Abu Dhabi: Owners of small and medium enterprises (SMEs) will soon benefit from a new law issued by President His Highness Shaikh Khalifa Bin Zayed Al Nahyan to regulate the relationship between government institutions and entrepreneurs.
The announcement came at a press conference held on Sunday by Sultan Bin Saeed Al Mansouri, Minister of Economy, who said the law aims to accelerate the country’s transformation to a knowledge-based economy.
“[The new law] will help improve the competitiveness of the small and medium enterprises, create new job opportunities for UAE nationals and encourage them to work in this sector and contribute to the GDP of the country — promoting its position as a hub for entrepreneurship,” Al Mansouri said.
In 2011, SMEs contributed more than 60 per cent of the UAE’s gross domestic product, and Al Mansouri said he hoped the law would increase such contribution to 70 per cent by the year 2020.
As per the new law, the federal government is committed to have contracts with SMEs by at least 10 per cent of the total contracts of these entities. SMEs will also be exempted from customs tax for equipment and raw materials.
Emirati entrepreneurs falling under the ‘small and medium’ classification will benefit from various incentives including credit and funding facilitation, financing, marketing and reduced licensing costs.
Additionally, they will benefit from land grants for industrial or agricultural purposes, along with suitable locations in international exhibitions to display their national products.
Al Mansouri confirmed that the ministry is currently finishing up the list of articles, and that the law will come into effect three months after the articles are approved.
Discussing the challenges faced by SMEs, he said the law will tackle main issues such as financing, lack of training and experience and the ability to reach the target market.
Abdul Baset Al Janahi, CEO of Mohammad Bin Rashid Establishment for SME Development, who was also speaking at the press conference, said the law presents a good start to deal with entrepreneurs’ challenges.
“We in Dubai have been involved in this sector for the past 12 years, and we think we know it all, but we just touch the tip of the iceberg because we’re talking about so many elements that need to be looked at,” Al Janahi said. “So, [the law] is a very good federal start.”
The new law classifies SMEs based on employment size, capital investments and the size of annual returns.
SMEs currently represent almost 92 per cent of the total number of companies operating in the country. With almost 300,000 UAE-based SMEs, the sector is providing more than 86 per cent of employment opportunities in the private sector.