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Doing business in Dubai

Dubai at a glance

  • Foreign investment fuelled a long boom in the north-east
  • Investors, entrepreneurs and contractors have flocked there from around the world, lured by zero taxes.
  • A lot of paperwork involved in setting up businesses and emigrating, but moves are afoot to ease the bureaucratic burden.
  • Social life often intertwine and business meetings can often stretch late into the night. 
  • Although the authorities tolerate Western vices for the sake of attracting investment and tourists, punishments are punitive for those who flaunt them in public.

Few places over the past decade have offered such scope for accumulating wealth and living luxuriously than Dubai.

A tax system formulated almost entirely in accordance with the needs of business - ie, taxes are negligible - and a high standard of living has seen contractors, entrepreneurs and businesses move to the United Arab Emirates' economic fulcrum in droves.

Dubai, which is home to the region's largest seaport and airport, leapfrogged London as the number one city in the world for foreign direct investment in 2008.

However, the global slowdown has slammed the brakes on this Middle Eastern juggernaut, sending its stock market and property prices plunging.

For now, opportunities for Western expats have been severely curtailed.

Until now the Gulf city-state has been the fastest growing city on the planet, and has been transformed from a desert village to a glittering metropolis in only 20 years.

People come to make money and live a luxurious life in the sun - an aspiration common to all mankind, so no surprise that people come from all corners of the world


The scale of its ambition, which has spawned man-made islands, the world's largest man-made marina and its tallest building, has often been breathtaking.

Naturally, the most ambitious place on Earth has attracted the most ambitious people.

People come to Dubai, above all else, to make money and live a luxurious life in the sun - an aspiration common to all mankind, so it's no surprise that people from come from all corners of the world.

The British contingent comprises 100,000 expats and 200 UK companies.

Only 20% of the 1.5 million inhabitants are indigenous Arabs.

Boom and bust

Such has been the influx and economic development that new buildings have sprung up at bewildering speed.

The Dubai skyline has changed constantly as grandiose skyscrapers jostle to outdo each other for size and, often, grandiosity.

At the height of the boom it was estimated that a quarter of the world's construction cranes were located in the emirate.

Inevitably, though, the worst global recession since World War II has hit the construction sector hard, leaving swathes of real estate unoccupied and surplus to requirements.

Half of the city-state's construction projects, totalling £400bn, have been put on hold or cancelled, including a Donald Trump tower, a $100bn resort complex by the beach, four theme parks and an artificial island.

Luxury hotels and other tourism-related businesses are struggling.

The stock market here has plunged 70% from 2005 levels, and banks, as elsewhere, have pulled the purse strings tight.

Dubai's boom has been as dependent on debt as anywhere, and is reputed to have the world's biggest per-capita debt.

Oil-rich Abu Dhabi recently bailed out its chastened neighbour to the tune of $10bn.

And yet, defaulting on debt or bouncing a cheque are seen as criminal offences, and many Britons, redundant and indebted, are now absconding.

Some observers believe Abu Dhabi, which opted for more controlled growth, will eventually overtake its more impatient neighbour.

But Dubai, whose oil reserves are meagre compared to Abu Dhabi, hasn't been left entirely at the mercy of oil and property prices.

Setting up

The oil revenues which initially powered its explosive growth now only account for 10% of an increasingly diverse economy. 

Dubai was the first emirate with a stock exchange and is a major player in finance, IT, legal services, manufacturing services, property, leisure, hospitality and other tourism-related industries.


Industries are often clustered in their own dedicated freezones, where they are exempt from tax and foreign nationals can own businesses outright.

Previously, and beyond the freezones, foreign entrepreneurs required a sponsor to own 51% of any venture.

The biggest freezone is in Jebel Ali, and is dedicated to trade and manufacturing, but there are also zones for most other sectors, including medicine, media and IT.

Getting into a freezone entails a lot of paperwork and some industries are favoured over others.

Betty Thayer, chief executive of, set up her company in the Airport Freezone. "We had to work really hard to convince the government that we weren't a recruitment company," she recalls.

Frustrating though the process is, however, you shouldn't try to avoid it.

"Some companies from the UK try to go over there and set up without going through all the licensing process. It works for a while but you cannot keep going for long," warns Thayer. 

You need a licence to operate a business, either a commercial licence for trading, a professional licence for professional services offered or an industrial licence for manufacturing or industrial activity.

You can get the relevant licence from the government's economic department.

If you buy a property in Dubai you automatically earn the right to a three-year renewable residency permit, though not to a work visa.

Concerned by the level of bureaucracy, the Dubai Department of Economic Development (DED) is currently reviewing licensing procedures, so hopefully the sometimes onerous bureaucratic burden will soon ease.

Somewhat ominously, one expat in the Middle East's commercial capital advises new arrivals to bring about 30 passport photos for the many forms.

Business culture

Just as damaging to your fortunes as failing to fill out all necessary forms is a failure to properly familiarise yourself with the business culture.

The national language in Dubai is Arabic but English is widely spoken and the lingua franca of business.

