An optimistic outlook

Neil Petch, Chairman & Co-founder, Virtuzone highlights how the UAE ranks higher in doing business compared to other countries in the Mideast region and how businesses can benefit from the country’s business conducive environment.

How will UAE-based businesses benefit from a borderless business environment?

A borderless economy refers to a situation whereby a Canadian entrepreneur/ investor runs an e-commerce platform that sells Chinese manufactured products to customers in Africa. The question becomes why the investor is running their business from Canada when they can do business from the UAE, a country that is naturally positioned as an international trade hub situated between Asia and Europe in on the east and west respectively as well as the CIS to the north and Africa to the south.

As Virtuzone, what we can do is give this investor/entrepreneur insight on how they can run their business better. This insight includes how the investor/entrepreneur can reduce operating cost, the infrastructure and logistics facilities that the UAE offers such as Jebel Ali Port and Dubai World Central.

The investor also needs to be given an insight into the advantages of UAE brands leveraging initiatives such as ‘Make it in the UAE’ and recently unveiled ‘Operation300bn’. A brand that is associated with the UAE and Dubai, is trusted and has an advantage on the market.

In terms of ease of doing business, the UAE ranks higher than any other country in the Mideast region. The country is home to two international finance centres, Dubai, is International Financial Centre and Abu Dhabi Financial Markets, a point of attraction for institutional investors.

All the points highlighted above are crucial to investors/entrepreneurs who seeks to do business globally whilst based in the UAE or Dubai. As a company, we are building on the momentum that we already have by highlighting how the UAE is globally connected due to its central location and its airlines, Emirates and Etihad, which connects with the world’s continents. It takes time for any country to develop infrastructure that enables ease of doing business.

Neil Petch, Chairman & Co-founder, Virtuzone.

Last October, Mark Beer, former Chief Executive of the DIFC Courts joined Virtuzone as a special advisor. Virtuzone and Mark’s shared vision is to position the UAE at the heart of a borderless global economy, supporting the country’s transition to the Fourth Industrial Revolution as a knowledge-based, technology-enabled digital economy.

The collaboration aims to deliver a global, borderless jurisdiction in which companies can establish, transact and succeed internationally whilst avoiding the increasing boundaries, borders and

INSTEAD OF RELIANCE ON OIL AND TOURISM REVENUE, THE UAE CAN BE A SERVICE PROVIDER, A GENEVA OF THE 21ST CENTURY

NEIL PETCH

tariffs of our deglobalizing world.

This prescient business setup model is expected to provide a way forward at a challenging time where widespread travel restrictions are in place and companies have limited opportunities to expand physically and tap into new markets.

What initiatives should the UAE implement do to achieve this?

Instead of reliance on oil and tourism revenue, the UAE can be a service provider, a Geneva of the 21st century. The UAE is moving towards providing a business conducive environment and an affordable lifestyle for all residence such as more cost-efficient healthcare plans that can be offered anywhere in the world. The UAE’s boasts of the most advanced infrastructure and biggest hospitals in the world such as Cleveland in Abu Dhabi.

The UAE can provide all these services to its citizens and residents, but for investors/entrepreneurs to fully appreciate what the country has to offer they have to be in the Emirates. For example, for one to open a bank account you should be resident in the country.

Having two international financial hubs works in the favour of whoever aspires to run their business from the UAE. DIFC and ADGM offer a robust independent judicial system and regulatory framework, a global financial exchange, inspiring architecture and enabling support services allowing investors/entrepreneurs and clean money into the country.

However, in the new age, we should think about how we can do things differently, how we can disrupt the market using the latest cutting-edge technologies. These include the latest biometric security technology such as finger scanners and iris recognition so that one knows who you are dealing with. This goes beyond software that demonstrates not only the UBO (Ultimate Beneficial Owner).

The technologies should allow investors/entrepreneurs to set up a business remotely while simultaneously that person needs to conduct a medical test to residence visa in the UAE – all being done remotely. Globally, governments should appoint entities that can facilitate these processes making it easier for investors to do business worldwide.

Part of this important borderless infrastructure is how can funds be transferred between goods/service provider and consumer to facilitate. The existing banking structure was built 50 years ago, though it is still providing excellent service, it does not cater for sectors such as SMEs. The current financial service sector should make it easier for startups to open bank accounts as well as access financing.

There is a need for more digital banks in the Middle East and Africa. The MENA region financial services sector’s digitalization drive is partly self-motivated. Industry experts expect the banks’ tech-savvy customers and regulatory initiatives such as regulatory sandbox and open banking to accelerate digital transformation.

