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Dubai Business Focus Issue 4 2010

Dubai Business Focus Issue 4 2010

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BridgingGaps atRamadanSuhoor
The Suhoor Networking event isrenowned for providing excellentnetworking opportunities tobusinesses, where they receive thelatest news on the state of theeconomy, can cement businessrelations and work towards a strongbusiness community in a vibrantbusiness environment.H.E. Eng. Hamad Buamim informedduring his opening speech that Dubaiis one of the first cities in the world tosee economic recovery with inflationlevels down to 4.1% in 2009 ascompared to 11.3% in 2008. As animportant gateway to one of the mostlucrative emerging market blocks,opportunities seem to have beengrasped successfully. This is
illustrated by the fact that Dubai’s non
-oil trade increased 18% over the firsthalf of 2010 with a value of AED279.2bn as compared to 237.6bn overthe same period last year.Total direct exports were record highin the first half of this year with AED32.8bn in comparison to 23.6billion inthe same period last year. Importsrepresented a 13% increase with AED177.4bn in contrast to 156.6bn lastyear. These positive trade figureswere possible, due to strongleadership and a creative businesscommunity, which provided theflexibility for ongoing diversification.In the keynote address following theopening speech, H.E. Eng. Sultan BinSaeed Al Mansoori informed that anumber of new laws are currentlyunder preparation. While the new lawsare believed to comprehensively reflectnew realities, the Chamber wascredited for providing a platform wherebusinesses are encouraged to seize theavailable opportunities for sustainablegrowth and progressively flourishingbusinesses in the UAE.Also during this evening, H.E. AbdulRahman Saif Al Ghurair applauded thevital role played by the members of thetechnical committee, which consists of business community representatives,for bridging gaps between the privateand public sectors by reviewing andrecommending on draft laws.The UAE has always nurturedentrepreneurial spirit and rewardedcreative minds and first movers. Withnew laws coming up soon andpromising economic indicators, moreopportunities are expected to be
explored by Dubai’s business
community, which should lead to anongoing and solid growth.
1
Volume 2
|
Issue 4 2010
Dubai Chamber’s prime annual business networking
suhoor proves to provide an important platform tobridge gaps for the business community.
 
The Importance of Standardised Reporting
2
reporting standards within the participant’s respective
companies, participants raised specifically their concernsregarding the challenge and cost of adoption of IFRS.The standards originated in a free market economy withan applied tax framework where tax systems are keydrivers of reporting. Although a tax system is lacking inthe UAE, the adoption of IFRS should not be morechallenging in the UAE than in other countries. Thespeakers pointed out that transparency, representingone of the biggest challenges in the region, doeshowever increase the challenge of adoption.In the UAE, companies are required to submit auditedfinancial statements annually, but only listed companiesare required to use IFRS. Unlisted companies areadvised to adopt an internationally recognized financial
standard, but the legislation doesn’t specify a particular
reporting framework. The discussion took furthermoreinto consideration that public accountability is currentlystill lacking in the UAE and that companies consequentlyuse different standards. Local GAAP is in general beingused by local companies, which implies thatstandardization is deficient. Financial statements mightbe of poor quality as companies can create their ownreporting standards, which furthermore are not alwaysaudited by reputable firms.
It isn’t surprising therefore that a regulatory framework
and its importance were highlighted significantly. It wasrecognized however that reporting standards will mostlikely improve, when regulations are standardized. Toreach to this point it was emphasized that it is essentialto have legal backing for standard reporting. Astandardized regulatory framework was also seen as aprerequisite to gain more transparency in reporting. Theparticipants were positive that the new official SMEdefinition, currently being developed by the Ministry of Economy, should bring more guidelines, monitoring andtransparency and streamline reporting as such. Also, thenew auditing law is to be released by the end of thisyear, which is believed to improve the professionalenvironment considerably.All in all, there was a general consensus that havingambitions to be a global player makes adoption of globalrules unavoidable, which includes transparency onfinancial reporting.Dubai Chamber took the opportunity during one of itsroundtables to highlight the International FinanceStandards (IFRS) for SMEs to the business community.This was especially relevant as IFRS are fast becomingthe financial reporting standard worldwide. As such, IFRSfor SMEs hold an excellent opportunity for SMEs to adoptan accounting framework that might potentially becomethe standard worldwide. Not only will companies adoptuniversally recognized reporting principles that easedecision-making on cross border business deals, but alsoaccess to capital is likely to increase as lenders will haveeasily comparable financial statements. And after all, theUAE business environment that is characterized by fast-paced global interconnectedness requires a degree of compliance with international standards.This simplified version of the International FinanceStandards, as its name clearly suggests, catersspecifically to SMEs and was introduced by theInternational Standards Accounting Board (IASB) withthe intention to meet the different needs of SMEs. Formany companies, the benefits of the full implementationof IFRS can be somewhat outweighed by theconsiderable cost and difficulty of preparing the requiredinformation. This was recognised by the IASB and henceIFRS for SMEs was developed and introduced.Company representatives that attended the roundtablewanted to find out more about this aspect and assessthe relevance to adopt IFRS for SMEs within theircompanies. Questions relating to what IFRS are, who itis intended for, the difference between IFRS and IFRS forSMEs, the importance of financial reporting standardsand the effect it has on companies were all discussed byexperts from Grant Thornton who gave a presentationand answered questions from the audience. They pointedout that IFRS and IFRS for SMEs are similar from theperspective that both require the same set of financialstatements. The difference lies rather however in thedisclosure of information and the skill needed tocomplete the sheets. The key strength of IFRS for SMEsis its simplification and therefore improved accessibilityfor SMEs.Many attendees were also very keen to find out moreregarding the difficulty level to adopt IFRS for SMEs.While assessing the relevance to implement the financial
“IFRS for SMEs
gives theopportunity toSMEs to meethalfway withoutcomplicating it too
much”.
Mr. Hisham Farouk,Partner, Grant Thornton
 
