CHAPTER 1

CHAPTER 1

The United Arab Emirates
1.1 The UAE: Formation

Al-Khaimah and Fujairah. Abu Dhabi City is the federal capital. Each emirate has contributed to the nation’s progress and exciting opportunities for investors are to be found in all parts of the country. Sharing a border with Saudi Arabia and Oman, the UAE has a land mass of 83,600 square kilometres and a total population now estimated at 4.1 million. The urban population is 75 percent of the total as four fifths of the territory is desert. The UAE’s foreign population is 78.9 percent. According to OPEC’s 2005 report, the UAE has the world’s fifth largest proven reserves of crude oil (9 percent of total world reserves), and fourth largest reserves of natural gas (5 percent of the world total). These reserves are expected to last for more than 100 years at current production rates. The people of the UAE are very proud of their ancestry but this publication will focus mainly on the success story of the last three and a half decades since the establishment of the Federation. Fifty years ago the UAE consisted of sand dunes, the occasional oasis, simple villages and

T

he United Arab Emirates (UAE) is a federation of seven emirates located in the Arabian Gulf: Abu Dhabi, Dubai, Sharjah, Ajman, Umm al Quwain, Ras

hard working shepherds, fishermen and seafarers. It was a real challenge to eke out a living in such a difficult terrain. Only a few decades ago the situation in the country was radically different from the way things are today. It was fortunate that the leadership of the various sheikhdoms constituting today’s UAE followed a vision and had the courage to build a dynamic modern country. In 1971, a few years after the discovery of oil and a modest transformation from a seminomadic society, His Highness, the late Sheikh Zayed bin Sultan Al Nahyan became the ruler of the largest and richest UAE emirate of Abu Dhabi. Following the withdrawal of the British forces from the Gulf region, he invited the rulers of the other emirates to form a federation. Thus the United Arab Emirates, or UAE, was born. Sheikh Zayed spared no effort to make the Federation a success. Now that the UAE is party to many international agreements, the Federal Government works hard to harmonise the activities and decisions of the seven emirates. The UAE has used oil wealth to finance infrastructure and diversify into service sectors. Today the non-oil economy constitutes around 63 percent of GDP. Almost half of the non-oil economy is based on services. The country has targeted sectors with the most rewarding

opportunities, including tourism, logistics and transportation, ICT and financial services. The emirate of Abu Dhabi is rich with natural resources and is much larger than the combined total areas of the other six emirates. Abu Dhabi city is the seat of the Federal Government. Dubai has been able to create one of the most impressive success stories of modern times. Today its many signature structures and initiatives have created a strong and enduring identity on the world stage. The emirate has become a holiday destination for many people around the world. Dubai’s success is particularly notable because the emirate is not endowed with large quantities of natural resources. The Northern Emirates are also buzzing with activity with each government drawing up ambitious plans for new developments as well as taking steps to improve their infrastructure. Culture, heritage and history are the defining characteristics of Sharjah. This emirate boasts a number of outstanding museums, galleries, libraries and renowned seats of learning. Sharjah is also the prime location for many UAE-based industrial firms. The emirate is keen to promote tourism and a number of major residential projects have been launched. Ajman is witnessing a boom due to the ‘spillover’ effect from Dubai and Sharjah. The

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THE UNITED ARAB EMIRATES

authorities in the Federation’s smallest emirate have opened wide its doors to investors and a raft of new investment projects have been recently announced. New focuses for economic development in Umm al Quwain include tourism and real estate development with plans for a new marina as well as huge residential complexes. The government of Ras Al-Khaimah (RAK) is making earnest efforts to provide world-class tourism facilities. In October 2006, RAK received its first charter flight of tourists from Europe and

for six months of the year, flights bring European tourists to the emirate’s resorts every week. In November 2006, RAK announced that foreign and domestic investment in the emirate had reached AED100 billion. Fujairah has focused on developing its port and free trade zone and is now one of the world’s top three locations in bunkering, alongside Rotterdam and Singapore. The emirate also has ambitious plans to develop the tourist industry and nine new hotels are due to open in the next five years.

The genius of the UAE is a combination of entrepreneurship, competition, cooperation and openness. With a tax free environment, worldclass infrastructure and negligible tariffs, the country has become a hub for entrepreneurship in the region, attracting the largest number of FDI projects. UAE businessmen and women realise that they need to compete locally but cooperate globally. They understand that the openness of the country to outside investment, labour and capital, results in increased economic prosperity for all.

1.2 Federal Government and the Political System
The federal system includes five bodies with no full separation of powers: the Federal Supreme Council, the President, the Council of Ministers, the Federal National Council, and the Federal Judiciary. The Federal Supreme Council, comprising the rulers of the seven emirates, is the top policymaking body of the Federation and is vested with legislative and executive powers. The Federal Supreme Council elects the President and the Vice-President of the Federation, ratifies federal laws and decrees, and approves the nomination of the Prime Minister (who is selected by the President in consultation with the Members of the Supreme Council) and accepts his resignation. The Council may also relieve the Prime Minister of his post upon the recommendation of the President. Sheikh Zayed bin Sultan Al Nahyan, ruler of Abu Dhabi, was elected as the first President of the UAE, and ruled until his death on 2 November 2004. Sheikh Zayed was succeeded by his son and Crown Prince, His Highness Sheikh Khalifa bin Zayed Al Nahyan, who was elected by Members of the Supreme Council as the new President on 3 November 2004. The post of Vice-President is held by the Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al
TUNBAL SUGHRA ABU MOUSA TUNBAL KUBRA

Maktoum, who succeeded his brother after his
OMAN

death in January 2006. The President and VicePresident are elected by the Supreme Council for a term of five years which is renewable.

Ras Al Khaimah
The Arabian Gulf

Um Al Quwain Ajman Sharjah Dubai

Khor Fakka Fujair

In the absence of the President, the VicePresident assumes his responsibilities. The President is accorded a wide range of legislative and executive powers. As chief executive of the State, the President has the right to convene and preside over meetings of the Supreme Council.

QATAR

DAS

ZIRKU ARZANAH DALMA SIR BANI YAS MERAWAH

SAADIYAT Port Zayed

Abu Dhabi

Sweiham Al Ain
OMAN

The President is also entrusted with signing laws, decrees and decisions sanctioned by the Supreme Council, supervising implementation through the Council of Ministers; and the ratification of treaties and international agreements after approval by the Supreme Council and the Council of Ministers. Headed by the Prime Minister, the Council

Abu Dhabi Dubai Sharjah Ajman Umm Al Quwain Ras Al Khaimah Fujairah
SAUDI ARABIA

Medina Zayed

Liwa Oasis

of Ministers is an executive authority of the Federation. The Prime Minister, who is currently the Vice-President and ruler of Dubai, selects his

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The Federal Supreme Court consists of five judges including a President of the Court. commercial. access to education. Judgments of the Federal Courts of Appeal are final. to work towards a society that would offer the best of modern administration. which oversees the federal judicial system. Panels Political Stability When the rulers of the seven emirates agreed on the forms of government for their new federal state. discussion and direct democracy. and other matters. consolidating the principles of shura (consultation) in the country. and other matters. the state has enjoyed political stability. one of whom had been elected. Dubai Women in the UAE According to the UAE Constitution. The emirates of Dubai and Ras Al-Khaimah have established a local judiciary. commercial. following the death of the Federation’s founder Sheikh Zayed. The third phase will result in an enabled. 12 Investor’s Guide to the UAE 10-31MOE Chap1. The number of seats assigned to each emirate (8). The majority of students enrolling for higher education are women. of three judges hear criminal cases. representing 22 percent of the total. The Federal Courts of First Instance have a body of judges and court presidents who hear criminal cases. instead. proof of that being the smooth transition that occurred. They chose. in Government and throughout the country. The UAE is the only one in the Arab world to have stood the test of time. was the participation of women who. which shows the UAE to be one of only 15 countries where girls outnumber boys in the formal education system. and discussing the annual budget. questioning ministers and holding them accountable for their respective ministries.indd 12 10/24/07 3:42:22 PM . Under the terms of the Labour Law it is prescribed that there shall be no discrimination between men and women in terms of equal pay for equal work. The foundations of a democratic process began in the UAE in December 2006 with elections for the FNC. The Government has also ratified international agreements relating to women including the Convention on the Elimination of All Forms of Discrimination against Women. It is evident that they made the correct choice. One of the most important aspects of the Federal National Council elections that took place in December 2006. and right to practise professions as men. The federal judiciary comprises the Federal Supreme Court. Under the Constitution. together with other disputes in accordance with applicable laws.CHAPTER 1 cabinet ministers among representatives from the seven emirates. Minister of Economy and Mariam Mohammed Khalfan. larger and stronger Council with more specific areas of responsibility. who are appointed for two calendar years. for the first time. At the Higher Colleges of Technology. and the Federal Courts of First Instance (civil and sharia). while at the same time retaining the traditional forms of government that. were eligible for inclusion into the council. Sheikh Khalifa bin Zayed with Prince Charles is based on its population: Abu Dhabi (8). examining and amending proposed federal legislation. They also hear appeals against judgments by the Federal Courts of First Instance and the local judicial authorities. despite the massive economic growth and the huge increase in population. The FNC is presided over by one of its members. women enjoy the same legal status. Umm al-Quwain (4). Ajman (4). When the results were officially announced in February 2007 the final make-up of the council’s 14th Legislative Chapter included nine women. is at the discretion of the ruler of each emirate. appointed by presidential decree and endorsed by the Supreme Council. the Federal Courts of Appeal (civil and sharia). Fujairah (4). for. This was the first phase of the process with half the members of the Council being elected. Minister of Social Affairs) and both the government and the private sector encourage the participation of women in all disciplines. Ras Al-Khaimah (6). the FNC has a consultative role. the proportion of female students is three times higher than that of men. they deliberately chose not simply to copy from others. including serving the people and the nation. both in the Arab world and elsewhere. Federal National Council The Federal National Council (FNC) comprises 40 members representing the seven emirates. Article 116 of the Constitution states that all matters not specifically stipulated as falling within federal jurisdiction may be considered within the relevant emirates. offered the best features of the past. The Judicial System The judicial system is composed of a federal and a local judiciary. with their inherent commitment to consensus. The Federal Courts of Appeal comprise a body of judges including court presidents. The selection of representatives. Sharjah (6). not attached to the Ministry of Justice. There is no shortage of female role models in the workforce either. During recent years the UAE has appointed two women ministers (Sheikha Lubna Al Qasimi. The judges decide on the constitutionality of federal laws and arbitrate on inter-emirate disputes and disputes between the Federal Government and the emirates. The UAE’s attitude to women is well demonstrated by recent figures from UNESCO’s Education for All Global Monitoring Report. Judgments are delivered by a single judge unless the law stipulates otherwise. Phase two will define the powers of the Federal National Council and its relationship with the government. as well as civil. WAM There have been numerous attempts to create federal states. civil.

