Doing business in Dubai. learn everything you need to know to do well
The Dubai News (Issue #14)
Dubai City Information Site
Doing Business in Dubai - A Comprehensive Guide
Hi
This newsletter is focused on everything you need to know about doing Business in Dubai.I have tried to make this as comprehensive as possible so that you can keep this email and refer to it from time to time. There are also links that will lead you to further detailed sections of each topic. I hope you enjoy reading this and I hope it proves helpful for you.
So have you ever considered investing in Dubai or doing business in the tax free haven? Sounds glamorous? Sure does. It comes with its own nuances and complexities. But if you are able to overcome those, then there is no sky to your progress. You can keep flying as high as you want.
Keep in mind that I am writing from my own experiences. I have several friends whose families have been settled in Dubai for decades. They are all doing business in Dubai in one form or another. None of them work for wages. They are not employees.
In addition, Kish's dad used to be an employee but became the Managing Director and CEO of his company.
Although still an employee (a high ranking one), he is also part owner of the business through owning shares.
Couple those facts with my research over the past few years and I can say I've learned a thing or two about how it is doing business in Dubai.
Business in Dubai is good overall. There are many wealthy individuals and the upper middle class is growing rapidly because of the latest economic boom the City has been experiencing. More people are relocating to Dubai today for white-collar jobs than anywhere else.
All this activity proves fruitful tocompanies in Dubai. If you are interested in doing business in Dubai, the single most valuable piece of advice I can give you is to focus on building long term relationships with the local Nationals.
Here in the US we use the term "relationship" very lightly. You hear it all the time in companies (I hear it all the time! I even use it!). But is this the same kind of relationship we are talking about here? Absolutely not.
In the US, your relationship is only as good as the bottom line. When cash runs out or if you can no longer benefit from the other party involved, it is time to let them go right? As sad as this is, it is very true for the most part.
It is the complete opposite in Dubai. Doing business in Dubai boils down to doing business based on relationships. I mean true human relationships, not business relationships.
Unlike the US and many other places where it is all bottom line oriented, there is so much wealth in Dubai that the numbers are the least of the concern for many involved in business. It's truly all about relationships and rapport. If you understand that you will be very successful doing business in Dubai.
You have to be a National (citizen) if you want to do business in Dubai; and Dubai does not grant citizenships through naturalization. So it becomes important to establish a good relationship with a local Arab so that you can enter a business venture through partnership.
This is a very big decision because the local that you partner with becomes the owner of the business on paper. Practically however that person remains silent. So basically you work your a^*@#& off and yet on paper someone else owns your business.
It is very important to establish a good trusting and long lasting relationship. A business is a serious venture, especially if you will be heavily investing in it. That said, it is not easy to find trusting partners in Dubai that you can become comfortable with.
Even if you do find someone, you can't become comfortable with them overnight. Neither would they. But then again, what do they have to loose right? To do business in Dubai, you need a good reference or connection. You need someone to introduce you to a local that you can trust and are comfortable dealing with.
It is very difficult to find someone, let alone build a relationship, without being introduced to them by someone else. My friend Riad (Ray) has been trying to find someone for years now.
He has been back and forth to Dubai from the US at least 10 times in the last 24 months. That is a lot of 15 hour trips across the globe! He is about ready to quit and he tells me how difficult it is every time I speak to him.
My friends' families on the other hand moved to Dubai back in the day when Dubai wasn't the Dubai we know of today. The rules were the same, but doing business in Dubai was much easier. Many times locals advertised themselves as available to do business with.
Those who moved there and have been settled and doing business are doing very well. Of course they pay their silent partners hundreds of thousands and even millions of dollars every year for simply using their name. The partners do absolutely nothing!
I still won't forget my trip to Dubai sometime in 2006 when I went for my friend Sunil's wedding (yes his name is Sunil too). We were talking business and he told me that last year they paid their silent partners close to $2M USD! My jaw just about dropped.
See Sunil's dad is involved in a few venture. They have a textile trading company, an electronics sourcing company and most recently he started a small real estate private equity type group. They are trying to liquidate and get into real estate solely given the massive boom Dubai is experiencing in property values.
Anyway, I won't sit here and tell you who to trust and who not to. All that comes down to your personal inclination and gut feeling. Some people are more trusting than others so it just depends on your appetite to trust and your risk. It is very important to keep that in mind when making an important decision such as doing business in Dubai by teaming up with a local.
Most of my friends who have been doing business in Dubai are very happy. I mean why not. Sure they pay up their wazooos, but they are also getting rich at the same time. It's a win-win situation for all.
