Dear Family, Friends & Visitors,

... and here is 'WORKING IN DUBAI' ... hope your enjoyed our  'MOVING TO DUBAI' & 'LIVING IN DUBAI' ,  please return our site for some more information on Dubai ... Enjoy & love to you all

NOVEMBER 2006 (Out of the Connector - your monthly guide to the UAE) ~ Mark Atkinson provides an insight into the Dubai business environment for anyone thinking of working in the city, either as a company employee or business owner.

Since the formation of the UAE in 1971, you would be hard pushed to find any other city in the world that has developed its infrastructure and business environment as rapidly and successfully as Dubai.

Aerial photographs in the early 70's show a largely barren desert landscape peppered with modest buildings and virtually no infrastructure in terms of road systems and utilities.

Going back only five to ten years, the Dubai business environment was in many respects inflexible and bureaucratic.  All foreign business required a 51% ownership stake with a 'local service agent' (local sponsor), and wading through red tape in order to obtain the necessary permissions to conduct business was both time consuming and labour intensive.  A 'single agency law' stipulated that international brands could only be represented by an 'exclusive agent', creating a number of 'brand' monopolies, often controlled by powerful local families.

In contrast, today's Dubai is a leading business centre with a highly sophisticated infrastructure that has as much to offer as any western city.

Over the past few years a number of free trade zones have been established.  Foreign companies that set up in these free zones are entitled to many benefits, including 100% foreign ownership and 100% repatriation of earnings, and range from multinational corporations to freelancers.

Each free zone is generally dedicated to a particular industry.  Just a few of the many free zones include the Dubai International Financial Centre (DIFC) , which plays host to organisations such as investment banks, asset management and insurance companies, Dubai Internet City (DIC) for companies in ICT-related industries and Dubai Media City (DMC) for media, marketing and PR-related firms.  In addition there are a number of other free zones in industries such as healthcare, education, distribution and more generic areas of industry, not just in Dubai, but across all of the Emirates.

With the absence of both corporation and income tax and Dubai's tolerance towards the western lifestyle, these free zones have been a major incentive for leading multinationals to set up their regional Middle East headquarters in Dubai.  Based in DIC are companies such as Microsoft , IBM and Cisco , while DMC accommodates AFP , the BBC and CNN amongst other.

The UAE's drive to take its place on the global stage has also meant complying with World Trade Organisation (WTO) rules of open competition.  So too has Dubai's competitive environment become increasingly dynamic as a result of the multitude of local and foreign businesses that continue to open operations in the city.

The above initiatives have also played a major part in Dubai's vision to diversify from an oil based economy.  Today, while crude oil and gas make up around 30% of the UAE's total GDP, Dubai's figure is nearer to 7%.  Tourism is now a fast growing industry in the city, with hotels and ambitious tourist developments emerging at a furious rate.

The incentives provided to foreign companies over the past few years have also made Dubai a highly desirable place to do business and have accelerated the city's diversification drive.  These factors and Dubai's excellent central location for trade and re-export to the Indian subcontinent, Middle East and Far East mean that Dubai's economy continues to grow from strength to strength, and foreign talent continues to pour in to take advantage of the massive opportunities here.

One of the downsides to Dubai's meteoric growth is the cost of living.  According to the Mercer Human Resource Cost of Living Survey, Dubai ranks as the 25th most expensive city in the world - a jump from 73rd place in 2005.  Main contributory factors include a 15% rise in inflation and a 60% hike in housing rents since last year.  While it is felt that this rate of escalation cannot continue, it is thought that prices will still continue to climb significantly into the future.

At present, with an increasing number of expatriates coming to live and work in Dubai, the supply and demand balance sits firmly in the lap of the property landlord.  Tenants are also often expected to pay a single cheque lump sum for the year's rent, although this may sometimes be divided into two or three 'post-dated' cheques.  This, plus a deposit and commission, can mount up to a considerable outlay before even receiving your first salary cheque.

Alternatively, expatriates now have the option to buy property leasehold or freehold in Dubai.  For those who receive a housing allowance as part of their package and do not wish to see it swallowed up in rent, this initiative has been incredibly popular.

These developments are generally on designated housing estates, most of which are located in what is commonly termed as New Dubai, an extension to the original city stretching towards Abu Dhabi.  As a result, Dubai has expanded to around twice the size it was ten years ago.

While the cost of living is rising, salary packages are decreasing over time.  Whereas in the past expatriate packages included benefits such as housing, a car and an education allowance for children, it is now more common to have an all-in sum designed to cover everything, which is considerably lower than one might have expected in the past.  Dubai is increasingly considered a desirable place to live and work in terms of both lifestyle and business opportunities.  With the number of expatriates pouring into the city, the salary equation is simply one of supply and demand.  This issue is particularly relevant to those employed by local companies.  Employees of multinational organisations can still expect to receive salary 'packages'.

Like so many other oil-based economies (with 10% of the world's oil reserves, Abu Dhabi is the world's third largest oil producer), the UAE currency, the dirham's rate of exchange is dependant on the dollar's strength.  Currently, for example, with the dollar being so weak against both the sterling pound and the euro, you stand to lose significantly by changing dirhams into pounds or euros, whereas exchanges the other way round will be strongly in your favour.  This is certainly something to consider when you are paid in dirhams and changing money into the currency of your homeland, as it could have a major effect on the value of your salary in real terms.

While the large majority of public sector jobs are taken by UAE nationals, only about 2% of the private sector employs Emiratis (only 20% of the UAE population is indigenous, with 80% expatriate).  As a result there has been a government drive over the past few years, known as 'Emiratisation' or 'Nationalisation', to integrate UAE Nationals into the private sector.  This also is placing further restrictions on expatriate labour mobility.

Nationalisation has taken two forms.  Industries were initially targeted, such as the banking and insurance sector, with the government giving quotas to companies in terms of target percentage increases of UAE nationals in the workforce.  More recently there has been a drive to completely nationalise certain job functions.  In June 2006 it was announced that all HR manager and all secretarial roles would be nationalised within 18 months.