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By: Charlotte Kan
In an exclusive interview with Accelerate SME, Dubai SME CEO Abdul Baset Al Janahi discusses 2016's trends and the outlook for SMEs in 2017.
How many new SMEs were created last year? How does this compare to previous years?
Recent trends and emerging opportunities in the Emirate point to SMEs maintaining their dominance in the years to come.
Last year, 1,029 licences were issued to UAE entrepreneurs, including 371 new licences and 658 renewals, as reported by the Business Registration & Licensing section in the Department of Economic Development.
The numbers showed a remarkable increase over 2015, during which 513 licenses were issued to UAE entrepreneurs.
Which businesses were the most popular and in which sectors?
Economic diversification has created vast opportunities for SMEs in Dubai and led to a high density of this category of enterprises across almost all industry sectors.
A survey of 500 SMEs by Dubai SME recently revealed that the trading sector accounted for 57 percent of SMEs, followed by the services sector (35 percent) and the manufacturing sector (8 percent).
The growing capability of SMEs in Dubai is further demonstrated by the fact that 51 percent of these firms export to other countries, mostly those in the GCC, Asia-Pacific and Africa.
Which sector grew the most?
Trading remains the sector with the highest concentration of SMEs in Dubai. However, the growing profile of Dubai as a services hub is reflected in the SME sector, with the number of SMEs specialising in innovative services on the rise in recent years.
How do you think SMEs in Dubai performed in 2016 compared to previous years?
SMEs account for 95 percent of the registered businesses in Dubai and contribute to approximately 40 percent of Dubai's GDP. They also account for 42 percent of the workforce.
Dubai SME is encouraging SMEs to adopt financial reporting as it would enable them to attract funding when required and expand their business, but it's still work in progress.
Our Dubai SME100 initiative to identify SMEs with the best growth potential has succeeded in improving transparency among SMEs and we hope to see more SMEs willing to report as part of a competitive corporate governance framework.
What would you say were the greatest challenges, or opportunities, for SMEs last year?
Growing competition remains the major challenge for SMEs in Dubai. There are other challenges too, like rising rentals, which are characteristic of business hotbeds like Dubai.
At the same time, the consequent increase in demand for services that help businesses improve efficiencies has created varied opportunities for competitive SMEs.
Results from quarterly surveys conducted by Dubai SME in 2016 showed that a substantial majority of the SMEs did not expect negative factors to hinder their operations.
What key trends did Dubai SME witness in 2016?
We are witnessing more and more women entrepreneurs launching their own business ventures in Dubai. Though a significant number of women entrepreneurs have been operating home-based businesses under Dubai SME's Intelaq programme, many women are stepping forward and articulating their ambitious vision and will to succeed.
Here are a few projects worth mentioning:
- Omniyati Prosthetic Art Centre. The brainchild of Emirati entrepreneur Dr Ashwaq Hassan Hashemi, the centre specialises in prosthetic face, jaws and eyes, thus enabling people with serious deformities to lead a better quality of life.
- Osraty Physiotherapy and Rehabilitation. Founded by Bushra Al Mulla, this business adopts a family-oriented approach to physiotherapy and rehabilitation services.
- The Hundred Pilates Studio. Created in 2007 by Asma Hilal Lootah, the studio provides professional pilates training that specifically caters to the needs of women. It's the only one of its kind in the Middle East providing gyrotonic and gyrokenesis training.
- Beauty Capsule. Launched by Lamya Al Awlaqi, it provides fast, efficient and basic beauty services to busy women.
Some key measures were introduced last year to help SMEs. What difference will they make?
The most significant measure adopted in 2016 in the SME sphere was undoubtedly the amendment made to the SME law by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE vice president and prime minister, and ruler of Dubai.
As per the amended law, all entities owned by the government of Dubai, or in which it has ownership of more than 25 percent, are committed to exempting Emiratis from any registration fees for being a preferred supplier and allocating 10 percent of procurement to them.
Five percent of the retail space owned by such government or government-related entities will also be allocated to Dubai SME members. In addition, there will be a 20 percent reduction on rentals for the first three years of the lease to Dubai SME members.
The amendment also empowers Dubai SME to issue licences to members who pay an annual fee of AED1,000 for the first three years of the licence and AED2,000 per year for the fourth and fifth years.
The amendments provide a significant advantage to SMEs in various stages of growth, and enable them to grow without being restrained by lack of resources or opportunities.
What are the opportunities for SMEs in 2017?
A favourable policy framework as evident in the amended SME law and increasing emphasis on economic diversification - locally, and also regionally, considering Dubai is the most important hub for an economically vibrant region - will open up greater opportunities for SMEs in Dubai in 2017 as well as the years to come.
As key suppliers of goods and services to local infrastructure projects, SMEs have a significant opportunity in Expo Dubai 2020. It has already been announced that 47 construction contracts worth AED11 billion and 98 non-construction contracts totalling more than AED360 million will be awarded in 2017 alone.
Finally, how have SMEs performed compared to the targets established in the Dubai Plan 2021?
The plan aims to increase SME contribution to 45 percent of GDP by 2021. The initiatives being launched by Dubai and the measures being adopted to enhance SME participation in these projects, as well as the growth being witnessed in the number of SMEs, are proof enough that we are on target.
© Accelerate SME 2017
