On 12 March 2020, the Dubai Government announced a AED 1.5 billion economic stimulus package to enhance liquidity and cushion the potential impact of the current global economic situation caused by the onset of the COVID-19 outbreak. The package includes 15 focused initiatives aimed at reducing the cost of doing business and simplifying business procedures, especially in the commercial, retail, external trade, tourism, and energy sectors.
Fifteen initiatives will be introduced soon and shall be valid for three months, after which time their impact on the UAE economy will be reviewed. According to news reports, Dubai’s key initiatives include:
- Refund of 20 percent of the customs fee imposed on imported products sold in Dubai
- Refund of bank guarantees or cash required to be paid by existing custom clearance companies
- Cancellation of the AED 50,000 bank guarantee or cash requirement in order to undertake customs clearance activities
- Cancellation of bank guarantees required to be submitted before resolution of customs-related grievances.
- A 90 percent reduction of fees imposed on submission of customs documents
- Freeze on the 2.5 percent market fees levied on all facilities operating in Dubai
- Exemption to traditional wooden commercial vessels registered in the country from mooring service fees for arrival and departure, and direct and indirect loading fees at Dubai and Hamriyah Ports
- Cancellation of 25 percent down payment required for requesting installment-based payment of government fees for obtaining and renewing licenses
- Permission to renew commercial licenses without mandatory renewal of lease contracts
- Reduction of municipality fees imposed on sales at hotels from 7 percent to 3.5 percent
- Exemption from fees charged to companies for postponement and cancellation of tourism and sports events scheduled for 2020
- Freeze on the fees for classification/rating of hotels
- Freeze on the fees charged for the sale of tickets, issuance of permits and other government fees related to entertainment and business events
- Reduction in water and electricity bills by 10 percent
- Reduction in deposits paid for water and electricity connections by 10 percent
Abu Dhabi has also announced 15 initiatives focused on supporting SMEs and easing the availability of loans to local companies. These measures are a part of “Ghadan 21”, an AED 50 billion development plan announced by Abu Dhabi in 2018 aimed at enhancing the competitiveness of the emirate.
According to news reports, key initiatives announced by Abu Dhabi include:
- Allocation of AED 3 billion to the SME credit guarantee scheme managed by the Abu Dhabi Investment Office to stimulate financing by local banks and enable SMEs to navigate the current market environment
- Allocation of AED 1 billion to establish a market maker fund, to enhance liquidity and sustain balance between supply and demand for stocks
- Establish a new committee to review lending options to support local companies
- Exemption to all commercial and industrial activities from Tawtheeq fees until the end of this year
- Suspension of real estate registration fees until the end of this year
- Reduction of industrial land leasing fees by 25 percent on new contracts
- Waiver of certain commercial and industrial penalties
- Suspension of bid bonds and exempting startups from performance guarantees for projects up to AED 50 million
- Settlement of all approved government payables and invoices within 15 working days
- Suspension of tourism and municipality fees for the tourism and entertainment sectors until the end of this year
- Rebate of up to 20 percent on rental values for restaurants, tourism and entertainment sectors
- Allocation of AED 5 billion in water and electricity subsidies
- Reduction in electricity connection fees for startups until the end of this year
- Exemption to commercial vehicles from annual registration fees until the end of this year
- Exemption to all vehicles from road toll tariffs until the end of this year
Businesses around the world are affected by COVID-19 and face issues linked to cash flow, profitability and ultimately continuity. Several governments, like Dubai and Abu Dhabi, are being proactive in rolling out stimulus packages with the intention of optimizing costs, supporting businesses and demonstrating support.
We will continue to monitor these initiatives while we await the details of their implementation over the coming days.