Day: August 24, 2022

By Ben Norton

 

“The sky is the limit for our trade and economic ties as we commit to building a shared future and enhancing the prosperity of our people,” said Piyush Goyal, India’s Minister of Commerce and Industry,

India and UAE have long-lasting historic ties that are woven between both their economies and cultures. The new Comprehensive Economic Partnership Agreement (CEPA), is poised to boost their combined economies greatly while fostering new job opportunities and supporting the growth of start-ups.

A total of $60 billion of trade flowed between the nations in 2019 alone from exports of goods such as jewellery, gold and diamonds. Although the energy industry may have brought the countries together, many other products and services will soon lead their journey to greater prosperity.

An additional factor that encourages continued support of the open market is the 3.4 million Indians living in the UAE. Many Indian-based companies continue to invest in their new partner’s economy due to its relative stability. UAE, on the other hand, has begun a search for tech-based businesses in India that need a capital injection with the idea of growing future billion-dollar enterprises.

The previous 5% import duty made Indian manufacturers uncompetitive in the Emirates, while up against China, Singapore and Malaysia. CEPA has levelled this playing field by bringing Indian goods into the market that match prices and often far outshine the competition’s quality.

“This agreement was long-awaited as India-UAE trade relations have huge potential to grow,”
— M C Garg, chairman of Goodluck India Exports.

India’s economy is still finding its way out of a lull created by the pandemic with many private enterprises on the hunt for new avenues to generate sales. From tourism to agriculture, both countries are encouraging, funding and guiding new connections between their borders in order to build greater trust and stronger relationships between firms.

The success of this agreement will likely spur on similar trade deals across the globe for both nations. UAE has its eyes set on the Middle East with the goal of becoming an even larger trading hub. India is looking further afield, targeting first-world countries such as Australia.

Will the CEPA agreement be the first step toward a network of similar partnerships? Many believe it could be the beginning of a tariff-less world market but only time will tell where this ground-breaking deal may lead.

“This bilateral trade agreement between the UAE and India will open new doors for many ventures across both the nations”
— Sanjay Borkar.

 

The two largest democracies in the Asia Pacific region are finally ready to shake hands.

Open trade between Australia and India has increased incrementally over the last decade. Their relationship seems to be making leaps and bounds with an interim Economic Cooperation and Trade Agreement signed on 2 April. Prime Ministers Morrison and Modi seem ready to commit to the long-term Comprehensive Economic Cooperation Agreement (CECA) by the end of 2022.

 

Is CECA Solely an Economic Partnership?

In short, no it is not. The partnership is also deeply motivated by both countries’ desire to negate their reliance on China. Australia has had diplomatic disputes with China for years, despite the Asian nation being their largest trading partner. Economic sanctions on coal, beef, wine, seafood and barley have been placed over Australia due to recent disagreements, further encouraging Aussie trade elsewhere.

India is desperate to diversify its supply chain management as reliance on China has become worrying after suffering recurring aggressive acts such as the Galwan Valley clash in 2020. The Indian economy offers the world more reliable manufacturing and an explosive tech market. Many countries may follow Australia’s desire to move away from Chinese exporters.

 

How Will It Work?

Tariffs will be lowered or completely removed on a wide selection of goods between the two nations in order to encourage two-way trade. Other constraints such as technical barriers to trade and certain immigration constraints will be renegotiated as well.

The agreement will simply boost what is already unfolding. Data from the Ministry of Commerce and Industry in India shows a 104.8% year-to-year increase in Indian exports to Australia, with Australian imports to India increasing by 99.5% a year. This momentum has created the perfect opportunity for such an agreement to slip into place seamlessly.

 

What is the End Goal?

Governments in both countries expect trade in goods to reach USD $50 billion within 5 years of the documents signing. Australia wishes to make India one of their top three export markets by 2035 and its 3rd biggest investment destination in Asia.