Business and social relationships often dovetail, and a rapport built on the tennis court can pave the way for fruitful relationships in the boardroom.

The boundaries between social and business interaction can often blur, so it's best to play it safe.

Never rush your host and wait for him to raise the topic of business.

Your first meeting with a Sheik or high-level Emirati might just be an informal chat, and you may have to wait until the second meeting to get down to business.

However, if patience is a virtue in the first instance, once you're seriously negotiating, meetings can stretch late into the night.

Personal relationships are important to Arab businessmen, who find face-to-face meetings the best way to build trust.

If you have a significant number of clients or prospective clients in Dubai, then relocating there or visiting frequently can reap dividends.

Visitors should avoid going in July and August though, because most decision makers are on holiday, while it's extremely hot and humid, with the mercury sometimes reaching as high as 49°C.

The weather is at its coolest, and most pleasant, between December and March, generally averaging between 25°C and 35°C in the day and as low as 9°C at night.

Also bear in mind the different working week, stretching from Sunday to Thursday.

Visiting during Ramadan can be a good time to reaffirm friendships with clients or contacts, but be sure to avoid eating or smoking in public (there are areas in hotels set aside for non-Muslims to eat in).

Employees of all religious backgrounds are not permitted to work more than six hours a day during the Islamic festival.

The continual relaxation of dress codes in British society has not been replicated in the Middle East, where suit and tie is de rigueur in business.

Less exact than the dress code is timekeeping, as Arab businessmen are extremely casual when it comes to punctuality.


Perhaps they are fatalistic about their chances of being on time, given the horrendous traffic congestion - a half-hour journey can take two hours at the height of rush hour.

Fortunately, an air conditioned metro system is under construction, with the first stage due for completion by the end of 2009.

"Soon you'll feel comfortable," promises the Metro website, "and be on time."

And perhaps safer, as driving in Dubai is erratic to say the least and its record for traffic accidents is among the worst in the world.


It can be fiendishly difficult finding your destination as most taxi drivers are immigrants themselves and there are no street numbers.

Your best chance of getting reasonable directions is to ask the hotel concierge.

Cost of living

Difficult and time-consuming to navigate, Dubai is at least cheap to get around, as petrol costs just over half a dirham, or 12p, for a litre, and there is no car tax.

Property, however, is a different story.

Until the recent crash, prices were rising sharply, fuelled by economic growth and the scarcity of land.

Soaring rents have pushed official inflation, running at about 9%, closer to 15%.

Even worse, rents are usually due one year in advance and in full - a big financial hit for new arrivals.

Fortunately, companies often loan the money to employees and deduct monthly repayments from their salary.

Office occupancy costs are competitive when compared to other major cities, such as London, Paris and Tokyo.

Richard Ellis Global Research & Consulting reported in 2007 that average office space costs $89.60 US per square foot per annum.

Dubai is as expensive as London in some regards, but when you factor in the absence of tax you can understand how people on modest salaries can live very comfortably and afford to enjoy the many leisure and other facilities on offer here.

Beach clubs, which tend to be part of a hotel with swimming pools and other sporting facilities, are great places to meet other expats and forge business contacts.

So is the golf course, of which there are many.

The British Business Group is another great place to network and find your feet, as it holds networking and other social events and offers advice and support to expats.

Simon McCrum moved to the Dubai with his wife and three children in 2001 to set up a company.

"Living in Dubai, particularly with small children, is fabulous," enthuses Simon. "For eight months of the year the climate is wonderful, schools are of the very highest standards, crime is very low and there is a very active social life on offer for those who wish to take part and best of all, there is no income tax!"

Stricter culture

While the taxman allows you to keep what you earn, the authorities are keener to regulate morality.

This Las Vegas-esque kingdom has a lively nightlife and permits the consumption of alcohol, albeit only in hotels, certain private clubs and, conditional on buying a licence (not difficult to obtain), at home.

But do not mistake tolerance for acceptance.

Drinking, being visibly intoxicated, dressing immodestly, or doing anything deemed sexual in nature in public is liable to get you arrested.

And penalties for infractions most westerners would consider trivial can be punitive.

The Gulf state recently set a mandatory four-year prison sentence for anyone caught with illegal drugs, even encompassing over-the-counter medicines and traces of recreational drugs invisible to the naked eye.

Last year a couple were incarcerated for three months for having sex on the beach.

Unmarried couples aren't permitted to live together, while homosexuality is outright illegal.

So if you want to live here, be aware that it's considerably less liberal culturally than economically, and be discrete where necessary.

Prominent women

Women should be aware that this is a highly patriarchal society.

The recent imprisonment of a British woman accused of adultery (she has now been released, but faces a fight for custody of her children) shows how the Islamic laws can encroach into what Westerners consider the private sphere.

Dubai is nevertheless considerably more progressive than its neighbours.

Women have become increasingly prominent in business, and familiarity has bred a certain amount of respect, as men have grown more accustomed to and respectful of women in business.

"I don't think there is any discrimination between men and women," says Shanti-Boxall, who set up a pet shop in the country. "A woman now, you can find her in airports, in banks - it's an open field."

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