It seems 2020 may not have any more bigger surprises hidden in its cache as no news could astonish us the way we received the news of the UAE-Israel deal to normalize the bilateral relations. The UAE is the only third country in the Middle East to strike a deal with Israel after Egypt and Jordan. The deal is a major political breakthrough but at its core, the movie can be considered economically motivated.
The mutual accord has been welcomed by the investors as the UAE is one of the most economically diversified countries in the Middle East and Israel the most technologically advanced nation in the region. Israel is poised to benefit from the oil wealth of the UAE and the latter could boost up Israeli investments in a variety of sectors including tourism, technology, startups, space, scientific research, etc. As the two unavoidable forces in the Middle East shake hands, it will accelerate and further energize the ecosystem of business setup in Dubai, the most advanced emirate in the UAE.
Business setup consultants in Dubai have identified five areas of shared interest for the two great economic powers that could receive beneficial impacts once the investments start pouring in:
1. Greater Tourist Inflow Likely
The landscape of business setup in Dubai owes a great deal of its strength to the tourism and hospitality sector. Nearly all of the world’s superior hospitality brands have a strong footing in Dubai. Also, the construction of The Ciel, which is being hyped as the world’s tallest hotel, is making rapid progress in Dubai.
Though the novel Coronavirus has battered the Dubai hospitality industry to an extent, the Israeli investments may give a major fillip to the sector. The people of Israel are generally known to be great globe trotters; many of them travel a lot after their army service. UAE’s Emirates or Etihad can open flights to Tel Aviv, which would be a great stimulus for the aviation industry. Israeli tourists often visit India and East Asia and the new ties could prompt them to use the connection via Dubai and Abu Dhabi to reach different cities in India.
2. UAE Gets an Oil-Hungry Customer
The normalization of ties would present the UAE with an oil-hungry customer. The Israeli economy is facing a recession after traversing through years of growth. The GDP of Israel is estimated to plunge by 6.2 % in 2020 as per official projections. In contrast, the rate of unemployment has soared 3.4% in February to 23.5% in May.
Israel is one of the prominent buyers of oil with Iraq being its major source of oil import. At present, the best opportunity Israel has for sourcing good quality local oil is buying Kurdish oil from Iraq. However, Kurdish oil travels through Turkey, which has turned a strong foe to Israel thanks to the influence of Iran. Post the normalization of ties, the UAE’s national oil company Adnoc could get a strong customer.
3. More Power to Tech Business Setup in Dubai
The new deal will equip the UAE to exploit the expertise of Israel in the field of science and technology. Israel has over the years successfully channelled its prowess in technology for the advancement of the startup sector to such an extent that the country is known around the world as the ‘startup nation’. The ecosystem of startup business setup in Dubai can borrow the technological expertise from Israel. Dubai has been encouraging the tech startups through its free zones such as Dtec, Dubai Silicon Oasis (DSO), and even DIFC (for Fintech startups). Imagine how the environment of business setup in Dubai would transform itself once the Israeli tech know-how is added to the powerful mix. This is more significant now than ever, as the demand for IT services has spiked in the post-COVID-19 pandemic era.
4. The inflow of foreign investments from Isreal to the UAE
At present, the goods manufactured in Israel are prohibited to enter the UAE. The Dubai Ports and Customs Officials seize and destroy the Israeli products or any goods that bear ‘Zionist Insignia’.Business setup consultants in Dubai expect that the normalization deal will facilitate the entry of Israeli-made products into the UAE local market. As a result, there will be a rise in the number of products registered in Dubai or other emirates & Israel companies will invest in business and freehold properties. Many Israeli manufacturers and other businesses are learned to be readying to make their presence felt in the UAE post the deal.
5. Spike in Trademark Registrations in the UAE
In a similar vein, the UAE Trademark Law bans the registration of trademarks that are associated with any signs or marks of Israel. As per Article 24 of Federal Law No. 8 for the year 2002 amending Articles of the Federal Law No. 37 for the year 1992, “The Ministry shall strike off the registration of trademarks decided by the Israel Boycott Office in the State to be similar or identical to an Israeli mark, logo or emblem as well the marks owned by persons regarding whom a decision is issued prohibiting to deal therewith.” Now, the new deal is likely to usher in a new business environment where more products and trademark registration could happen on the back of the entry of Israeli investments into the UAE.
Recommendations from Jitendra Business Consultants
The UAE-Israel normalization deal has opened the door for more investments and mutual cooperation that is poised to have a significant impact on almost every major sector. Sectors such as tech startups, tourism, oil, would receive great investments which will propel recovery amidst the COVID-pandemic. Jitendra Business Consultants expect the deal will facilitate the entry of Israeli products into the UAE and there would be more productive and trademark registrations in the UAE. This is a landmark deal that would have a huge impact on the environment of business setup in Dubai. JBC recommend the investors exploit the situation and ensure the bus is not missed.