On 27th November, 2018, Mr. Lu Hongxiang, Chairman of Jumore E-commerce Co., Ltd, met with H.E. Abdulla Al Saleh, Undersecretary of the UAE Ministry of Economy during his visit to the United Arab Emirates (the UAE). Both sides exchanged ideas extensively on digital cooperation between JUMORE and its UAE counterparts, and promoting innovative growth of bilateral & multilateral trade via digital tools.
China is the largest trading partner of the UAE, and the UAE features the most profound and extensive bilateral cooperation among all China’s partners in the Middle East. 60% of Chinese products are exported to the Middle East via the UAE. As a leader in diversified economic development in the Middle East, the UAE is actively exploring cooperation with China in new fields in addition to energy.
During the meeting, Mr. Lu introduced Jumore’s strategic intentions for business development in the MENA region and emphasized JUMORE’s mission of global win-win partnerships via digital tools. H.E. Abdulla Al Saleh highly recognized the Jumore business model and highlighted the strategic position of the UAE on economy & trade, logistics, investment, etc. as well as the local digital innovation. He proposed that Jumore use the UAE as the base of the MENA digital platform to better serve the digital transformation of local enterprises, and expressed his support to JUMORE’s development effort in the region.
Digitalization has been recognized as an important driver of innovation in the UAE. The director of the Smart Dubai Office has pointed out that the digital transformation will generate an additional output value of 33.8 billion dirhams (about $9.21 billion) for the UAE in the next three years.
It’s noted that the Middle East is among the regions which see the fastest growth of e-commerce. In fact, sales in the Middle East Market have increased by 1500% in the past decade.
Attractions of the UAE
1、Free and open trade policy
The UAE government implements an open and free trade policy. There are no trade barriers, foreign exchange controls and income tax, value-added tax, consumption tax, or various taxes. Profits can be freely remitted. Except for very few categories such as tobacco and alcohol, most commodities are only symbolically levied with 5% tariff.
2、Favorable business environment
The UAE has excellent facilities of transportation, warehousing, communication and free trade zones, as well as high-quality and efficient services for finance and trade. All of these conditions create a safe, fair and convenient business environment for investors.
3、Developed international transportation hub
The UAE acts as the hub of transportation and trade linking Europe, Asia and Africa. Transportation via sea, land and air in the UAE is highly developed. There are about 5,600 flights of 125 airlines per week in Dubai International Airport, which could directly reach more than 200 cities in the world. 2 billion consumers from more than 50 countries in the Middle East, Africa, Europe and Southwest Asia, etc. could be involved in the huge market.
4、Sound economic order
The UAE is also featured by strong inclusiveness. Foreigners can easily obtain visas for business, tourism and even living in the UAE, thus making it convenient for entrepreneurs to travel frequently between the UAE and other countries for business activities.
The Most Promising Industries in the UAE
The UAE Ministry of Economy has identified 14 promising industries that are attractive to foreign investment.Transportation、warehousing、manufacturing、maintenance, tourism, medical care, hospitals, universities, consulting and engineering design are also included in the list.
Chinese enterprises are advised to keep their eyes on investment opportunities in the following two areas:
First, multi-faceted cooperation between China and the UAE under the “Belt and Road” framework. Evolving from exchanges of pearls and shells in the 7th century to the current strategic cooperation in energy, China-UAE cooperation has become the main impetus for cooperation among China and other Belt & Road countries. Located at the convergence of Asia, Africa and Europe, the UAE becomes a natural logistics and business hub for the “Belt and Road” initiative to fuel the mutually beneficial and win-win cooperation among the countries along the Belt and Road.
Second, potential investment opportunities in oil and gas, telecommunications, new energy, tourism and other industries.
Preferential Policies of the UAE
1、Preferential policy framework
To attract foreign investment, the UAE has imposed a low tax rate nationwide. At the federal level, the UAE government basically implements a non-tax policy for enterprises and individuals, and there is no income tax, value-added tax, consumption tax and various taxes in intermediate activities. Foreign joint ventures, wholly-owned enterprises and local enterprises are legally entitled to equal treatment. From the emirate perspective, policies formulated by emirates on free trade zones in their respective jurisdictions constitute the basic preferential policy framework for attracting foreign investment.
2、Incentive policy for industries
Incentive and preferential policies for industries are mainly reflected in the following two aspects. First, different taxes are levied in different industries. Entitled to levy taxes independently, different emirates can impose a “company tax” at varying rates on companies, most of which are foreign banks and foreign oil companies. A so-called “indirect tax” can also be imposed on certain goods and services. Second, different regions can apply various preferential policies to the industrial development zones established according to the regional conditions (e.g. Dubai Motor City), and promote rapid development of these industries by establishing free trade zones.
3. Provisions for special economic zones
Foreign investors who invest in free zones and special economic zones will enjoy the following advantages:
1) Foreign capital can hold 100% of shares
2) Capital and goods can reflow in full
3) No requirement on minimum investment capital
4) Shareholders are liable only to the extent of paid-in capital
5) No restriction on the shareholding ratio
6) No corporate income tax
7) No personal income tax
8) Excellent plant and warehousing facilities