Thursday 16, February 2017 by Jessica Combes

SMEs receive further support from UAE Government

Not long after the UAE’s bankruptcy law was passed, new legislation has been issued to further support the SME sector.

Entrepreneurs from the Gulf Cooperation Council countries will be treated the same as Emiratis, and will be licenced as members as per DSME terms and conditions, according to a new law that was put in place in mid-November 2016 by His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. Law No. 16 defines policies and strategic plans for SMEs in Dubai.

All government bodies, institutions and companies that are owned by the Dubai Government, or in which the Government’s stake exceeds 25 per cent, will be obliged to exempt DSME-licenced members from fees charged and add them to the aforementioned bodies’ suppliers list.

“The amendment is a further example of Dubai’s commitment to achieving greater diversification and investment in the UAE by supporting entrepreneurs and SMEs. Like the new Insolvency Law, it is a step toward making the UAE an even more attractive place to do business,” said Rebecca Copley, Head of Financial Services Disputes and Investigations for the Middle East, Eversheds.

Dubai SME will also coordinate with banks and financial institutions to facilitate the availability of suitable financing options for Dubai SME members, as well as licencing members as per approved terms and conditions. Licenced members will be expected to pay an annual fee of AED 1,000 during the first three years, and a AED 2,000 fee will apply during the fourth and fifth years of the licence.

“Recent amendments to the law on Dubai Small and Medium Enterprises (DSME) bears witness to how the UAE is moving swiftly to shield businesses in its SME sector from potential failure, as the region faces a financial downturn triggered by low oil prices,” said Saad Maniar, Managing Partner of Crowe Horwath UAE.  Many companies have been left in financial distress, a problem exacerbated by late payments from dealers and suppliers.

These government bodies will also allocate 10 per cent of sales, as well as five per cent of commercial spaces in malls to DSME members, with selections regarding these allocations being made as per criteria set by DSME.

Finally, priority will also be given for bids or offers submitted by members if the value of the bid does not exceed five per cent of the value of the best tabled bid. Members will also receive a 20 per cent minimum discount on their tenancy contracts during the first three years.

All government bodies, institutions and companies that are owned by the Dubai Government, or in which the Government’s stake exceeds 25 per cent, will be obliged to exempt DSME-licenced members from fees charged and add them to the aforementioned bodies’ suppliers list.

New SMEs suffer from a high failure rate, with statistics showing that 99 per cent of start-ups fail in their first five years, and no doubt these decrees will offer the much needed protection, as the SME sector is an important vehicle to address the challenges of job creation, sustainable economic growth and the overall stimulation of economic development in the country, said David Cafferty, Director, Crowe Horwath.

 

 

 

  

 

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