Project exports promotion council of india

People & culture

Foreigners wishing to do business in the UAE [must] understand the traditional manners and customs

Arabic is the official language of the UAE, although English is more commonly spoken. Despite nationals being a minority in the country, it is important that foreigners wishing to do business in the UAE understand the traditional manners and customs.

When you first meet a UAE client, you should not immediately begin to discuss business matters. Usually, tea will be served, followed by coffee. Occasionally, considerable time will be spent exchanging courtesies. The key to successful negotiations is trust and you may be requested to return on a second, third or even fourth occasion. Ultimately, a national’s word is considered a bond. Courtesy may inhibit a firm no, but it is rare for a national to back down from an agreement.

The notion of wasta (power and influence) still holds strong in the UAE. That means if you have the right connections or family background you can get things done. Personalities play a significant role in the business place, as does understanding the subtle influences present in individual markets and maintaining a steady physical commitment to the UAE.

The national dress is a symbol of identity worn by nearly all locals. Most men wear the white ankle-length shirt or dishdasha and a white or sometimes red-chequered head cloth or gutra, with a black coil or agal to hold it in place. Under this they wear a skull cap or taqia. Sheikhs also wear a cloak with gold braid. UAE women wear a black cloak or abaya and a headscarf or shayla.

Islam is the official religion of the UAE and is widely practised. Most Emiratis are Sunni Muslims. The Islamic holy day is Friday. Other religions are tolerated in the federation and there are several churches and Hindu and Sikh temples.

Economy

The downturn in fortunes that began in Dubai with the property market crash in 2008-09 was followed by a collapse in confidence in the emirate’s ability to service the tens of billions of dollars in debt it had accumulated in order to finance its building spree.

In November 2009, state-owned conglomerate Dubai World sent shockwaves through global financial markets by announcing that it was requesting a six-month standstill on $24.9bn worth of debt repayments.

In May this year, it emerged that Dubai Holding, another state-owned company, was also seeking to restructure several billion dollars worth of debt.

During the economic boom of 2003 to mid-2008, banks had assumed that, in the case of default, these companies would receive the full backing of the government and that the risk they were taking was on a sovereign level rather than a corporate one.

This proved not to be clear-cut. Shortly before the Dubai World announcement, the Dubai government announced that it was “under no obligation to extend support to any government-related entity (GRE).” Since then, many GREs have come forward to declare debt problems and been left unassisted by the state, prompting a raft of downgrades by global ratings agencies Moody’s and Standard & Poor’s.

GDP by emirate, 2009*
Emirate	($bn)
Abu Dhabi	162.5
Dubai	81
Shrajah	16.6
Ras al-Khaimah	4.3
Ajman	3.8
Umm al-Quwain	0.6
Fujairah	2.5
GDP=Gross domestic product. *Emirate figures for 2010 not yet available. Source: UAE National Bureau of Statistics

Dubai World’s announcement on 27 October that it has secured full approval from all its creditors for its $24.9bn debt restructuring deal has certainly injected some much-needed confidence into the economy and marks a key milestone in the debt-laden emirate’s recovery.

Dubai’s debt woes are far from over. The property development unit of Dubai World, Limitless, is still negotiating a debt restructuring resolution on its $1.2bn Islamic loan, following an extension in March this year.   

Dubai’s debt pile is estimated at $109bn according to the International Monetary Fund (IMF).

In the next couple of years, economists expect the focus to be on deleveraging and more stringent borrowing conditions in order to aid economic recovery. However, any recovery is likely to be a slow one.

The bursting of Dubai’s real-estate bubble saw prices drop by as much as 50 per cent, but there is still some argument as to whether the property market has bottomed out. Certainly, real estate will continue to be a drag on the economy for some time.  

The downturn in its property market is encouraging Dubai to place greater focus on its key strengths: as a global logistics centre, a tourism hub and as a retail centre.

