Every country that has recurring budget deficit
adopts various measures to improve economic growth in general and business
progress in particular. The city state of Dubai is no exception. But if the
measures are ad-hoc and are made as business tactics then the benefits would be
short lived.
There are three concomitant business goals in Dubai. Economic
stability is ranked number one followed by improving competitive advantage and
attracting considerable quantum of foreign investment. These goals need to be placed
at the bedrock of economic facts some are plus points others are negative.
Generating 94% of income from non-oil sector is definitely
a great plus point for Dubai. Second in importance is the fact, tax revenue is
65% of total state grossing. Third plus is the controlled inflation at 1.5%
annually. But the negatives
are overwhelming: Budget deficit flagged at USD 1.4 billion and the GDP
growth being stagnated at 2%. Incidentally the same figure was recorded in 2010
and 2018 as well.
To achieve the goals Dubai has resorted to a suite
of business tactics:
To ease existing firms doing business, there are
three measures. One, a scale reduction of selected state admin charges. Two,
freeze some of the charges at the current level. Three, moratorium placed on
additional or new charges.
To attract more business firms especially from
foreign sources three measures are listed. One, 100% foreign ownership is to be
allowed in selected sectors. Two, Residence Visa of 10 year duration is
afforded to investors and professionals. Three, 20% of the government contacts
are to be awarded to the SME sector.
So far so good! Yet the overall strategy for taking
these measures is still not visible. The dictum that strategy implies “means-ways-ends” is something
obviously forgotten!
Cheers!
Muthu
Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business
Strategist
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