Exchanging the sunny climes of California or Florida for the even sunnier weather of the United Arab Emirates (UAE) may not be uppermost in the minds of Americans thinking of setting up business operations in the Middle East’s prosperous Gulf region. Climactic conditions in the main will play little part in the analysis or decision-making process. But profits almost certainly will.
Strong international banking relationships, which positively support and encourage short and long-term business plans with sound financial management services, will also play a vital role in the success of any foreign venture. As it happens, the major multinational banks are well represented in the UAE, offering not only historical perspective but also timely, accurate advice. Business bank accounts from HSBC UAE, or Barclays, for example, certainly reflect long involvement with the region, but such financial services are also being constantly reshaped and redefined to take account of an ever-changing, dynamic business environment.
It seems pretty obvious a business bank failing to adapt to changing economic conditions and realities will pay an obviously high price. Clients will simply desert them, in droves, as they look elsewhere for what they need. It’s so easy to make online comparisons nowadays and to quickly react to such basic, minimalist research. Times have certainly changed.
However, what has not changed is the strength of the ties between the United States and the UAE which have resulted in a tremendous growth in trade and investments between the two countries over recent years. It’s an incredible success story. But there are misconceptions about the relationship, the UAE government freely admits.
The most prevalent is that the relationship is dominated by oil exports from the UAE. Not true, says the UAE government. Instead, it is characterized by a set of high value trade and investment activities that often have little to do with oil. These range from computer chips to city centres. The US and the UAE have a dynamic relationship based on a diverse array of products and trade.
Official figures show that US exports increased from $11.6 billion in 2010 to over $15.8 billion in 2011. The UAE bought more US goods than any other country in the Arab world, bypassing Saudi Arabia, Egypt, and Israel. Furthermore, the UAE’s purchase of US goods exceeded purchases by any US Foreign Trade Agreement (FTA) partner country in the Arab world, making the UAE the single largest import market for US goods in the Middle East for 2011.
Interesting stuff, which perhaps helps to explain why more and more businesses from the US and elsewhere are looking increasingly at free zones in the UAE as an attractive operational stepping stone. Certainly, locating to the UAE puts businesses slap-bang in the middle of markets to the east and west. However, that’s not by any means the whole picture.
If location is one side of the free zone coin then a relaxed and business-friendly tax and regulatory regime is the other side. And the free zone benefits are many. They range from zero corporate and personal tax liability to 100% foreign ownership allowed. Add in full repatriation of capital and income, no import and export duties or currency restrictions, and unrestricted access to a large and skilled labour force. With such benefits on offer, who would think twice about setting up a business in the UAE, if they had the chance to? Surely not many of us..