Regional economists believe that Dubai has learnt its lessons the hard way, but that it will grow more sustainably in the future. The 42 per cent increase in government expenditure in 2009 has been followed by a 6 per cent spending cut for 2010.   

Furthermore, of the $9.64bn in budgeted expenditure, just less than half - $4.71bn – has been earmarked for infrastructure and transportation. This is a deliberate move aimed at providing a platform for inward investment, but also for building the foundation for more sustainable growth in the future.  

The country is also making efforts to boost its levels of transparency, something it has increasingly come under fire for since the onset of the downturn.

On 6 May, the government issued a decree authorising the establishment of the first credit bureau, Emirates Credit Information Company, which will help creditors make more informed decisions on dispensing loans.

A new Federal Statistics Law and the creation of a National Bureau of Statistics will also foster a culture of financial transparency and disclosure.

After having shrunk by 0.7 per cent in 2009, the UAE’s growth in 2010 is likely to be little better, at 0.6 per cent, according to the IMF. The recovery will be stronger in 2011, with growth reaching 3.1 per cent.

Despite the overall poor fortunes of the UAE as a result of the downturn, Abu Dhabi has fared the storm rather well, owing essentially to the fact that it holds most of the nation’s hydrocarbon wealth.  

This has provided a significant cushion during the downturn and left it with a deep pool of liquidity. It has used these same capital reserves to help aid the recovery process in 2008 and 2009.  

Furthermore, it has played an invaluable role in keeping Dubai’s economy afloat during the downturn, bailing its sister emirate out with $20bn.  

Its real GDP is expected to grow 4.1 per cent in 2010, compared to a fall of 0.4 per cent in Dubai, according to figures from Egyptian investment bank EFG-Hermes.

With oil currently hovering around $80 per barrel, it will have the budget surplus to forge ahead with infrastructure development spending.

But the symbiotic relationship of the two emirates should not be underestimated and until Dubai gets back on its feet, it is unlikely that the UAE economy as a whole will fully recover.

The UAE’s total government debt as a percentage of GDP is set to decline from 27.1 per cent this year to 24.7 per cent and further to 21.6 per cent of GDP in 2011, according to the IMF’s Regional Economic Outlook for the Middle East and Central Asia, which was published in October 2010.

There is no specific scheme to promote the exporting firms in the country.    However, some assistance is provided to exporters under Marketing Development Assistance (MDA) Scheme and Market Access Initiative (MAI) Scheme.    Other schemes for export promotion include Duty Neutralisation Schemes like DEPB, Advance Licence, duty concession schemes like EPCG and Reward Schemes like Served from India, Vishesh Krishi and Gram Udyog Yojana, Focus Market Scheme and Focus Product Scheme.

These schemes are reviewed periodically and necessary corrective measures are taken.
ANNEXURE-I

4.1 market development assistance (mda) scheme

Export Promotion Assistance given by Government

The Government of India encourages Indian project/product exporters by providing financial assistance under the following export promotion assistance schemes:

1. 
   Market Development Assistance (MDA) Scheme
   
2. 
   Scheme for Export Promotion by Small Scale Manufacturers
   
3. 
   Market Access Initiative (MAI) Scheme
   

Under this scheme assistance is given to individual exporters for participation in following export promotion activities abroad

• 
  Trade Delegations
  
• 
  BSMs
  
• 
  Trade Fairs/Exhibitions
  

1. 
   Exporting companies with an f.o.b. value of exports of upto Rs. 30 crore in the preceding year. No such ceiling is applicable for participation in Focus LAC region.
   
2. 
   The exporter should have complete 12 months membership with concerned EPC etc
   
3. 
   Assistance would be permissible on travel expenses by air, in economy excursion class fair and/or charges of the built up furnished stall. This would, however, be subject to an upper ceiling mentioned in the table per tour.
   

