pestle analysis united arab emirates

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PESTLE analysis PESTLE ANALYSIS Summary The UAE has achieved steady progress over the past three decades to emerge as a significant global player in both the political and the economic arena. The extremely rapid pace of economic growth until 2008 was due to the steady demand for oil, supplemented by a shift in focus to a number of non- oil sectors. The UAE maintains active diplomatic ties with over 60 countries, primarily in Europe and Asia. The UAE is considered to be one of the leading political forces in the Middle East and is a member of a number of regional organizations, including the Gulf Cooperation Council (GCC), the Arab League and the Organization of the Islamic Conference. Although the UAE has received international recognition as an economic force, its decision to ally with the US-led coalitions during the Persian Gulf War and the Iraq war also boosted its political weight. Under the leadership of former President Sheikh Zayed, the UAE transformed from a nation affected by large-scale poverty to a highly developed and prosperous country. With the death of Zayed in 2004, his son, Sheikh Khalifa, immediately took over as president. Although the government structure in the UAE is not democratic, both Zayed and Khalifa have shouldered the responsibility of maintaining the country's progress. The government has consistently received recognition for its efforts at creating business opportunities over the past decade. The country's tax regime is also considered among the best in the world for businesses. The UAE market is equipped with a strong telecommunication network and, as a result, the country's IT market is gradually becoming competitive. However, the level of science education remains low. The country has a strong integrated environmental development program. Its ecological procedures are integrated with the Environmental Impact Assessment (EIA) program, which is part of business practice in the UAE.

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Page 1: Pestle Analysis United Arab Emirates

PESTLE analysis

PESTLE ANALYSIS

Summary

The UAE has achieved steady progress over the past three decades to emerge as a significant global player in both the

political and the economic arena. The extremely rapid pace of economic growth until 2008 was due to the steady demand

for oil, supplemented by a shift in focus to a number of non-oil sectors. The UAE maintains active diplomatic ties with over

60 countries, primarily in Europe and Asia. The UAE is considered to be one of the leading political forces in the Middle

East and is a member of a number of regional organizations, including the Gulf Cooperation Council (GCC), the Arab

League and the Organization of the Islamic Conference. Although the UAE has received international recognition as an

economic force, its decision to ally with the US-led coalitions during the Persian Gulf War and the Iraq war also boosted its

political weight.

Under the leadership of former President Sheikh Zayed, the UAE transformed from a nation affected by large-scale poverty

to a highly developed and prosperous country. With the death of Zayed in 2004, his son, Sheikh Khalifa, immediately took

over as president. Although the government structure in the UAE is not democratic, both Zayed and Khalifa have

shouldered the responsibility of maintaining the country's progress. The government has consistently received recognition

for its efforts at creating business opportunities over the past decade. The country's tax regime is also considered among

the best in the world for businesses. The UAE market is equipped with a strong telecommunication network and, as a result,

the country's IT market is gradually becoming competitive. However, the level of science education remains low. The

country has a strong integrated environmental development program. Its ecological procedures are integrated with the

Environmental Impact Assessment (EIA) program, which is part of business practice in the UAE.

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PESTLE analysis

Political analysis

Overview

The UAE government is considered to have a consistent policy-making agenda. The country is also one of the first Gulf

countries to have conducted partial elections in the region. However, the absence of democratic institutions and fragile

relations with Iran now pose problems for the government.

Table 3: Analysis of the UAE's political landscape

Current strengths

▪ Strong policy implementation

Future prospects

▪ Improving foreign relations

▪ Nuclear deal with the US

Source: Datamonitor

Current challenges

▪ Absence of democracy

Future risks

▪ Fragile relations with Iran

DAT AMONITOR

Current strengths

Strong policy implementation

The UAE government is known for its consistent policy implementations. Under the leadership of the former President

Sheikh Zayed, the UAE transformed from a nation affected by large-scale poverty to a highly developed and prosperous

country. With the death of Zayed in 2004, his son, Sheikh Khalifa, immediately took over as president. While the

government structure in the UAE is not democratic, both Zayed and Khalifa are believed to be directly responsible for the

country's progress. In general, Khalifa is viewed as a modern ruler, with a pro-Western attitude similar to his father's.

