DUBAI: The United Arab Emirates scrapped a mandatory deposit for private sector employees, freeing up about USD3.8 billion for businesses, in its latest move to stimulate the economy.
A new insurance plan costing 60 dirhams annually for workers’ guarantees will replace the mandatory deposit of 3,000 dirhams (USD817) per employee, the state-owned WAM news agency reported. The oil-rich country is also loosening visa rules for job seekers and tourists.
Lower oil and weaker regional economies are hurting growth in the UAE, where expatriates make up about 80% of the population. The country has reacted in recent weeks with a number of reforms, including changes to ownership structures for businesses. Dubai said it would cut numerous fees and Abu Dhabi announced a separate stimulus package.
“This is a very comprehensive and includes some measures that should have an immediate impact,” Abu Dhabi Commercial Bank’s Chief Economist Monica Malik said. “The reduction in fees on companies is a sign the government is looking to help business after realizing they have come under pressure with lower demand and increased costs.”
The latest changes allow job seekers a obtain a six-month temporary visa, free of charge. Currently a worker has three months from the date of the employment termination to find a new job or leave the country.
Transit passengers will be exempt from all entry fees for the first 48 hours and will be allowed to extend their visas by up to 96 hours for a fee of 50 dirhams, according to WAM. That will help hotels and restaurants as more tourists can stop and see the city, Malik said.
Earlier this month, Dubai waived some fees on aviation and real estate transactions, froze school fees, and cut charges levied on businesses, while neighbouring Abu Dhabi plans to spend 50 billion dirhams over three years to boost the economy. The UAE is also changing foreign ownership rules allowing up to 100% of a company in some industries to be held by non-locals.