S No. (1)	Area/Sector (2)	No. of visits (3)	Maximum Financial ceiling per event (4)
1.	Focus LAC	1	Rs. 2,50,000
2.	FOCUS AFRICA ( including WANA Countries)	1	Rs. 2,00,000
3.	FOCUS CIS	1	Rs. 2,00,000
4.	FOCUS ASEAN+2	1	Rs. 2,00,000
5.	General Areas	1	Rs. 1,50,000*
	TOTAL	5

There is a separate scheme designated as Marketing Development Assistance for SSI Exporters meant to encourage small scale manufacture exporters along the following lines:

(i) Exporting unit must be registered as SSI / SSSBE.

(ii) Exporting unit must be a member of FIEO / EPC.

(iii) Exporting units with aggregate exports of Rs. 2 crores and above over the last three financial years (Rs. 1 crore for ISO 9000 certified exporters) are eligible for assistance from the Ministry of Commerce & Industry through EPCs/other grantee organisations. SSI units with aggregate exports less than this limit would now be eligible for direct assistance from the Office of DC(SSI) under this scheme. SSI units which have not yet commenced exports are not eligible for assistance.

(iv) An exporting unit would be eligible for assistance under SSI-MDA only once in a financial year.

(B) Activities eligible for financing

(i) Individual participation in overseas fairs/exhibitions.

(ii) Individual overseas study tours/as member of a trade delegation going abroad.

(iii) Production of material for overseas publicity.

90% of cost of return ticket by economy class subject to an upper ceiling of Rs.60,000/- (Rs. 90,000/- for Latin American countries). In case excursion fare is cheaper than economy class fare, the excursion fare will be considered.

(ii) 25% of the cost of production of publicity material limited to Rs.15,000/- in a financial year.

(D) Other conditions:

(i) Assistance shall be available for travel by one permanent employee/director/partner/proprietor of the SSI unit in economy class by Air India. Air travel by airlines other than Air India would be permissible provided that their economy class airfare is not higher than Air India.

(ii) Applications must reach the Office of the DC(SSI) at least one month before the start of the event in question.

(iii) The SSI unit should not have been charged/prosecuted/debarred/ blacklisted under the export and import policy or any other law relating to export and import business.

Total MDA assistance under SSI-M[DA scheme shall be inclusive of MDA assistance received from all Government Bodies/FIEO/EPCs/Commodity Boards/Grantee Organiations etc.

ANNEXURE-II

MARKET ACCESS INITIATIVE (MAI) SCHEME
The scheme is formulated on focus product- focus country approach to evolve specific strategy for specific market and specific product through market studies/survey. Assistance would be provide to Export Promotion Organizations/ Trade Promotion Organizations / Exporters etc. for enhancement of export through accessing new markets or through increasing the share in the existing markets. Under the Scheme the level of assistance for each eligible activities has been fixed.
The following activities will be eligible for financial assistance under the Scheme :

• 
  Research studies consistent with the priorities;
  
• 
  WTO Studies for evolving WTO compatible strategy;
  
• 
  To support EPCs/Trade Promotion Organistions in undertaking market studies/survey for evolving proper strategies.
  
• 
  To support marketing projects abroad based on focus product - focus country approach. Under marketing projects, the following activities will be funded:
  
  • 
    Opening of Showrooms
    
  • 
    Opening of Warehouses
    
  • 
    Display in international departmental stores
    
  • 
    Publicity Campaign and Brand Promotion
    
  • 
    Participation in Trade Fairs, etc., abroad
    
  • 
    Research and Product Development
    
  • 
    Reverse visits of the prominent buyers etc. from the project focus countries
    
  • 
    Export Potential Survey of the States;
    
  • 
    Registration charges for product registration abroad for pharmaceuticals, bio-technology and agro-chemicals;
    
  • 
    Testing charges for engineering products abroad;
    
  • 
    To support Cottage and handicrafts units;
    
  • 
    To support Recognized associations in industrial clusters for marketing abroad