Current challenges

Absence of democracy

Despite several changes in the international sphere, the regime in the UAE has done little towards implementing

democracy in the country. It had one of the lowest percentile ranks—20.7—on the voice and accountability indicator in 2008

(World Bank's Governance Matters 2009). This parameter measures the extent to which a country's citizens are able to

participate in selecting their government, along with freedom of expression, freedom of association and the availability of

free media. The present regime does not tolerate an interventionist media and tightly controls the functioning of news

outlets, while private media operators are not allowed to operate from the UAE. There are no political parties and no official

opposition exists in the country. The delay in implementation of democratic laws is leading to increasing unrest among the

public and the media. Furthermore, the country has been historically dominated by family rulers. Although such a system

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ensures that power is mostly concentrated within the large ruling families, inter-family relations are sometimes fractious.

Furthermore, there is no formal or recognized legal structure for determining family seniority or claims on power. Although

there was much talk about extending the FNC's powers and moving towards universal suffrage, there has been no tangible

progress on realizing these goals, in part because of a negative perception of the more advanced parliamentary system in

Kuwait, which is quite fractious and has developed a strong Islamist bloc.

Future prospects

Improving foreign relations

The UAE will continue to base its foreign policy on maintaining close strategic relations with the West, particularly the US.

These relationships have been buttressed by a series of agreements—with France, the US and the UK—on the

development of nuclear power and on the establishment of a French military base. The UAE has also signed a major arms

deal with the US. Furthermore, the UAE reopened its embassy in Iraq—making it the first Arab country to do so since a

general exodus between 2003 and 2005. In 2008, the UAE also waived all of nearly $7 billion debt dating from the Saddam

Hussein era indicating that it is ready to take significant initiatives in certain areas.

Nuclear deal with the US

The UAE and the US agreed upon entering a nuclear exchange deal during 2008. In February 2010, the US signed

cooperation and information-sharing agreement with the UAE to develop the latter's civilian nuclear energy program. The

agreement is expected to create a framework for the US national nuclear security administration to assist its Emirati

counterparts.

Future risks

Fragile relations with Iran

If the relations between the US and Iran take a turn for the worse, which may lead to a war between the two countries, then

the UAE's commercial interests are likely to suffer. The risk of a US military conflict with Iran has been of particular concern.

The UAE's geographical proximity to Iran, where it also has extensive commercial interests, makes it more likely that it

would experience negative repercussions from any conflict there. The country has traditionally taken a low-key approach to

wider Arab affairs, raising the risk levels on its relations with Iran.

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PESTLE analysis

Economic analysis

Overview

The state budget surpluses that the UAE enjoys have been driven by high oil prices; two-thirds of the UAE's fiscal revenues

are accrued from oil and gas sales. The government's high degree of dependence on exports of these resources for its

revenues makes it vulnerable to oil price movements, and it has realized that in the long term more dependable sources of

tax revenues will be required.

Table 4: Analysis of the UAE's economic landscape

Current strengths

▪ High per capita income

▪ Strong trade surplus

▪ High quality infrastructure

Future prospects

▪ Improving economic ties

▪ Emirates Development Bank

Source: Datamonitor

Current strengths

High per capita income

Current challenges

▪ Debt issues in Dubai

▪ Dependence on oil revenues

Future risks

▪ Hurdles to foreign investment

DAT AMONITOR

The UAE's per capita income of $38,900 (as of 2009), calculated on a purchasing power parity basis, is the 23rd highest in

the world. Per capita income is also expected to see a rising trend in the coming years. High per capita income shows a

strong market for goods and services across all sectors; it also gives a boost to internal production and reflects the strength

of the domestic market.

Strong trade surplus

The UAE economy has maintained a strong trade surplus position during 2000-09. The country's trade surplus has

increased over the years, growing from $18 billion in 2005 to $31 billion in 2009. This reflects the strength of the export

sector of economy, with the balance of trade being the most important component of the current account. The largest

contribution to the balance of trade comes from oil exports, with the UAE being the fifth largest such exporter in the world. A

strong trade account balance has provided strong finances to the government.

High-quality infrastructure

The UAE has been ranked sixth in the world for the quality of its infrastructure according to the World Economic Forum

(WEF). The country has advanced infrastructure in public premises, roads, ports, aviation and electricity. Moreover, Burj

Khalifa, a skyscraper in Dubai, was opened in January 2010. It is considered to be one of the tallest man-made structures

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at 828 meters. The building is part of the flagship development called Downtown Dubai. This development is expected to

attract investment and generate employment opportunities in the near term.

