09 July, 2006

SMEs fleeing Dubai

From Gulf News:
Fresh small and medium-size investment is shying away from Dubai due to the high cost of rent in its free zones. Companies are looking for cheaper alternatives in Sharjah, Ajman, Ras Al Khaimah and other free zones, as the cost of obtaining trade licences and the rents are much lower in other emirates, officials say. The cost of a small start-up for a year including a trade licence and rental in Ras Al Khaimah Free Zone (RAKFZ) has been around Dh22,000 ($6,000), while a similar operation in Sharjah Airport International Free Zone (Saif Zone) is around Dh25,000. The same in Dubai is almost four times higher. The cost of a similar operation at the Jebel Ali Free Zone (Jafz) and Dubai Airport Free Zone (Dafz) ranges from Dh85,000 to Dh100,000, including Dh75,000 to Dh80,000 for rental.

The beginning of the end? It's probably not a bad thing that the other emirates get more investments but if SMEs are being more careful about Dubai, that can't be good can it?

1 comment:

blog400 said...

We really should not be surprised. reasons include:

* Increasing cost and reducing value - compared to the remainder of the Emirates and elsewhere in the world. The days of very low cost labour (etc.) are drawing to an end.
* Stealth taxation - import duties, licence fees, price fixing cartels.
* Lack of world-class talent - in international terms, salaries are generally low.
* Emiratisation - implemented or impending government legislation forcing companies to employ only UAE nationals in certain job classifications (e.g. government relationship officers, secretaries and human resource managers). The quality of human resource management in the UAE is generally bad and now it will be awful. Most UAE nationals and companies equate HR to the “personnel” function of some Western company of the 1950’s.
* Regional instability and perception of such instability - Iraq, etc. Iran, Shiaa-Sunni tensions, etc.
* Quality of life - too much traffic, not enough schools, inadequate medical facilities, etc.
* Lack of transparency.

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