The Dubai government plans to help small businesses hit by the credit crunch to tap short term loans.
Entrepreneurs to get government help
The Dubai Government plans to help provide small businesses that have been hit by the credit crunch with access to short-term loans. The Dubai Department of Economic Development (DED) is working with the Central Bank and the Ministry of Finance to decide which companies will qualify for short-term loans. The amount of funds available - to be distributed through local banks with the help of the DED - has not yet been decided, but the plan should be ready within months, department officials said on the sidelines of a lunch hosted by the Italian Business Council in Dubai. "We will be focusing on the sectors that will respond positively to the grants - that will help the real economy," said Sami al Qamzi, the director general of the DED. "The banks will act as facilitator to this initiative. Currently we are negotiating with some of the banks to close this deal and we are going to submit it to the Government." The aid will operate separately from Dubai's US$10 billion (Dh36.71bn) bond programme, which is also providing money to Dubai-based companies suffering from the credit shortage. The short-term loan programme is part of the revision of the economic component of Dubai's Strategic Plan 2015, which is expected to be ready at the end of next month. The revised plan will include an adjustment of business fees and visa regulations for national and expatriate workers. In particular, the rule that expatriates must leave the emirate within 30 days of being laid off may be changed. Other regulation changes being considered concern business ownership and easing the cost of sponsoring workers. Businesses now pay up to Dh4,000 in visa costs for each employee. "One initiative is trying to reduce the cost of doing business," Mr al Qamzi said. "We believe labour costs have increased dramatically and this is one obstacle of doing business." He said that although the global crisis has had an impact on the Dubai economy, there had still been a net increase in the number of new businesses in Dubai. In the first quarter of this year, the number of new business licences issued by the emirate outnumbered cancellations by more than 2,000. Raed Safadi, the chief economist of the DED, said the new plan would place the greatest emphasis on the logistics, transport, retail and trade sectors. "These have been, and will remain, our pillars in this economy," he said. "We will look at strategic sectors in terms of their outlook and their contribution to GDP, and then all the other sectors will have to line up to make sure that the objectives are being fulfilled." email@example.com firstname.lastname@example.org