The UAE’s economic restructuring will boost the technology industryNew economic reform policies will generate long-term synergies, but in the near term, they will make the UAE the lead beneficiary of global investment in the Middle East.
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Posted on 09/09/2021
The pandemic has harmed tourism and other industries in the United Arab Emirates (UAE), while oil price fluctuations in recent years have hit economic growth and stability. To sustain its growth, the UAE must diversify its economy. Oil will not last forever, and the country will want to protect itself from a worldwide oil crisis. So, it is gradually shifting its economy away from oil exports by exploiting globalization, primarily via globalized capital and labor, with the technology sector a pivotal force.
The technology business community will be looking at ease of doing business, foreign ownership and long-term business viability in the Middle East. The UAE has stepped up its efforts to attract new technology investors to its economy:
- It is lowering the cost of starting and running a business to keep stakeholders interested in building technology-based ecosystems.
- It is removing barriers to entry for enterprises to setup local headquarters.
- It is supporting unrestricted migration, which is a vital element for an effective technological ecosystem.
The UAE is well on its way and has formed economic partnerships with eight key countries for global trade investments and other initiatives, such as the “Projects of the 50”, a series of development and economic projects. These include technology sector initiatives, such as building 500 national technology companies to encourage advanced technology adoption, “tech drives” for adopting innovative technologies within various sectors and plans to hire 100 new coders every day.
We believe these policies will lay the groundwork for substantial economic development in the post-pandemic era, with the primary themes of opportunity, mobility and sustainability. In the Middle East, the UAE recovered the fastest from the pandemic. It still maintains a tax-friendly climate for corporations and has lower business setup costs than its neighbors. Also, the tech drives will act as a bridge to create a viable environment for global technology leaders to interact, collaborate and explore business opportunities in the region. Furthermore, establishing a start-up in the UAE now enables entrepreneurs to become UAE residents and sponsor their families and employees.
Attempts to improve workers’ welfare through the rise of the digital economy will help the UAE by providing a larger revenue stream for the administration, higher pay scale and the adoption of a skills-based economy. For the past few decades, immigrants have made up around 90% of the UAE’s population and have been at the center of its economic growth. These foreign nationals work in the private sector and add value to the economy by buying real estate, goods and services. Earlier, foreign workers in the UAE would often hold renewable visas related to jobs that were only valid for a few years. To enhance this, the government made amendments and unveiled a “green visa” that would allow visitors to work legally without being approved by an employer. Better technology infrastructure and a growing population of skilled workers will also enhance the growth of ecommerce and other supply chain industries.
With these new economic reforms diversifying the economy, the UAE is becoming a desirable destination for highly skilled individuals and technology investors in the long term. But neighboring nations are also looking to restructure their economies through international investment. At the same time, global geopolitical tension will act as a potential headwind against these initiatives. Overall, most of the UAE’s economic reform policies will generate long-term synergies, but in the near term, they will make the UAE the lead beneficiary of global investment in the Middle East.