STEADY AS SHE GOES

Abu Dhabi 2016 | ECONOMY | INTERVIEW

TBY talks to HE Sultan bin Saeed Al Mansouri, Minister of Economy, on SME development, weathering poor economic conditions, and the implementation of a new regional VAT.

 HE Sultan bin Saeed Al Mansouri
BIOGRAPHY
HE Sultan Bin Saeed Al Mansoori was appointed Minister of Economy in the UAE, effective February 17, 2008. He holds a bachelor's degree in Industrial Engineering & Management Systems from Arizona State University, US . He also has a diploma in Computer System Analysis from the Institute of Computer Technology, Los Angeles, California, US.

SME development has been unprecedented in the UAE, with the total contribution now more than 60% of GDP. How has this development been achieved?

The SME segment is part of the UAE's economic diversity policy and its sustained efforts to reduce reliance on oil as much as possible. The SME segment's role has increased YoY as a result of this policy's success. The SME sector plays a vital role in boosting development, strengthening economic diversity, and supporting the steps taken to achieve a knowledge economy that is based on innovation. Efforts to develop this commenced with granting citizens pieces of lands to start their commercial and industrial projects. The government also offered financial guarantees to citizens so it could leverage banking services. This process has developed over the years with the establishment of official government entities that oversee the support citizens are provided in the SME sector, such as the Khalifa Fund for Enterprise Development, Dubai SME, Ruwad Establishment, Saud bin Saqr Programme for Young Business Leaders, and the Saud bin Rashid Al Mualla Program for Youth Projects Support. The UAE Cabinet approved the decision to create a council for SME projects and establishments, and to launch the national program for SMEs and projects to support their owners with benefits and incentives that boost the spirit of entrepreneurship. As a result of the above-mentioned legislations and support, around 350,000 SME companies and projects have been established in the country, creating job opportunities for over 86% of the total workforce in the private sector.

Current economic conditions have affected emerging economies and GCC nations, although the UAE has fared better than its regional counterparts. What can we attribute this resilience to?

The UAE's economic resilience is a result of many factors, such as its non-reliance on one resource of income, with non-oil sectors currently contributing about 70% to the economy. The contribution of non-oil sectors to the GDP is increasing annually; thus, helping to reduce the reliance on oil. We expect that non-oil sectors will contribute up to 80% of the GDP by 2021, which will enhance the country's resilience toward any negative impacts of market fluctuations or global oil prices. The UAE economy has proven to be strong and promising, regionally and globally. It has maintained a significant growth level throughout the past years. In addition, the UAE's cash reserves in offshore accounts have largely limited the negative impacts of fluctuating emerging market economies over the last two years.

In 2018, the GCC region will introduce a regional VAT, at 5%, which will create a new and secure revenue stream. How important is it to balance this with ensuring the UAE maintains its relative tax-free status to attract business?

The VAT, which is expected to be implemented across the GCC region in 2018, is one of the most significant financial reforms to be implemented by those countries. The UAE Ministry of Finance has stressed that VAT will be imposed on sectors that GCC countries concur with, noting that it will be preceded by tax-policy unification across the GCC region. Significantly, the ministry has reiterated that healthcare, education, and a list of food items will be exempt from this tax. The implementation of VAT will certainly not affect the country's position as an attractive investment destination. The UAE came first regionally as the destination of choice for foreign investments. In terms of the global investment indicator, the UAE ranked first in the Arab world and 22nd globally in 2015, while over 25% of the 500 largest global companies have chosen the UAE as a regional headquarters for their operations in the MENA region. In general, any future tax plans will ensure that taxation in the UAE will be the lowest in the world. In this way, we will definitely ensure our country's long-term investment appeal.