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$4bn: expected trade between UAE and Israel 0% tax in free zones 1bn AED incentive scheme for agri-tech companies in Abu Dhabi Smart Dubai 2021 CAGR of pharma in the UAE exceeded Israel’s by 2.2x last year (8.5% vs 3.9%)…
- $4bn: expected trade between UAE and Israel
- 0% tax in free zones
- 1bn AED incentive scheme for agri-tech companies in Abu Dhabi
- Smart Dubai 2021
- CAGR of pharma in the UAE exceeded Israel’s by 2.2x last year (8.5% vs 3.9%)
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A momentous agreement and opportunity
The UAE has become the first Gulf nation to normalise its relations with Israel. On 28 August 2020, UAE President Sheikh Khalifa Bin Zayed Al Nahyan issued Federal Decree Law Number 4 of 2020. This ends a ban on business and trade with Israel, which has been in place since 1972.
“Dubai is in many ways the economic capital of the Arab world, of South Asia and of East Africa. It is one of the four greatest business hubs in the world, where people put aside disagreements and prefer personal connections.” – Dorian Barak, an Israeli-American fund manager and venture capitalist
Located in a strategic location between East and West the UAE is a world-class hub for international commerce. It’s focus on logistics is of particular note. As seen with the success of the country’s primary airlines Emirates and Etihad and the development of the free zone ports. With a progressive approach to foreign investment and an extensive double taxation treaty regime the UAE has become a country of opportunity for foreign businesses.
The UAE market is incredibly versatile and open to investors. Abu Dhabi’s Chamber of Commerce and Industry has forecasted that the growth rate of the UAE economy over the coming years is 13%. The Emirates have been liberalizing their policies, to encourage foreign individuals and companies to invest and take part in this exciting growth process. One of the biggest incentives for foreign companies to invest is tax exemption, drawing many foreign companies to establish activities in the country’s world-renowned free zones.
Which sectors will benefit from this new relationship?
The tech and innovation, tourism, oil, and pharma sectors are expected to flourish:
The normalisation of relations between the UAE and Israel will provide universal benefits for businesses in each country. Initial estimates show trade between the two countries should be in excess of $4bn per year. There are certain industries that are expected to thrive:
Tech and Innovation
In recent years, the UAE has started to focus heavily on tech and innovation with a notable desire to attract tech companies from around the globe. With ‘Smart Dubai 2021’ nearing, focus is on key sub-sectors. These include cloud computing, cybersecurity, IoT, artificial intelligence and Smart Cities. The UAE has set out its plans to become a pioneering hub in the tech industry.
The well-established expertise of the Israeli tech industry would be a perfect fit for the trajectory that the UAE is heading in.
Agriculture
In a world with increasing temperatures and growing concerns with the sustainability of farming, Israel has firmly established itself as the world leader in sustainable desert agriculture. With innovations in hydroponic farms, drip irrigation and agri-tech Israel has pioneered the industry.
This expertise is much needed in the comparably junior agriculture industry in the UAE. With a policy of industry specific farming grants and cheap licensing the UAE is committed to revolutionising its agricultural presence to reduce its reliance on International food imports.
Health and pharmaceuticals
With no formal international agreement, the UAE and Israel have reportedly been cooperating in healthcare for a period of time. This was evident with a mutual collaboration on the treatment of Covid-19. Company setup in dubai
To achieve sustainable growth for the healthcare and pharmaceutical industry the U.A.E. government has adopted several long-term plans. The Dubai Industrial Strategy 2030 and the Abu Dhabi vision 2030, consider the pharmaceutical industry as one of the main priority sub sectors to develop. Reason being export potential, future growth prospects and the mid to long-term economic impact.
The UAE is also focused to see international pharmaceutical companies establish and expand in the country. To bolster their infrastructure the UAE has developed several free zones throughout the country that have become hubs for the pharmaceutical industry. They include Dubai Healthcare City, Dubai Science Park and Jebel Ali Free Zone.
When comparing the two nations the CAGR of pharma in the UAE exceeded Israel’s by 2.2x last year (8.5% vs 3.9%). This means that the Israeli pharmaceutical industry can benefit hugely from working with the UAE market.
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Sources:
https://www.ft.com/content/55127d22-d2e6-4ab7-81e6-cf5658467ccc
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