The National personalf nance Saturday, September 19,2009 www.thenationa1.a~ ( rIPozam isea gertos tart hisl nternet-based businessnow hat henolongerneedsDhl50 wrealicence. Jeffrey EBienglThe National Capital punishment ends f or en t repreneurs TheUAEGovernmenttooka big step when it eliminated minimum cal for new businesses, removing shackl es from many fledgling start-ups. aital requirements , Keith Park er report s "Jungle Model s is s till a concept, hotelsinthe regionandratedthem "To receive a lice nse to oper- hut th at concept is now much based on the q ual ity of attention ate in Ahu Dhahi, you had to have closertoreality."savsSabriPozam. hereceivedfrom staff.Whil e he en- Dh300.0 00 in the bank. In Dubai. . , 29 , a Dubai-bawd entrepre neur. joyed thi swor k,. Mr lWam heganto that num ber was l .iu ,tlu u. Once \o\v that tlie UAK no longer re- e\plorelii*~entrepreneurialspirit. yo u had your lic ense, thougli,you qinre sa Dhl .it~,Ot ~Ocapita l equire "lintlie UAK , there are manv mod- had access 1 0 these funds and llie v men t to start a busines s, we are ellingwebsites thatlinkcustomers can he used withinvour business," looking at a much more t-omfort- to each of their agencies' ffas h- he explain s. ,~ ow iv er , an! corn- ahlestartiiigpoiiit." ion and runway1 model s. As the name s this requirement as an On ~ugust 0,2009 , the U A E gov- number of agencies g rows, it is he- additional expen seand added it to ern men t announ ced t hat it was coming- difficult for clients to find their estimate for the cost of noen- takinganothersteptowardseas ing the right model s for their needs inganofficeintheUAE." - the cost ofstaringa businessin the without spend ing all of their time While Mr Poza m may now h ave country. Prev iously,entrepreneurs browsing eve rysingle site ." his sight s set on set tin g up in were require d to haveDhl50,OOOin To fill the niche, Mr Pozam hopes Dubai, he is not fullysatisfiedwith the ha nk in ord er to move forward his site will serve as a one-stoo the ease of doing business in the ill net$ company application, shop, li~iki~i~clie~its~iclia't~iiod- mimle.As\lr Maynereveals,"'I'he a l a w that dates hack to l Y U l.Tli is elmg agencie s and iii aga/m es 1 0 reiiiovaloftliecapilal requirement resl i~lio n hasno~ eenremoved. fashion iiiodels. Compili ng infor- restr iuion \$as a good Mart, hm 'We believe t hat t he new decree mation about the many agencies nowwe are facing an onslaught of will definitely helo enhanc e the and model s in he market. his cli- other start-uo costs. The fe e f or a , UAVs appeal to investments an d enisshould beabletolind thenglit sponsor can range from anywhere will pro! ide the pnvale '¥¥e~lor~vil ndividuals fo rt he jo b mnreeasily. het!\ee n DhlO,lIuuand l)h20u ,Ot111 the right impetus it needs in these Topicalofasmallstart-upsi te, Mr dependingonwhatyouarelooking challenging- times." said Hamad Pozam isn't workin g with a huee for . After this. vou 'll need to oava ~uamim. he director general of budget check. "sincewe are creit - fee to the economic deoartke"nt l i e ~ubai hamberofCommerce mg&iiiteniet-basedcompany,~$e and set-up fees that vary depend- and Indiistry. don't iieces\ariI, lhaveto be located in gon the typeof compa ny you are Thegovernment'smlingwill have in the UA E. Whe n researching our opening," the hierest effect s on those inter- business clan. we beean to look at "A t the end o f it all. on average. , . ested ~~~ openmgsmall usinesses n~olocati~ns~orour eadquarters: one can expect to spend anywhere in the country, a move lauded b Dubaiand Lon don." he t!