Business Practices in the UAE

Chapter 3&4

Prepared By Dr.Rashad Al-Saed Skyline University

Fact and figures

• • •

Business as usual

Despite the impact of the

global financial crisis

resulting in

an inevitable contraction

in 2009, the UAE economy

remains robust (Strong

revenues.

), shielded by significant overseas financial assets garnered during the era of high oil

Substantial public expenditure

assets, allied with strong fundamentals and sound fiscal

policies

, has served to and is expected , made possible by those

minimize the impact

of the crisis and receding petrodollar income on the UAE's economy,

to speed up its recovery in 2010

.

In particular, the government has its investment budgets at high levels, especially for core long-term infrastructure projects, in growth.

pledged to maintain order to rekindle

UAE General Information

• • • • • • • • Official name – United Arab Emirates Population – 2,602,713 (July 2006 est.) Official Language – Arabic Currency – Emirati Dirham (AED) Capital city – Abu Dhabi GDP – purchasing power parity $115.8* (2005) GDP Per Capita - purchasing power parity $45,200* (2005 est.)

Reasons for Doing Business in the UAE

• • • • •

Robust open economy

The UAE has a

vibrant (vital)free economy

, a

significant proportion

of its revenues arising from exports of oil and gas. Successful efforts have been made to

diversify away

from dependence on hydrocarbons and a solid industrial base has been created, together with a very strong services sector. The establishment of and

free zones reform of property laws

has been an important feature of this diversification policy gave a major boost to real estate and tourism sectors.

• • • • •

Security and stability

Since its establishment in 1971, the UAE has enjoyed an enviable degree of

political stability,

unequalled in the region. This has enabled the implementation of

consistent sound economic policie

s and the reinforcing of the country’s social structure to produce one of the most

tolerant, prosperous, secure and safest so

cieties in the world. Dubai and Abu Dubai have been ranked the

top two citie

s in the Middle East region for

quality of life,

according to the latest edition of a global survey.

Long-time investors include a wide range of

multinational companies headquartered

across the globe.

•

Tax-efficient business environment

Special economic zones and free zones

offer 100 per cent ownership

, repatriation (back to home) of profit and • capital as well as exemptions from taxes. Outside of these areas,

significant incentives

are being offered to investors and corporate governance provisions ensuring transparency and accountability are being enforced. • A negligible 5 per cent tariff is imposed on goods imported from non-Gulf Cooperation Council (GCC) • countries, although tobacco and alcohol products are subject

to 50 per cent customs duties

• • • • •

Solid infrastructure

Infrastructure in the UAE is second to none.

Telecommunications, including mobile and fixed telephony as well as internet access is on par, if not better, than the world’s largest international business hubs.

The road network is constantly upgraded and ports and airports are of world-class standards.

UAE is creating one of the world’s biggest and most efficient cargo handling centers. To date, the Government has invested heavily in infrastructure development, but it has also opened up its utilities and other infrastructure to greater private sector involvement, so much so that public-private partnerships are now the norm.

• •

Proximity to growth regions

The UAE’s strategic location between Asia, Europe and Africa is a major advantage to investors, particularly the country’s proximity to some of the world’s fastest growing economies in Asia.

India and China alone comprise almost 40 per cent of the world’s total population and support a combined GDP in excess of US$5 trillion, providing significant economic and trading opportunities. • •

Intellectual property protection

Intellectual property, including patents and trademarks, is legally protected in the UAE The country is also a member of international bodies, treaties including the World Intellectual Property Organization (WIPO), World Trade Organization (WTO), Paris Convention.

Business practices in the UAE

• • • •

Emirati Culture – Key Concepts and Values

Islam – Religion has

played an important and influential role

in shaping the society and culture of the UAE. Islam is the

official and majority religion

and pervades almost every aspect of life.

Laws, education, food, clothes, daily routines and even conversations are all strongly influenced by Islam. The Islamic faith places great emphasis on

behaviors such as generosity

,

respect and modesty

which most Emiratis will display .

• • • •

Emirati Culture – Key Concepts and Values

Understanding Islam and the influence it has on everyday life and Emirati business culture is the

first step to conducting successful business

in the UAE.

Family –

Family and tribal

connections form the basis of Emirati social structure. The family and tribe are highly influential and play a role in shaping a person’s values and behavior. The family comes before anything else and its honor is protected by doing whatever necessary.

• • •

Emirati Culture – Key Concepts and Values

Loyalty between family and tribe members

carries over into business

where it is not uncommon for companies to be run by and

employ several members of one family or tribe

.

Hospitality –

Hospitality is an essential part

of Emirati culture and applies to both social and professional contexts. Guests will be received with enormous generosity . In the home this usually comes in the form of a feast of

traditional Emirati food

, especially during the holidays .