On the other hand, my friend Hansie was cheated on a few occasions. His dad had to completely dilute a company because of disagreements with his local partner. Generally this is not a smart move. Not so much because it's bad for business, but simply because you can get kicked out of the country immediately and no one would even know.
Yes, Dubai is known for "deporting of the hip". One mistake and you're gone! That is why you can't have a citizenship to begin with! That is why the country/city is so safe. People are afraid of committing crimes and making mistakes. If they do, they might not see another day in Dubai. I will cover this more on my website.
But my point is that knowing who to trust and do business with is an individual decision. Things are risky overall but if you don't take risk you won't see any rewards. That goes for anything in life. Just make sure you are well informed and take calculated risks whenever you contemplate a tough decision; in this case doing business in Dubai.
Their constitution stresses to development of commerce and investment between US and Dubai as well as the other Emirates. This is a FREE and volunteer composed resource so make sure you take advantage of it.
Train Yourself Locally
One way to win the respect and trust of the locals is to blend with them. This goes for anything right? Think about it. If you come across someone that shares the same culture and language as you, wouldn't you feel closer to them off the bat?
This is human nature. It is particularly helpful when you are overseas away from your country. Meeting someone who shares the same background as you is comforting and encouraging.
Learn the basic customs, rules and regulations of Dubai. More on this in other sections of our website. Also, learn the basic "Hi" and "Hello" type words in Arabic. This is not hard.
Grab a self teaching program and just do it. Kish can partly understand Arabic and can speak a lot of it too! Just a little bit will help tremendously with your business in Dubai!
Laws, Regulations and Taxes
Once you get started conducting your business in Dubai, all else falls into place nicely. Laws, regulations and taxes are not of concern. Everything is very relaxed and as long as you are going about your business legally and cleanly, there is nothing to worry about.
Dubai does not tax your personal income so that is a big plus for a lot of business men and entrepreneurs. Many companies are also taking advantage of the tax haven by establishing locations in DubaiCity.
The Jebel Ali Free Zone Dubai
TheJebel Ali Free Zone Port of Dubaiis located 35 kilometers from The City. The port was established around 1970 and a small area was developed around the port to house all the construction workers that worked on the port.
Jebel Ali is the biggest port in the Middle East and the largest mad-made harbor. The sight is absolutely amazing. This port is extremely busy as billions and trillions of dollars in international trade are transacted here every year.
The area has improved dramatically over the years. As Dubai is progressing, DubaiCity is expanding outward and overlapping into nearby territories like Jebel Ali. When I was in Dubai in 2007 I stayed in a corporate apartment in the Jebel Ali area.
Everyone told me how nothing used to be there and roads used to be narrow and made of dirt. I just couldn't believe it. When I was there it looked like Pasadena, California. They even built a brand newIbn Batuta Mallin the area which is supposed to be one of the biggest and best malls in the Middle East.
Dubai Investments
So what do you do with all that extra cash from doing business in Dubai? Whether you do business or work, you will likely save more money at the end of the year. Here in the US, .40c of every $1 I make goes to my long lost Uncle Sam.
That is A LOT OF MONEY!!!! You can save your money (savings account), invest it in a CD (certificate of deposit) or buy Gold which is increasing beyond belief. Did you know that Gold is more valuable than Diamonds today? Amazing isn't it?
Dubai has some of the best 24K Gold in the world. A lot of Dubai's Gold is supplied directly from India (once known as the Golden Hen). I have not seen Gold as pure as the one I see in Dubai.
You can also look intoDubai Properties. Real estate in Dubai is booming and property values have experienced unprecedented growth since 2005. Rents are up 30% in a two year period and there is no sign of slowing down. Real estate is probably the best Dubai investment (in my humble opinion - though I think that a bubble does exist!).
In fact the rent to mortgage spread in Dubai is about 7% on average. This means you can get a loan and pay 3% interest rate and rent your investment property out for 10% cash flow after paying your mortgage.
10% minus 3% is 7% pure profit in your pocket. And the best thing is that your tenant pays your property off. This is free equity! Appreciation on your property is icing on cake.
All in all you just made bank! Hey doing business in Dubai also entails smart real estate investing. For many this IS a full time venture.
Also considerDubai investments online. There are many options available today that might fit your investment profile. Managing yourDubai financesis key in successful business tenure in Dubai. Why?
[Pardon this brief tangent:If you don't manage your finances and simply keep cash in the bank account, you are actually loosing money over time. With inflation, your $1 today isn't $1 tomorrow. You need your $1 to grow at whatever the inflation rate is to keep up with rising costs.
In countries that tax your earnings, you need to make your money work even harder. Suppose inflation in your country is 3% and your tax rate is 25%. That means if you have $100 invested and you earn 5% on it, you are really taking home a .75% return.
