Given the continued rise of M&As and an active bond market, what services are in highest demand in the UAE?
Our services change with the dynamics of Dubai and the UAE, and also with the wider region to some extent. During the 1980s the government was primarily trying to develop the free zones and the warehousing industrial exports, and we were also active with IPOs. Since the IT boom there has been a lot more work in software and the production of brands, which drew a lot of companies here and energized the intellectual property space. Real estate work boomed from 2003 onwards, as did mergers and acquisitions and capital markets work. All of that has brought the UAE markets, and to some extent the GCC markets, maturity. As well as operating on a larger scale, with bigger mergers and acquisitions, the style has also changed from individuals to corporations, groups, funds, investments, and so on. Now, the move is largely toward the emergence of new sectors such as renewables and data. With those changes we had to adapt our style and focus very closely on new hires, ensuring we were recruiting individuals specialized in intellectual property rights, something we previously did not have any experience with. Underpinning all of this is the drive to create a highly transparent and regulated society, making the UAE as a very attractive destination to do business.
How has the shift from shop floor to boardroom altered things for your company?
It had multiple effects on the style of the business and on us running our firm and doing business with our clients; it is partly global and partly local. There is huge pressure on attracting talent but the good news for attracting talent in the UAE is that in previous years we had to pay a premium to attract talent to the country, but that is not the case now as Dubai sells itself as a location. The economy has developed, the environment has changed, there are excellent schools, and the healthcare sector has improved immensely and will continue to do so. Similarly, if you look at the projects in the pipeline, Dubai is going to be a very different city which in turn will have a greater effect on its ability to attract talent.
What security will the bankruptcy law provide for the economy?
A number of laws will follow the bankruptcy law in the UAE and these will be the platform required for the UAE to continue to perform as a major trading hub in the region. There is a vacuum here in the laws and regulations, but the positive thing about the UAE, and Dubai in particular, is that the key decision-makers are very aware of this. I forecast a legislative framework that will ensure that the UAE is enabled to emerge as a major economic hub in the region. Strictly looking at the short term, the bankruptcy law is not favorable, but at the same time it tells you is that you must pay your debts, pay your creditors, and pay your banks and suppliers, providing guidelines on how to conduct business in a honorable and honest way. We do not want people doing business in the UAE that have no intention of paying for goods and services and distorting the transparency of the UAE market. Businesses both large and small encounter challenges that have a very negative impact on cash flow, but if there are assets, income streams, and a solid business model then there is a case for keeping the company afloat. The law has provided two fundamental mechanisms to save such businesses: one mechanism is through a committee to help businesses restructure and the other mechanism is similar to Chapter 11 where you file for protection against your creditors. An owner can approach an agency with a strategy for repayment within a timeframe and ask for protection until this has been completed. The law will provide transparency and discipline in the market. As people become more familiar with this, there will be a greater amount of respect for the law. It will allow for creditors to be confident that they will get their money and for the debtors to have confidence in seeking their routes.
What implications might VAT implementation have on your firm?
There is one advantage of VAT and one advantage for taxes that I believe is extremely important for any economy, and that is a solid tax system means that every business must have well-kept accounts. This will help the UAE economy improve its transparency and ensure closer attention to corporate governance within organizations. This law will therefore enhance the sophistication of accounting for small and medium enterprises. The VAT is going to replace customs duty, so instead of paying the custom of the port, you are paying it at the cashier's desk.