Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Social and economic reform in the Gulf
From visa liberalisation to changes to the working week, there are sweeping reforms taking place across the Gulf as the region looks to attract investment and talent. This has led to an increase in investments from Asia, as explored in Asia House’s new report, The Middle East Pivot to Asia 2022.
The Gulf states have been liberalising their economies for several years, introducing economic and social reforms to attract new foreign investment, business, and talent. The shock of COVID-19 sped up this process. Economic reform not only attracts international businesses, including from Asia.
New visas introduced throughout the Gulf
The Gulf states have introduced several new visas for existing expatriates, as well as foreign businesses and their employees looking to expand in or relocate to the region. Expatriates make up the majority of residents in the UAE, Qatar, Kuwait, and Bahrain. The introduction of visas bestowing greater rights and benefits for expatriates is designed to encourage them to remain in the country, maintain their investments and continue contributing to the economy.
The UAE has recently introduced several new visas and entry permits that offer greater benefits and privileges to expatriates, tourists, and business travellers. Introduced in 2019, the “Golden Visa” is a renewable residency permit valid for 10 years and can be obtained without an employment sponsor. A Golden Visa holder can sponsor their spouse, children, and domestic workers (UAE Government, 2022b). As of July 2022, the UAE has issued around 65,000 such visas.
“There are a growing number of inquiries about golden visas to set up new offices in Dubai. We expect this trend to increase, thus indicating the rising interest in Dubai.”
Chermaine Lai, Country Head – Hong Kong, Mashreq Bank, spoke to Asia House as part of the research. Read the interview.
There are signs that visa liberalisation is helping attract new business. Dubai recorded a 25 per cent increase to 45,653 in new licences issued in H1 2022 (Sharma, 2022).
Other key reforms
Greater benefits and protections for expatriates in the Gulf
In addition to visa regulation changes, the Gulf states are introducing other reforms to give greater privileges and benefits to expatriates. The most significant change since last year’s report has been the introduction of a new UAE labour law in February 2022. It recognises new modes of working such as flexible and part-time employment.
Among other benefits, the new law extends maternity benefit to 60 days of paid leave and introduces greater clarity regarding rights, and more protections for employees, including against harassment. In May 2022, the UAE announced that unemployed workers in the UAE will get 60 per cent of their salary up to 20,000 AED a month (around US$5,445), provided residents pay between 40AED and 100AED (roughly US$10-27) a year into the scheme (Oommen, 2022e).
Changes to the working week
Another impactful reform introduced was the UAE’s change of its working week from Sunday to Thursday to a four-and-a-half-day week spanning Monday to Friday. This came into effect on 1 January, 2022. The change moves the UAE in line with both Asian and Western markets, increasing the number of hours that UAE businesses can interact and engage with foreign businesses. The change also moves the UAE’s capital markets in line with international ones, increasing the number of hours that Asian traders can operate in UAE markets, and vice versa.
Saudi Arabia’s new Companies Law
Saudi Arabia introduced a new Companies Law in July 2022 which will move it closer to best international business practices. The law allows Saudi firms to raise revenue in new ways, establishes clearer frameworks to govern mergers, and provides greater clarity and rights for shareholders. It also introduces a new type of unit in Saudi Arabia, called a ‘simplified joint stock company’, which does not have a minimal capital requirement, encouraging greater entrepreneurship. The new law also exempts SMEs from the requirement to appoint an auditor, again simplifying their operations and encouraging SME growth.
Capital market reform
The last couple of years have seen the Gulf states introduce reforms governing their capital markets to encourage growth and increase liquidity and trading. Recent expansion and development of these markets offers opportunities for Asian and Western institutional and retail investors and could encourage greater capital flows between Asia and the Gulf.
Gulf states are diversifying their economies by floating state-owned assets, leading to a recent surge in IPOs. The floating of state-owned assets is set to continue, meaning Gulf capital markets are on a pathway to growth that could attract greater institutional investment from Asia, making Gulf growth important to Asia’s.
For more information about Asia House’s Middle East expertise and research services, and to enquire about bespoke presentations on the issues covered in the report, please contact Jonathan Smith, Corporate Affairs Manager: jonathan.smith@asiahouse.co.uk