India is not a part of any significant trade block. FTAs are their greatest hope of boosting an export market and securing imports to bolster their shaky supply chain. Securing well-placed inputs is a crucial factor in the future of Indian economic growth — especially that of coal which can now be sourced more affordably from Australia.

Bi-lateral cooperation is the future of political prosperity. FTAs are becoming commonplace between nations. Securing a key spot in the global supply chain is the only way to ensure economic stability.

Private operators seem equally excited by the progressive partnership. Investors across the world watch with tenterhooks — ready to take advantage of the opportunities this deal will create.

 

For more information on the CECA trade deal click here.

By Ben Norton

 

UAE is Australia’s most significant economic partner in the Middle East creating over $10 billion in annual trade during pre-COVID times. On the 17th of March 2022, UAE officials including HE Dr Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade signed a joint document outlining both nations’ intention to follow a Comprehensive Economic Partnership Agreement (CEPA).

Signed CEPA Document

 

How Will The Partnership Work?

It will be Australia’s first open trade venture in the Middle East and encourage the flow of products, services and investment between the prosperous nations. The details of the document are yet to be negotiated but it will likely affect the following changes:

• Reduction or elimination of tariffs. (These will probably be geared toward specific industries)
• Improvement in product standards on both sides of the deal.
• Decreased legalities and costs for international investors.
• More lenient Visa and immigration systems for business travellers.

 

Further Explanation of FTAs

 

Who Will The Agreement Effect?

Both Australian and UAE businesses will be provided with great opportunities by signing this pact. The largest current Australian exports into this market are aluminium oxide, beef, lamb, sheep, vehicle parts and telecommunication equipment. There are, however, many more products and services that could support both economies now that their markets are more accessible.

The deal also opens up massive space for international government procurement, lessening the cost of national projects while boosting private corporate sales. Investors will also have a cheaper, more trustworthy and better-facilitated avenue through which to create projects and purchase assets. Deregulation and the minimization of entry barriers will make both countries’ economies far more attractive to their partners.

Further Info on the changing dynamic

 

At What Cost?

Like all deals, FTAs do come with some risks and costs. These include the outsourcing of employment to a competing region, crowding out of domestic industries and reduced tax revenue.

Although these issues are real and worth considering the beauty of this trade agreement is that the nations involved possess very different competitive advantages. This ensures that neither country will face a loss of employment or industrial opportunity while their greatest strengths can be taken advantage of. Taxes gained from an increased GDP should make up for the loss of income from tariffs.

Cots and benefits of FTAs

 

Final Thoughts

Only time can tell how this trade partnership will unfold but it seems that both countries are eager to strengthen their ties and promote the free flow of trade. Private investors, procurers and corporations should start preparing to penetrate new markets to get ahead of a very big intercontinental wave.

By Ben Norton

 

UAE has been carefully constructed to facilitate international investment with open arms. From their globally minded legal system to a top-class banking regime, you won’t find anywhere to put your money that makes it more straightforward.

A constantly expanding range of assets is made available on the trading market for private investors to access that fit anybody’s affinity for risk and reward. The Gulf receives well over USD 10 billion from foreign direct investment every year as a result of its welcoming structure and prosperous history.

World Bank data on the UAE economy.

 

Best Investment Opportunities

 

Property

Two decades ago UAE offered a boom and bust market providing investors with the opportunity to make fast money while bearing high risk. This has all changed, however, as the government managed to stabilise the sector by issuing new retirement and investment visas that encouraged housing and apartment sales in 2018. Previously ex-pats could only buy a 99-year lease on property.

Despite the current ease of entry, we would suggest using an agent or a lawyer to navigate the legalities of the purchasing process. There are some tricky details to get right such as drafting agreements, transfer of ownership documents, the actual payment and communication with necessary government departments.

UAE governmental advice on buying property.

 

Business Investments

There are two main ways to set up a business in the UAE. You can either form a business in one of the free zones or register onshore. We would suggest the former as it allows for 100% ownership and the steps to completion are far more straightforward.

