Dubai welcomes 45,000 new businesses in 2022 … so far

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• Government’s new business incentive initiatives provide boost
• Companies still cite challenges of opening bank account and inflation

Dubai has seen a 25 percent rise in the number of new company licences issued in the first six months of 2022, highlighting the impact of the government’s new business incentive initiatives.

“As a corporate services provider, I have seen first-hand a significant rise in foreign direct investment into the UAE from several geographies directly attributable to the ability to have 100 percent foreign ownership,” said Helen Barrett, partner at CBD Corporate Services and deputy chair of the British Business Group.

“We have noticed an uptick of new businesses within the emerging technology sector including crypto, fintech and cashless payments. 

• Opening a bank account still the ‘biggest hurdle’ for UAE startups

• Poor us: Dubai’s richest suffer 19% increase in cost of living

“This is underpinned by the recent introduction of new laws governing virtual assets which places the UAE at the forefront of governance within this sector,” she added.

Making banks accountable

While a total of 45,653 new licences were issued in the first half of this year, and liberalised regulations and procedures have simplified business set up, some Dubai company owners still point to local challenges, such as establishing a bank account and the rising cost of materials.

A report published in May by identity verification platform IDnow Middle East, which surveyed more than 1,000 people, found that opening a bank account is still the biggest hurdle entrepreneurs and business founders face in the UAE. 

“It took me three business days to get the license without leaving my home. The biggest challenge was getting a business bank account – the process is gruelling and lacks transparency,” said Naira Bhutta, owner of VersaTile, a company which sells decorative ceramic tiles and was set up in February.

“I still have one pending application initiated four months ago from a well-established bank which I eventually stopped pursuing,” she added.

“This would be the one area I feel many entrepreneurs face a huge challenge and could use improvement. I was only able to start trading seven weeks after getting my license due to delays in getting a business bank account set up.” 

Inflation nation

The latest S&P Global UAE Purchasing Managers’ Index (PMI), published earlier this month, found that businesses in the UAE’s non-oil sector continue to squeeze profits rather than hike prices, as energy costs climb at the fastest pace for 11 years, according to a new survey. 

Irene Balan, CEO of Midori Beauty Salon, who launched her business in June,  praised the Dubai government for making it “relatively easy for aspiring startups to explore their business dreams”.

She has so far been one of the few to be able to avoid the worst of the rising costs.

“We were lucky to purchase inventory at 2021 prices, which has greatly helped. We are using the current phase to ramp up marketing and outreach, so we have not yet been significantly impacted by the high inflation numbers,” she said.

The UAE’s free zone business model, which provides private enterprises with infrastructure, zero taxes and 100 percent ownership, has been successful over the years. 

Dubai alone is home to more than 30 free zones targeting sectors such as transport and logistics, healthcare, media and technology, but for some new startups the sheer range of choice – and finding out which license they need – can amount to the biggest setup hurdle.

“On the whole, the government is doing a fantastic job of supporting small businesses,” said Donna Burfield, owner of Joy and Purpose Coaching and Consulting.

“The one thing that would help many startups (because we do make a lot of mistakes at the beginning) would be to make the business license process easier to understand.”

She added: “There are so many companies who say they can help and then give you the wrong license and then charge you for additional activities that you didn’t know you would need.”

Strength in numbers

One option to gain knowledge of the market and the legal and commercial requirements is to network with other business owners.

Jen Blandos, founder of Female Fusion, a UAE-based community of female entrepreneurs set up in 2015 and with more than 20,000 members across a range of industry sectors, said she has seen the group’s number of paid members increase by around 335 percent since December 2021.

“For new businesses, what they really need help with is being able to keep costs low and be agile. We are constantly working with suppliers of business services to provide big discounts for our members,” said Blandos.

“Shipping and courier fees are a big expense for many SMEs in the UAE right now, and Aramex [the UAE logistics company] has been incredibly supportive by providing discounted rates for our members.”