The UAE’s first independent digital banking platform, YAP, was launched in March. Other neobanks expected to launch soon include Zand, the first Shari’ah-compliant digital-exclusive bank, while ADQ also plans to set up a digital bank using a legacy banking license of First Abu Dhabi Bank.

Digital banks or neo banks bring banking services to the customer hence there is no need for someone to drive to the bank branch to open an account. A customer provides all required information on a mobile app and AI can access risk associated with an individual allowing a bank to process services like loans among other banking products.

People are increasingly adopting technology to make life more efficient. The private sector and entrepreneurs are working closely with the government to drive foreign direct investment. For the past 12 years, Virtuzone has been working hand in glove with governments to try and enhance the business setup process for investors/entrepreneurs.

Globally, governments are competing to provide the most conducive environment for doing business. For example, if a customer walks into a Samsung store looking for a television, they will get a Samsung TV. If another customer walks into Carrefour, Sharaf DG, or Jumbo, they’ll have a variety of choices. The same happens with setting up a business. When a customer walks into Virtuzone, we listen to their requirements and find solutions that best fit their needs. At Virtuzone, we use buying power to drive the absolute best prices on behalf of customers to enhance customer experience. The best journey in setting up a company is not always the cheapest one, but it is the one that saves you time while enabling you to set up following the right protocol.

Most entrepreneurs think it is all about getting the company licence. It is not. It’s about getting an operating company, and to have an operating company, in 99% of cases you need a bank account, and you need a telephone.

That is the role we take. At Virtuzone, we spent 12 years building up a sup-

portive ecosystem so that investors/ entrepreneurs don’t just get set up but get supported in their growth journey. And we’ve spent those 12 years studying our customers, Know Your Customer (KYC), compliance and other issues of governance that are required by our partners. This puts us in an excellent position to help investors/ entrepreneurs get that bank account to set up a company.

Why is the UAE best positioned to introduce a borderless jurisdiction in the MENA region?

The UAE can make decisions swiftly compared to other Western governments that are very dependent when it comes to public opinion. If you take several countries’ response to the outbreak of the COVID-19 pandemic, the UAE is among the top 10 countries that have handled the situation well. The country also boasts of the most business-friendly environment as the UAE is among the countries that have the highest rates of coronavirus vaccination globally.

As the UAE is moving towards reopening all economic activities, investors/ entrepreneurs and other people from different nations are relocating to the Emirates to enjoy all the experiences that the country has to offer. This is due to what the UAE has to offer including a conducive working environment and recreational services as well as access to world-class infrastructure such as a great telecoms network. The UAE offers one the opportunity to work next to some of the world’s leading financial centres, DIFC Courts and ADGM Courts, that uses an independent English language common law judiciary while enjoying the world-class standard of living which someone may not afford in the West.

The move allows bright minds to come together as people suddenly realise that the UAE is a great place to stay hence, some of the country’s sectors such as real estate are rebounding amid an increase in the demand for accommodation.

Dubai and the entire UAE position itself as the best jurisdiction to do business. The opening of Virtuzone in Israel a few months ago is also boosting our business in several ways. Israeli companies are looking for ways to collaborate or operate their business in the UAE – having Israeli-owned multinationals companies running their operations through Emirates-based structures.

This is because corporation tax in Israel is 23%, in the UK it was recently increased to 25% while in France it’s even higher. Multinationals companies or entrepreneurs who runs their operations from the UAE are guaranteed of saving at least 23% compared to operating in other jurisdictions.

Similarly, the UAE is a much stronger entity than any other traditional jurisdictions such as the British Virgin Islands, Cayman Islands, Hong Kong and Cyprus. The renowned structures that have in use in these traditions are weak which gives the UAE a competitive edge.

Now what we seek to do as Virtuzone is to champion the UAE globally. At Virtuzone we urge businesses to establish their operations in the UAE which gives them access to government support, better infrastructure, better taxation, a more vibrant growing community – and we are there to educate investors/entrepreneurs make it easier for them to establish in the UAE.

We would like that first step for investors/entrepreneurs to be an easier one and equip them with knowledge as they look to establish in the UAE especially now when there are global travel and movement restrictions. Initiatives that investors/entrepreneurs can benefit from in the UAE include digital banking and remote approvals.

The UAE financial sector is also working to regulate Open Banking and the use of blockchain. The UAE needs to be looking at the traditional places where hundreds of thousands of companies have been operating from including Cayman Islands, the British Virgin Islands and Mauritius.

Neil Petch, Chairman & Co-founder, Virtuzone.