gov. Fax: 04 2668967 Ministry of Energy The Minister: Mohammad bin Dha’en Al Hameli POB: 59.moew Ministry of Culture.gov.moca.moh. Abu Dhabi Tel: 02 441 4666.gdocd.ae Investor’s Guide to the UAE 13 10-31MOE Chap1. Fax: 02 449 5150 Website: www.ae Ministry of Environment and Water Ministry of Higher Education and Scientific Research The Minister: Sheikh Nahyan bin Mubarak Al Nahyan POB: 45253.ae Ministry of Economy The Minister: Sheikha Lubna bint Khaled Al Qasimi POB: 901. Fax: 02 6665889 POB: 4409.ae Website: www.gov.mcycd. Sheikh Mohammed bin Rashid Al Maktoum POB: 46616. Abu Dhabi Tel: 02 626 0606. Fax: 02 666 3088 Email: mofi@uae. Fax: 02 642 8778 Website: www. Abu Dhabi Tel: 02 626 2288.gov.fedfin. Abu Dhabi Tel: 02 642 8000.almajles. Abu Dhabi Tel: 02 681 4000.net.gov. Abu Dhabi Tel: 02 672 6000.gov.gov.gov.gov.gov.ae Ministry of Social Affairs The Minister: Mariam Mohammed Khalfan Al Roumi POB: 261.ae.ae/uaeagricent Ministry of Health The Minister: Humaid Mohammed Obeid Al Qattami POB: 848. Fax: 02 633 3259 Website: www.moe.ae Ministry of State for Cabinet Affairs The Minister of State: Mohammed Abdullah Al Gargawi POB: 899.ae/moj Ministry of Governmental Sector Development The Minister: Sultan bin Saeed Al Mansouri POB: 6633.ae/mohe Ministry of Public Works The Minister: Sheikh Hamdan bin Mubarak Al Nahyan POB: 878. Fax: 02 6351164 Website: www. Fax: 02 622 2228 Website: www.indd 13 10/24/07 3:42:22 PM . Abu Dhabi Tel: 02 4444488.H.gov.ae Ministry for Foreign Affairs Foreign Minister: Sheikh Abdullah bin Zayed Al Nahyan The Minister of State: Mohammed Hussein Al Shaali POB: 1.uae.ae Ministry of Presidential Affairs The Minister: Sheikh Mansour bin Zayed Al Nahyan POB 80. Fax: 02 626 0037 Website: www. Abu Dhabi Tel: 02 449 5100. Fax: 02 681 2846 www.moi. Fax: 02 446 3286 Website: www.uae.gov.ae Ministry of Education The Minister: Dr Hanif Hassan Ali Undersecretary: Dr Jamal Al Mehairi POB: 295. Youth and Community Development The Minister: Abdul Rahman Mohammed Al Owais POB: 17. Abu Dhabi Tel: 02 62138000. Abu Dhabi Tel: 02 446 6145.ae Ministry of Finance & Industry The Minister: Sheikh Hamdan bin Rashid Al Maktoum The Minister of State: Dr Mohammed Khalfan bin Kharbash POB: 433.moca. Fax: 02 626 0026 Website: www.ae Ministry of Justice The Minister: Mohammed Nukhaira Al Dhaheri POB: 260. Fax: 02 4414938 Website: www.uae. Fax: 02 445 3409 Email: moca@uae. Fax: 02 445 2504 Website: www. Abu Dhabi Tel: 02 6671700 or 02-4183888.mopw. Fax: 04 295 9888 Website: www. Abu Dhabi Tel: 02 681 2000. Abu Dhabi Tel: 02 622 2221.ae Website: www. Abu Dhabi Tel: 02 446 1300.uae.ae Ministry of Labour The Minister: Dr. Abu Dhabi Tel: 02 445 0777. Fax: 02 681 0680 Website: www.gov.gov.ae Ministry of State for FNC Affairs The Minister of State: Dr Anwar Mohammed Gargash POB: 836.ae The Minister: Dr Mohammed Saeed Al Kindi POB: 213.gov.gov. Abu Dhabi Tel: 02 632 2500. Dubai Tel: 04 295 2999.ae Website: www. Fax: 02 626 9942 Email: economy@emirates. Dubai Tel: 04 2691666.economy.THE UNITED ARAB EMIRATES 1. Abu Dhabi Tel: 02 633 0000. Ali bin Abdullah Al Ka’abi POB: 809.ae Ministry of Interior The Minister: Lt-General Sheikh Saif bin Zayed Al Nahyan POB: 398. Abu Dhabi Tel: 02 626 5000. Fax: 02 671 7722 Website: www.3 Federal Ministries Ministry of Defence The Minister: (also Prime Minister) H. Fax: 02 4449200 Email: mofa@uae.mopa.mdgs.

in the UAE. There was a 26.indd 14 10/24/07 3:42:23 PM .484 1.063 125.) 14 Investor’s Guide to the UAE 10-31MOE Chap1.159 210.339 75.44 45 .106.684 30.399.54 55 . over the last few years.1 Male 58.29 30 .CHAPTER 1 1. Population Results 2005 by Gender and Nationality Nationals Male 10.075 80.1 Non-nationals Female 21.64 65-69 70-74 75-79 80-84 80+ Not clear Total 55120 52371 53985 55575 50673 39396 25846 20189 14633 12433 10246 7893 6176 5335 3657 1621 1160 958 650 417917 UAE Nationals Female 52310 49704 50382 52536 52764 41121 26497 21554 16366 13857 9947 6341 4549 3283 2699 1205 960 830 673 407578 Total 107430 102075 104367 108111 103437 80517 52343 41743 30999 26290 20193 14234 10725 8618 6356 2826 2120 1788 1323 825495 Male 90497 87567 76777 65823 221350 444220 464072 366565 248093 162043 97081 43410 12632 3840 1746 576 370 304 1269 2388235 Other Nationalities Female 84217 79754 67887 58304 108756 137028 123994 92265 62190 37458 21592 9467 3971 2001 1319 622 479 339 1054 892697 Total 174714 167321 144664 124127 330106 581248 588066 458830 310283 199501 118673 52877 16603 5841 3065 1198 849 643 2323 3280932 Male 145617 139938 130762 121398 272023 483616 489918 386754 262726 174476 107327 51303 18808 9175 5403 2197 1530 1262 1919 2806152 Total Female 136527 129458 118269 110840 161520 178149 150491 113819 78556 51315 31539 15808 8520 5284 4018 1827 1439 1169 1727 1300275 Total 282144 269396 249031 232238 433543 661765 640409 500573 341282 225791 138866 67111 27328 14459 9421 4024 2969 2431 3646 4106427 Source: MOE Tedad (Census) 2005 (These results do not include 335. while an influx of expatriate workers is helping support the rapid industrialisation of the UAE.4 Demographics Population.234 131.621 47.19 20 .806. Expatriates constitute the majority of UAE citizens (around 85 percent) and all expatriates come to the UAE to work or invest.3 percent participation in the labour force in 2006.148 273.275 Total 1. Unemployment does not exceed 4 percent.8 Total 79.698 4.9 Total 20.997 49.321.305 520.427 Population Results by Age Groups and Nationality 2005 Age Group Male 0-4 5-9 10 .34 35 .3 Total Female 31.819 989.584 2. Around 2 percent of the growth rate is natural.442 78.59 60 .39 40 .665 332.9 Male 68.14 15 .49 50 .300.615 individuals who for various reasons are not counted in the census.453 793.313 19. has been rising.573 206.084 129.152 Female 472. at a staggering rate of around 7 percent per annum.114 1.7 Total 100 Population Results 2005 by Emirate Emirate Abu Dhabi Dubai Sharjah Ajman Umm Al Quwain Ras Al Khaimah Fujairah Grand Total Male 926.2 Female 9.24 25 .

