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(e) estimate (f) forecast Comparative Economic Indicators - 2006
*Data for Kuwait, Egypt and Iran are for Fiscal Year 2006/2007 Credit and Collections
According to OP&C (Overseas Press & Consultants): “Half of all shipments to the UAE are on open account; one-third is either paid in advance or covered with letters of credit; the balance is covered with sight or dated drafts.” Dispute Resolution (information from the U.S. Department of State): There have been no significant investment disputes during the past few years involving any foreign investors, but there have been several contractor disputes, with the government as well as local businesses. Disputes generally are resolved by arbitration, by the parties themselves, or by recourse to the legal system. Enforcing arbitration judgments can be difficult as they require court certification, and judicial proceedings may continue for several years.
The UAE federal Supreme Court has held that a foreign arbitration clause in a registered commercial agency agreement is unenforceable as UAE courts have jurisdiction over commercial agency disputes. UAE courts will, however, recognize a decision by both parties to refer a dispute to arbitration. The parties can move to arbitration at any stage during litigation and no party in a dispute can file a court claim if such party already has agreed to refer the claim to arbitration. The civil procedure code details rules governing the qualification of arbitrators and many other aspects of the arbitration process. The venue of arbitration is required to be within the UAE, and if not, the resultant award is treated like a foreign judgment. The UAE is a member of the International Center for the Settlement of Investment Disputes. Although the UAE Cabinet approved entry into the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards in 2003, the UAEG has not implemented the legislation, and is unlikely to do so in the near future. Risk AssessmentCoface Country Risk Rating: A2 -- Default probability is weak. Ducroire Delcredere Political Risk Rating: 1 – Low Risk Dependence on a large expatriate workforce and oil are significant long-term challenges to the UAE's economy. The UAE is a drug transshipment point for traffickers given its proximity to Southwest Asian drug-producing countries. The country’s position as a major financial center makes it vulnerable to money laundering. Anti-money-laundering controls are improving, but informal banking remains unregulated. Business ClimateThe UAE, although an attractive market for a wide variety of products, can be a difficult place to do business. According to the US Department of Commerce, it is not a market for the first-time exporter. The legal system protects local entities. Foreign companies find it difficult to legally dismiss a non-performing local agent without protracted litigation, and it is difficult, if not impossible, to sell without a local agent. Payments tend to be slower than in the US and Europe. The US Embassy strongly advises companies wanting to do business in the UAE to seek competent legal counsel while exploring the market and to get to know their prospective client or business partner well prior to entering into an agreement.
The UAE is a member of GCC (Gulf Cooperation Council), which is involved in negotiations with the European Union for a free trade agreement (FTA). The UAE is also negotiating FTAs with the United States and Australia, and is considering the same with Singapore and Japan. As a result, investment laws and regulations are evolving and are expected to become more conducive to foreign investment. Foreign Ownership of Business: Except in the free trade zone, the UAE requires at least 51% local citizen ownership in all businesses operating in the country. Transparency of Regulatory System: The fundamental instrument by which all of the emirates regulate business activity is the requirement that any place of business must acquire and maintain a proper license. The procedures for obtaining a license vary from emirate to emirate, but are straightforward and publicly available. A license is not required unless a place of business is set up. Patents and Brands: The UAE government leads the region in protecting intellectual property rights (IPR). Anecdotal and statistical evidence confirms that the government is enforcing copyright, trademark, and patent laws including those for pharmaceuticals. Conversion and Transfer Policies: There is no currency exchange control in the United Arab Emirates. Free repatriation of capital and profits is allowed. Corruption: There is no evidence that corruption of public officials is a systemic problem. For more detailed information on these topics, visit the 2006 Investment Climate Statement –UAE, of the U.S. Department of State. Business and Cultural PracticesThe following applies if your host is a UAE national or from a neighboring Arab country. However, it should be noted that, as the UAE is so cosmopolitan and has such a small native population, it’s likely you will be dealing with other nationalities (except for government business). Practices, in those cases, should be adapted to the nationality of the host. Work Hours: The basic working week is 5 days, beginning on Saturday rather than Monday. Appointments: It is customary to make appointments for times of day rather than precise hours. Business Cards: Business cards are common but not essential. If used they should be in Arabic. Common practice is to have English on one side and Arabic on the other. Business Attire: Appropriate business dress for men is shirt and trousers during the day with collar and tie in the evening. Ladies need not dress quite so modestly as elsewhere in Arabia but should still be careful not to wear anything too revealing. Unlike elsewhere in Arabia, it is inappropriate (in some places even illegal) for foreigners to wear local garb. Conversation: Intelligent argument is admired and welcome but only when it is courteous and reasoned. The more feedback you provoke, no matter how forceful so long as it is not angry, the more highly you are esteemed. Acceptable Public Conduct: Although women are active in most professions and some commercial activities, social encounters are largely segregated. Loud speech and raucous laughter are deplored as vulgar. Generally, one should always shake hands with every man present but not with women. For more detailed information on these topics, visit United Arab Emirates, on the Executive Planet web site. Sources for further information on doing business in the United Arab EmiratesDoing Business In United Arab Emirates: A Country Commercial Guide for U.S. Companies – 2007: Publication of the US Department of Commerce (PDF format). Embassy of the UAE in the United States Embassy of the United States in UAE ***** Subscribe to the Credit-to-Cash Advisor This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including United Arab Emirates. For further information, contact info@abc-amega.com. This report represents a compilation of information from a wide variety of reputable sources including: the U.S. Department of State, U.S. Commercial Service, CIA World Factbook, Federation of International Trade Associations, and Economist Country Briefings. Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," June 2007. |
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