UAE economic growth on sound footing

The UAE ranks as the third-most competitive economy in the region after Qatar and Saudi Arabia, the latest study by Dubai Chamber of Commerce and Industry (DCCI) finds. According to the World Economic Forum’s Global Competitiveness Report 2011/12, the UAE ranks 27th out of 142 countries, below Switzerland (in the 1st place), United States (5th), Qatar (14th) and Saudi Arabia (17th), but higher than other regional peers, such as Oman (32nd), Kuwait (34th), Bahrain (37th) and Egypt (94th). Moreover, according to the World Bank’s Doing Business 2012 report, UAE advanced two places to 33 out of 183 countries compared to the rankings of the previous year while the country ranks 5th in the world for trading across borders, 6th for registering property and 7th for paying taxes. Additionally, in 2012, the UAE has recorded the first place globally in the field of efficiency of governmental fiscal policy issued by the International Institute of Management Development (IMD) in Switzerland. Furthermore, the country’s legal and regulatory environment is more than adequate as according to the World Bank’s 2011 World Governance Indicators (based on figures for 2010), the UAE scores reasonably well comparing to other countries in the region for its rule of law. The study states that though general legal standards across the region have intensely improved during the last few years, UAE’s regulatory quality is improving and showing an advancing trend in recent years. Moreover, the study indicated that the government effectiveness is high and the overall freedom to conduct business is well protected under the existing regulatory environment as the UAE tax regime, which is a major attraction for foreign investors, strengthens Foreign Direct Investment (FDI) inflows, as both income and sales taxes are non-existent. Also, the study points out that the UAE has long been an attractive investment destination. However, there are a number of challenges that need to be addressed. According to the World Bank’s Doing Business 2012 report, there are aspects of the business regulatory environment that needs immediate attention, including resolving insolvency (ranked 155), contract enforcement (134), protecting investors (122) and getting credit (78). The inadequacies of the bankruptcy legislation remain a major challenge for the UAE. Specifically, according to the same report, the time taken to resolve bankruptcy is around 5.1 years, well above the regional average of 3.4 years and the average Organisation for Economic Co-operation and Development (OECD) member countries’ experience of 1.7 years.