Current challenges

Debt issues in Dubai

The Dubai government is facing major debt issues. "Dubai Inc" (which is formed by Dubai World, Dubai Holding and the

Investment Corporation of Dubai) has around $109 billion in debt. Though Dubai World reached agreement with the majority

of its creditors regarding its $23.5 billion debt restructuring in May 2010, Dubai International Capital (DIC), one of two

finance arms of Dubai Holding has requested for an extension on some of its $2.6 billion debt. The repayment

extensions clearly indicate that the debt problems in Dubai are not sorted out yet.

Dependence on oil revenues

The state budget surpluses that the UAE enjoys have been driven by high oil price levels, and two thirds of the UAE's fiscal

revenues come from oil and gas sales. The government's high degree of dependence on exports of these resources for its

revenues makes it vulnerable to oil price fluctuations. The authorities have realized that, in the long term, more dependable

sources of tax revenues will be required. The economy's overdependence on oil revenues is now causing the government

to worry about future sustainability.

Future prospects

Improving economic ties

The UAE government is making consistent efforts to improve its economic ties internationally. As part of this, the country

has participated in many successful negotiations with China, Italy, Ireland, Kazakhstan and other Gulf countries. The UAE

attaches great importance to its economic and trade co-operation with China, and is set to work with the country to boost

co-operation in the finance sector and invest in China's petrochemical industry. China and the UAE have seen

comprehensive and fruitful co-operation in economy and trade since 2002, and the UAE has become one of China's most

important trade partners in the Middle East. Bilateral ties between the UAE and China have huge potential for growth, with

predications made at the Abu Dhabi and China Economic Forum suggesting that bilateral trade between the two countries

could exceed $100 billion by 2015.

Meanwhile, the UAE and Italian governments are keen on exploring opportunities for co-operation and may thereby benefit

from increasing trade and investment on both sides. Bilateral trade between the two countries reached a value of AED30

billion ($8.2 billion) in 2009. Improving international ties are gradually integrating the UAE economy with other parts of the

globe and are expected to have a positive impact on the UAE's economic performance.

Emirates Development Bank

The UAE government approved a law in June 2009 to set up the new Emirates Development Bank (EDB) with an initial

capital of AED10 billion ($2.7 billion). The Emirates Development Bank (formed by the merger of Industrial Bank and Real

Estate Bank) will have a paid up capital of AED2.3 billion ($0.6 billion), which would be increased to AED3 billion ($0.8

billion) during 2011 and to AED5 billion ($1.4 billion) over five years. A committee has been set up to devise a business

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plan for Emirates Development Bank. The Emirates Development Bank is expected to invest in infrastructure and housing

projects in 2010. With the establishment of EDB, the government aims to develop and support various sectors in the

country, and also bridge the gap between the industrial sectors and the government.

Future risks

Hurdles to foreign investment

Foreign investors do not receive the same treatment as national companies. Complete foreign ownership is restricted under

the country's laws. At least 51% of a business must be owned by a UAE national, and projects must be managed by a UAE

national or have a board of directors with a majority of UAE nationals. Distribution of goods must also be conducted through

a UAE national. These restrictions affect the FDI in the country.

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Social analysis

Overview

The country has a low level of unemployment and an abundance of semi-skilled youth workers for its labor markets.

However, low literacy and a lack of proper facilities for education are dogging the social system. Furthermore, the

government's expenditure on schooling is low.

Table 5: Analysis of the UAE's social landscape

Current strengths

▪ Liberalized labor immigration

Future prospects

▪ Usage of IT systems in healthcare

Source: Datamonitor

Current challenges

▪ Low literacy rate

▪ Low education expenditure

Future risks

▪ Unemployment levels set to rise

DAT AMONITOR

Current strengths

Liberalized labor immigration

Labor immigration has been liberalized to allow foreign workers to come and work in the UAE. The Ministry of Labor

passed new legislation on immigration rules in 2007, making the policies and procedures easier for foreigners. The new law

relaxed the rules regarding residence permits for foreign workers from the EU and other Western countries, and now a

mere registration will suffice to work in the UAE. This has created a good environment for many highly skilled foreign

workers coming to the UAE. Foreign labor participation in the labor force is 75% of the total workforce in the Gulf countries.

The private sector remains the major employer of foreign labor, constituting over 95% of the total in nations such as the

UAE and Qatar. In recent times, Dubai has seen a major rise in the influx of foreign labor due to the growth in the

construction sector. Due to liberalized labor policies, the country has a skilled workforce from all parts of the globe.

Current challenges

Low literacy rate

The UAE's 77.9% literacy rate is low compared to other countries in the region. A low literacy rate acts as an obstacle to

the availability of highly educated native workers suited for different sectors of the economy. This is another reason why the

dependence on foreign workers has been increasing over the years, as employers find it easier to find the right kind of

resources to match their requirements among the foreign population.

