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General and Legal News from the UAE – May 2021 № 1

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updated on 7 May 2021 | reading time approx. 9 minutes

 

The following provides a brief overview about the latest business, economic and legal news from all around the United Arab Emirates and GCC region.

 

    

 

Dubai draft law to freeze rents for three years “will stabiles property market”

As disputes between tenants and landlords arose the Dubai Land Department, the government body that handles registrations and frames legislation for the real estate sector, says “Fixing rent values for three years will reduce the number of disputes between landlords and tenants by painting a clearer and more consistent picture.”
 
The new draft law proposes unchanged rents for a three-year period to ease disputes between owners and renters as well as to ensure properties are valued fairly. This law, if approved, will bring stability to the real estate market.
 
“The new law will help stabilize the market and boast trust in it, leading to a continuously dynamic real estate industry that Dubai is renowned for”, the department said.
 
As a result, the fixed three-year rent would encourage investments and increase the occupancy rate of properties in Dubai.
 
Jonathan Hood, Head of residential valuation at Colliers was quoted “In every market, elements of uncertainty don’t instill confidence. If we can have more regulation to give people more confidence and to allow people to better plan their finances, it could be a good thing.” From the landlord’s perspective, if they knew they had a tenant for three years, it gives people a little bit more transparency.
 
A disadvantage of the proposed law is however that it would not be able to trade advantage of market fluctuations to gain the benefit of lower fees or a rise in charges.

New penalty for companies that don’t pay salaries on time

A new penalty for private sector companies that don’t pay salaries to their employees on time has been introduced by the Ministry of Human Resources and Emiratization (MoHRE). The Ministry tweeted “The MoHRE calls establishments to pay salaries through the Wage Protection System, in light of raising the insurance cost from Dh120 to Dh250 for violating establishments with 30 days insurance coverage.”
 
In 2018, the Ministry announced a new insurance policy called ‘Taa-meen’, which gives the employer the option to either submit Dh3,000 as bank guarantee on behalf of the employee, as per the rules and regulations of the bank guarantee system, or insure them under the new insurance policy, which costs Dh120 for two years.
 
The new policy will provide a maximum insurance coverage of Dh20,000 per employee against the following benefits in the workplace: unpaid entitlement, end of service benefits, vacation allowance, overtime allowance, unpaid wages, return air ticket and work injury in case of company’s bankruptcy or failure to pay the employee’s benefits and after it has been determined by a court ruling.
 
The state-run news agency WAM stated that “the new insurance policy covers the financial entitlements of the employees of relevant companies for 30 months.


Saudi Arabian Airlines to trial IATA Travel Pass

As other airlines from the region (such as Emirsates and Etihad), the Saudi Arabian Airlines announced its trial of the IATA Travel Pass, which was due to start on 19 April on its Jeddah- Kuala Lumpur route.
 
In its efforts to help the travel industry in its recovery from the impact of the coronavirus pandemic, the IATA launched its travel pass, which is a digital health pass in form of a mobile application aiming to support the safe reopening of borders by enabling passengers to create digital passports where passengers test results and vaccination data can be securely loaded and by that way ensure that all relevant governmental health requirements are fulfilled at both the departure and the arrival points.
 
The CCO of Saudia, Khalid Al Bassam said, “Saudia is keen to partner with IATA in this innovative digital solution, which will assist in steering industry recovery and facilitating the travel process for all stake­holders, the passenger, the airline, the testing labs and the border authorities”.
 
Saudia is among other carriers from the region – namely Emirates, Etihad, Gulf Air and Qatar Airways – to trial the Travel Pass. Once the IATA Travel Pass is finalized, it is planned to be rolled out across the airlines’ networks.
 
Nick Careen, IATA Senior VP for Airport, Passenger, Cargo and Security said “We are proud to work with Saudia to make IATA Travel Pass available in Saudi Arabia. This is the first step in making regional and international travel during the pandemic as convenient as possible giving people the confidence that they are meeting Covid-19 governmental health requirements”.

