A positive market overview

Although the end of the first quarter brings a degree of uncertainty in what remains an unpredictable global economy, we are seeing that while there is dampened interest in the volume of businesses interested in entering the UAE, those that are enquiring are serious about establishing in the marketplace.

Liquidity in the UAE has been tightened, which has put considerable pressure on many SMEs and, in some cases, pushed some companies to downsize or exit the market. Fortunately, many remain unperturbed by outside challenges, perhaps seeing this as an opportunity to steal a march on competitors. That said, for those that already have a presence in the UAE, a key question companies need to ask to make sure they are protected is whether their current sponsor is able to cover the liability if a number of companies they sponsor were to default or flee the market?

Promisingly, Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai recently said the UAE’s “march of development and progress” will not be affected by these outside challenges including low oil prices. As the UAE moves away from its dependency on oil revenues and introduces reforms such as VAT to become a more robust economy in the long term, we see more companies taking a similar long term approach by replacing existing individual shareholders with corporate nominees to strengthen their structures.

While the second quarter of the year is expected to follow a similar direction, with sentiment still relatively muted and the oil price still languishing at $40 a barrel despite recovering from recent lows, opportunities still exist and for those that are considering entering the UAE, now is the time to clinch the multiple projects that are on offer especially in the lead up to Expo 2020.

Article by Links Group on Mar 31st 2016