COVID-19: Impact On Business In The UAE
UAE is the greatest exporter of oil and gas and is primarily a tourism-based economy. However, a great contributor to its economy is aviation, as it is the world’s transit destination in connecting flights from country to country. In addition, it is the centre of the business world. Precisely, it is a state that thrives on the influx of people from all over the world, whether for business, residence, or visit.
The coronavirus, first identified in China, unleashed its horrors on the world in 2020. A fatal respiratory disease that spread through contact, the coronavirus (dubbed Covid-19) drastically changed everything from lifestyles to business. The world saw the worst example of a lockdown. Businesses were closed; people were forced to stay home; the streets were empty; it seemed as if no humans were inhabiting the cities. This had a direct impact on economies where GDPs hit rock bottom.
The first case of Covid-19 in the UAE was confirmed on 29 January 2020. Thus, the UAE imposed strict lockdowns to prevent spread. Global lockdowns had a direct impact on the tourism, business, and retail sector. However, the Dubai Expo 2020 was most affected, which got postponed. In such a situation, the UAE set an example of sustainability and effective policy-making. The government immediately announced an AED 100 billion support scheme for the corporate sector. Governments of Abu Dhabi and Dubai also announced economic packages for their citizens to help them through trying times. A prompt and extensive vaccination program was initiated to ensure containment of the disease, prevent further spread and attain herd immunity.
With the virus gradually disappearing, UAE is in the recovery phase: both socially and financially. Experts had predicted a drastic fall in UAE’s economy, yet it has done a remarkable job in sustaining itself and preventing a recession. However, this pandemic has changed the way businesses will operate in the future. The UAE, in particular, has sleeved up to be the first one to adopt the new modifications to better equip itself in the face of a future possible change. We will briefly discuss some of these shifts and changes in this article.
On the other hand, while Abu Dhabi faces its own fiscal pressures from falling oil prices and demand, but its massive sovereign wealth fund (SWF), estimated at over $800 billion (Parasie, 2020), suggests that Abu Dhabi is in a better position to withstand moderate to severe economic impact from the pandemic.
Trust in the System
Stability of countries is measured by their ability to overcome the economic crisis and their overall economic growth and sustainability. UAE has been one of the first countries that efficiently respond to the outbreak of coronavirus. UAE’s vaccination program has been the most efficient after Israel. Federal governments of Dubai and Abu Dhabi had been swift to announce support packages for employees and businesspersons in order to sustain jobs and the overall economy.
All these measures were directed towards, and intended for, the expatriate labour force and business setups that are the backbone of the UAE economy. Needless to say, they have yielded fruit. The labour force and expatriate employees have expressed their relief and appreciation over the government’s measures. This trust is beneficial for the existing business setups and will attract even more. This is because businesses prefer to establish in countries where their concerns are addressed and their sustainability protected. Existing businesses are now confident that the government will take necessary actions to prevent any economic setback in the future too.
Boost in E-Commerce
As compared to its neighbouring countries in the Gulf region, UAE has always been the first to adopt innovations in every field. Since the pandemic, it has maintained that mark by being the first one to embrace and implement technology-driven strategies to sustain and enhance economic growth. During the lockdown, UAE was quick to move several sectors to digital operation such as customer service. Many customer service centers were closed and moved to apps and over-the-cloud. Business in E-commerce, new technology, financial technology and others flourished during the lockdown. In addition, the UAE government has launched the Strategy of Government Service, which aims at a digital transformation until 2023.
Free Zones
The UAE has set up several free-trade zones to attract investors from around the world. It has 37 free-trade zones and more are under construction. The policy-making to retain foreign talent has been successful during the pandemic. New policies revolve around attracting SMEs and encouraging them to set up their businesses in free zones, which now have even relaxed terms and conditions. While the world faces weakened trade systems, these free zones and policies will prove to be an attraction for investors and boost the economy of the UAE.
Small-Medium Enterprises
Surprisingly, UAE has focused more on business start-ups and SMEs. In a global situation such as the coronavirus, one would expect the country’s financial planning to revolve around big industries as they bring more revenues. However, UAE’s strategy is beneficial for the country’s existing setup and statistics. A major of UAE’s population are the expatriates and their business brings foreign investment as well as revenues to the economy. Large business setups are either government-owned or have international links, which, due to the pandemic, were cut. Therefore, the government has taken steps to retain small-medium businesses and has supported start-ups to prevent an exodus of people. This has made UAE an attraction for entrepreneurs and this is the best time to start a new business venture in the UAE.
Wrapping it up
While UAE itself is dealing with looming uncertainties due to the coronavirus, it is a well-established fact that it has taken effective steps in preventing an economic recession. The pandemic has affected businesses worldwide but it is hoped that UAE will compensate for all the losses through its policies and investor-attracting initiatives.
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