However. companies in the UAE are often family affairs. This can be disconcerting if you come from a business environment where verbal agreements are not binding. Your cup will be frequently refilled. All buildings are air conditioned. Businesswomen are commonplace in the UAE and are generally treated seriously. When being introduced to a woman it is better to avoid offering your hand unless she offers hers first. In the UAE. with the ultimate decision-maker being the head of the family. shake the cup to show that you have had enough. Some people prefer to avoid this kind of contact. your initial meetings will probably be at a lower level. Do not be offended if an Emirati does not return your handshake. It is considered polite to return the invitation. As a regional hub. business is conducted on the basis of personal relationships and mutual trust. It can get quite cool in the evening in winter when a sweater or light jacket may be required. Be careful not to offer the left hand when accepting or passing items to Emirati people and position yourself so that you do not show the soles of your shoes or feet. You should always arrive on time for a meeting but you may be kept waiting. once a deal is made an Arab businessman’s word is his bond. It is a good idea to print your business card in both English and Arabic and make sure that your promotional material is in full colour and well produced. It is vitally important to build on these. If Arabic coffee is offered. Foreigners are attracted by a delightful winter climate. the UAE is thought to be the ideal place to establish branches in nearby countries. courtesy and patience are prized This highly cosmopolitan. Jumeirah Good manners. Your meeting may be interrupted by other guests or telephone calls as ‘open office’ arrangements are quite usual. it is important to identify the decision maker. Even if this is not the case. Although smart slacks. Although large firms are structured as in the rest The UAE is widely regarded as being at the forefront of regional development with a relaxed business environment.THE UNITED ARAB EMIRATES 1. will have come across countless nationalities in the course of life at home. shirt (ideally long-sleeved) and tie are sufficient for some meetings. a blazer/ jacket are required for meetings at senior level. If you do not want any more. It is best to dress conservatively and good grooming is essential – you will find that all business people are impeccably turned out. well-educated society is familiar with the ways of doing business worldwide and even those few Emiratis who are not frequent travellers themselves. Investor’s Guide to the UAE 10-31MOE Chap1. attributes. you should accept at least one cupful. highly sophisticated infrastructure and a crime-free environment.indd 15 10/24/07 3:42:42 PM CERT 15 . particularly if the woman acts in a confident and self-assured manner. Although Arabic is the official language. hard-hitting approach is not always welcome and it is usual to exchange pleasantries before getting down to business. of the world. Corporate leaders comment favourably on the high quality of life in the Emirates and the availability of good schooling for their children. These are also very important as a means of building mutual trust. The direct. Nevertheless. perhaps more than anywhere else.5 Business Culture and Tips on Business Etiquette in the UAE RAKFZ Hospitality is a matter of honour and a way of life in the Arab world and business is frequently conducted over lunch or dinner. all Emiratis speak fluent English. You will be offered traditional refreshments in an Arab home or office and sometimes a sweet tea or coffee flavoured with cardamom is served without milk. so throughout the year it is quite comfortable to wear a jacket indoors. During negotiations there may be unwillingness on the part of Emiratis to say ‘no’ to your face. Three cups are considered to be sufficient.

3 billion and the investment in airports is expected to be around AED45. the Federal Government has proactively earmarked significant investments developing a world-class infrastructure. hydro-carbon industries and real estate development. If you consider the Impressive Growth Rates One of the major success stories in the UAE is the growth in the private sector. finance and services and has attracted major global companies. it is clear that this is a country that wants to encourage investment. This has contributed to the worldrenowned status of the UAE as an international centre for trade.5 percent in the 1980s.4 percent in 2006 to AED599 billion from AED485 billion in 2005.6 Economic Transformation of the UAE The UAE Government has successfully pursued a strategy to create an enabling business environment that is conducive to economic growth. The UAE was the highest ranking country in the Gulf Cooperation Council (GCC) on the World Economic Forum’s Global Competitive Index for 2006-2007.indd 16 10/24/07 3:42:42 PM .9 percent in the 1970s and 29. The Ministry of Economy is actively contributing to the country’s potential by negotiating free trade agreements with key nations and implementing new regulations such as consumer protection laws. The Government emphasises continued diversification away from dependence upon oil and gas to non-oil industries. International entitities such as the WTO refer to the Emirates as an increasingly important supporter of the multilateral trading system. The UAE has recorded a surplus in the consolidated government financial accounts for the first time after over 20 years of fiscal deficit in the budget. Again. the development of Free Trade Zones has been an important policy tool. followed by Qatar in 38th place.4 percent in 2006 and 8. Each emirate has made significant investment in developing and operating these zones. Keeping this in mind. During the Middle Ages ships plied the routes between the Indian Ocean and the Mediterranean carrying goods back and Investment Hub Local investment in the UAE was expected to grow by 29 percent in 2006 to reach AED121 billion given the volume of projects under construction around the country. or clusters where organisations from the same sector can create a vibrant community. lured by the strength of the UAE economy. Nominal Gross Domestic Product has risen by more than 18 percent a year. which is an engine to drive the economy for decades to come. tourism. and more recent initiatives such as the Dubai International Financial Centre (DIFC) or Abu Dhabi Industrial City (ICAD). and transport and telecoms services. International companies are also investing heavily in the UAE. Examples of this are the Dubai Metro and the various airport expansion plans currently being undertaken right across the UAE.6 billion. In addition to facilitating inter/intra GCC trade. but these are being managed in a way that will enable further national development. Assets of local and foreign banks in the UAE grew 18 percent in first quarter 2006. The conditions which have dominated the energy market throughout 2006 have created favourable circumstances which have led to the development of all economic sectors and enhanced expansion of investements directed to infrastructural projects. the regulatory policies and the overall ‘can do’ approach toward commercial activities. The major drivers behind this growth are higher oil prices as well as development in the manufacturing sector. logistics. success of Dubai Internet City. the growth rate in terms of current prices reached 33. and focus on creating industry hubs. There are always impediments to the growth of any economy. The people of the Emirates learned the values of trading. In 2006 the Ministry issued Federal Law No 24 concerning consumer protection and created a special department for this purpose. and manufacturing. This is evidenced by the export mix of the UAE: non-oil exports were 52. real estate and business services. the growth of services will contribute to increased diversification and broad-based growth. have served the UAE well. The budget allocation for Dubai Metro is AED14. in forth from India and China. the zones also serve as the regional hub for businesses in the Middle East and Africa. According to the Ministry of Economy. which has developed into the entrepreneurial spirit the UAE is displaying today. Another positive indicator is the increase of nominal GDP of non-oil sectors from AED212 billion in 2005 to AED376 billion in 2006 as the contribution of non-oil sectors in nominal GDP has reached approximately 63 per cent. Long before the recent phenomenon of oil wealth. As a part of the approach to encourage businesses to set up operations in the UAE. with analysts attributing that Diversification The UAE economy of the 21st century is becoming increasingly diversified as a result of concerted efforts to grow vertical sectors such as aviation.CHAPTER 1 1. It was ranked 32nd. The services sector is another policy focus. The UAE has always focused on strengthening its stance as a hub for private commerce. and the UAE is addressing the issues that accompany rapid growth. the local economy showed entrepreneurial spirit. with its blue-chip members. such as a rising cost of living and increased traffic. increasing by 23.9 percent in terms of fixed prices. The World Economic Forum also ranked the UAE in 29th place on its 2006 Networked Readiness Index. 16 Investor’s Guide to the UAE 10-31MOE Chap1. coupled with the UAE’s tax-free status and world-class logistics infrastructure. just four places after Spain. part of its Global Information Technology Report. it was the WTO that pointed out that the low trade barriers. Economic growth in the UAE has witnessed a phenomenol increase over the last few years.3 percent of total exports in the five years from 2000 to 2004 compared to 31.

operation and attraction of foreign investment and tourists. abundant financial resources.1 billion. including the Abu Dhabi Investment Authority.4 billion. The wholesale and retail trade sector is one of the vital sectors in the development process and in 2006 it contributed 16.6 percent of the total GDP.4 74. In terms of natural gas supplies.000 78.2 billion in 2006. Its current account has been consistently in surplus since independence. amounting to AED62. 60 percent of the balance sheet growth was attributed to claims on the private sector.3 90. A number of high-tech SMEs have also been set up in the free-zone areas in the various emirates. Dubai Holding. building materials. The country is also an important participant in global capital markets through several investment institutions. these included the increase in the price of oil which raised the crude oil and natural gas sector from AED92 billion in 2003 to almost double that figure (AED223 billion) in 2006. Jebel Ali Free Zone in Dubai houses the world’s largest man-made port and the emirate is already a major centre for international trade and the world’s third largest reexport centre after Hong Kong and Singapore. The UAE has less than 0. probusiness climate and central location between Europe. in the aftermath of Sept. The return of GCC and UAE capital to the region. reflecting the importance that the government and the private sector are devoting to industry. and Abu Dhabi’s International Petroleum Investment Company.5 percent of total GDP at a value amounting to AED73. Specifically. and its investment in the UAE economy. zero income taxes and the free movement of capital and profits.184 12.1 49. The manufacturing sector reached 19.THE UNITED ARAB EMIRATES the world’s cranes! While construction is not an UAE FDI INFLOWS COMPARED TO OTHER GCC COUNTRIES.7 The UAE and its Potential The UAE has the fifth largest proven reserves of crude oil in the world.628 296 1.5 billion. an increase of 31.av United Arab Emirates Saudi Arabia Qatar Bahrain Oman Kuwait -111 504 1. The adoption of free market policies and regulations in the UAE. US$ Million CAGR 2001-05% 1 export sector. The UAE maintains extensive trade and economic relations across the five continents because of its strategic geographical location. and family-owned business groups in the UAE creating more formal corporate structures. The country is politically and economically stable with free market policies. the Emirates have become the largest trading partner of China in the GCC with two-way trade representing $14. As a gateway to huge markets of more than one billion consumers Investor’s Guide to the UAE 17 10-31MOE Chap1.469 80 1. 11th. The UAE is the Gulf Region’s major transhipment hub due to its excellent port facilities. The volume of international trade reached AED847 billion in 2006. it hires the low-income segment of the population and therefore has the highest multiplier effect since blue collar workers have the highest marginal propensity to consume. The real estate sector contributed 12. trade and real estate.8 N/A 4. as witnessed by its high ratio of imports plus exports (of goods and services) to GDP (around 142 percent). the Dubai Ports Authority. According to the Chinese Embassy in UAE. has led to impressive growth rates and a trend towards sustainable and diversified development. food processing and pharmaceutical products have been developed.5% on the previous year. A wide range of industries including oil by-products. Turning to positive external factors. more achievements in customs and banking reforms and the continuous appreciation of all economic indicators including the rise in the rates of growth.1 percent of the world population but boasts 15 to 25 percent of 1.indd 17 10/24/07 3:42:43 PM . The three non-oil sectors that led the way in 2006 were: manufacturing. aluminium.2 percent of GDP at a net value of AED46. the UAE is at third place in the Arab World and ranked fourth in the world. had benefits that are still being reaped today. The UAE has made great strides towards becoming a major player in the global economy. chemical fertilisers. External Trade and Outward Investment The UAE is a trading nation. The UAE anticipates further private sector growth through initiatives such as the privatisation of government organisations.049 5 715 250 2001 1 2005 Compound Annual Growth Rate Source: United Nations Conference on Trade And Development (UNCTAD) growth in part to the continuation of strong private sector activity. Recently there has been greater expansion in the national economic liberalisation policy. Asia and Africa.3 245.

