This emirate. To achieve the set goals of attracting FDI, the UAE has many investment incentive policies in parallel with the construction of Free Trade Zones. Businesses operating in these free trade zones will be provided with a very modern infrastructure and convenient services at preferential prices. Goods produced in these free trade zones will be exempt from taxes when circulating in GCC member countries. 100% foreign-owned companies are also allowed to establish and operate in these zones. These free trade zones are places to attract investment, create jobs and are also the basis for the UAE to implement its economic diversification program. Currently, there are about 13 free trade zones in the UAE, most of which are concentrated in Abu Dhabi. Many of these free trade zones have been built to specialize in a field such as information technology, communications, finance, gold and jewelry, and health care. The largest free trade zone today is the Jebel Ali Free Zone (JAFZ) in Dubai with over 4,000 businesses from more than 100 countries operating here.
In parallel with the construction of free trade zones, in January 2006, the UAE government also announced plans to build and develop deep-sea ports and industrial zones in Taweelah with a project value of up to 8 billion Dirhams. The ports and industrial zones will attract investment and promote development in the industrial and tourism sectors.
The UAE is also investing abroad. The Abu Dhabi Investment Authority (ADIA) is aiming to invest around $250 billion in foreign markets next year, mainly in the US, as well as in Europe and Asia.
2.3 Policy for employees
UAE labor law is mainly regulated by Federal Law No. 8 of 1980. In addition, a number of ministerial decrees and Cabinet resolutions also provide regulations related to the labor market. These legal documents regulate all matters relating to the relationship between employees and employers in the UAE. Labor law applies to all employees working in the UAE,
except for those working in state agencies, military forces, police and security agencies, domestic workers and agricultural workers. (These subjects are subject to certain other conditions).
Senior government officials in the UAE are now beginning to establish new regulations that will force private sector companies to hire more local workers. In 2004, the UAE government also passed a resolution calling for the establishment of trade unions and workers' associations in the UAE. However, trade unions are currently limited to UAE nationals, while migrant workers must go through a special committee under federal labor law.
The UAE government also prohibits forced labor and the employment of child labor (under 15 years old), and has special provisions for the employment of workers between the ages of 15 and 18. 3. Some business practices in the UAE.
3.1 Working hours and holidays
Business Hours : Business hours in the UAE are 8am-2pm for government offices; 9am-1pm and 4pm-8pm for businesses, with banks opening from 8am-1pm, and Thursday afternoons from 8am-12pm. Mashreq banks and priority banks are allowed to open from 4:30pm to 6:30pm.
Holidays : Like some other Arab countries, the weekend in the UAE is Thursday and Friday instead of Saturday and Sunday. Business and Bank offices are closed only on Friday. In addition, Islamic holidays are also highly respected because the UAE is a Muslim country. A holiday or holiday will fall on different days in different years if compared to the regular calendar, and they are usually announced in the press a few days before taking place. The most important and longest holiday is the month of Ramadan (which lasts for a whole lunar month). This is a month of fasting during which Muslims must
abstain from eating, drinking, smoking, sexual activity and other indulgences from sunrise to sunset. Non-Muslims must be respectful and avoid eating and drinking in public during daylight hours. However, during Ramadan, most hotels in Dubai still serve food and drinks to non-Muslims. Regarding dress, men and women must dress modestly throughout the holy month. During Ramadan, working hours are reduced by 2 hours per day. There are also days off on festivals such as Eid Al Fitr, Eid Al Adha, Lailat al Qadr, Lailat Al Israa Wa Al Miraj and Ras Al Sana New Year (according to the Islamic calendar).
3.2 Business communication practices
The communication traditions of Arabs in general and Dubai people in particular have their own characteristics (such as not sitting cross-legged or giving an object to someone with the right hand). Over time, communication customs in business have become more and more internationalized, but there are still some points to note as follows:
When meeting in person or by phone, there are usually some greetings and short exchanges before presenting the main purpose of the meeting or phone call.
Business cards should be printed in both Arabic and English. Flyers and brochures should also have clear explanations and lots of pictures and should be printed in both English and Arabic.
Oral agreements are also considered binding. Bargaining over price and terms is also considered very important and it seems that a discount will remove the buyer's suspicion that they are being overcharged.