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Low education expenditure

Government expenditure on education has been historically low in the country. The government expenditure on education

was as low as $1.5 billion in 2002, which increased to around $2.8 billion by 2009. Education expenditure as a share of

GDP was a mere 1.2% in 2009. Furthermore, the spending on higher education is 38% less than spending in other GCC

countries, according to a study conducted by the National Human Resources Development and Employment Authority

(Tanmia). The low level of education spending might decrease the availability of skilled domestic labor in the country.

Figure 2: Public education expenditure in the UAE, 2002-13

5

4.5

4

3.5

3

2.5

2

1.5

1

0.5

02002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Year

2.5

2

1.5

1

0.5

0

Education expenditure Education expenditure as % of GDP

Source: Datamonitor DAT AMONITOR

Future prospects

Usage of IT systems in healthcare

The UAE MoH formulated a policy in October 2008 to automate healthcare processes through the implementation of IT

systems in the country. The MoH will be implementing healthcare information technology (HIT) systems from Cerner—a

private sector pharmaceutical company—that are designed to improve patient care and the way that doctors and nurses do

their jobs. 12 hospitals and 60 clinics will employ a suite of Cerner Millennium solutions to optimize and automate paper-

based processes. iCapital, a UAE-based company and consortium lead, will serve as the prime contractor for these

implementations. The Cerner Millennium solutions installed throughout the MoH healthcare delivery facilities will automate

processes in the scheduling, admissions, emergency, laboratory, pharmacy, radiology, surgery, medical records and

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Percentage

$

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clinical supplies departments. Nurses and physicians will also use these programs to manage and document patient care

through online order entry, and results notification and viewing. The HIT-enabled systems are expected to streamline the

medical system and document healthcare activity across the country, increasing accountability.

Future risks

Unemployment levels set to rise

Though unemployment levels in the UAE remained low until the onset of the global economic crisis, it is expected to rise

sharply in the coming years. The rate of unemployment which remained below 2.75% during 2002-08, jumped to a high of 4%

in 2008 and to 4.2% in 2009. According to the UAE Economic Report for 2009, around 47% of the country's population

is unemployed. As per Datamonitor estimates, the unemployment rate is expected to increase to 5.8% by 2013.

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Technological analysis

Overview

The country has a strong telecommunication network with state-of-the-art technologies. As a result, it is attracting entrants

to its IT market at a rapidly increasing pace. However, poor science education and a lack of R&D facilities are a hindrance

to technological development.

Table 6: Analysis of the UAE's technology landscape

Current strengths

▪ Rapid growth in telecom segment

Future prospects

▪ Dubai Silicon Oasis

▪ Growing market for information technology

Source: Datamonitor

Current challenges

▪ Poor science education

Future risks

▪ Low level of intellectual property registration

DAT AMONITOR

Current strengths

Rapid growth in telecom segment

The country has made rapid progress in its telecom segment since privatization began in 2000. The telecom segment

generated more than $6 billion in revenues in 2009. The fixed telephone line segment grew at 6.6% in 2009 while the

mobile phone market grew at 4.2% in the same year. According to Datamonitor estimates, the UAE has a high mobile

penetration rate of more than 212 mobiles for 100 people.

Until 2006, the UAE's telecom market was still a monopoly, with the government-owned operator Etisalat being the lone

player. But the entry of telecom operator Du in 2008 marked a vital shift. In less than a year, Du has a share of nearly 30%

in the mobile telecom market as of 2009, and analysts predict that it will continue to grow in the years to come. According to

the government, the telecom industry will be more open to private players going forward.

Current challenges

Poor science education

The educational system in the UAE has been inadequate for meeting its technological development needs. Since the

education laws are based on Islamic principles, schools have traditionally not devoted enough attention to science and

mathematics. With the focus instead on traditional subjects, students are ill-prepared to meet the needs of a growing

knowledge economy. There were no centers for higher technical education until 1988, and a lack of technical education has

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restricted the enrollment of UAE students into technologically intensive industries. Moreover, the firms operating in the UAE

have to rely on expatriates to meet their need for technical staff, which proves to be more expensive.

