Dubai scraps bank guarantees required to set up tourism companies
More than 2,000 tourism companies will benefit from Dh250 million in waived bank guarantees
Dubai will waive bank guarantees required to set up tourism companies as the emirate seeks to lower the cost of doing business and attract investments in line with government initiatives to stimulate the economy.
The move will exempt more than 2,000 travel and tour operators from bank guarantees worth a total of about Dh250 million and free up capital to reinvest in their businesses, Dubai Tourism and Commerce Marketing said in a statement on Tuesday.
"Relaxing regulations in support of the business community, especially supporting start-ups and SMEs, is fundamental for sustained sector growth," Helal Almarri, director-general of Dubai Tourism, said. It is "a very positive signal for prospective investors and new ventures to launch tourism projects by taking advantage of the quick and hassle-free processes in place”.
Dubai has slashed various corporate and government fees as part of efforts to increase the emirate's competitiveness and stimulate business growth after the introduction of a five per cent value-added tax (VAT) last year. The emirate has set a target to attract up to 25 million visitors annually by 2025 and to become the world’s most visited destination. Tourism numbers remained flat at 11.58m visitors in the first nine months of 2018 compared to the same period in 2017, according to Dubai Tourism data. The rate of annual passenger growth at Dubai International Airport in 2018 has decelerated after years of massive expansion.
Before the new deregulation measure, tourism companies were obliged to provide bank guarantees ranging from Dh100,000 to Dh600,000 as a pre-condition to acquire a trade license from the Department of Economic Development (DED). The amount depends on the type and number of business activities that the company will engage in.
The DED totaled the bank guarantees paid by each of the 2,000 companies to arrive at the Dh250m figure, which it will exempt operators from paying.
Going forward, investors will no longer need to provide bank guarantees to Dubai Tourism to set up tourism companies or offer travel and tour-related services in the emirate.
Dubai Tourism earlier proposed a plan to attract more transit passengers to visit the emirate, including introducing time-share accommodation to attract more families and luxury yachts to stopover in Dubai.
Last year, Dubai slashed aviation and municipality fees as part of initiatives aimed at making it easier to do business. The emirate will scrap 19 fees related to the aviation industry as it seeks to attract more than Dh1bn of foreign investments into the sector.
In seeking to diversify its economy from oil, Dubai focused on developing its aerospace sector as part of plans to boost non-oil revenue, transform the city into a business hub, create jobs and attract tourists.
Open-skies policies, large investments in infrastructure and a foreign investor-friendly business environment spurred the development of the aviation industry. Aviation will account for 37.5 per cent of Dubai’s gross domestic product in 2020 and about 45 per cent of GDP by 2030 from 27 per cent in 2013, according to Oxford Economics.
Dubai is the world’s fourth most-visited cities after Bangkok, London and Paris, according to a Mastercard annual survey in 2018.
Updated: January 8, 2019 04:56 PM