Protecting the economic impact of the pandemic through effective stimulus plans
April, 14,2020
By Manish Narayan
The current pandemic, COVID-19 is the greatest challenge which the global economy has experienced since the 2008 ¬nancial crisis, disrupting people, trade and business. To enable societies to move forward, whilst protecting the wider community, Government bodies around the world have introduced several stimulus packages to support the economy, whilst reducing the impact.
Within the United Arab Emirates (UAE), the Government have developed several preventive measures to reduce the spread of the virus, whilst ensuring stimulus packages are in place in order to support businesses and entrepreneurs to continue moving beyond the pandemic, thereby aiming to reduce its impact to some extent.
We summarise the current support available and will be updating the list as new provisions come into place.
Abu Dhabi Global Market (ADGM) ADGM has announced an economic stimulus to ensure sustainability of registered entities operating in its nancial free zone. Some of these support measures run up to March 2021.
The highlights include:
• 100% waiver until 25th March 2021 on:
– Commercial license renewal fees (with the exception of special purpose vehicles (SPVs) and foundations licenses)
– Business activity renewal fees
– Data protection renewal fees; and
– New temporary work permits issuance, renewal and late application fees
• 100% waiver on annual funds fees until 31st December 2020
• 100% refund of annual funds fees already paid by Financial Services Regulatory Authority (FSRA) regulated entities for 2020.
• 50% refund on supervision fees alread paid by FSRA regulated entities for 2020
• 50% waiver on any new FSRA supervision fees to be collected until 31st December 2020.
• Deferment of rental payments and service charges for oce tenants at ADGM Square on Al Maryah Island for 2020.
Sharjah Government
The Sharjah Government has announced a 47-point stimulus package to mitigate the COVID 19 impact on businesses and individuals eective as of 1st April 2020. The highlights include:
• 3-month exemption on:
– Fees for economic establishments who must renew their licenses between 1st January 2020 to 31st December 2020
– Rent from tenants in the buildings of the Sharjah Chamber of Commerce and Industry (Buildings 1 &2)
– Parking fees for the public
– Fees of renewing municipality related permits for the private sector; and
– Hotel establishment municipal fees and fees of the Sharjah Commerce and Tourism Development Authority.
• Reducing the value of trac violations by 50% and canceling trac points for oences committed before 31st March 2020. for a period of 3 months
• 50% discount on Roads and Transport Authority violations committed prior to 31st March 2020, for a period of 3 months
• Providing sanitation services for houses free of charge for a period of 3 months
• Suspension of all rental property eviction cases currently underway, along with execution procedures like imprisonment, blocking of bank accounts, seizure of vehicles, stocks and assets for a period of two months
• The release of approximately 100 prisoners imprisoned on rental issues and a 3-month period to settle their overdue amounts
• Exempting all shipping and customs clearance companies from the bank guarantees required to conduct their activities
• Exemption from visa nes in free zones.
Dubai Government
On March 17th, 2020, Dubai Government announced a Dh4.5 billion economic stimulus to support businesses in Dubai and provide relief to citizens and residents, which will be valid for the coming three months.
The relief available includes:
• Recovery of 20% on custom fees paid on imported products sold locally
• Cancellation of the required Dh 50,000 bank guarantee or cash to facilitate the custom clearance
• 90% reduction of fees imposed on submission of custom documents
• Cancellation of the 25% down payment required to avail installment-based payment of government fees for licensing and renewal of licensing
• DEWA bills are reduced by 10% for all customers (residential, commercial and industrial)
• A reduction of 50% on the municipality fee imposed on hotels (i.e. 3.5% from 7% of daily sales)
• No fees imposed on postponement or cancellation of tourism and sports activities in 2020; and
• A freeze on fees charged for the rating of hotels, the fees for the sale of tickets and acquiring permits and other government charges for business and entertainment events.
UAE Government
On March 22nd, 2020, the UAE Cabinet approved an additional Dh46 million economic stimulus to ensure business continuity and enabling a reduction in the cost of conducting business. The measures include a renewable six-month suspension of work permit fees and collection of administrative ¬nes by the Ministry of Human Resources and Emiratisation (MoHRE) and a reduction of labour charges and fees charged by the Ministry of Economy.
UAE Central Bank
On April 5, 2020, the the UAE Central Bank increased the value of their relief fund to Dh456 billion. Additions to the relief include a reduction of reserve requirements for demand deposit for all banks from 14% to 7%. The capital buer relief is now extended to the end of 2021 and the zero-cost funding facility is extended until December 31st, 2020. These continued measures will relieve pressure on the banks and nancial institutions and allow them to extend support to businesses and individuals.
Some other highlights include:
• Waiving fees related to payment services provided to banks operating in the country through UAE Central Bank’s payment and settlement systems
• Banks in the UAE will have the provision to free up their regulatory capital buers in order to boost their lending capacity
• Reduction in fees incurred by merchants in relation to the use of debit or credit cards by customers • The loan to value ratios applicable to mortgage loans for ¬rst time homebuyers will be raised which will facilitate aordability of housing
• Revision of the existing credit limit which sets out the maximum exposure banks can have to the real estate sector. Banks will be allowed to increase the exposure to 30% when the exposure reaches 20% of the banks’ loan portfolio (measured by risk-based assets); and
• Reduction of the amount of capital banks are required to hold for loans to small and medium sized (SME) enterprise businesses by 15% to 25% which will increase the ¬nancing available to SMEs.
The above initiative by UAE Central Bank will facilitate temporary relief from payments of principal and interest on outstanding loans for all aected private sector companies and retail customers in the UAE.
Dubai Free Zones
The Jebel Ali Free Zone has imposed a reduction of 50%-70% in licensing and general administration fees to support businesses. Dubai Free Zones Council announced relief in the form of:
• Postponement of rent payments for 6 months
• Facilitating instalment for payments
• Refunding of security deposits and guarantee
• Cancellation of ¬nes and allowing temporary contracts permitting the free movement of workers between companies operating in the free zones.
These initiatives will assist in business continuity and will also be advantageous to workers who can seek new opportunities.
Under these initiatives, the cost of conducting and operating a business across the UAE will reduce, providing much needed relief for businesses. Such measures will facilitate the survival of many SMEs, along with playing a key role towards protecting the UAE’s economic stability.