Setting Up a Commercial Company
Setting up a business is a one-time decisionand starters need to take the right decision atthe right time to assure a successful businessundertaking.
Individuals looking to establish a company requireprofessional advice and Dubai Chamber caters in various
ways to this need. It’s not surprising, being the prime
business advocator in Dubai, that we hear questionsrelating to establishing a company often at DubaiChamber. Starters come to Dubai Chamber as one of thefirst starting points in their quest to find out on the variousrules, regulations, and procedures.To give better insights to those who are looking to
establish a company in the UAE, Dubai Chamber’s Legal
Services Department organised a training workshop onEstablishing Commercial Companies in the UAE. Duringthis workshop various types of commercial companieslaws, regulations on the formation of companies as well aspractical information were provided. The commercialcompanies law was analysed in further detail in addition tospecific regulations and requirements to establish LimitedLiability Companies (LLCs), Joint Stock Companies, andspecial rules pertaining to setting up a branch orrepresentative offices of foreign companies. Attendeesconsisted of Dubai Chamber members, investors,entrepreneurs, lawyers, consultants, and SMEs.This training workshop provided attendees with focusedand essential insights on starting up companies. DubaiChamber strives to create a favourable businessenvironment, to support the development of businesses,and to promote Dubai as an international business hub. Tothis end many other exciting and beneficial initiatives areundertaken. For more practical information on starting abusiness in Dubai, you can obtain a free copy of the
Chamber’s
Dubai Business Advisor Series.
The last updateson our initiatives can be found on our website,www.dubaichamber.ae.
3
The First Rule toSuccess for an SME
A strongly founded business plan that maps all factors of key importance for a company brings clarity for allbusiness undertakings in start-up, growing, andestablished phases. On July 4
th
& 5
th
, companies looking torealize their full business potential had the opportunity toattend the two-
day training workshop “Crafting a WinningBusiness Plan” at Dubai Chamber. The training workshop
catered for companies that want to stay abreast of theever- changing business environment and believe that it isessential to be outstanding. With this in mind, a variedgroup of participants from different age groups and withdiverse professional backgrounds joined the training
workshop last week. With the “Winning a Business PlanCompetition” attendees were further motivated to put
theory directly into practice. They were encouraged todraft their own business plan within the following twoweeks on which the trainers provided direct feedback. Allparticipants also had access to a special interactive follow-up session online while preparing for their business plan.
Did you know?
All businesses, whether industrial, professional,trading, or providing services, must be licensed tooperate in the UAE.
Each Emirate has its own set of rules and regulationsregarding the establishment of new businesses.
 
The Commercial Companies Law no. 8 (1984) asamended (CCL) and the Commercial Agencies Law no.18 (1981) as amended are the primary federallegislative framework that control commercial activity inthe UAE.
 
Types of Licenses
A Commercial License is for companies thatwill be engaged in all sorts of trading activity,such as importing, exporting, selling,distribution, and storage.
An Industrial License is intended forcompanies that will be conducting industrial ormanufacturing activities. This includes importsof raw materials, manufacturing of certainproducts, and the export of finished products.
The Professional License covers professionsand the provision of services.

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