Always be on time but also be prepared to accept delays or postponements for appointments. 4
4 Dubai – UAE market overview, Statistical Publishing House, 2003 page 55
3.3 Payment practices
The tradition of merchants in Dubai owing money for goods dates back to the early 20th century, when Dubai became a regional transshipment port. At that time, shippers who came to Dubai to get goods often owed money on a rolling basis, paying for the previous shipment with the next shipment.
Nowadays, payment via bank is becoming more and more popular, especially in the UAE, there are 4 banks providing international payment services via the Internet. The most popular form of payment via bank is paying checks (mainly transfer checks and cash checks). For international payment, the popular form today is payment by letter of credit (L/C). Normally, banks in the UAE provide quite strict and imposing terms in L/C, these terms are in the general form so there is no negotiation in each specific case. For small value shipments, to save on bank fees, buyers often request payment by telegraphic transfer (TT).
II. UAE's economic and trade relations with countries and economic blocs
1. The UAE's position in the world and regional economy
Although it is a relatively young federal state (it was not established until 1971), as a country with large oil reserves and an open economic policy, the UAE has had a significant influence on the world economy.
As an Islamic country, but without extremist ideology, the UAE pursues a moderate, flexible, and clever foreign policy; takes advantage of the US and the West; maintains good relations with Arab and Muslim countries; actively supports the struggle of the Palestinian people; supports the Middle East peace process. The UAE develops extensive relations with all countries in the world, with special interest in relations with the Gulf Cooperation Council (GCC) countries and neighboring countries. Currently, the UAE has established diplomatic relations with over 60 countries, including the US, Japan, Russia, China and most EU countries. In the international forum, the UAE has ratified a number of international treaties and is a member of many international organizations.
such as the Arab League (consisting of 22 countries of the Arab world), the Gulf Cooperation Council (GCC) since 1981, the Organization of the Petroleum Exporting Countries (OPEC) since 1982, the Organization of the Arab Petroleum Exporting Countries (OAPEC), the World Trade Organization (WTO) since 1996, the World Bank, the United Nations, the World Health Organization (WHO), the International Monetary Fund (IMF) and the International Industrial Development Organization and many others.
The UAE is the third largest economy in the Middle East and Central Asia after Saudi Arabia and Iran in terms of GDP. In terms of per capita income, the UAE ranks second in the region, after Qatar, due to the UAE's small population. According to the IMF report, in 2005, the UAE's GDP was 133.8 billion USD, ranking 58th out of 180 IMF member countries. According to the WB ranking, the UAE ranked 56th out of 162 countries with a GDP of 103.923 billion USD. Meanwhile, according to calculations by the Central Intelligence Agency,
According to the CIA World Fact Book, the UAE's GDP in 2005 was 111.3 billion USD, ranking 57th out of 231 countries . 5 Although there is a difference in ranking, this difference is not too big and it can be affirmed that the UAE's GDP is also high compared to other countries in the world.
Table I.4 : Information on GCC countries and other countries in the region
Nation
Population in 2005 (thousand people) | Area (km2) | GDP 2005 (billion USD) | GDP per capita 2005 (USD/Person) | |
Saudi Arabia | 24,573 | 2,149,690 | 307,770 | 13,410 |
Iran | 70,896 | 1,648,195 | 196,409 | 2,767 |
UAE | 4,626 | 83,600 | 133.8 | 28,500 |
Algeria | 32,854 | 2,381,741 | 102,026 | 3,086 |
Egypt | 74,033 | 1,001,449 | 93,045 | 1,265 |
Kuwait | 2,687 | 17,818 | 74,598 | 26,020 |
Morocco | 31,478 | 446,550 | 51,986 | 1,713 |
Li by | 5,853 | 1,759,540 | 38,735 | 6,696 |
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5 http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29
Qatar
813 | 11,437 | 37,852 | 43,110 | |
Oman | 2,567 | 309,500 | 30,326 | 12,664 |
Bahrain | 727 | 694 | 12,921 | 18,403 |
Source: Compiled from the World Encyclopedia website http://en.wikipedia.org 6
Regarding the UAE's trade relations with the world : With the policy of globalization and economic opening, the UAE has been actively participating in the world economy. If in 2000, the UAE's import turnover accounted for only 0.48% of the world's total turnover, by 2004 this rate had doubled, reaching 1.04%. Similarly, the UAE's export turnover in the world's total turnover also increased from 0.8% in 2000 to 1% in 2004 ( Figure I.3 ). The figure of 1% is not high compared to countries such as China, the US or South Korea..., but if you note that the UAE's population in 2004 was only 4.3 million people, this is a very significant number. The UAE's export turnover is quite high because the UAE's main export item is oil, with prices always high and fluctuating. The UAE's import turnover accounts for more than 1% of the world's turnover (while local purchasing power is low because it has only over 4 million people), which can be explained by the fact that the UAE, specifically Dubai, is the third largest transit market in the world (after Hong Kong and Singapore).