Future prospects

Dubai Silicon Oasis

The Dubai Silicon Oasis (DSO), a technology park in the UAE, houses 180 companies and is expecting more companies in

2010. The DSO is inviting more companies (large corporates such as IBM, Nokia and Motorola) to set up research and

development (R&D) and design centers rather than merely sales and marketing offices. This is expected to encourage

development of innovative products and also generate employment. In addition, a venture capital (VC) fund will invest in

potential startup companies in the Middle East and beyond. Going forward, the DSO is also likely to work with science and

technology universities to foster innovation in the country.

Growing market for information technology

The UAE is becoming a lucrative destination for IT development, in part due to the strong telecommunications network at

its disposal. With the size of the population and demography, the country favors investments in the IT industry, and provides

cost-effective structures that are beneficial to interested parties. The country's proximity to Asia gives it access to a potential

market of almost two billion people. Furthermore, basic computer skills are becoming part of the curriculum in

lower education institutions, while major universities and education facilities are now promoting and offering courses in the

telecommunications and IT fields. There is also formidable government support for the industry, which is trying to attract

foreign technology firms, particularly in the free trade zones. With 10 free trade zones, the IT industry enjoys unique and

huge advantages in the UAE, and the constant growth in the demand for Arabic software packages in the UAE and

neighboring Arabic-speaking countries for business creates strong prospects for IT development. With huge revenues and

profits from oil, the standard of living in the country will grow and technology will become essential in sustaining this

standard.

Future risks

Low level of intellectual property registration

The number of patents registered by the UAE is extremely low compared to other developing and developed countries

around the world. In 2009, the UAE registered only nine patents with the US Patent and Trademark Office (USPTO),

compared to 95,037 in the US, 1,525 in Israel. Although the country has been performing well in terms of economic growth,

it lags behind in terms of registering intellectual property rights. To make matters worse, the 2009 budget did not make any

effort to strengthen the R&D activity in the country.

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Legal analysis

Overview

The UAE is one of the few tax-free zones in the world, with virtually no tax laws in the country, and the country has also

improved its policy towards the industrial sector. However, the federation's company ownership laws still act as a hurdle to

foreign direct investment (FDI) flows and continuous government interference in business affairs can stifle the performance

of businesses in the country.

Table 7: Analysis of the UAE's legal landscape

Current strengths

▪ Low tax legislation

▪ Favorable judiciary

Future prospects

▪ Improved policy towards infrastructure sector

Source: Datamonitor

Current challenges

▪ Compliance to local ownership laws

Future risks

▪ Government interference in business

DAT AMONITOR

Current strengths

Low tax legislation

The UAE as a federation does not have any income tax legislation; each emirate has its own income tax decree, which is

enforced upon oil companies and foreign banks. Relying primarily on immigrant employees, the UAE economy has

projected itself as an employee-friendly nation. There is no tax levied on any personal income, including all types of salaries

and capital gains. Currently there is no national sales tax, although some emirates levy minor sales taxes, such as Dubai's

10% tax on hotel bills. Along with the absence of income tax laws there is also near-total (99.9%) fiscal freedom in the

country. This has led to explosive foreign interest, investments and corporate relocation into the UAE. Free trade zones

have also been legalized in multiple locations to reduce trade laws and allow new markets to take hold.

Favorable judiciary

The court systems are highly organized and efficiently run in the country. The judicial structure is being reformed to improve

the level of services and facilitate transactions for better efficiency. Each emirate has the option of participating in the

federal legal system or retaining its own. Five of the seven emirates have joined the central system under a unified set of

procedures and rules. The UAE's establishment of civil and criminal courts has resulted in a diminished role of their Islamic

equivalents. These new courts have been crucial in the establishment of Western corporations and foreign investment.

Current challenges

Compliance to local ownership laws

The laws pertaining to the ownership of corporate holdings in the UAE are restricted, with a mandatory majority to be held

resident companies. Current policy dictates that all businesses within the UAE are required to have at least 51% local

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ownership, except for those within the free trade zones. While the purpose of this legislation was to encourage

entrepreneurship and business innovation among the Emirati population, it is expected to be amended in the near future to

bring policy in line with WTO norms. However, there have been no changes yet in the law, resulting in continued

restrictions on foreign investment.

Future prospects

Improved policy towards infrastructure sector

The policy towards the industrial sector and the laws pertaining to tariffs are slowly being modified. Due to climatic

conditions, infrastructural development and manufacturing facilities within the UAE are concentrated in pockets. For

example, Dubai's Jebel Ali complex has over 200 factories operating within it. Facilities available at the complex include a

power plant, a deep-water port, a steel fabrication unit and a free trade zone in which there is a 100% duty exemption on

goods meant for transshipment or re-export. The complex will also host a new international airport called the Dubai World

Central International Airport, which will be completed in phases from 2013 to 2017. The airport is already under

construction and, upon completion, will have the highest cargo and passenger capacities of any airport in the world.