This has been mostly a result of both exogenous and endogenous factors. the Arab World and Africa. was a major step towards this goal.5% in 2005 to reflect increasing world prices The decline in the USD vis-avis other world currencies and its analogous effect on GCC currencies.UAE and Arab capital returned from the US and the EU . The country is keen on enhancing economic. healthcare. WAM Inflation In the UAE. Nevertheless. the UAE is an enormously important investment hub. the second largest trader and the fastest growing tourist destination.Due to supply shortages. ranging from petrochemical.The dollar lost around 27% of its value over the years 2002-2005 Foreign Trade 2006 Exports Crude oil Petroleum by products Gas Free Zone exports Re-exports Others Total Source: UAE Ministry of Economy AED billions 178 18 22 80 162 28 488 Imports Commodities Free-zones exports AED billions 283 76 359 18 Investor’s Guide to the UAE 10-31MOE Chap1. trade and technical cooperation with other economic blocs.Fuel prices increased by 31. .Rent constitutes around 26% of the average household expenditure according to current CPI (Consumer Price Index) weights. The UAE is the region’s most advanced business centre and is set to become one of the world’s most successful headquarters for every kind of international business. Several rent ceilings were issued at the emirate level to deal with the rent increases. Such an environment is clearly conducive to foreign investment. A one-time increase in the price of fuel . financial services and a host of other services. A Consumer Protection Law was recently passed The next decade will witness a transformation to the super quality realm in the fields of education. Dubai Internet City. Dubai International Financial Centre (DIFC) plans to become a regional financial hub bridging the time zones between New York. with Sheikh Mohammed bin Rashid with Microsoft’s CEO growth in air and maritime transport. Increasing rent prices . rent prices increased significantly in Dubai. Logistics City. and Silicon Oasis. the UAE government has started to actively combat inflation. (See page 57 for list of Free Zones). Some of the pressure on rent prices is expected to ease in 2007. the CIS. as construction projects are completed. India. in addition to creating and equipping special zones and parks such as Abu Dhabi Industrial City.CHAPTER 1 The UAE is targeting higher and sustainable growth and further diversification to reduce dependence on oil. Increasing money supply post September 11th . Abu Dhabi and Sharjah. London and Hong Kong. an active open economy and an opportunity to penetrate neighbouring markets. The country is proud of its uncontested first place position as the most open and competitive economy in the Middle East and North Africa. The opening of the Dubai International Financial Exchange (DIFX) in 2005 with its international-style rules and regulatory standards. culture and tourism. metal and food-stuff industries to tourism.indd 18 10/24/07 3:42:46 PM . marine. tourism. The UAE can offer a wide range of attractive investment opportunities. Media City. number two in terms of per capita income. . Pakistan. The UAE is the third largest country in terms of GDP in the Arab World. Those who choose to set up businesses in the UAE will find a hospitable and simple process. The country has established a number of industrial estates in various regions. Services will make an increasing contribution to GDP. The United Arab Emirates thus represents an innovative business environment that facilitates international trade and investment. services and advanced IT industries.M1 grew at least 30% a year over the last few years. gas. inflation reached 10% for 2006. FACTORS CONTRIBUTING INFLATION TO in countries such as Iran.

765. The UAE also plays a major role in supporting the economies of other countries through expatriate transfers to their countries of origin.4% in terms of current prices and 8.317 9. non-oil sources will offset a decline in energy receipts.1 billion (12. This was primarily due to the UAE government’s provision of an enabling regulatory environment.THE UNITED ARAB EMIRATES that should reduce inflationary pressures by protecting the consumer against price fraud. The BMI considers the economy “relatively well insulated” from external shocks and capable of riding out any stock price correction. Moreover. The surplus in the current account also rose by 16 percent above the levels achieved in 2005. a moderate cyclical retreat to 4. the UAE Central Bank also uses certificates of deposit as a monetary tool to curb money supply.423 Kuwait Oman 2.5 billion. Source: United Nations Conference on Trade And Development (UNCTAD) Qatar Bahrain 796. The Ministry of Economy is in the final stages of drafting a Competition Law that should provide further assistance in combating cartels and abuse of dominant position. oil exports are set to subside. with pickup thereafter. US$ UAE GDP PER CAPITA COMPARED TO GCC COUNTRIES Future Direction The UAE has made significant strides in economic development over the past few years.000 13. logistics.945 Saudi Arabia United Arab Emirates 4. BMI says the UAE is “likely to emerge as one of the region’s strongest locations for FDI”. The manufacturing sector contributed AED73.698 Population 2005 number of people GDP per capita 2005. Real Estate accounted for AED46. the debate of changing the exchange rate system is irrelevant to the UAE given that all GCC countries are currently pegged to the US dollar and that the GCC is working towards a unified currency by 2010.9 million in the same year.4 billion (19.1 billion in 2005 to AED99. measured as nominal GDP will rise steadily from US$165 billion in 2006 to US$237 billion by 2011. It is expected that services will play a larger role in the UAE economy over the medium to long term.000.000 696. the national economy grew at the rate of 33.472.695 23. the government is committed to maintaining ‘laissez-faire’ policies and an effective public-private partnership.9% in terms of fixed prices reaching AED389.104. Over the medium term Dubai is said to be on course to spend some US$200 billion on project activity. GDP per capita is expected to level off in the region of US$34. Despite rising imports based on strong domestic demand.5 billion (16. an increase of 5. Business Monitor International’s (BMI) regular outlook for the UAE released in November 2006 forecast GDP growth of 8 percent in 2007. 1.949 16. The surplus in the trade balance reached AED129 billion representing a 14 percent increase over the previous year. with a mixture of hydrocarbons muscle and robust non-oil performance”.000 15.9 billion in 2006. (The base year for the fixed prices growth calculation is 2000.3 percent of GDP in 2006.indd 19 10/24/07 3:42:47 PM . With population projected by BMI to reach 6. While the depreciation of the US dollar vis-à-vis other world currencies over the last decade has led to imported inflation. with Abu Dhabi catching up at around $160 billion. To achieve that vision. ie.) The rate of increase in nonoil sectors reached 10.6%).. The vision of the government of the UAE is to transform the country into a regional (and even global) hub for entrepreneurship in several industrial and service spheres.580 2. propelled particularly by opportunities in real estate.8 Economic Data In 2006.2%) and the Government Services Investor’s Guide to the UAE 19 10-31MOE Chap1. The value of the output of oil and natural gas sector rose from AED95. Surpluses were achieved in both the trade balance and the current account in 2006. In 2005 transfers to India alone reached AED29 billion. medical tourism. with levels rising through US$20 billion in 2007. BMI presents the positive prognosis that the UAE is “charting a steady course . pharmaceuticals and IT. with rapid increases in niche sectors such as air and maritime transportation. The publication estimates that national income. As oil prices also ease back towards US$40 a barrel.0 percent.687. but hold a plateau above US$40 billion against the background of gently rising volumes. Intermediate and capital goods contributed AED62.5 percent in 2009.3 percent.5%) to non-oil GDP in 2006. The output of these sectors constituted 74.001 23...355 30.

2% to reach AED104.8%) to reach AED324.5% Construction 7. reaching a record AED121 billion.4% 0 2003 2004 2005 2006 1.9% Fujairah 0. Storage and Communication 6. the impact of net other factors (capital.2% Umm al Quwain 0.5 billion has been allocated for health (7.7% Transportayion.9% Sharjah 7. Retail Trade and Repairing Service 10.82 billion (33.2% Crude Oil and Natural Gas 37.indd 20 10/24/07 3:42:49 PM . trading volume increased by 541 percent in Abu Dhabi Securities Market and 703 percent in Dubai Financial Market. Fixed investments in the country also grew by an impressive 29 percent in 2006.7% Wholesales.4%).CHAPTER 1 GROSS DOMESTIC PRODUCT (BY SECTOR) 2006 Quarrying 0. Education makes up 33 percent of the total (AED7. Meanwhile. AED1. OIL SECTOR CONTRIBUTION TO UAE GDP 35. by AED21.51 billion (14.5% 36.7% 37% 31.1 percent).497 billion) and projects (AED1. social & personal Source: Ministry of Economy 2003 2004 2005 2006 Source: UAE Ministry of Economy sector came in at AED39 billion (10. agriculture. quasi-monetary deposits increased by AED58. Gas and Water 1.06 billion.9 billion in 2006) maintaining a zero deficit for the third year running.45 billion by the end of 2005. money supply (M1) rose by 29.70 billion (29. Financial markets in the UAE witnessed marked growth in all performance indicators. Consequently. 35 Source: Ministry of Economy Contributions to GDP by Emirate (2005) Abu Dhabi 59% Dubai 28. while almost similar amounts have been earmarked for social affairs. livestock & fishing. which grew by AED28.9 Federal Budget 2007 The federal budget for 2007 amounts to AED28. GDP at base price and at current prices achieved higher rates of growth in 2006.9% 28.19 billion (36%).1 billion or 5.3% AVERAGE OIL PRICES PER BARREL 65% 53.9%). reserves.01 billion (45.6%) on broad money (M2) was. restaurants & hotels.4% Electricity.4% 20 Investor’s Guide to the UAE 10-31MOE Chap1. infrastructure (AED1.8%).Live Stock and Fishing 2% The Finance corporation Sector 4.4% Manufacturing Industries 12.9% 28. compared to rates recorded in recent years.4% Government Services Sector 6.4% Ajman 1.4% Ras Al-Khaimah 1.5% Real Estate and Business Services 7. Security and justice constitutes 15.1% 0 * incl.1 billion).4% Social and Personal Services 1.4 billion (compared to AED27.8 billion) of the budget.7 percent (AED3. contractionary. As a result of increases in the number of traded shares and of listed companies.2 percent). broad money (M2) expanded by AED81.2% Domestic Services of Households 0. in addition to the expansionary impact of net domestic credit of AED89. However. The Emirates (Abu Dhabi and Dubai) contributed 52 percent (AED14.7% Agriculture.3 billion).6% Resturants and Hotels 1. An analysis of the factors affecting broad money shows that the impact of net foreign assets was expansionary. With regard to monetary and banking developments. provisions and other items). electricity & water.

