Page 9 - Sept Oct Issue
P. 9
Overview of the United Arab Emirates
potential. Ajman and Sharjah are both resided in by offering on a different exchange (such as the London
Dubai workers looking for cheaper accommodations. Stock Exchange), through bond dealers in commercial
Ajman has great stability, with only four rulers banks or through private placements directly to investors.
since 1900. Sharjah is a city of learning and the arts,
representing the cultural capital of the Arab World Of the seven emirates in the UAE, Dubai has been hit
and has over twenty museums. Umm al-Qaiwain the hardest by the global inancial crisis. The volatile
is the second smallest emirate and is relatively situation in Dubai has affected the whole country and,
unproblematic and politically stable. However, the coupled with a fall in oil prices, the IMF estimate a 3.3
emirate’s stance on alcohol has created rifts with the percent contraction in the UAE in 2010. Alternatively,
UAE rulers. Umm al-Qaiwain licenses the right to UAE oficials have expressed optimism about the
sell and consume alcoholic products, like Dubai, but country’s future in an attempt to instill conidence in the
also operates hug shops at beach resorts. Residents UAE economy.
in this emirate rely on ishing and cultivating palm
trees as primary sources of income. Umm al-Qaiwain The GCC states, seek to become a regional inancial
is undergoing an architectural renaissance and is hubs. Barriers to achieving this goal have risen as a
rapidly developing. Fujairah is the only emirate on result of the Dubai World crisis and the UAE’s response.
the eastern side of the UAE along the Gulf of Oman International conidence in the ability of GCC to
and has lowly status in the country’s development restructure their debts have been questioned as global
process. If it is able to overcome this situation, investors express concern over issues of transparency,
Fujairah has the potential to become an important accountability and good corporate governance. At the
alternative port of Dubai and the rest of the UAE. heart of the issue is the region’s reputation for good
governance. An even more serious development is
The emirate beneits from great stability and good whether such problems are symptomatic of a deeper
neighbor relations. Ras al-Khaimah has experienced trend. It is expected that international investors will
instability over the last few decades and is expected subject the Gulf states to a far greater level of scrutiny in
to have more internal problems over the near future. the future.
It is not oil rich nor near Dubai, but is an important
supply of labor into Dubai. UAE government-produced research on the economic
outlook in 2009 acknowledged that challenges lay ahead
Financial regulation is somewhat complex in the due to the inancial crisis and global economic downturn,
UAE. The DIFC has its own regulator, the DFSA, but emphasizes the country’s strong foundation in which
and its own civil and commercial laws. The rest of to withstand such challenges. The large current account
the UAE inancial system is regulated by the Central surplus, estimated at $285 billion (USD) in 2008, and
Bank of the UAE, The Emirates Securities and the government’s large controlled overseas assets is
Commodities Authority (ESCA) and the Ministry of expected to shield the UAE from a sharp downturn.
Economic Planning (MEP). However, trade and associated industries are anticipating
a slowdown in exports in the future. One positive key
The Central Bank of the UAE is granted a general prospect from this downturn is the expected decline in
power to create rules governing all matters that fall inlationary pressures in the UAE due to a fall in soft and
within its authority. Most of the Central Bank’s hard commodity prices.
power focuses on setting monetary policy and bank
regulation, rather than regulating the securities Liquidity in the banking sector is an issue that is
market unless it regards anti-money laundering receiving close attention by government oficials in
practices. the UAE, as non-Abu Dhabi based banks appear to be
undercapitalized following a series of proit falls. The
There is no formal bond market in the UAE. In order property market, especially in Dubai, is very weak and
for companies to issue debt, they must list the bond precipitated by negative sentiment and a short
9
potential. Ajman and Sharjah are both resided in by offering on a different exchange (such as the London
Dubai workers looking for cheaper accommodations. Stock Exchange), through bond dealers in commercial
Ajman has great stability, with only four rulers banks or through private placements directly to investors.
since 1900. Sharjah is a city of learning and the arts,
representing the cultural capital of the Arab World Of the seven emirates in the UAE, Dubai has been hit
and has over twenty museums. Umm al-Qaiwain the hardest by the global inancial crisis. The volatile
is the second smallest emirate and is relatively situation in Dubai has affected the whole country and,
unproblematic and politically stable. However, the coupled with a fall in oil prices, the IMF estimate a 3.3
emirate’s stance on alcohol has created rifts with the percent contraction in the UAE in 2010. Alternatively,
UAE rulers. Umm al-Qaiwain licenses the right to UAE oficials have expressed optimism about the
sell and consume alcoholic products, like Dubai, but country’s future in an attempt to instill conidence in the
also operates hug shops at beach resorts. Residents UAE economy.
in this emirate rely on ishing and cultivating palm
trees as primary sources of income. Umm al-Qaiwain The GCC states, seek to become a regional inancial
is undergoing an architectural renaissance and is hubs. Barriers to achieving this goal have risen as a
rapidly developing. Fujairah is the only emirate on result of the Dubai World crisis and the UAE’s response.
the eastern side of the UAE along the Gulf of Oman International conidence in the ability of GCC to
and has lowly status in the country’s development restructure their debts have been questioned as global
process. If it is able to overcome this situation, investors express concern over issues of transparency,
Fujairah has the potential to become an important accountability and good corporate governance. At the
alternative port of Dubai and the rest of the UAE. heart of the issue is the region’s reputation for good
governance. An even more serious development is
The emirate beneits from great stability and good whether such problems are symptomatic of a deeper
neighbor relations. Ras al-Khaimah has experienced trend. It is expected that international investors will
instability over the last few decades and is expected subject the Gulf states to a far greater level of scrutiny in
to have more internal problems over the near future. the future.
It is not oil rich nor near Dubai, but is an important
supply of labor into Dubai. UAE government-produced research on the economic
outlook in 2009 acknowledged that challenges lay ahead
Financial regulation is somewhat complex in the due to the inancial crisis and global economic downturn,
UAE. The DIFC has its own regulator, the DFSA, but emphasizes the country’s strong foundation in which
and its own civil and commercial laws. The rest of to withstand such challenges. The large current account
the UAE inancial system is regulated by the Central surplus, estimated at $285 billion (USD) in 2008, and
Bank of the UAE, The Emirates Securities and the government’s large controlled overseas assets is
Commodities Authority (ESCA) and the Ministry of expected to shield the UAE from a sharp downturn.
Economic Planning (MEP). However, trade and associated industries are anticipating
a slowdown in exports in the future. One positive key
The Central Bank of the UAE is granted a general prospect from this downturn is the expected decline in
power to create rules governing all matters that fall inlationary pressures in the UAE due to a fall in soft and
within its authority. Most of the Central Bank’s hard commodity prices.
power focuses on setting monetary policy and bank
regulation, rather than regulating the securities Liquidity in the banking sector is an issue that is
market unless it regards anti-money laundering receiving close attention by government oficials in
practices. the UAE, as non-Abu Dhabi based banks appear to be
undercapitalized following a series of proit falls. The
There is no formal bond market in the UAE. In order property market, especially in Dubai, is very weak and
for companies to issue debt, they must list the bond precipitated by negative sentiment and a short
9