Emirati Culture – Key Concepts and Values

• • • while in a business context, meetings are almost

always

accompanied by traditional Arab coffee and pastries. The emphasis placed on hospitality is closely connected to the

importance of relationships.

Foreigners should

show their gratitude

and dedicate time to cultivating relationships with their Emirati counterparts.

Working practices in the UAE

• • • • • The working week traditionally starts

on Saturday

and ends on

Wednesday

. Thursday and Friday are the official days of rest, though in some cases, people will work Thursday and take off Saturday instead. Office hours tend to

be 0900-1300 and 1630-2000

today work often goes even later as a result of the immense construction boom.

though Meetings should be anticipated.

scheduled in advance

with extra time allocated in case it should go on longer or start later than Often meetings

are cancelled at the last minute

, so it is important to be flexible and come prepared with either a business card or letter to let them know you were there.

Attitudes to time in the UAE are much more

in many Western cultures. relaxed than

Working practices in the UAE

• • • • • People and relationships are

more important than

schedules and punctuality. It is not uncommon, therefore, for your Emirati counterparts to

arrive late

expected to arrive on time.

but foreigners are The Emirates are a considerably

modern state

relation to the rest of the Middle East. in As such, many traditional attitudes and business practices are evolving towards a more

Westernized approach

. Nevertheless, it is still important to exist

be aware

and respectful of some of the differences that might

Working relationships in the UAE

• • • • • • People in the UAE prefer to do through

business in person.

Relationships and mutual trust are

face-to-face meetings

.

paramount (basic

) for any successful business interaction and can only be developed It is important

to spend time with your

counterparts and ensure future meetings take place to continue cultivating the relationship.

Emirati business It is important to have connections to someone in the UAE who can

introduce you before

there on your own.

attempting to do business Emirati people prefer to do business with to your business relationship.

those they know

, so having someone to introduce you will be of immense benefit

Family and friends

come before anything else.

As a result, it is

not uncommon

for an Emirati to reschedule or cancel something to accommodate their needs or wishes.

Do &Don't • • • • The customary greeting is

“As-salam alaikum,

” (peace be upon you) to which the reply is “Wa alaikum as-salam,” (and upon you be peace). When entering a meeting, general introductions will begin with a handshake.

You should greet each of your Emirati counterparts individually. In line with Muslim customs.

Avoid shaking hands

with a woman unless they extend their hand first.

Initial business meetings are often a way to become acquainted (know) with your prospective counterparts. They are generally long in duration and discussions are conducted at a leisurely pace

over tea and coffee.

Do &Don't • • • •

Time should be allocated

for such business meetings, as they are an essential part of Emirati business culture.

Business cards are common but not essential

to Emirati business culture. If you do intend to use business cards whilst in the UAE, ensure that the

information is printed in both English and Arabic

. DO address your Emirati counterparts with the

appropriate titles followed by his or her first name

. If unsure, it is best to

get the names and correct form of address

of those you will be doing business with before hand. DO dress conservatively.

• • • • • • • While the UAE is more Westernized than many other Middle Eastern countries and therefore home to many Western style clothes, it is still important to

dress modestly

. As a sign of respect, men and arms.

should wear a conservative suit

and women should ensure their clothing covers their legs Doing Business in the UAE © Communicaid Group Ltd. 2007 DO accept an invitation to a

meal or social event

.

Relationships

Emirates. are an integral part of doing business in the

Spending time

with your Emirati counterparts is the best way to build trust and mutual understanding.

DON’T

schedule business meetings during prayer times or any of the major Islamic holidays such as Ramadan or Eid.

These are extremely important periods for the majority of native Emiratis who are Muslims.

• • • • • • • Business is

usually put on hold during

these occasions as it is a time for reflection and celebration.

DON’T expect a one-on-one

meeting to only include yourself and the other person. Often there will be other people present in the office or meeting room waiting their turn to meet with that person. When you arrive, it is polite to greet the person, take a seat and accept any coffee served until it is your turn.

DON’T assume

important.

that the person who asks the most questions in meetings holds the most responsibility. In the UAE, this person is considered to be the least respected or least The decision maker is usually a silent observer and will only speak when discussions come to a close.

DON’T ask about a person’s wife

or daughters. It is polite to enquire about a person’s family or health, but never ask specifically about any female members. Family life which involves female members is kept extremely private.

• • • •

Business Dress

Visitors are expected to abide by local standards of

modesty

(humility) however,

do not adopt native clothing.

Traditional clothes on

foreigners can be offensive.

Despite the heat, most of the body should always remain covered.

A jacket and tie are usually required for men at business meetings. Men should avoid

wearing visible jewelry

, particularly

around the neck.

Women should

wear modest clothing in public.

