Abu Dhabi, UAESaturday 24 August 2019

How 2018 became the UAE's 'year of reform'

The year began with the implementation of VAT and included a series of announcements that affects the country’s economy, visa system and even the gender make-up of the Federal National Council

With a new year comes time to set new goals. Kushnum Bhandari / The National
With a new year comes time to set new goals. Kushnum Bhandari / The National

It was a landmark year for reform, with the Government announcing a series of sweeping changes that would affect the country’s economy, visa system and even the gender make-up of the Federal National Council.

The aim of 2018’s changes — some of which are already in place, and others soon to be introduced — are to prepare the country for a more prosperous future.

Together the plans represent a vision of the future economy in a post-oil world which aims to stimulate investment, create jobs, spur innovation and improve the overall quality of life of those living in the country.

VAT was introduced in the UAE on January 1, 2018. Pawan Singh / The National
VAT was introduced in the UAE on January 1, 2018. Pawan Singh / The National

VAT

One of the most significant changes of the year began in the earliest hours of 2018, with the introduction of VAT. It was a change so significant the Federal Tax Authority came in eighth on a list of most searched terms on Google in the UAE this year.

While many were still in bed sleeping off the New Year’s Eve revelry from the night before, shop workers were busy updating the prices on items to reflect a 5 per cent rise to account for the introduction of VAT.

The consumption tax was placed on many consumer goods and services — namely anything other than basic food and essential commodities, such as medicines or hospital and school bills.

It was not without controversy, as UAE nationals and residents worried about the impact it would have on the cost of living. But many accepted its introduction was inevitable, as a staple of other modern economies.

It already cost Azza Al Khoury, a mother of four girls aged between one and 15, Dh3,500 a week to feed a household of eight — including her husband, three nannies and driver. VAT would further increase that already hefty bill.

“If we need to improve our country, we have to do it. The government gives a lot to us, but we do not know how long they can give for”.

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Read more:

How VAT in the UAE will affect you

Crown Prince reveals Tomorrow 2021 plan for Abu Dhabi's economy including Dh20bn for spending next year

Rents frozen on school buildings in Dubai to help education sector

UAE's new visa regulations: what we know

Sheikh Khalifa: UAE's Federal National Council to be 50 per cent women

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The UAE Government issued new visa regulations this year. Andrew Parsons / The National
The UAE Government issued new visa regulations this year. Andrew Parsons / The National

Visa changes

Over the past couple of decades, the UAE has proved incredibly popular with foreign residents — offering a safe and secure home with salaries typically double that of their home countries.

But residency has depended on the status of a person’s employment, and the duration of the visa is typically only two or three years at a time, subject to renewal. Should someone lose their job, they must leave, unless they can find another role quickly. As a result, many have been hesitant to put down roots, choosing to channel their money into property or savings schemes abroad instead.

In fact, in 2017 alone, expatriates remitted Dh164.3 billion ($45 billion) home, according to state news agency Wam.

But this year, the government announced plans to offer longer-term visas to key professionals in the UAE in a move that is hoped will increase the number of residents choosing to settle here — and invest in the country — long term.

Investors, entrepreneurs, executives, as well as specialists working in medicine, science or research will be granted permission to stay in the country for up to 10 years as part of the plan, which was approved by the UAE Cabinet earlier this year.

Outstanding students will also be eligible for a long-term visa as part of the changes, which are expected to encourage professionals to settle in the Emirates long term.

In other changes, divorcees and widows have been granted the option to apply for a one-year residency visa, without the need for a sponsor.

And students who have completed university or high school, or who are aged 18 or above, can also apply for residency for a year. This is renewable for a further 12 months.

It is, however, worth noting the new of the visas are subject to a set of conditions. Widows or divorcees must be able to financially support themselves and investors must demonstrate a minimum investment to qualify, for example.

Ghadan 21 is expected to create 10,000 jobs for Emiratis over the next five years. Getty
Ghadan 21 is expected to create 10,000 jobs for Emiratis over the next five years. Getty

Stimulus package

More change came in the summer. While many residents were on holiday, the Abu Dhabi government was working hard on a plan to transform the emirate’s economy.

‘Ghadan 21’ or Tomorrow 2021, was the name given to sweeping economic reforms announced in June.

The package, which represents a Dh50billion investment over the next three years, is designed to enhance Abu Dhabi's competitiveness based on 4 main tenets — business and investment, society, knowledge an innovation, and lifestyle.

It promises to stimulate business and investment, as well as promote economic development for the private sector and small businesses and support industry projects for the renewable energy sector. The lives of Emiratis will be improved with the launch of new housing and quality education projects at an affordable cost.

The knowledge sector will be supported by encouraging technology companies, supporting research and development centres, and training and developing talent and expertise. Cultural, sporting and transport initiatives will also be launched.

In total, the package is expected to create 10,000 new jobs for Emiratis in the private and public sector over the next five years, while dual licenses will be available for companies in Abu Dhabi free zones to allow them to work outside free zones and bid for government tenders.

In total, Dh20bn of the total will be ploughed into the economy next year.

Landlords and landowners will not be allowed to increase prices this coming academic year Victor Besa / The National
Landlords and landowners will not be allowed to increase prices this coming academic year Victor Besa / The National

Rent frozen on school buildings in Dubai

Those living in the Dubai also experienced changes when the emirate announced plans to protect schools from rent hikes on their buildings for the current 2018-19 academic year.

The move was made in a bid to support schools and reduce their operational costs.

“This initiative reflects the efforts of the Knowledge Fund to support the development of the education sector and encourage investment in education. The initiative will freeze any rental increase due from the next academic year 2018-2019 for all its investors who are subject to contract renewal," said chief executive Hesham Khalifa Al Qaizi at the time.

"The revision of the rent value and any subsequent increase, if applicable, will be postponed until after the specified period.”

School fees are the subject of frequent complaints among parents in the UAE, particularly Dubai, where fees can be as high as Dh120,000 a year.

In February, more then 20 private schools reduced or froze their fees.

Women must occupy 50 per cent of the Federal National Council seats after the elections next year. Pawan Singh / The National
Women must occupy 50 per cent of the Federal National Council seats after the elections next year. Pawan Singh / The National

FNC

The UAE has made great strides to increase gender equality. Women account for more than 46 per cent of the country’s workforce, up from around 6.2 per cent only in the early 1980s.

In December, President Sheikh Khalifa called for Emirati women to occupy 50 per cent of the country's Federal National Council after next year's elections, giving women a greater say in their country’s future.

There are currently eight women members on the council, representing 20 per cent of the 40 available seats. This puts the UAE in 79th place worldwide.

And seven of those female members were appointed by the Rulers of the emirates after the 2015 elections, after only one of 78 women candidates who stood was elected by the public.

The directive will place the UAE in the top five countries in the world for female representation when the change comes in to force next October.

The news was welcomed across the country, with leaders from Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, to Sheikha Fatima, chairwoman of the General Women’s Union, praising the directive.

UN under-secretary-general and executive director of UN Women Phumzile Mlambo-Ngcuka, called the decision a “major step forward” for gender equality and women’s empowerment in the UAE.

Updated: December 29, 2018 04:47 PM

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