 

Saudia Airline getting ready to operate on 17 May

As Saudia was ranked among the 10 top airlines for its health and safety measures, it is preparing for full- capacity operations.
 
Saudi Arabia is lifting the travel ban next month and the airline is preparing for the return of international flights from 17 May, the day on which suspensions of international travel for Saudi citizens by land, air and sea will be lifted.


UAE witnesses 21 per cent spike in online shops

Pre-Covid 19, the UAE’s digital economy contributed 4.3 per cent to the country’s GDP. By 2023 it is ex­pected, in case current trends continue, to hit $62.8 billion, according to the Dubai Future Foundation.
 
The UAE witnessed an increase of 21 per cent in the number of online shops which resulted in an upsurge in online consumer spending and came along with a 44 per cent year-on-year increase in the number of high-volume e-Commerce trading partners from 2019 to 2020.
 
As a result of Covid-19, the Gulf region’s prosperous regional online shopping market is projected to expand by more than a third this year, realizing a gross value of $30 billion.
 
Towards the end of 2020, the Middle East regions’ eCommerce Industry was worth a total of $22 billion. Alone online consumers from the UAE, Egypt and Saudi Arabia accounted 80 per cent of the region’s overall eCommerce market.
 
It is estimated that by 2024, in Saudi Arabia alone the market value will hit $8.2 billion.
 
Bricklin Dwyer, Head of Mastercard Economics Institute and Mastercard Chief Economist said that “while consumers were stuck at home, their dollars travelled far and wide thanks to eCommerce. This has significant implications, with the countries and companies that have prioritized digital continuing to reap the benefits. Our analysis shows that even the smallest businesses see gains when they shift to digital”.


Economy forecast to ‘fully recover’ in 2022 with 3.5 per cent GDP growth

A pick-up in employment and in credit, an increase in fiscal spending and EXPO 2020 Dubai, which is due to start this fall, will lead the economy to be buoyed, a new UAE Central Bank report states.
 
By 2022 an estimated increase in GDP of 3.5 per cent will have the UAE economic growth recover fully from the consequences of the global COVID-19 pandemic. In 2021 already, real GDP will rebound to a positive growth of 2.5 per cent according to the Central Bank.
 
While the UAE’s oil sector is likely to remain flat based on the OPEC+ production schedule and announcements, the non-oil industry’s GDP is estimated to grow by 3.6 per cent, driven by an increase in fiscal spending, relative stabilization of the real estate market and EXPO 2020 as well as by a pick-up in credit and employment.
 
The report quotes that “this will be the result of the continued fiscal spending growth, healthy banks’ credit growth, strong improvement in employment and recovered business sentiment, with part of Dubai EXPO 2020 taking place in 2022 as well”.
 
Amendments to the UAE's nationality law also contribute to the country’s “development journey” by attracting more foreign talent thus also foreign invest­ment. Additionally, foreign companies are no longer required to have Emirati local shareholders as part of the new foreign ownership laws. Furthermore, a retirement program for resident expatriates aged above 55 has been launched in September 2020 resulting in a retirement visa for eligible foreigners, renewable every five years. Eligibility is bound to either a monthly income of Dh20,000, owning savings of Dh1 million or owning a property in Dubai worth Dh2 million.
 
A further step towards the recovery of the economy is the launch of the Virtual Company License, which allows international businesses to access a regulated e-Commerce platform populated by Dubai-based com­panies, while simultaneously exploring new markets and investment opportunities digitally. This initiative is estimated to attract more than 100 000 companies.


UAE weighs curbs on unvaccinated people, sparking criticism

In the UAE more than 10 million doses of vaccination have been administered and the government is providing free vaccines to all UAE residents aged above 16. In recent news that emerged it is stated that the UAE is considering restrictions on people who haven’t yet taken a vaccine even though they are eligible for taking one.
 
Saif Al Dhaheri, the spokesman for the National Emergency Crisis and Disasters Management Authority, said that “strict measures are being considered to restrict the movement of unvaccinated individuals and to implement preventive measures such as restricting entry to some places and having access to some services”.
 