\een Dh lt~.tluuaiid )h2 :)u ,Ou u Mr I'o/ain.The lifeblood ofalnioM Upon disc-overmi; he Dhl Jtl, tltl U toget star ted - and that doesn't in- every economy aro und the world, capital requirement in the UAE, cl<deofficespace," hecnntinoes. smaller enterprises are n ow in the MrPozam leaned towardsLondon. "We see manv oeoole come to us . . spotlight as the health nflhe ecoii - wherelie believed liecould hemore 10 takec areofall oftlie paperwo rk only reina in't uii certain. prolitable,e~eiiafterUKtaxes. and upfront costi becauie they Governments areeager toenc nur- "Wew eregoi ng to have to find an find that theywaste ton much time age new inves tment . esoeciallv in investor forth e Dhl50.000reauire- mnn ing aro und evaloat ingoff ices. l~~litofrece~itre~ortsth~ttlieh~si- e w , w h o would then expect a suppli~~s,sponsorshipa~dset-up iies-.environment isonthecuspof pnrtio~iofourprolit'ti~iret~ir~i.'l'he ptions rather than focusing on recovery.Just last inionth a Yielsen çh ol dea oI'<tartingin l)nbai i$as tlieirbiisiiiess." .\lr Mavnesa\s. survey O~WAE onsumers revealed put intoquestion," h i says . Other governments in the region that nearly 50 per cent of respond- "With the requiremen t r emoved, ents bel ieve that the economywill the decision was made for us: we recoverfrom the current downturn are definitely star tingin Dubai," he have also made efforts to eradicate prohibitive harriers to entry for businesses. In Kuwait, for exam- ple, oflicials announced tliissuiii- imer that tIieyarecoiisideriiiu;(.aii- celling the"kafil8', or sponsorship, svstem. Under kafil. foreign com- panies must partner i+ it ia ocal spons or 10 operal e ill lh e country, ini u~l i ike the sv-.tein 11 1 he UA I: . In additon, ~ ukait as recently made moves to allo w foreimers tn sponsor themselves fora s$orkvisa, bin thesewou ld app l! only under specific conditionsand \\uuldii't affect thevast majorit y of foreign workers. liein incredibly lhigli cost of office space in the UAI pus eHet a nuther challenge t o entre preneurs. "Even in Knnwlede-eVillage. t will cost at a l)li8tl,~011 e<viar fora cuhi- cle in a lar ge room with about lu u iithercubides," a vs Mr Po/am. "Leasing desk space is required, so ever vbndv has t o soend this money.'~~M eople don't even need i t tliougli,espe~iallyifyoiiare mnnin gavew small busi ness, lik e awebsite. In fact, on ly about 10 o 15 per cent of the approximately 100 cubicles i n Knowledge Village Building #7 are ever being used. Therestofthemjusthave thename ofthe comoanvhanffinffon hem." . ., ., lie says. "I Ihis is a completel) uii- iiecessaq cost ofduin g husiness for many people. he^, once yon have an office, you get charged for every ittle thing. A Non -Objection Letter, for example, costs Dhl.000. This is simply for a piece of pape r withsome inkonit." However. Mr Pozam does not warn to underplay hi\ approval of li e rece iit ruling. "I he removal of nme see the gla ssa s half torsview present UAKe cnn nmi full. and for others it's condi tions onsiti velv as neva 0 alfemply. For a; third fively, but byain^rginof & & eonstkuenw that ap- than 5 o 1 hey expect eondi patently includesmany people irons toimproyemtnerthan de to th e UAE. h e flaw ninneth taiioiate. over, even thnugharational ap- Assuming that the s urv ey re praisal of thevessel would con- spond ents and thei r peers h aw elude that there isnot nearly as put t hei r money where thei much here. mauths are, they are aking Thehalf-fanuartofthe13AEin- hu m bet on that rscovetv. If i vestmentpictureisthedoubling it may be accounted fo of the MSCI UA K index from msharepricesalready,andifi its low in early Febr uary. After doesn't, the market may bevul the market hascaught up with The prudent course for inves other saroun d thewnrld,includ- tors is, well, prudence. It's