on different regional trade agreements. Some 435 million will be allocated for road projects. The UAE has never been involved in any dispute under the WTO Dispute Settlement Mechanism. The ten key programmes for the fiscal year 2007 include education. Egypt Finland France Germany Italy Korea Kuwait Lebanon Malaysia Mongolia Morocco Mozambique Pakistan Poland Romania Sudan Sweden Switzerland Syria Tajikistan Tunisia Turkey Turkmenistan UK Yemen Date of Signature 24-Apr-01 17-Jun-01 27-Mar-00 1-Jul-93 23-Nov-94 11-May-97 12-Mar-96 9-Sep-91 21-Jun-97 22-Jan-95 9-Jun-02 12-Feb-66 … 17-May-98 11-Oct-91 21-Feb-01 … 9-Feb-99 24-Sep-03 … 5-Nov-95 … 31-Jan-93 11-Apr-93 18-Feb-01 … 10-Nov-99 3-Nov-98 26-Nov-97 17-Dec-95 … 10-Apr-96 28-Sep-05 … 9-Jun-98 8-Dec-92 13-Feb-01 24-Nov-99 15-Dec-93 25-Aug-01 24-Feb-97 15-Mar-00 16-Aug-99 10-Jan-01 9-Apr-94 7-Apr-96 1-Apr-02 14-Jul-99 22-May-92 Date of Entry into Force 3-Jun-02 1-Dec-03 16-Feb-01 28-Sep-94 25-Dec-95 11-Jan-99 15-May-97 27-Apr-92 2-Jul-99 29-Apr-97 5-Jun-04 Belgium & Lux. Once ratified.5 billion. Director General. The UAE is a staunch advocate of multilateralism. The initiative supports the diversification of exports. It grants at least Most Favoured Nation treatment to all its trading Investor’s Guide to the UAE 21 10-31MOE Chap1.indd 21 10/24/07 3:42:55 PM .1 are billion estimated and at infrastructure AED 6. except Israel. fulfils the aspirations of most (if not all) of its members. foreign policy and higher education at UAE University and the Higher Colleges of Technology. police services. would only result in a stagnant and inefficient private sector. social development. A contracting party to the GATT since 8 March 1994. including non-ferrous metals with strategic priority for primary aluminium. especially in sectors where developing countries have a comparative advantage. Protectionism. It is expected that the elimination of tariffs on raw materials would increase the demand of such materials in the world market and allow for a fair and level playing field for those commodities.6 billion) from investments. 1 June 2006 Partner Algeria Austria Belarus China Czech Rep. 5-Mar-04 … The United Arab Emirates’ sectoral initiative submitted to the World Trade Organisation with free respect to the Non-Agriculture Market Access (NAMA) negotiations proposes the elimination of all customs tariffs on raw materials. WTO Total number of Bilateral Investment Agreements concluded.9 billion) came from ministries revenues and 13 percent (AED3. in the form of high tariff barriers and technical barriers to trade. the UAE became an original member of the WTO on 10 April 1996. the UAE believes that it is essential to have a strengthened international trade system which is fully legitimate. Sheikha Lubna & Pascal Lamy. power generation. As a developing economy that thrives on free trade (as evidenced by a total trade that constitutes around 145 percent of GDP). The initiative aims at reaching a balanced approach between tariff reductions through a formula approach – which does not in many The UAE government believes that trade is a necessary condition for increased competitiveness and productivity in the long run. Salaries constitute projects AED9. educational curricular development. and lays down the principles and rules for promoting international trade liberalisation. It is in this spirit that the UAE has joined the World Trade Organisation (WTO) and has signed several free trade agreements and embarked on negotiations.10 World Trade Organisation partners. 1.THE UNITED ARAB EMIRATES percent (AED9. export and re-export of commodities to ensure greater integration with the global economy and facilitate the movement of commodities to and through the UAE. treaties and international agreements prevail over domestic legal instruments. curative services. the government is reviewing the various laws regarding trade. either individually or with the GCC. With the full integration of the UAE into the World Trade Organisation.

Norway. A Trade Investment Frame Agreement (TIFA) was signed between the two countries in March 2004. Exports than 50 of raw materials of the contribute GDP of more many percent provide the necessary flexibilities and allow these countries the possibility to exclude sensitive materials and ask for longer transitional periods for adoption of the initiative. This reflects the flexibility referred to in the July package of 2004. the UAE has also signed joint FTA’s with some other countries and regional economic blocs. Pakistan and India. GCC FTAs As a committed member of the GCC. and based upon the positions of WTO Members and with regard to the past experiences on the Zero to Zero initiative of the ASEAN countries.in near future Source: Ministry of Economy was part of the intensive process and tabling of the draft schedules of concessions. followed by China.in near future GCC New Zealand . The initiative would allow for a reduction in the speculative and distortive pricing of raw materials. in recognition of the potential of such agreements to reinforce global trade liberalisation.indd 22 10/24/07 3:42:55 PM . In this respect. while noting that it is important for all Member states to maintain the objective of a balanced agreement on all points of negotiations. the GCC Heads of States have agreed that any new preferential agreement concluded by one of its members will apply “pari passu” to all members. Morocco and Iraq. As primary aluminium can account for up to 50 percent of the cost of an aluminium semi-finished product. Lebanon. On the services process. In the NAMA negotiations. The UAE has also signed bilateral preferential agreements for trade with Syria. that nation will be left behind. Jordan. and notes that the initiative falls under the development aspect of the Doha Agenda. which was commensurate with the objectives of the Government to augment the current liberal policy on trade in goods. With the aim of addressing the sensitive issues existing in handling a sectoral initiative. WTO-consistent FTAs with its trading partners. 1. the UAE has already submitted an initial offer which is in line with the on-going reform process. The United Arab Emirates is fully committed to WTO principles. Bilateral Agreements In March 2005. At GCC level the EU is the primary one in terms of trade agreements. China Conference. 22 Investor’s Guide to the UAE 10-31MOE Chap1. which would GCC FTA negotiations with other countries and economic blocs: GCC Japan GCC Singapore GCC EU GCC Mercosur GCC India GCC Turkey GCC China GCC EFTA (European Free Trade Assoc: Switzerland. the differences mainly relating to whether or not participation of WTO Members in such initiatives should be mandatory or voluntary. The UAE is actively participating in the Doha Development Agenda Negotiations and working closely with other WTO members to reach the objectives agreed in the Hong Kong.CHAPTER 1 cases focus on areas of interest to developing countries – and the aim of increasing exports of raw materials that many developing countries consider an essential element of their economy. the UAE developing countries. Today. can be considered an example of cooperation and convergence between the interests of both developed and developing countries of the WTO. the UAE points out that developing countries who decide to participate in the initiative may look for a selective participation approach. The United Arab Emirates reaffirms its full support of the “less than full reciprocity” approach accorded to developing countries as a special and differential treatment.11 Free Trade Agreements The UAE has adopted an open-minded approach in pursuing high-standard. Sectoral initiatives have been a point of divergence among developing and developed countries during the fifth Ministerial Meeting of the WTO Members in Cancun 2003. The United Arab Emirates is not such a nation. the United Arab Emirates fully supports the position of the developing countries with regard to the voluntary approach of the sectoral initiative. the UAE officially started negotiations with the USA with the aim to conclude a comprehensive Free Trade Agreement (FTA). eventually becoming marginalised. To avoid conflicts between bilateral under-takings and commitments as a GCC member. A sectoral agreement on raw materials. new collective requests have been received from certain WTO members and are under consideration. The world is becoming increasingly small as globalisation affects us all. The UAE is also a member of the Greater Arab Free-Trade Area (GAFTA) in which all GCC States participate. which in turn would provide more predictability in the operation of the aluminium market and secure a more transparent environment. a duty free primary aluminium would therefore stimulate consumption and support the competitiveness of this material. except for agreements with the United States. Negotiations are still in process. unless a nation recognises these global trends and pays attention to their directions. Liechtenstein & Iceland) GCC Australia . Recently.

Leading sectors attracting FDI are oil and gas field machinery and services. The reform of the current investment framework (through amendments to the Company Law) is perceived as one of the most important ways to materialise this objective and attract more Foreign Direct Investment to support this endeavour. create an institutional framework dealing with investors.5% Wholesale and retail trade. to champion a National Investment Reform Process that includes several relevant parties and aims at making the UAE more conducive to investments. Opportunities exist in most economic sectors with access to the Arab market of around 300 million consumers. The bulk of the companies in Jebel Ali are active in the assembly of electronic products. they apply differently to local free movement of labour (less than 22 percent of the population are UAE nationals) negligible barriers to entry (the effective tariff rate is 5 percent for most goods) The UAE maintains the belief that income tax exemptions encourage an increase in FDI and a more vibrant private sector development.THE UNITED ARAB EMIRATES 1. The law will regulate the foreign investors’ investments.12 Direct Investment Policy The UAE strongly believes that the private sector (both local and foreign) is the true engine of growth in the long run and that FDI brings in transfer of knowledge and expertise in areas that are not the country’s core competencies.2% Others 1. efficiency enhancing infrastructure. Such a decision would be binding on the government with no reversal possible. Finally. For example. Professional licences covering all services and artisans 3. Commercial licences covering all kinds of trading activities Licences can be obtained only by domestic companies that are majority-owned by UAE nationals.9% The UAE is keen to develop the following sectors: ICT Financial Services Electronics and Engineering Industrial Technology Healthcare Biological and Life Sciences Education and Knowledge Industries Tourism Service industries Source: Ministry of Economy Investor’s Guide to the UAE 23 10-31MOE Chap1. in Dubai. To this end. medical equipment. The MOE is currently preparing a federal Unifed Foreign Investment Code. STOCKS OF THE COMPANIES OF DIRECT FOREIGN INVESTMENTS DISTRIBUTED IN INDUSTRIAL SECTORS Real Estate and Commercial Enterprises 10. Foreign investors can now benefit from: 100 percent foreign ownership in any of the UAE’s Free Trade Zones no taxes (on all sectors excluding banking) no restrictions on repatriation of capital Investment Framework The UAE’s investment policy is implemented through licences. The bulk of FDI has been directed into real estate projects.3% Health and Education 0. promote specific investment opportunities. or by 100 percent foreign-owned branches. the Ministry of Economy has been given the mandate. According to the World Bank. Jebel Ali Free Zone in Dubai in particular has estimated annual revenue of over US$8. foreign direct investment in the UAE reached US$12 billion in 2005. open up sectors or sub sectors for foreign investors. This does not apply in the free zones. Under this new law some sectors will be liberalised by a decision of cabinet of ministers. Reform of the Investment Framework Currently discussions are underway in the UAE to re-examine the Federal Commercial Law that limits foreigners to minority stakes in local firms (the historical cap of 49 percent) and a new Companies Law will be announced in 2007. telecommunications.4% Transformational industry.0% Construction 4. computers. there are three categories of licences: 1. power and water. the UAE believes that a balanced public budget is conducive to economic growth. which will serve as a one-stop-shop law reflecting government policies towards foreign investments.indd 23 10/24/07 3:42:56 PM . the partnership with foreign investors opens new market opportunities due to the creation of new networks. Moreover. the basic requirement for all business. maintenance of engine vehicles and personal commodities 21.5% Mining and Energy 19. from the UAE Cabinet.7% Financial mediation 6. describe investment guarantees and facilitate start-up procedures. which must appoint a local services agent or “sponsor”. Industrial licences for industrial activities 2.5 billion. All free zones therefore benefit from zero income tax. water and electricity supply 29. and foreign companies. Licensing procedures vary from emirate to emirate. Moreover. and into the free zones. and logistics services. as well as in distribution services benefiting from low costs.6% Transport and storing and communications 6. and franchising. The main objective is to further diversify the economy. light engineering and manufacturing. FDI sustains investment confidence and creates employment. but are publicly available and transparent.

