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Originally published:
Jun-25-2007
Internet Domain: .ae
International Dialing Code: +971
Table of Contents
The United Arab Emirates (UAE) is a federation of seven largely self-governing emirates (principalities), each ruled by the head of the leading family of the tribe that first settled there. The seven emirates include:
- Abu Zaby (Abu Dhabi) - major oil producer
- Dubayy (Dubai) - commercial center
- Ash Shariqah (Sharjah)
- 'Ajman
- Al Fujayrah
- Ra's al Khaymah
- Umm al Qaywayn (Quwayn)
Under the provisional constitution of 1971, each emirate reserves considerable powers, including control over mineral rights (notably oil) and revenues.
The federation has three branches: Executive – Supreme Council of Rulers that elects the president and vice president, each serving 5-year terms; Legislative -- 40-member National Assembly, a consultative body whose members are appointed by the emirate rulers; and Judicial -- Islamic and secular courts. The population at large has no voting rights.
Federal court system that applies to all emirates, except Dubai and Ra's al Khaymah which are not fully integrated into the federal judicial system. All emirates have secular courts to adjudicate criminal, civil, and commercial matters and Islamic courts to review family and religious disputes.
- Population: 4,444,011 (July, 2007 estimate)
- Population growth rate: 4% (2007 est.)
- Languages: Arabic (official), English, Hindi, Urdu, Persian
Only 15-20% of the total population are UAE citizens. The rest include significant numbers of other Arabs -- Palestinians, Egyptians, Jordanians, Yemenis, Omanis -- as well as many Iranians, Pakistanis, Indians, Bangladeshis, Afghanis, Filipinos, and west Europeans.
Since the discovery of oil more than 30 years ago, the UAE has undergone a profound transformation from an impoverished region of small desert principalities to a modern state with a high standard of living. The UAE has the fourth highest GDP per capita in the world.
The UAE has an open economy with a sizable annual trade surplus. Despite largely successful efforts at economic diversification, about 30% of GDP is still directly based on oil and gas output, and the fortunes of the economy fluctuate with the prices of those commodities. However, development of tourism, infrastructure, and property has resulted in strong growth of construction, transport, commerce, and financial services.
Currency: Dirham (AED)
- AED per USD: 3.67 (as of June 27, 2007)
- AED per EUR: 4.94 (as of June 27, 2007)
Leading Markets (2005): Japan 24.5%, South Korea 9.8%, Thailand 5.6%, India 4.3%
Leading Exports-commodities: crude oil 45%, natural gas, re-exports, dried fish, dates
Leading Suppliers (2005): UK 10%, China 9.7%, US 9.4%, India 9.2%, Germany 5.9%, Japan 5.4%, France 4.7%, Singapore 4.1%
Leading Imports-commodities: machinery and transport equipment, chemicals, food
Top Industries: petroleum and petrochemicals; fishing, aluminum, cement, fertilizers, commercial ship repair, construction materials, some boat building, handicrafts, textiles
| |
2003 |
2004 |
2005 |
2006(e) |
2007(f) |
| GDP (USD billion) |
88.6 |
103.8 |
130.3 |
168.3 |
185.9 |
| GDP per capita (USD) |
21,920.0 |
23,871.1 |
27,831.4 |
33,396.6 |
34,283.0 |
| Economic growth(%) |
11.9 |
9.7 |
8.2 |
7.7 |
9.7 |
| Inflation (%) |
3.1 |
5.0 |
7.8 |
10.1 |
6.2 |
| Exports (USD billions) |
67.1 |
91.0 |
115.5 |
144.6 |
166.8 |
| Imports (USD billions) |
45.8 |
63.4 |
71.2 |
82.6 |
97.4 |
| Foreign debt (% of GDP) |
19.1 |
26.4 |
31.4 |
30.6 |
31.6 |
| Foreign currency reserves (in months of imports) |
2.9 |
2.7 |
2.6 |
3.1 |
3.5 |
Exchange rates (AED per USD)
2007 = 1/1 to 6/13 |
3.7 |
3.7 |
3.7 |
3.7 |
3.7 |
Exchange rates (AED per EUR)
2007 = 1/1 to 6/13 |
4.2 |
4.6 |
4.6 |
4.6 |
4.9 |
(e) estimate (f) forecast
| |
UAE |
Saudi
Arabia |
Kuwait* |
Egypt* |
Jordan |
Iran* |
| Population (millions) |
5.0 |
23.7 |
3.1 |
72.1 |
5.6 |
69.8 |
| GDP (USD billions) |
168.3 |
348.6 |
96.1 |
107.4 |
14.3 |
212.5 |
| GDP per capita (USD) |
33,396.6 |
14,714.7 |
31,051.3 |
1,488.6 |
2,544.1 |
3,045.8 |
| Economic growth: (%) |
7.7 |
5.7 |
6.0 |
5.6 |
5.0 |
5.8 |
| Inflation (%) |
10.1 |
2.3 |
3.0 |
4.2 |
6.3 |
14.6 |
| Exports (USD billions) |
144.6 |
225.8 |
59.8 |
20.8 |
4.6 |
62.0 |
| Imports (USD billions) |
82.6 |
65.4 |
18.8 |
32.8 |
9.8 |
45.7 |
| Foreign debt (% of GDP) |
30.6 |
11.2 |
22.6 |
26.4 |
61.1 |
10.4 |
| Currency |
Dirham-AED |
Riyal-SAR |
Dinar-KUW |
Pound-EGP |
Dinar-JOD |
Rial-IRR |
| Exchange rates (per USD) |
3.7 |
3.8 |
0.3 |
5.8 |
0.7 |
9,491.8 |
| Exchange rates (per EUR) |
4.6 |
4.7 |
0.4 |
7.3 |
0.9 |
11,928.5 |
*Data for Kuwait, Egypt and Iran are for Fiscal Year 2006/2007
- Collection Experience: Fair
- Exchange Delays: 2+ months
- Preferred Credit Terms: Unconfirmed letter of credit
- Minimum Credit Terms: Sight draft
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.
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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.
Coface Country Risk Rating: A2 -- Default probability is weak.
Ducroire Delcredere Political Risk Rating: 1 – Low Risk
Ducroire Delcredere Commercial Risk Rating: B – Medium 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.
The 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.
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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.
The 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.
Doing 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
US-UAE Business Council
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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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