More UK firms keen on UAE

Tom Arnold

• Last Updated: November 21. 2009 7:59PM UAE / November 21. 2009 3:59PM GMT

The UK bank Lloyds TSB’s regional unit has seen a substantial uplift in the number of western firms opening accounts with it in the UAE. Jason Alden / Bloomberg

The number of UK firms taking official advice on doing business in the Emirates is expected to rise this year despite the effects of the global recession.

Service-based companies such as consultancies and firms in the education, health and manufacturing sectors are among those showing strong interest, UK officials and bankers say.

UK Trade and Investment (UKTI), the government’s organisation for international business development, expects this year to help more than the 1,500 companies it advised last year on setting up operations in the Emirates.

“I am confident we will assist more this year,” said Jeff Wilson, the director of the UKTI. “The level of interest is at least the same as last year, and that’s significant as we are talking about a high level of activity last year.”

Sectors where UK businesses already have a strong presence, such as construction, infrastructure, security and transport, continue to be of interest, he said. The organisation recently held roadshows across the UK to assist firms interested in the UAE.

Britain is already the leading foreign investor in the Emirates, the UKTI said. However, the global recession led to a slowdown in economic activity at the end of last year, forcing many companies to cut jobs and reassess their expansion plans.

Mr Wilson said the UAE still held a strong attraction for UK firms considering operations overseas as it remained the biggest export destination in the Gulf for UK products. Exports to the Emirates were expected to rise 10 per cent this year, having increased by 30 per cent last year from 2007 to Dh22.6 billion (US$6.15bn), he said.

Proposed legislation to relax UAE foreign ownership rules is likely to encourage more firms to expand into the country, he said. A new law is in the pipeline that is expected to raise the stake that international companies in certain sectors can have in businesses they establish in the UAE from the current limit of 49 per cent outside free zones to up to 100 per cent ownership in some sectors.

“Clearly, we would welcome a relaxation on foreign ownership rules as it would be a massive boost to the UAE economy,” said Mr Wilson, who is based in Dubai. “Some businesses are hesitant [about the current arrangement] as it’s not typical to models in the UK.”

Lloyds TSB Middle East, the -regional division of the UK bank, has experienced a “substantial uplift” in the number of western firms opening UAE accounts with the bank in the fourth quarter from the previous quarter, said Graham Mitchell, the head of commercial banking for the division. The vast majority of those firms were UK-based, he said.

“There is a better feel about the economy globally and the UAE,” Mr Mitchell said.

“The reason we are seeing offices open up is that, from a structural point of view, their businesses are financially sound so they can look to expand overseas.”

UK and UAE officials last month agreed to expand bilateral trade by 60 per cent to Dh73bn by 2015.

The UAE Ministry of Economy this month announced it would hold regular video conferences with UK officials from January next year to discuss progress on the formation of task forces to examine closer relations in financial services, especially Islamic finance, as well as in research and development, and renewable energy.

The ministry would also focus on encouraging UK firms to open manufacturing units in the UAE to export goods to the MENA region.

tarnold@thenational.ae