21-22 December 2002) Federal Law No. 5 of 1975 Federal Law No.indd 24 10/24/07 3:42:57 PM . 16 of 1975 (the public tenders law) Ministerial Decision No. 1997 and No. 14 of 1988 and Federal Law No. 20 of 1987. 7 of 2002 concerning copyrights and neighbouring rights Federal Law No 37 of 1992 on trademarks as amended by Law No. Federal Company Law No. the monetary system and organisation of banking Federal Law No. import and export procedures. Main Federal Trade-Related Laws in the UAE Laws GCC Common External Customs Tariff GCC Common Customs Law of 1 January 2003 (Decision of the Supreme Council of the GCC regulating the customs procedures for the establishment of the customs union. 4 of 1983 on the Pharmaceutical Profession and Pharmaceutical companies Federal Insurance Law No. 13 of 2006. 7 of 1976 establishing the State Audit Institution Federal Law No. 3 of 2004 Federal Law No.ae. 18 of 1993 UAE Federal Order No. 5 of 2002 Subject Tariff Customs regulations.13 Legal Framework Full information on the Commercial Companies Law and the Trade Agencies Law are available at www. 18 of 1981 concerning the organisation of commercial agencies. 1 of 1979 organising industrial affairs Federal Law No. 8 of 1984 concerning commercial companies and the amending laws thereof Federal Law No. No. industrial drawings and designs. 20 of 2000 on Administration of Contracts System Federal Law No. Federal Law No. as amended by Federal Law No. 5 of 1985 Federal Law No. and the Executive Order of the Supreme Committee No. rules of origin Regulation of commercial agencies (exclusive distribution rights) Commercial companies law Commercial register Civil transactions (Civil Code) Commercial transactions Government procurement Government procurement Government procurement Industrial projects Copyright Trade marks Industrial patents Pharmaceutical profession and pharmaceutical companies Insurance services Insurance services Telecommunications Postal services Banking and financial intermediation services Securities regulation Legal services 24 Investor’s Guide to the UAE 10-31MOE Chap1. 17 of 2002 on the industrial regulation and protection of patents. the amended Federal Law of 1991. 333 of 2004 regulating the activities of foreign insurance companies Federal Law by Decree No. 8 of 2002 Federal Law No. 23 of 1991 concerning the practice of the advocate profession and amending laws.CHAPTER 1 1. 10 of 1980 concerning the Central Bank. 8 of 2001 Federal Law No. 3 of 2003 regarding the organisation of the telecommunication sector. 4 of 2000 (Stocks and Commodities Authority) Federal Law No. respectively.economy. 9 of 1985 Ministerial decision (Minister of Economy and Commerce) No. 4 of 1985 and Federal Law No.

Other laws relating to industry include Federal Law No. for example. 1 of 1979. The UAE’s initial offer on services. mineral raw materials refining and small projects with a fixed capital of less than AED250.THE UNITED ARAB EMIRATES 1. Federal Law No. The concept of holding the open “majlis” or council.13(a) Federal / Local Constitution According to the Constitution. matters concerning unemployment. The largest emirate. or specific individual requests. The Council is also vested with powers to question officials and examine and endorse local legislation. Local industrial production is defined as that in which local manufacturing accounts for not less than 25 percent of the total. Each emirate has jurisdiction in all matters not assigned to the exclusive jurisdiction of the Federal Government. In the majlises. however. The law stipulates that industrial projects should employ a minimum of 25 percent local labour. Abu Dhabi.13(b) Industrial Law The main legislative instrument governing industrial affairs is Federal Law No. Abu Dhabi also has a legislative branch at the local government level. is in line with the policy objectives set by the Government and its reform process that is currently under way. Any foreign equity Investor’s Guide to the UAE 25 10-31MOE Chap1. and according to Article (23) of the Federal Constitution of the UAE. At the emirate level. This is especially important given that services now account for over 50 percent of the country’s GDP. discussions between sheikhs and other citizens may address a variety of issues including economic and foreign policy. postal. which has a role similar to that of the Federal National Council. and its main cities are administered by municipalities. 14 (1992) regarding the establishment of the Department of Standards and Specification and Federal Law No. Overall. Its Eastern and Western regions are headed by an official with the title of Ruler’s Representative. the licensing of aircraft. and Sharjah have similar local government structures. In order to provide a more flexible and transparent incentive scheme. The Federal Companies Law is in the process of being amended allowing the Council of Ministers to determine the sectors that non-nationals can operate in and the foreign equity participation thereof. security and defence.13(c) Company Law and its Update The UAE is keen on progressive liberalisation in a wide range of its service sectors. telephone. 8 (1980) governs the rights. 44 (1992) for the regulation and protection of industrial ownership of inventions and designs. most key decisions are made at the emirate level. The law applies to all industrial projects other than those of the federal government. There is a similar pattern of municipalities and departments in each of the other emirates. a committee has been formed to modify the Industrial Law which and duties of employers 1. presided over by Crown Prince Sheikh Mohamed bin Zayed Al Nahyan. The Council provides a forum for its members to voice concerns and suggest introduction or revision of federal legislation. the minister may reduce or waive this requirement if insufficient national citizens are available for the position. this sector is excluded from the Federal Companies Law of the UAE. has remained relevant. while in other emirates the ruler has a diwan – his office – through which the concerns of citizens may be directed to the government. federal authority responsibilities include foreign affairs. Local governments. education. currency. air traffic control. is due for completion in 2007. and other communications services. The emirates of Abu Dhabi. concerns and complaints to their rulers. sectors included and foreign equity participation may not be reduced. Ministerial Decision No.indd 25 10/24/07 3:42:57 PM . As for natural resources. which may be up to 100 percent in sectors that would be specified in a cabinet’s decision. nationality and immigration issues. and labour relations. modern and traditional government structures co-exist and evolve together. 51 (1986) gives preference to local products in terms of government procurement provided such goods are equivalent in quality to foreign products and not more than 10 percent more expensive.000 or employing fewer than ten people. Important examples of this are the decision to unify the armed forces in 1976 and the relinquishment by each emirate of the right to join the Organisation of Petroleum Exporting Countries (OPEC) and the Organisation of Arab Petroleum Exporting Countries (OAPEC). Its National Consultative Council comprises 60 members elected from among its main tribes and families and is chaired by a Speaker. responsibilities and employees. The committee studies applications for the setting up of industrial projects and any exemptions and incentives and decides by a majority. public health. has its own central governing council. Under the Constitution each emirate is permitted to relinquish national powers to the Federal Government. each of which has a nominated municipal council. 1. Once a decision has been issued. The law appoints an industrial committee under the chairmanship of the Minister of Finance and Industry. oil and gas extraction and refining. However. Foreign equity will not be dealt with by this new law but will instead form part of the companies and foreign investment codes. the Free Zones and the Federal Environment Agency have issued various laws and regulations related to industry. a traditional means for the people to voice their opinions. ownership of all natural resources is vested in each individual emirate and not the Federal Government. The law requires that at least 51 percent of the capital to be local and that the manager and majority of board members are UAE citizens. The Federal Government provides the broad framework for policymaking in the UAE. governments differ in size and complexity. Dubai. Industrial projects that wish to manufacture medicines have to obtain the prior approval of the Ministry of Health. the Executive Council. Ras Al-Khaimah.

