Dubai should introduce Virtual office system for doing business outside free zones

Integration of Labour/Immigration services with DED and lower business setup costs will improve Dubai’s World Bank ranking

The Virtual Office concept should be extended beyond the free zones, if Dubai is to maintain its competitive edge and move up in the World Bank ranking, according to Jitendra Gianchandani, Managing Partner of Jitendra Business Consultancy.

1. Virtual office in Business centre

Gianchandani says the Department of Economic Development (DED) should launch a Business centre for investors looking for small offices and reduce the formalities for obtaining work visas. This has already been successfully in many free zones in other emirates, he said.

Alongside the Virtual Office, Gianchandani called for linking Labour and Immigration services with DED, lowering visa fees, conditional labour guarantees, multiple services license and an updated standard activity book.

“As UAE gears for increasing the foreign workforce from 49% to 70/80%, this will definitely boost cross-border investment, but bolder and more innovative measures would be needed to improve the investment climate and generate greater employment for UAE nationals,” said Gianchandani.

2. Issuance of Visa and cost adjustment

According to Gianchandani, employment visas should be approved without Labour office inspections, and the total number of visas for each license/office should be pre-determined, as in the case of the Free zones.

Further, Labour card and Immigration card should be issued along with the trade license. Currently, the process starts only after a license is issued and it takes two weeks of running from the labour office to the immigration, leading to delays in starting up business and wastage of office rental, which can be avoided if visas are approved instantly.

Reflecting the general feeling in the business community, mainly SMEs, Gianchandani said the exorbitant visa costs need to be reduced drastically if Dubai wants to remain competitive. Visa costs have skyrocketed from Dh. 1200 in 2001 to Dh. 6000 per employee. Today, 95% are the SMEs in the UAE are suffering due to high visa costs and losses due to visa cancellations.

Further, labour guarantee should be applicable for labour intensive business, such as hotels and restaurants, contracting and maintenance companies and companies having poor labour records.

Visa fees of employees who leave a company or are terminated within period of less than 6 months should be adjusted against the replacing employee, Gianchandani says.

3. Multiple service licenses

“A multiple services license, along the lines of the general trading license, should be issued for multiple services that are inter-related, in line with international standards. In the auditing profession, clients sometimes want us to recruit accountants or provide HR consultancy or IT consultancy, or supply/recommend good accounting software or assist in Banking facilities or feasibility study services. Though we have qualified professionals we cannot serve our clients due to the limited scope of the license.”

4. Controlling body and Educational institute

“Also, at present all expatriate professionals get a professional license without undergoing any training or examination, except for auditing and insurance licenses which are regulated by Ministry of Economy. But other consultancy services licenses, such as feasibility study or IT consultancy or HR consultancy or management consultancy, do not have any controlling body, on the lines of RERA which regulates real estate activity and has started Dubai Real Estate Institute. This will create more job opportunities for UAE nationals.”

5. Standard classification of activity book to be upgraded

Gianchandani also called for updating of standard procedures through a complete activity book. “Over the past five to six years, business in UAE, particularly in Dubai, has grown manifold, but present standard classification of activity book does not provide accurate information on procedures and documents required for setting up business and ministries regulating the activities, such as auditing, insurance, sports, tourism, transport and legal services. Due to this, the investors have to personally run from window to window, often to get conflicting information verbally, instead of official written official.”

“In many cases, changes in procedures are decided internally by the departments, without intimating experts like us through circulars or online channels, because very often we as experts are not aware of the changes and have to confirm the current procedure by visiting to DED, before advising investors,” added Gianchandani.

Source: Dubai City Guide