Stay with me. 5% return on $100 is $5 right? A 25% tax on $5 is $1.25 right? Subtract that from $5 and you are left with $3.75. A 3% inflation on $100 is $3 right? Subtract $3 from $3.75 and you are left with only a .75 cent gain. Do you see why you need to make your money work hard for you and grow?]
TheDubai Stock Exchange, or the Financial Market was founded in March 2000. It has been well received and investors are slowly developing confidence in it overtime. As of 2007 there were close to 60 companies listed.
Most of the companies are local UAE based companies and others from the Middle Eastern Region (also called MENA). Investments are open to foreigners and are often good avenues to diversify your portfolio as well.
More and more companies are joining the Dubai Stock Exchange and the list of participating industries is also growing.
Banking in Dubai is pretty straightforward like in the USA. There are financial institutions established left and right. You can find a bank pretty much anywhere.
Banks in Dubai offer pretty much the same financial products and solutions that you will find in the US. After all, the entire world has modeled their economy after the US - to some extent.
Pretty soon the whole world will look the same as one. True Globalization!
Today, the Jebel Ali free zone is home to some 6,000 companies, a long cry from just 19 when it was started in 1985. Learn about this business heaven and all it has to offer companies willing to set up shop within its boundaries.
The great thing about work in Dubai is the way things are so neatly organized, from working hours to the number of annual leave days that each employee is allowed. Now you might prefer a more flexible set-up but for most employees in Dubai, this is the "way of work" they know about.
Companies & business in Dubai are both booming, flourishing and prospering ever than before. Thanks to the decree of 1985, Dubai companies have never looked back into the past.
The Dubai employment scene is booming and ever changing. As the industries prosper and continue to expand, so will employment in Dubai. Dubai jobs can be found left and right today.
Working in Dubai can be very good for many when compared to some of the western nations, especially the 'no personal taxation' part. I am not sure how many of you have worked overseas, but if you had, you will be able to see the benefits of working here right away.
The Dubai investment Company is quite well diversified and offers you an easy way to optimize your investments in such a way that you do not have to spend any more sleepless nights worrying about "putting all your eggs in one basket".
Dubai investments are as good as any other, if not much more lucrative and safer. In scope and size, they offer you a valuable opportunity to make some good money by investing some of your savings.
The Dubai stock exchange continues to remains unaffected despite the global markets suffering from the sub prime industry crash and global credit crunch.
The Dubai stock market is one of the best today (2008) to turn your investments to high gear. The average Joe investor has tripled his investment since March 2000 and the trend remains the same.
Setting up a business in Dubai can be very easy, but once you know the rules and regulations. Dubai is a business friendly place and running your own business here can be extremely lucrative, especially with no tax.
Read this discussion if you are looking for a shipping agency in Dubai. Shipping agencies play a major role in the transportation of goods from one country to another. Find a reliable partner for your business here.
Dubai Ports World controversy was a recent dispute (2006) in the American government that led to a sale of operations by the Dubai government to the United States.
There are many lawyers in Dubai and you may need one either for business or personal issues at any point. Read this discussion to find out about the best ones to engage who will get your work done for you the right way.
Read about the distributors in Dubai and how much they impact the local economy. Dubai's progress and emergence has created an opportunity for even the small importer and exporter to claim a piece of Dubai's economic pie. Definitely critical to doing business in Dubai.
By far the best guide for investors and entrepreneurs wanting to do business in Dubai that I have read! From legalities, pros and cons to step by step guidance.
A highly acclaimed book on doing business in Dubai that has received rave reviews. It is a pricey investment but well worth it from what I have heard. I cannot speak to its content as I have not read it yet. I will write a review on this book once I have read it and include it in theDubai Book Review section.
Doing business in Dubai comes with a unique set of challenges. Find the perfect business partner in Dubai to set up your company and start conducting business.
Want to know the cost of setting up a business in Dubai? Starting a business in no joke, and it certainly isn't in Dubai. But the benefits can far outweigh the costs.
Engage the right Dubai business services firm to set up your business in Dubai. Quality business establishment services have distinguished the successful companies in Dubai to date.
Oil revenue securitization aided in the Dubai Stock Market bust, and business in Dubai in general. Find out how banks in Dubai gambled with oil securitization and went south as a result.
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In the next newsletter I will write about The Popular and Mostly Visited Areas in Dubai. Don't forget to tell us what you are interested in so we can bring you ONLY the latest and greatest information that you are MOST interested in.
Take care and see you soon...
~Sunil
The Dubai City Information Site is the first and only comprehensive website on Dubai from a fresh, practical and first hand perspective.
Join your hosts Kish & Sunil and learn straight from their actions, adventures and experiences in Dubai.
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