Future risks

Government interference in business

Government interference has impeded business and domestic activities. There have been several human rights violations

in the labor sector. Furthermore, the Company Law regulates the activities and the registration of foreign enterprises

intending to establish a presence in the UAE. This gives the government almost total control over which non-native

companies may enter or do business with the federation. Businesses operating in the UAE face strict financial supervision

and lack foreign investment freedoms. Since the nation is composed of absolute monarchies, the government is free to

interfere in the economy. In 2008, price controls were placed on 52 commodities, emphasizing the social responsibility of

the private sector in line with the directives of Sheikh Khalifa Bin Zayed Al Nahyan, which hinder business activities. Also,

due to the lack of intellectual property laws and property ownership laws, many companies face intellectual property

infringements, as duplicate products are manufactured throughout the country.

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Environmental analysis

Overview

The country has a strong integrated environmental development program, with supporting economic policies. Its ecological

procedures are integrated with the Environmental Impact Assessment (EIA) program, which is part of business practice in

the UAE. However, the increasing level of emissions is still a concern, with the country being one of the largest producers

of oil in the world.

Table 8: Analysis of the UAE's environmental landscape

Current strengths

▪ Integrated environmental development

Future prospects

▪ Wastewater recycling plant

Source: Datamonitor

Current strengths

Integrated environmental development

Current challenges

▪ Increasing emission levels

Future risks

▪ Increasing hazardous effects of desalination

DAT AMONITOR

The UAE government places a lot of importance on sustainable development and environmental conservation in its

economic development decisions. It is mandatory for all businesses to assess the impact of their activities on the

environment. The EIA policy is monitored by the Ministry of Environment. According to the policy, business proposals must

pass through the EIA's verification process before approval. Furthermore, the Ministry of Environment has initiated a project

in which information about any successful implementation of EIA principles is collected and analyzed for further

strengthening and development. The Ministry of Environment, in co-operation with other ministries, is also encouraging the

application of EIA principles to sector-specific programs, such as transport, energy and oil production. The integration of

environmental assessment into business activities has brought in many changes, improving the environmental credentials

of the UAE.

Current challenges

Increasing emission levels

Emissions of greenhouse gases in the UAE have been increasing over the years. CO2 emissions in the UAE increased by

3.9% to reach 169.4 million metric tons during 2009. The petroleum and manufacturing industries, along with vehicular

emissions, account for the majority of the UAE's overall greenhouse gas emissions. Continued growth in road traffic and

metals production also contributed to the country's emission levels. Datamonitor forecasts suggest that CO2 emissions will

increase to reach 187.1 million metric tons by 2013. The rising level of emissions is a cause for concern, making the

country vulnerable to adverse environmental consequences.

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Future prospects

Wastewater recycling plant

An advanced wastewater treatment and recycling plant was launched at the Al Ghail Industrial Park in April 2010. The

water recycling plant incorporates environment friendly recycling technology and has been funded by the Japanese

government. An investment of $4.5 million has been made for the construction of the plant and a funding of $1 million will

be made available annually during the three year period for plant operations. The project is aimed to design, build, operate for

three years a 2000 cubic meter per day Membrane Bio Reactor. The wastewater recycling and treatment plant is

expected to recycle waste water for industrial usage as an alternative to potable water in the Al Ghail Industrial Park.

Future risks

Increasing hazardous effects of desalination

The water resources per person in the UAE are already one of the lowest in the Middle East. The water needs in the UAE

are met through a desalination process, the effect of which is slowly becoming hazardous. Most of the country's domestic

water needs are met by this process. The process removes salt from seawater. Other Gulf countries have also invested in

desalination facilities, and the United Nations (UN) estimates that almost half the world's desalination capacity is in the Gulf.

Abu Dhabi has five large desalination plants, which release brine with a very high salt content of about 70,000 parts per

million (ppm) back into the sea. According to classifications from the US Geological Survey, fresh water has less than

1,000ppm and US oceans have 35,000ppm. The brine released into the Gulf waters, therefore, has negative environmental

implications. Furthermore, the cost of this process has been very high. The increasing negative affects and the high cost of

drinking water have now become a problem for the country.

United Arab Emirates: Country Analysis Report - In-depth PESTLE Insights Published 09/2010

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