The discussion on putting strict measures on people who didn’t get vaccinated despite eligibility, has triggered controversies and triggered debates over the policy whether people should have a choice in taking vaccinations.
 
Most people in the UAE have received the Chinese Sino­pharm, which is now being produced in the UAE. Despite criticisms over the efficiency of the Sino­pharm vaccine, a study conducted by Abu Dhabi Public Health Centre found a ‘significant’ decrease in the rate of infection after the second dose.
 
“We call on the public, both citizens and residents above the age of 16 who did not get vaccinated, to visit the nearest vaccination center and get the vaccine. Delaying or refraining from taking the vaccine poses a threat to the safety of society”, said a statement of the National Emergency and Crisis Disaster Management Authority.

 

Coronavirus: Pfizer-BioNTech vaccine approved for use in Abu Dhabi

After the Chinese vaccine Sinopharm, the Pfizer-BioNTech vaccine is the second available vaccine in the emirate of Abu Dhabi. The Pfizer-BioNTech vaccine is available by appointment only in certain selected clinics in Abu Dhabi City, Al Ain and Al Dhafra.
 
The Pfizer vaccine received approval as it shows 95 per cent effectiveness. In Israel, for example, where approximately 56 per cent of the population is Pfizer-vaccinated, infections have fallen, with only 152 new daily cases in mid-April from a high of 10 000 new cases in February.
 

Dubai closes 53 food outlets in Q1 2021 due to Covid-19 infractions

Dubai Municipality has conducted nearly 14 000 inspections to ensure compliance with the precautionary measures implemented to fight the Covid-19 pandemic during the first quarter of 2021.
 
In line with these inspections the Municipality issued warnings to 1 133 establishments and has closed down 53 food outlets across the Emirate for finding them violation Covid-19 protocols; amongst others such as social distancing violations and failure to wear personal safety equipment such as masks and gloves during food preparation and not using appropriate disinfection and sterilization materials.
 
Sultan al Taher, head of food inspection section in the Municipality said that “During their visits, the municipality inspectors check the daily follow-up records of workers’ hygiene, the sterilization and disinfection operations, in addition to ensuring that food safety requirements are applied while receiving food items, food preparations, storage, display at healthy tem­pera­tures, and the application of hygiene and sterilization procedures, to prevent cross- contamination as well as pest control operations”.

 

Qatar may allow 100 per cent foreign ownership of listed companies

Foreign ownership of many Qatari companies currently is far below the 49 per cent limit. As of 14 April, for instance, the Central Bank of Qatar’s foreign ownership was at 21 per cent and Qatar General Insurance had 32 per cent foreign ownership, as data of Qatar Stock Exchange shows.
 
The Qatari cabinet has approved a draft law, that would if implemented, allow non-Qatari national investors to own up to 100 per cent of the capital of companies listed on the Qatar Stock Exchange.
 
The implementation of this draft law could attract inflows of an estimated $1.5 billion into listed Qatari companies.
 
Previously, in October 2020, Qatar has already eased rules on foreign property ownership to make the real estate sector more attractive to foreign investors.
 

Changes to laws related to cohabitation of unmarried couples in the UAE

The United Arab Emirates introduced new amendments to the current law in late 2020 that overhauled the country’s Sharia law. Previously, in accordance with the Al Khilwa Al Muharama Clause, it was illegal for a man and a woman to live together if they were not married or a relative. In addition to this, sexual intercourse outside of marriage was punishable by imprisonment and deportation according to Article 356 of the UAE Penal Code. These applied regardless of religion or nationality. In Dubai, the police are not permitted to randomly check homes or hotel rooms, but if there was an official complaint, they could take criminal action. However this only happened in rare cases.
 

Changes to this law were made to allow the cohabitation of unmarried couples, thereby removing it as a criminal act under law. The consensual sexual intercourse between these individuals is also no longer the business of the government. However, pregnancy out of wedlock is still seen as an offence. This reform has transformed the UAE into a favorable choice for those looking to move, and signifies the start to more forward-looking legal reforms.

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