The usual employment, tax and trade laws do not apply in free areas such as Ras Al Khaimah Economic Zone. On-shore start-ups require 51% ownership from a UAE citizen, a far longer application process and greater recurring costs over time.

Ministry of Economy advice on setting up a business.

 

Stocks and Shares

As international stock trading goes, UAE is a no-brainer.

First, get registered with one of the exchange platforms (Dubai Financial Market, Abu Dhabi Securities Exchange or NASDAQ Dubai). You will also have to get an Investor Number from the Investor Services Desk to trade on DFM and ADX. Here the opportunities are endless, with a wide range of sectors, start-ups and securities for you to choose from.

With little knowledge of the local climate, you may want to consider putting your money into a fund. Here investors are able to collectively purchase assets, often through the leadership of a fund management team. This approach allows for a great amount of diversity with lower average costs from fees. Have a look at HSBC, First Abu Dhabi Bank or Sarwa to find the asset management products that fit your needs.

For more info on these steps.

 

Our 2 Cents

Now is the time to invest in the UAE. With a stable economy that is less and less dependent on oil and gas, the Emirates are a clear world leader when it comes to global trade. The new CEPA agreement with India will further boost their GDP while opening an exciting bilateral avenue for international investors to access. Similar open trade deals will follow suit in coming years and we suggest getting ahead of the game.

Here’s a great synopsis for anyone in search of more information.

By Ben Norton

 

Do 10 years of Golden Visa status sound inviting to you? Well, companies in UAE are handing them out to leading employees and top recruits as a way of boosting their talent pool and retaining excellent workers. This trend seems to be gaining momentum as it is especially encouraging to skilled immigrants that are new to the country.

 

How is the Golden Visa Useful?

Many businesses or individuals that are new to the UAE have difficulty filing regulatory paperwork without a local bank account or Emirati partner. The Golden Visa opens doors for those that do not want to be tied down to a single business or those that have not been granted their 10-year residency.

Now, 100% foreign-owned businesses are able to cut through red tape like never before — enabling them to set up shop in the UAE hassle-free. This has resulted in a rush of applications for the Visa status, with the eligibility criteria becoming broader by the day.

 

Advantages for Local Businesses

It costs very little for employers to submit these applications for their staff, while the benefits will last the workers for years to come. This clever move was originally used as an attempt to retain employees but is now a popular way of attracting the very best experts within their industries.

The status comes with many advantages outside of seamless banking. Many insurance packages, for example, are far more affordable to those with the Golden Visa. Not only will it save the businesses recurring costs but it elevates their staff to a new level of security in a country that may still feel very unfamiliar.

 

How to Get Involved

The 10-year investment-linked residency previously had a required level of Dh 10 million but recently this has been lowered to Dh 2 million. Although this is still a very substantial buy-in, it has opened access to many international investors who wish to operate within the Emirates. As well as enjoying taxation benefits, these immigrants are now able to use some of the world’s best banking, hassle-free.

For those of us who do not have half a million USD to invest, we would suggest finding employment in Healthcare, Tech or Finance as these sectors are pushing the sought-after status the hardest. It is not difficult to find out which corporations are offering this exciting sign-on bonus to their new recruits — so apply accordingly.

There will be little standing in the way of your financial prosperity with access to the world’s most globally connected economy and a Golden Visa in your hand!

By Ben Norton

 

India, UAE and Israel are forming a multi-lateral supply chain that should bolster food security across the Western Middle East. Although this relationship has been forming gradually over time it has become of greater importance since the global pandemic. Food security has never been so unstable, however, these three countries seem to be pushing back against the trend.

 

How Did The Chain Form?

Interregional cooperation between these states has recently been encouraged by the United States, with many believing the U.S. formed the ‘I2U2’ to combat Chinese influence in the Pacific. Although the corridor does suit U.S. interests and Joe Biden has been present at the meeting of heads conferences — the three countries have been forming the chain step by step for nearly a decade.

