Interview: Hamad Buamim
How has the introduction of value-added tax (VAT) in the UAE impacted its business environment and competitiveness?
HAMAD BUAMIM: Businesses in the UAE have adjusted quickly to the new tax system during 2018. Beyond the financial and regulatory benefits, VAT is expected to have a positive impact on business and investor confidence as it is introducing more transparency in the market, reducing reliance on oil revenues and ultimately enhancing the UAE’s economic competitiveness. The introduction of VAT is also expected to generate an estimated $3.3bn in new revenues for the UAE in 2018 and this is forecast to reach as high as $5.4bn by 2019. Of this total, 70% will be allocated locally in each emirate, with the remaining portion going to the federal government’s annual budget. These additional funds represent a major increase to local government budgets, which will enable them to boost efficiency and accelerate the progress of projects.
What sectors are set to lead the expansion of Dubai’s trade and investment ties with Latin America and Africa in the coming years?
BUAMIM: Financial services, agriculture, retail, logistics, and travel and tourism have been identified as the key sectors in which UAE companies could boost their collaboration with their African counterparts. Several UAE companies have already established a presence in Africa and there is strong interest on the part of businesses in Dubai, with a number of firms currently considering expansion opportunities. As a result of this interest and the ongoing efforts to align our goals, non-oil trade between Dubai and Africa has grown steadily in recent years, to reach $35bn in 2017. Furthermore, Latin America is home many of the world’s leading agricultural producers and exporters, meaning there is considerable room to expand trade in this area, and enhance cooperation between GCC and Latin American countries on food security. Food products from Latin America and the Caribbean (LAC) countries accounted for 9%, or $4.3bn, of the GCC’s total agricultural imports in 2016. The UAE and Saudi Arabia remain the top trade destinations in the GCC for LAC countries, which together receive at least 80% of the region’s six main agricultural exports. Roughly 40% of the total imports from LAC into the GCC are comprised of agricultural products, while Latin American farms produce almost half of all the GCC’s meat imports. Businesses in the UAE also have much to offer their Latin American counterparts. For example, they can provide much-needed investment in key sectors such as logistics, infrastructure, tourism and aviation. Such support would be valuable to several Latin American countries that are currently working through economic reforms and looking to attract investment for ongoing national infrastructure projects and economic development plans.
How do you assess the potential impact of the global rise in protectionism on the UAE’s medium-term growth potential?
BUAMIM: We have not seen any signs suggesting that the rise in protectionism around the world will have a major impact on the UAE’s economic growth. In fact, we have see growing interest and commitments from both developed countries and emerging markers in achieving improved relations with the UAE, as well as between Dubai and many of its largest trading partners, including China and India. Evidence of this can be found in the growing trade and investment flows between the Middle East and Asia. Dubai’s non-oil trade with China reached $48bn in 2017, a 38% increase from 2013. Dubai is also expected to play a key role in China’s Belt and Road Initiative. The emirate is also well positioned to reap the benefits that this major initiative is creating, which include the improved efficiency of supply chains, enhanced connectivity and plenty of new investment opportunities.
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