Environment

Overseas businessmen will find that their counterparts combine local and regional expertise with a full understanding of international business practices. English ranks on a par with Arabic as the main business language and there are plenty of foreign banks, lawyers and other advisors - as well as the Department of Tourism and Commerce Marketing, The Economic Department, Chamber of Commerce and Industry and Jebel Ali Free Zone Authority to help those wishing to enter the market.

The emirate's transport infrastructure is unrivalled in the region in terms of size, facilities and efficiency. Its ports are served by more than 170 shipping lines and the airport by around 100 airlines. The postal system in the UAE is very modern and the post offices are among the most efficient in the Gulf. Between the UAE and Europe or the USA.

There is an excellent telephone system and you can phone anywhere in the world from the most remote areas. Throughout the country there are telephone offices which are equipped to send and receive fax, telex and telegraph messages. Internet use in the UAE in general and Dubai in particular (as evidenced by the creation of Dubai Internet City) is extensive, and the government has developed many effective online portals for accessing services and information.

There is no corporate tax in Dubai. The only exceptions to this are for oil producing companies and branches of foreign banks. Likewise, there are no personal taxes. Direct taxation is against the traditions of the UAE and it is highly unlikely that it will be introduced in the near future. (See Direct Corporate Taxation and Personal Taxation).

Trade practices in Dubai are in line with normal international standards. All correspondence should be in Arabic or English. As a sophisticated market, full technical specifications should be provided with CIF Dubai prices and Middle East references. Payments are normally effected by letter of credit. The UAE is a signatory of the General Agreement on Tariffs and Trade (GATT).

Foreign companies and individuals are not permitted to own land or real estate in Dubai. All property must be rented or leased for the purposes of running a business.

Dubai has many local and international law firms willing to advise foreign business organisations on legal matters. Dubai has civil, criminal and Shariah (Islamic) Courts of first instance. All court decisions may be brought to the Dubai Court of Appeal. Thereafter, a final appeal may be made to the Dubai Court of Cessation.

The Civil Court (as opposed to the Shariah court) has jurisdiction over labour, civil and commercial transactions, as well as personal matters (e.g. wills, divorces etc) relating to non-Muslims. The language of the Courts is Arabic and advocates admitted to plead are Arab nationals. However, in addition to these systems, the DIFC has its own court, which held its first session in October 2005.

Stock Exchange

Dubai stock market trading began in March 2000 in the Dubai Financial Market (DFM). DFM operates as a secondary market for trading of securities issued by public shareholding companies, bonds issued by the Federal Government or any of the Local Governments and public institutions in the country, investment units issued by local investment funds and any other financial instruments, local or foreign, which are accepted by the Market. Located in the Dubai World Trade Center, the Market is regulated by the Emirates Securities and Commodities Market Authority (ESCA). Its rules ban insider trading and enforce transparency rules and release of information guidelines.

Dubai Gold And Commodities Exchange (DGCX)

The DGCX commenced trading on November 22, 2005, and is the first international commodities derivatives market in the Middle East region. DGCX offers a range of commodities, commencing with gold futures, with electronic trading accessible from anywhere in the world. Transactions on the DGCX take place on a state-of the-art electronic trading platform.

The exchange is established within the Dubai Metals and Commodities Centre (DMCC), which is a strategic initiative of the Dubai government created to establish a commodity market place in Dubai. The DMCC is also a free zone authority offering 100% business ownership, a guaranteed 50 years tax holiday and freehold property options.

The DGCX is regulated by Emirates Securities and Commodities Authority. Alongside the DGCX, the newly created Dubai Mercantile Exchange (DME) is likely to focus on energy trading starting with crude futures, and will not compete against the DGCX.

In February 2006, the DME unveiled its plans to launch a new trading hub concept on an electronic trading floor, in an effort to capitalize on local liquidity, draw regional market participants and attract financial institutions from the Middle East and internationally. Once the trading in futures is stabilised, the DGCX will allow options trading on different commodities.

International Financial Exchange

The Dubai International Financial Exchange (DIFX) opened for trading for the first time on September 26, 2005. The launch of the first truly international stock exchange located between Western Europe and East Asia took place at a ceremony at the Dubai International Financial Centre (DIFC), where the DIFX is located.

The stated aim of the DIFX was to become the leading exchange in its region for equities, bonds, funds, Islamic products and other securities, and a gateway for international and regional investment.

It is the first exchange in the region that has been created to list securities from many different countries. UAE companies are able to list shares on the DIFX by setting up a holding company in the DIFC. Companies seeking listings on the exchange must have a minimum market capitalisation of USD50 million.

The exchange is additionally regulated in such a way as to allow companies which list on it to determine the portion of shares that they want to offer to the investing public. This flexibility is designed to encourage family-owned businesses and government entities discouraged by the current UAE lower listing limit of 55% to list on the bourse.

The DIFX market opened with the listing of five Deutsche Bank securities. These are index tracking certificates, which cover the US S&P 500, the German DAX 30, the Japanese Nikkei 225, the EuroStoxx 50 and the Stoxx 50. The DIFX opened with four member banks – CSFB ( Europe) Ltd, Deutsche Bank AG, HSBC Bank plc and UBS AG. In 2007, it had 19 member brokers, including leading international and regional banks.