Billion Euros
70
60
50
40
30
20
10
0
-10
27.6
43.5
15.8
32.1
40.6
8.5
58.8
53
Import Export
Trade surplus
-5.9
2000 2002 2004 Year
Figure I. 3 : UAE's trade with the world
Source : IMF (Direction of Trade Statistics )
6 http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29, http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita
Imports into the UAE are mainly for re-export purposes. The UAE's re-export rate in 2003 accounted for 34% of the country's total export turnover (1.5 times higher than in 2000). The main re-export markets are neighboring Arab countries, North African countries and Central Asian countries.
The UAE's largest export market is Japan, with exports to this market accounting for 25.3% of the UAE's total exports (in 2005), followed by South Korea (10%), India (5.5%) and Thailand (5.3%). The UAE's largest import partner is China, with imports from China in 2005 accounting for 10.1% of the UAE's total imports. Following China are India (9.9%), Japan (6.9%) and the US (6.1%).
The UAE's largest import demand is electronics; gold, silver and jewelry (Dubai is a world-famous market for these two industries), followed by textiles; means of transport, aircraft, ships; metals and metal products; products from the chemical industry. These six industries always account for about three-quarters of Dubai's imports. (Dubai's imports account for about 70% of UAE's imports). Meanwhile, the UAE's main export is crude oil. Other export items only account for a very small proportion compared to the amount of re-exported goods. The largest re-exported goods, in addition to electronics, gold, silver and jewelry, are also notably vegetables, fruits and agricultural products.
2. UAE's economic and trade relations with other countries in the world
2.1 UAE – US Relations
The UAE and the United States have a long-standing and good relationship in diplomacy, security and economy. The United States was one of the first three countries to officially establish diplomatic relations with the UAE since the early days of the country's establishment. This relationship really flourished in the 1980s when the UAE imported a lot of weapons to serve the plan to counter Iran's attack and expansion. On March 15, 2004, the United States and the UAE also signed the Trade and Investment Framework Agreement (TIFA). According to
Accordingly, a cooperation council was established to study solutions to promote and expand bilateral cooperation in trade and investment between the two countries. This is also an important stepping stone towards signing a Free Trade Agreement between the two countries. (FTA is one of the efforts of the United States to achieve a free trade area with the Middle East by 2013). Since March 2005, both the United States and the UAE have been promoting negotiations with the hope that the FTA will be officially signed by the end of 2006. However, this progress has not been achieved because the 5th round of negotiations (in 2005) was suddenly delayed after the deal to acquire the management rights of 6 ports in the United States by the UAE state-owned company was not accepted by the US government. In early 2006, negotiations began to resume and there were quite positive signs.
Currently, the UAE is among the top 10 largest trading partners of the United States in the world and is the third largest trading partner in the Middle East (after Israel and Saudi Arabia) . Currently, there are about 600 US companies with representative offices in the UAE. According to US statistics, in 2004, the value of US exports to the UAE was 4.063 billion USD while the value of imports from this market was only 1.141 billion USD. The United States is the 6th largest trading partner of the UAE with the total import and export turnover with the United States in 2004 accounting for about 4% of the total trade turnover of the UAE with the world.
The main US exports to the UAE are weapons, equipment used in the oil and gas sector, machinery, cars, aircraft, and medical instruments. The US imports mainly oil and gas and textiles from the UAE.
2.2 UAE-China Relations
China and the UAE officially established diplomatic relations on January 1, 1984. Since then, the political, economic and trade relations between the two countries have developed continuously and significantly. In 1985, China and the UAE signed an agreement on economic, trade and technical cooperation. In the same year, the Committee on Economic, Trade and Technical Cooperation was also established.