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Fee Cap Decision To Boost Business Confidence and Competitiveness
01/06/2009
Business
leaders and top officials havepraised a decision by His Highness Sheikh
Mohammed bin Rashid Al Maktoum,Vice-President and Prime Minister of the
UAE and Ruler of Dubai, to reducegovernment fees – a move which is
expected to give further impetus to anyeconomic recovery.
They
said the decision will have a positive effect on many sectors of
theeconomy, benefiting more than 100,000 businesses in Dubai by
reducing operatingcosts and overheads and complements other measures
taken in the past few monthsto stimulate and revive the economy.
Sami
Al Qamzi, Director-General of the Dubai Department of
EconomicDevelopment, said the decision underlines "the government's
flexibilityduring this period in dealing with economic changes", adding
that the aimwas to more efficiently facilitate procedures for
businessmen and to improvethe overall working environment in the
emirate.
Sultan Butti bin Mejren, Director-General of the Dubai Land Department, saidthe decision would "boost Dubai's competitiveness".
"Putting
a freeze on fees or reducing some of them will give extrareassurances
to investors and will help stabilise the economic environment andboost
transparency
Fee reduction and freeze to help reactivate Dubai’s ecomomic andtrade movement, says business leaders.
Since then the world has
slipped into what could be the worst recession in morethan half a
century, leaving most nations facing the reality of living in
toughneighbourhoods.
A decision on Thursday by Sheikh Mohammed
to freeze or reduce Dubai Governmentfees is the latest in a raft of
far-reaching measures announced in recentmonths to help manage the
impact of the global slowdown.
Tellingly, he also ordered that
fees should not be increased even if it meantsome services ran at a
loss, effectively subsidising some business costs.
The final
quarter of last year saw Dubai and the UAE reeling into
economicdownturn – local property prices began to fall as transactions
stalled,question marks were raised over the emirate's ability to meet
its financialobligations and stock markets in the region tanked.
The
beginning of the year coincided with concerted efforts by Dubai
authoritiesand business leaders to rebuild confidence using all the
experience andknowledge that the emirate has gleaned over the years to
"reinvent itselfand cope".
Of the latest decision by Sheikh
Mohammed to revitalise the emirate's businessand financial sectors,
Sultan Butti bin Mejren, Director-General of the DubaiLand Department,
said: "His Highness' decision will boost Dubai'scompetitiveness and
will positively reflect on the emirate's economic and trademovement
since putting a freeze on fees or reducing some of them will giveextra
reassurances to investors and will help stabilise the
economicenvironment and boost the transparency standards in various
commercialtransactions."
More than 100,000 business are
expected to benefit from the decision, whichwill be implemented in a
matter of days, said Hussein Lootah, Director-Generalof Dubai
Municipality.
"The municipality will discuss the rates of
reduction in services wherethe decision will be enforced and which
range between 20 per cent and 30 percent, after reviewing the matter
with the Department of Finance," he said.
Sami Al Qamzi,
Director-General of the Dubai Department of Economic Developmentthe
Department of Finance, had suggested the mechanism of pricing
governmentservices, which the Executive Council subsequently approved.
The
move will be implemented by small teams made up jointly of the
Departmentof Finance and government bodies concerned that will work
independently.
Business leaders were quick to praise the move.
"The
initiative comes at a very important time and expresses the
DubaiGovernment's keenness to provide a proper environment for
investment and tradeand to maintain the emirate's vital position as a
world trade and economiccentre," Sheikh Khaled bin Zayed Al Nahyan,
Chairman of home lenderTamweel, said.
Sheikh Khaled said the
decision would have "positive psychologicalreflections on investors and
their commitment to work in Dubai" and it"reflects His Highness'
keenness to alleviate the burden on investors atsuch a difficult time".
Ahmad Al Matrooshi, Managing Director of Emaar Properties, said
the decisionwould "tangibly help reactivate Dubai's economic and trade
movementespecially with regard to the real estate sector".
"There will be positive results and impact on investment and tourism inthe emirate soon," he said.
Cost savings
Some of the services included in fee reduction of up to 30 per cent:
- Issuance and renewal of trade and vocational licences
- Sale and promotional campaigns
- Issuance of property ownership certificates
- Registration of a rent contract that expires with the transfer ofownership
- Extension of payment period in a mortgage contract
- Ending a rent contract that ends with the transfer of ownership
- Evaluation of buildings (without land)
- Any charges linked to improvement of services
- Licence of converting a building into a hotel or hotel apartments
- Charges linked to the modification of all kinds of buildings
Achieving stability
A
major step forward in achieving stability came in February with
theannouncement of a $20 billion (Dh73.4bn) bond programme, the first
$10bntranche of which was taken up by the UAE Central Bank.
"This
issuance will provide the Dubai Government with the necessaryliquidity
to substitute the liquidity that has dried up globally in the past
12months and meet all upcoming financial obligations," the Department
ofFinance said at the time.
"It will secure the necessary funding for Dubai to meet its financial obligationsand continue its development programme."
The news seemed to soothe anxiety over Dubai's economic outlook