High necklines sleeves at least to the elbows are expected. Hemlines, if not ankle-length should at least be well below the knee. It is a good idea to keep a

scarf handy

, especially if entering a Mosque.

• • •

Language for business

Arabic is the official business language. Most government forms and official contracts – e.g. tenancy, residence visa – are in Arabic.

Official documents (e.g. university diploma, marriage certificate) that have to be submitted to a government agency for processing or authentication also frequently require

translation into Arabic

. However, English is commonly used

in business circles

.

•

Working hours

Working hours are either ‘straight shift’ or ‘split shift.’ The former normally requires eight working hours beginning from 7:30 a.m. or 9:00 a.m. with a lunch break lasting 30 minutes to an hour. The latter comprises eight to nine working hours that typically commence between 9:00 a.m. and 10:00 a.m. and ends between 8:00 p.m .and 9:00 p.m., with a three- to four hour break in between. The split shift is thought to be an efficient means of addressing the extremely hot weather during the summer months, particularly for laborers. Working hours are shortened during the holy month of Ramadan, usually by two to three hours.

•

Multi-national human resources

Investors benefit from an abundant supply of human resource skills, courtesy of professionals migrating to the emirate from nearly every country in the globe, as well as the increasing number of UAE nationals that are joining the private sector.

• •

Efficient government services

E-government websites, free zone authorities as well as chambers of commerce and industry provide new entrants with helpful information and guidance. Federal e-government www.government.ae/ Dubai e-government www.dubai.ae

Federation of UAE Chambers of Commerce and Industry www.fcciuae.ae/ UAE Ministry of Economy www.moe.gov.ae

UAE Central Bank www.centralbank.ae

Mubadala www.mubadala.ae/ UAE Offsets Group www.offsets.ae/ Abu Dhabi Investment Authority www.adia.ae/ Abu Dhabi Chamber of Commerce Online Services www.abudhabionlineservices.ae

Abu Dhabi Department of Planning and Economy www.dpeportal.adeconomy.ae

•

Women and Business

• Professional women are commonplace in the UAE and are generally treated seriously, particularly if the woman acts in a confident and self-assured manner.

It is advised to dress conservatively and here again good grooming (ready) is essential – you will find that all business people, male and female, are impeccably dressed. Patience and good humor will carry you through most situations.

• • • • • •

Communication Guidelines

Do not discuss the subject of women, not even to inquire the

health of wife or daughter

. The

topic of Israel

should also be avoided.

Sports is a perfect

topic for conversation.

Names are often confusing. It's best to get the names in English. Learn both their full names and how they are to be addressed in person before you meet.

Communication is a bit slow, do not feel obligated to speak during periods of silence. "Yes" usually means "possibly".

Meetings are commonly interrupted

by phone

calls and visits from friends and family.

One who asks the most questions in a meeting is likely to be the least important. The decision maker is a silent observer.

A customary greeting is salaam alaykum. Shaking hands and saying kaif halak follows.

• • • •

Business Visa Rules for UAE

Business visas are issued only by UAE Embassy, and requires company letter and sponsor in UAE to send a fax or telex to UAE Embassy confirming the trip and accepting financial responsibility. A single-entry visa is valid within two months from the date of issuance for stay of up to 30 days. To receive a visa, submit 2 application forms, 2 passport size photographs and prepaid envelope for return of passport by certified/registered mail. Public Holidays :Festival Date Detail New Year's Day January 1 Mount Arafat Day Date Varies Eid al Adha (Feast of Sacrifice) Celebrated 3 Days. Date Varies Islamic New Year Date Varies The Prophet's Birthday Date Varies Sheikh Zayed's Accession Date Varies The Prophet's Ascension Date Varies Eid al Fitr (End of Ramadan) Celebrated 2 Days. Date Varies National Day December 2

• • • •

Travel Tips

Though tipping

is not expected

but it is a common practice. Most of the restaurants include

service charges in the bill

. If it is not included, add 10% to the total.

Taxi drivers are not tipped

. Supermarket beggars, bag carriers and the windscreen washers at the petrol stations are usually

given Dh2

. There are no departure tax. A passenger can carry without incurring customs duty, 2000 cigarettes and 400 cigars and 2kg of tobacco; 2l of spirits of more than 22 per cent alcohol, and 2l of wine (non-Muslims over 18 years only); a reasonable amount of perfume for personal use (1l of eau-de-toilette and 150g of perfume for those visiting Dubai and/or Sharjah).

• • • •

Travel Tips Ask for permission

people in general. Do

avoid taking

photographs of Muslim women before photographing Electricity is 220 volts. Standard of food hygiene and water

very high

.

quality is

Water is generally produced by desalination, hence it is safe to drink. Drink plenty of water in the heat