The United Arab Emirates government has told some of its largest trading partners that it wants to eliminate only those who sell foreign goods while the Gulf is promoting economic reforms in order to attract more money.
Over the years, people from many ethnic groups have chosen to share the property with their neighbors. The government will enact a law banning the renewal of existing agreements, giving foreign businesses the opportunity to distribute their assets or change their businesses upon completion.
“It does not make sense for families to have such energy and access to easy resources,” the Emirati official said. “We need to restructure our economy.” Officials say the new law is expected to be approved by the Emirati administration but its timing is unknown. The UAE government has not commented.
The proposed change will end the existing alliance between the government and the well-known business families, including well-known names such as Al Futtaim, Al Rostamani and Juma Al Majid, instead of years of protection from local interests in favor of foreign corporations. “This is one of the most difficult issues to address because of the impact on local businesses, which are one of the largest economic sectors in the UAE,” said Habib Al Mulla, senior vice-president of the legal department at Baker McKenzie in the Middle East.
Family-owned businesses, ranging from small companies to corporations built over the years by leading business groups, make up 90 percent of UAE private companies, accounting for about three-quarters of jobs.
The changes are part of the UAE’s drive to attract more revenue through legal and competitive reforms, such as longer-term programs and lower bans on alcohol.
The pace of the transition has intensified as a result of the recent economic crisis with neighboring Saudi Arabia. The empire, as part of its hydrocarbons-separated plans, has set high prices on purchases from the Gulf and is forcing various countries to relocate their headquarters to Riyadh.
Terrified by the rapid pace of change, leading business families have appealed to Dubai’s deputy prime minister, Sheikh Maktoum bin Mohammed al-Maktoum, who briefly commented on the matter.
Dubai’s commercial families are at the forefront of the retail sector that supports the city’s tourism sector, which is also expanding as the country struggles with the epidemic to attract tourists and locals. At the end of the trade agreement, local businesses are expected to receive compensation for their sales revenue and sales networks.
“The buyer benefits if the model goes from one sponsor to more than one. However, local businesses have made a lot of money in these organizations and it would be better to give them several years to set a good example with foreign businesses or to profit from their businesses,” said Al Mulla.
In recent years, some newcomers, including Apple and Tesla, have been allowed to open their own stores without local helpers. Some people from different countries have been asking their local partners to turn corporate agreements into corporate businesses, give them more business power and increase their profits. Commercial families, recognizing the inevitable end of the old corporations’ agreements, have been accepting such demands, the people added.
“This is the right thing to do now, but probably not the right way to do it,” said one family businessman. “We have to keep up with the times, but these changes also need to be discussed.”
Representatives of family groups say that in various countries, instead of taking advantage of the UAE market in the 10m, people may choose to vote for their audience in other Gulf Cooperation Council countries, such as Saudi Arabia, which has a large population. “The government thinks that, suddenly, global trade will overflow, but in reality the GCC will be in control,” said one businessman.
The government still believes that opening up the domestic market will reduce consumer prices.
Family businesses also complain that rapid change comes at a time when the government is relying on public-sector organizations.
Over the next five years, the UAE has stated that Emiratis should create 10 percent of the workforce in the private sector, often relying on low-cost, foreign workers. “The government should focus on its relationship with the private sector, especially now that it wants to force us to do more,” said one family member.
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