18 of 1981. 13 of 2006 to original law no. Commercial agents are entitled to prevent products subject to their agency from being imported into the UAE if the agent is not the consignee. Upon such expiry of the term of the agency contract and at the request of either party. Therefore.CHAPTER 1 in projects related to natural resources in the UAE is determined by the competent authorities of the local government of the emirate. (The Commercial Companies Law and Agencies Law can be downloaded at www. there are other types of agencies. 5. the term of the commercial agency runs parallel with the term of the agency contract. Commercial agents are entitled to an exclusive territory encompassing at least one emirate for the specified products (Article 5(1) of the Law). representatives. The Article further states that a commercial agency may only be deregistered by mutual agreement of the parties or pursuant to court order. foreign investors may have an agent to represent their interests in the UAE. The most common type of agency is the contracts agency. Currently. The Federal Law concerning commercial agencies does not necessitate that importing activities. the commercial agency shall be deemed to have expired unless the parties have agreed to extend it. Primary Requirements of Commercial Agencies: 1. in which the natural resources are located. A statement that the commercial agency contract runs for the duration of its term. all registered agencies for such items should be cancelled. Each emirate practises its right in accordance with its development needs. 2. Commercial agents must be registered with the UAE Ministry of Economy. requirements for investment. commercial agents are entitled to receive commissions on sales of the products in their designated territory irrespective of whether such sales are made by or through the agent (Article 7 of the Law). the Ministry shall then deregister the agency unless the Ministry receives an application from the parties expressing their mutual desire to renew the contract for a further term. The Commercial Agency Law provides for compensation of the agents terminated without due cause only if the agency agreement has been registered with the federal Ministry of Economy. the instigation and negotiation of the conclusion of deals. to the advantage of the principal and in return for payment” (Article 217 of the Code). the importing of the subject matter of the contract to the geographical area specified in the agency contract should be reserved for the exclusive agent. Distributor contracts are treated like contracts agencies when they involve one agent as the sole distributor (Article 227 of the Code). The Law regulates and governs the appointment of commercial agents. and technical know-how. At the conclusion of the term. 14 of 1988 and Federal Law 13 of 2006). the aggrieved party may recover compensation for the damage which he has suffered. and distributors. wholesale and retail distribution services should be reserved for exclusive agents. or either party to a non-fixed term agency contract wishes to terminate the contract. there are some companies working in the natural resources sector (including the petroleum sector) in the UAE with foreign equity up to 100 percent. technology. But in the case of exclusive agents. The agency agreement must be registered in order for the agent to avail itself of the protections afforded under the law and to have the agency relationship recognised under UAE law. Hence. sell. the commercial agency will run for that period and will expire at the end of the contract term. Unless otherwise agreed. as amended by Federal Law No. or provide goods or services within the UAE for a commission or profit” (Article 1 of the Law). Confirmation that no goods of a commercial agency may enter the UAE except through the 26 Investor’s Guide to the UAE 10-31MOE Chap1. This law defines a commercial agency as any arrangement whereby a foreign company is represented by an agent to “distribute. If the agency contract is for a fixed term. 4.economy. whereby the agent undertakes “on a permanent basis and in a specific area of activity. 2. then the agency and its registration shall continue indefinitely unless the parties agree to terminate the agency or change the contract to a fixed-term contract (without the involvement of the Ministry of Economy). This general rule has been diminished by the Cabinet’s Decree that was recently adopted which amends Article 23 of the Federal Law concerning Commercial Agencies providing that “no commercial agency might be the subject matter of any commercial item liberalised by a decree of the Cabinet and therefore.ae) Amendments Introduced under the New Law The new amendments made under UAE Federal Law No. 6. Commercial Agencies According to the UAE Commercial Agencies Law (Federal Law No. Commercial agents must be UAE nationals or companies incorporated in the UAE and owned entirely by UAE nationals. it merely provides that whenever an agency contract is concluded and registered in the Ministry of Economy. Many UAE commercial agents will insist on a registered arrangement in order to avail themselves of the protection of the Commercial Agencies Law. termination can only occur by bringing the matter before the court and it ordering deregistration pursuant to the parties’ arguments in court.indd 26 10/24/07 3:42:57 PM . If the agency contract is for an unspecified term. 3. 18 of 1993) augments the Commercial Agencies Law and establishes the regulatory framework for the various types of commercial agencies permitted. offer. 3. The Commercial Code (Federal Law No. where the parties to a fixed term agency contract wish to terminate the contract summarily. A statement that if the termination of an agency has caused damage to either of its parties. 18 of 1981 have the following effect: 1. This right is given to both parties and not just to one party at the expense of the other.

including child sexual abuse. The new department will do so by educating consumers about their rights and how to secure those rights. It will also issue a decree for the setting up of a Consumer Protection Department at the Ministry of Economy and enact a law giving the Minister the power to take the necessary action to stop any unnecessary price hikes and to protect the interests of consumers. which the UAE is currently examining. Two representatives from the Emirates Society for Consumer Protection are to be included among the committee members. The members of the Committee had to be representatives of the emirates. The department will also ensure fair competition in the market and will team up with other concerned bodies to ensure consumer awareness. Furthermore. in consultation with the Ministry of Finance & Industry and the chambers of commerce. There are no ‘a priori’ price controls. such as internet fraud. such goods may be imported into the UAE. hacking credit cards. computer forgery and aiding and abetting cyber criminals. The Law repeals Articles 27 and 28 which provided for the referral of any dispute to the Committee set up under the Ministry of Economy.13(e) Consumer Protection Law Federal law no. However. anti-competitive practices are dealt with on a case-by-case basis by the Ministry of Economy. Articles 27 and 28 were repealed entirely so as to do away with the Committee at the Ministry of Economy. in the event of any dispute arising between the parties. 1. in order to contain the negative effects of cartels and other anticompetitive practices. The GCC Secretariat has submitted a draft for a unified GCC competition law. In particular. The Ministry of Economy has the mandate to develop and implement the Competition Law. but the Ministry of Economy monitors the prices of 15 goods. mainly food products. 24 of 2006 concerns consumer protection. including telecommunications. The Ministry of Economy is setting up a special department to supervise the general policy on the protection of consumers and regulating prices. Therefore. The law re-affirms federal law no. information systems and programs as well as electronic correspondence and online government information and documents.000 for cyber crimes such as interception. 1.13(f) E-Commerce Law The UAE E-Commerce Law carries a maximum 15-year prison sentence and a fine of up to AED100. 1. This is in line with the strategy of the UAE government to create an enabling business environment that is conducive to economic growth. such goods may be seized and can only be released with the consent of the Ministry or agent. data theft. Various model laws are being considered. either party may approach the courts which have original jurisdiction over any commercial dispute. The law states that commodities put on shelves for sale must have tags clearly displaying price. There are severe penalties for criminal activities. identity theft. as well as other rights safeguarded by the new law. However. 18 of 1981 and its amendments which deal with the organising of commercial agencies in a way that every commercial agent or distributor must give all the necessary guarantees that producers or commercial agents give on their commodities. competition within the telecommunications sector. computer intrusions and others involving the use or targeting of computers or networks will carry tough penalties. water. (TRA) issues policies directives concerning Investor’s Guide to the UAE 27 10-31MOE Chap1. Other offences. The law also tackles computer-related crimes. Electricity. Currently. 4. It will also set up a hotline in the ministry to receive complaints from consumers. interference and sabotage of networks. the seizure will remain in force pending the resolution of the dispute over the goods entering the country. the Telecommunications Regulatory and when Authority necessary.THE UNITED ARAB EMIRATES registered agent. the UAE Government plans to introduce a Competition Law in 2007. If goods are the subject of a registered commercial agency. hacking and virus distribution. The Committee was competent to decide any dispute that arose between an agent and principal and the matter could not be referred to court unless it had first come before the Committee.13(d) Draft Competition Law In order to protect consumers from groundless price increases. abusing the internet to promote terrorism or thoughts that contravene public order and ethics and money laundering. The law called for the setting up of a special committee to be known as the Higher Committee for Consumer Protection under the chairmanship of the Minister of Economy. The provision aims to protect certain goods by stipulating that even if an agent already exists. The new law protects the rights of consumers in the market by giving them full freedom in making a choice and returning or substituting faulty items. including computer fraud. the Article contains a new provision concerning goods which have been classified as exempt and goods which may be traded and imported into the UAE regardless of the existence of a commercial agency. and pursuant to a Cabinet decision. The Federal Government and the emirate governments have a role in the price determination or approval of a number of services. the UAE government is committed to developing a highly competitive market with low import duties and the absence of non-tariff barriers. Recent inflationary pressures have led to the exemption of basic food items from the scope of the Trade Agency Law. whenever necessary or whenever required by the UAE economy to prevent monopoly.indd 27 10/24/07 3:42:57 PM . postal. Sector specific competition policies exist and are enforced. modification. and medical services. and gas prices are set by state-owned companies at emirate level. The Cabinet is to issue a decree to set up the committee and determine its prerogatives. The law protects the privacy of internet users.