The technological and geopolitical synergies between the states create the perfect formula for multi-lateral cooperation with UAE acting as their central hub. Israel and UAE have worked hand in hand since their signing of the ‘Abraham Accords’ further boosting the efficiency of this corridor. Although they do not rely on the U.S. to facilitate the corridor’s functionality, American involvement does solidify its existence.

 

How Will it Work?

USD 7 billion has been earmarked for agricultural investments in India by the Emiratis. The budget will fund projects such as mega food parks, contract farming, sourcing agricultural commodities and all relevant agri-infrastructure. As well as boosting the farming sector dramatically in India, transportation facilities such as ports and highway improvements will be required in order to support integration across the Arabian Sea.

Essentially, India will be the food basket of the Middle East, while Israel and UAE will finance and facilitate its development with the latter carrying most of the weight. This can only be achieved through a radical change in India’s agricultural systems. Israel has set up 29 centres for agricultural excellence across the country that are teaching 150,000 Indian farmers best practices, as well as introducing them to clean technology to ensure the project’s sustainability.

 

Into the Future

The India – UAE CEPA agreement, signed in February 2022, has eliminated 90% of tariffs on mutually traded products. Since then, a similar document has been signed between Israel and UAE, creating a flow of goods between the nations that are traded seamlessly. Soon other Arab states are likely to join the chain, including countries such as Egypt and Saudi Arabia.

As this trade agreement gains momentum, it will provide more and more security to all involved. With the global food supply becoming consistently unreliable, deals such as these may be the future of global security. Not only does this food triangle facilitate trade, but it also creates greater food production from the ground up for a more prosperous tomorrow.

Click here for an in-depth discussion on the I2U2.

By Ben Norton

 

India and UAE are on the hunt for unicorns. No, that’s not as ridiculous as it sounds. Unicorn is the term used in the venture capital industry to describe a startup company with a value of over $1 billion. By 2025 these two countries aim to have grown 10 start-ups into market-leading businesses through the new CEPA trade agreement.

 

How UAE And India Plan On Achieving Such Rapid Growth?

They are currently in the process of selecting 50 tech-enabled budding businesses that will be closely monitored over the next three years. Those that show great promise will be hand-picked to lead the way through what will become a thriving start-up corridor. Their thinking is that businesses that are built on the backbone of tech will be able to scale more rapidly than anyone else.

Of course, these businesses will need capital in order to achieve such rapid growth. Groups such as Indian Angel Network, Turbostart, FICCI LEAD and MCA management Consultants will all be major players contributing to the entrepreneurial funding. $150 Mn has already been set aside during talks on creating this corridor.

For more information on CEPA’s startup investments goals click here.

 

Why Are Governments Supporting The Unicorns?

Both nations involved in CEPA understand the importance of flourishing start-ups while aiming to achieve the massive financial goals placed on the agreement’s success. These 10 businesses are likely to inspire many more entrepreneurs to use the opportunities provided by open trade when driving new business growth.

All organisations involved in this ambitious concept have agreed that although the businesses selected should be tech-enabled, they should also be sourced from many different industries. From health care to financial services the companies will all offer services in different sectors in order to encourage investment from all angles.

For more information on the effects that the start-ups will have on industry click here.

 

What Does This Mean For Investors?

The corridor offers a unique opportunity to investors, in that the companies selected promise explosive growth with the support of government and exterior funding. One can assume that they will also be bolstered by expert advice and guidance on how to use the open trade to their greatest advantage. Very rarely does a secure investment offer such rapid and extended returns.

Furthermore, the unicorns are simply the inaugural opportunity. Once the corridor is established it will produce hundreds of prospering businesses in search of venture capital. There is no greater time than now to keep an eye on this source of start-up

We strongly suggest that you keep your finger on the pulse and get involved when you spot the magical one-horned business that’s galloping its way toward $1 billion.

For a more in-depth discussion click here.