han ing the United States, where the t o envision a stock market tha *Gee of the advance hasdowed. ha s doubled in seven month and China, where s tocks have not undergoing a meaningfu suffered a se vere correction in correction, so wh y not wait fo tfaelast month. one? Togetthehalfwaytyperspec- Another way to play defence tive,zoom.outandbokatalong- whmereryoudecideitlstimeti Wrm chart. MSCI UAE. ev en huv- is to conce ntrate on corn afte r itsspectacular recent run, panic s whose e arning s haw is still about 75 per cen t below proven resilient throughout th. theall time hieh reachedin late last awful yea r. A recent repor they wou ld neverawaken from the Dubai dream, let alone see it turn imothe nighun are it be- came last year. Against such a backdrop, you would expect the mood ofinves- tors to be cautiously optimistic at best. Bu t thelatest readingsof Middle East investor sentime nt detectalotofoptimismand IiuJe caution. Evidently thereareplen- ty nfmarketparticipantswhnsee theglassasoverflowing. Shuaacapital'ssurvey of65 in- vestmentprofessionals based in thesixGulfCooperatinnCouncil countries and elsewhere found a moderately positive bias toward global stock marketsgenerally, but overwhelmi ng bullishne ss toward certain GCC markets, especially in the U A K B ya margin of 10 to 1, the s u r vey respondents expect share prices inAbu Dhabi to be higher rather thanlower insixmnnths, more than forany other market The ratio of bulls to bears for Dubaiwasabnut 3101. Lookingat the ntherGCC ma r kets, investors were also bullish on Om an, Saudi Ara bia and Qa- tarand neutral on Bahrain and Kuwait. As fo r stockma&eta inthed* vdopedwarid,npiiyanwas,nesi- tralto sligMtyh6peful. ~y mar" ginsof3 o 2 orabitles6,survey takers espeeted higher prices for stock indlcss in the United States, Bittaimnd Continental Rnmne - -r- The Shuaa results arecnnsist- en1 with survey dat a of global orlfolin manaeers compiled by Hanc of ~m er ic a ecurities- Merrill Lynch .An overwhelming majority of Merrill's respond- ents said they were overweight in emerging markets; in fact, thegap between the proportion of overweig ht an d underweight managerswas thepeate st since early 20M (the survey does not specifically keep track of npin- inn on GCC markets, which are considered too small). Senti ment surveys like these tend to wor k as contrarian i n- dicators: the more bullish in- vestors seem to be, the more likely share sare todecline.Tha1 happensinpartbecause strong sentitneatreflectshigh expeeta- flons,and reality hasa habit of dashingthose. Other Sgures in the Shuaa report show how it ca n work. More tha n twice as'(nany inveg- bv ~itiffrok~ some su e ffestions. * Air Arabia' s s econd -quart e results showedp rofitsthatwee Sperc ent higherthan the nfert od last year. ~ iti a s a bu ratingonthe shares. Tw o other UAE companie reported second-quarter earn toes that were lowerbutat eas within shouting distance o theirresults ayearear lier,wh ei the economic and cnmmercia landscapewas much strnnget First GulfBank,whichalsn has: buv recommendation fmm fit1 reported a 4 per cent decline National Bank of Abu Dhabi which carries a neutral ratifis had& 10 weeentfall. ,.onking a bit fart her afield Nakilat, a Qatari shippin g coi n pany with a neutral asses smen from Citi, experienced 24 8 pe cent growth, and Wataiiiya, Kuwaiti telecommunication concern with a buy rating, hat 140per cent highere arnings . There are no guarantees, o course, but the ability of thes companies to produce consist ent earnings, or better, make them good candidates to with stand a renewed downturn o an anaemicreco very. Jt'salm ns like havinga shatterproofglass full, empty or in between.