since January 2005. Article 23 of the Patent and Designs Law stipulates that the importation of the product is not sufficient ground for granting a compulsory licence. They are now covered by Article 66 of the law. since September 1974. inventions dealing with the chemistry of drugs or pharmaceutical compounds. The UAE is a member of the following treaties: the WIPO Convention.13(i) Plans for Import / Export Laws The UAE is planning to issue an Export Control Law which will provide further incentives and benefits to foreign investors. The term of patent protection was increased from 15 years renewable for five additional years. Domestic companies doing business globally and foreign investors looking at opportunities in the UAE will benefit from the country becoming a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. 28 Investor’s Guide to the UAE 10-31MOE Chap1. handicrafts. to ensure conformity with the provisions of the TRIPS Agreement. This will make resolving disputes easier and fairer for all parties doing business in the UAE and boast the prevailing investment climate. the Berne Convention (literary and artistic works). On November 20th 2006. and to establish uniform principles and rules related to the documentation and safety of electronic correspondence. and Designs Law provides for non-exclusive compulsory licensing. or using the method. an industrial process or method or to the application of a known industrial process or method. Previously. The UAE is amongst the leading countries in the protection of IPR and this was confirmed by recent international reports. diagnostic. The country is firmly committed to ensuring the enforcement of Intellectual Property Rights. years (non-renewable) from the date of filing the application. and services. fishing. specific pieces of legislation have been enacted with the aim of further strengthening and enforcing protection of IPR. since June 2005. hunting. it has opened a register for filing patent applications for inventions concerning pharmaceutical and agricultural chemical products. or for an improvement on a patented invention. covering both product and method of processing. The Patent 1. the PCT (Patent Cooperation Treaty). which directly coordinates with different sectors of the government such as the municipalities and police. therapeutic and surgical methods for the treatment of humans or animals. The law enables the patent holder to prevent others from manufacturing.13(j) Intellectual Property Laws Since the inception of the Federation of the UAE in 1971. since July 2004. scientific principles and discoveries. Micro-organisms are patentable. The licence should be for the purpose of fulfilling the demands of the local market. This law will also deal with equity of foreign investors. Exceptions (from patentability) exist for plant and animal research. since September 1996. the amendment specified the rights of the patent holder in preventing others from using it. To conform to Article 28 of the TRIPS Agreement. or biological processes for the production of plants or animals. No compulsory licence has so far been 1. the Paris Convention (industrial property). importing. the UAE joined the United Nations Commission on International Trade Law. Since the entry into force of the TRIPS Agreement.CHAPTER 1 The law is applicable to all offences. since July 2004. as well as inventions in foodstuffs were excluded from coverage. with the exception of microbiological processes and products. to 20 1. The new law confirms that the UAE respects agreements between parties to refer any disputes to private arbitrators rather than the courts of the UAE or of any other state. giving UAE courts powers to enforce arbitration awards made in foreign countries. Intellectual Property Rights (IPR) have been protected in accordance with the general principles of law. The law was amended in November 2002. including agriculture. since March 1999. From 1992 onwards. and the WIPO Performances and Phonograms Treaty (WPPT).indd 28 10/24/07 3:42:58 PM . especially to the benefit of e-commerce and other transactions. This legislation aims to facilitate the exchange of e-mails via reliable electronic records. Patents The 1992 Patent and Design Law No. to allow better transfer of electronic documents to government bodies and enhance the availability of government services via reliable e-mail connections.13(h) Plans for Investor Laws The UAE is planning to issue an Investor Law which will provide further incentives and benefits to foreign investors. An applicant must prove that efforts have been made to obtain a licence from the patent owner on reasonable conditions. after the lapse of at least three years after granting the patent. even those committed partially or totally outside the country if they harm the country’s interests. the WIPO Copyright Treaty (WCT). using or otherwise keeping for the purpose of selling or using the product. and inventions related to national defence or that would be contrary to public order and morality. The supervisory ministry for IP matters is the Ministry of Finance and Industry. 44 provides for the protection of a patent granted for any invention that is the result of an innovative idea. selling. This is a move that will boost business confidence in the country. to facilitate and promote e-commerce and transactions at local and international levels by using e-signature. The 2002 amendment also extended the coverage of the protection of innovations to all fields of technology. 1. offering for sale. whether in relation to a new industrial product.13(g) Arbitration Law The UAE has joined the UN convention for arbitration – a global agreement that allows for the enforcement of trade dispute arbitration decisions in member countries. the Rome Convention. There is a special department in the Copyrights and IPR Office for combating counterfeiting and piracy. to limit forgery and amendment of e-correspondence.

In particular. Protection is granted for ten years. Article 2 of the law considers as trademarks. 40 is the main legislation protecting copyright. Trademarks The 1992 Trademarks Law No. or to indicate that the products.indd 29 10/24/07 3:43:02 PM . literary works. except Article 6 bis). the Trademark Law could. Under the Trademark Industrial designs are protected by the Patent Law through the extension of the works and types of expression covered as well as the nature of the protection. The amendment introduces the exclusive right to exploit. among others. However. as a result. The 2002 amendment has brought under its scope computer program applications. However. Trademarks Geographical Indications The Trademarks Law does not contain a definition of geographical indications as such. no such case has so far been filed in the UAE. Geographical indications related to alcoholic beverages cannot be registered in the UAE. Articles 1-21.THE UNITED ARAB EMIRATES granted. geographical indications can be considered as trademarks if they are used to distinguish goods or services with regard to their production. by a written notarised contract. be invoked by the owner of the trademark to prevent parallel imports. Layout of Integrated Circuits (topographies) Computer programs are protected by the 1992 Copyrights and Neighbouring Rights Law No. According to the authorities. The Trademark Law does not contain provisions with respect to parallel imports or to national or international exhaustion of rights. Protection is for ten years. The 2002 amendment of this law added that the non-use of the trade mark should not be a reason for the deletion. grant to any person a licence to use the trademark (Article 30).economy. or processing of such a product for the purpose of offering it for sale or selling it. The licence has no effect on third parties unless it has been recorded in the Register and published as prescribed in the Executive Regulations. registration is renewable indefinitely. 37 is the main legislation protecting trademarks. renewable once for five years. It was amended in 2002. Copyright protection is for 50 years. the owner of a trademark may. as well as compilations of data. The law now provides for clear provisions to deal with the situation foreseen in the derogation from Article 36 as specified in Article 37 of the TRIPS Agreement. 11 (Articles 45-49). Industrial Designs Industrial designs are protected by the Patent and Design Law (Article 51) and the related 1993 Decree No. unless the owner justifies the non-use of the trademark. selection or commercialisation. renewable once for five years. The holder is accorded exclusive rights over imports of any product related to the industrial design. Sound constitutes an element of the trademark if it accompanies the trademark. The amendment provides more detailed measures to enforce copyright in line with the provisions of the TRIPS Agreement. under the rental right. 40. (The Trademark Law can be downloaded at www. The Ministry of Economy is the supervisory ministry for issues related to trademarks. There is no provision on parallel imports of patented products.ae) Investor’s Guide to the UAE 29 10-31MOE Chap1. The provisions on industrial designs under the Patent and Industrial Design Law also apply to integrated circuits (Articles 43-51). products or services. The Trademarks Law allows the court to delete the registration of a trademark if it is determined that the mark has not been used effectively during five years. All industrial designs must be registered by the Ministry of Finance and Industry (the Directorate of Industrial Design). whereby a person has no knowledge or reasonable grounds to know when acquiring an integrated circuit or an article incorporating such an integrated circuit that it contains an unlawful topography. if it is due to reasons not related to the ownership of the trademark. The provisions on industrial designs under the Patent and Industrial Design Law also apply to integrated circuits (Articles 43-51). including computer programs and cinematography work. the amendment is designed to meet the obligations arising from Article 9 of the TRIPS Agreement (Berne Convention. goods or services are the properties of the owner of the mark. Copyright and Related Rights The 1992 Copyrights and Neighbouring Rights Law No. signs that take a particular form if they are used to distinguish goods. The law also contains provisions on well-known marks.

unless it has been published or made available to the public.CHAPTER 1 keep it confidential. 4 of 1983 related to pharmaceutical institutions and the pharmacy profession and its by-laws provide for the establishment of a committee in charge of pharmaceutical registration and pricing. or in accordance with international conventions.000. Law. the Environment Agency in Abu Dhabi (formerly the Environmental Research and Wildlife Development Agency . chemicals (Rotterdam Convention on prior informed consent).ERWDA). Environmental concerns are an important element in sustainable development in UAE. misleading practices. provided the owner has undertaken the necessary steps to 1. imitation.000-100.indd 30 10/24/07 3:43:03 PM . and combating desertification. All confidential information submitted to it must be kept confidential. including preventive seizure. 3 of 1987 specifies imprisonment of up to three years for IPR violation. Customs can take measures at the border to prevent any violation of intellectual property rights. (24) of 1999 specifies that “No public or private party or qualified or unqualified persons are allowed to import or bring. The UAE adopted the “Johannesburg Declaration on Sustainable Development”. the term of protection of undisclosed information in the pharmaceutical sub sector is. No taxes are levied for environmental purposes.000. Environmental-Related Trade Measures The UAE prohibits the import of certain products for environmental or health reasons. bury or dispose of hazardous wastes in any form in the UAE”. the UAE has established four environment protection agencies: the Federal Environmental Agency (FEA). in respect of transboundary movements of hazardous wastes and their disposal (Basel Convention). and it is now an essential component of government policy. in accordance with the above-mentioned laws as well as under Customs regulations. and fines of AED10. Protection of Undisclosed Information Article 1 of the Patent and Industrial Designs law defines “know-how” as the technical information. the Environmental and Protected Areas Authority. II and III of CITES convention). The Federation has also signed many regional and international conventions that are concerned with climate. the Patent and Design Law. Over the past decade. 11 of the Ministerial Council) lay down procedures to ensure the protection of know-how.13(k) Environmental Laws Sustainable development has been an increasingly important objective of public policy. The handling of hazardous chemicals and waste in the UAE falls under the Regulation on Handling of Hazardous Substances.000 can be levied. confiscation. the UAE has achieved major steps in sustainable development and is one of the leading countries in the region with regard to protection of the environment. in practice.000-50. During the past three decades. and up to three years under the Punitive Law. and fraudulent use of registered trade marks. and the Environmental Protection and Industrial Development Commission in Ras Al-Khaimah. established in 1999. established in 1993. established in 1998. Hazardous Wastes and Medical Wastes. and has always recognised the importance of conserving environmental resources. in Sharjah. These measures can be taken upon demand of the right holder based on a judicial order. Imprisonment is for at least three months. The Copyrights Law lays down similar procedures. As regards pharmaceutical products specifically. a trademark that misleads consumers about the origin of a product cannot be registered. Article 39 states that know-how shall be protected against any unlawful use. and compensation. Law No. disclosure or communication by third parties. protection of the environment from pollution. penalties with regard to counterfeit. as well as unlimited prison sentences (up to three years under the Punitive Law). Enforcement The Copyright Law. Federal Law No. Their activities do not have a direct impact on trade. Punitive Law No. and products of animals and plants (Appendices I. In addition. except for issues related to the international conventions mentioned above. The UAE has finalised its National Environmental Strategy and the National Environmental Plan in line with international best practice. established in 1996. removal or destruction of products and equipment. as well as elimination of the effects of the illegal acts. Articles 60-62 of the Patent Law also lay down criminal sanctions and monetary penalties in the range of AED5. Articles 37-42 of the Trademark Law define Pharmaceutical products are subject to special laws one of the important bases in its environmental policies for the present and future generations. According to the authorities. Unlimited fines of at least AED5. data or knowledge that results from professional experience and is applicable in practice. something that became 30 Investor’s Guide to the UAE 10-31MOE Chap1. the bylaws of the 1992 Patent Law (1993 Decision No. underlining the commitment of the UAE towards environmental protection. five years. with minimum detention of two months (up to three years under the Punitive Law). and the Trademarks Law provide measures to prevent violation of intellectual property rights.

THE UNITED ARAB EMIRATES Sheikh Zayed bin Sultan Al Nahyan.indd 31 10/24/07 3:43:03 PM . Founder and First President of the UAE WAM Investor’s Guide to the UAE 31 10-31MOE Chap1.

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