The UAE has improved its global ranking in the Global Innovation Index (GII) to 34th for the year 2020 and maintained its No 1 status among the Arab nations. The country scored high in many key indexes including Human Capital & Research, Infrastructure, Business Sophistication, and Creative Outputs. At the core of the accomplishments is Dubai, one of the most progressive and well-developed emirates in the UAE. Dubai transformed itself into a global centre of innovation with efficient government policies, the development of free zones, and the emergence of various startup incubators and funding programs that provide an effective business setup ecosystem for the startups.
This blog tracks the factors that led to the transformation of Dubai from a barren oil town into a global innovation hub.
1. Government Creates Right Environment for Innovation
The UAE government spearheaded the country’s journey to innovation and economic growth with the creation of free zones and financial centres. Free zones were established for encouraging innovation by enabling the setting up of innovative businesses and startups. The concept of free zone is a popular and highly successful ecosystem used by governments across the world to spur innovation. By facilitating the free zone business setup in Dubai, the government has succeeded in attracting premium multinational companies known for their impeccable background of innovation, ability to form networks with comparatively small businesses, and the inclination to develop and spread future-ready technologies.
The free zones extended to the foreign investor’s multiple benefits including 100% ownership and total repatriation of capital along with providing them a tax relaxation for 50 years. Dubai Internet City, Dubai Silicon Oasis (DSO), Dtec, and Dubai International Financial Centre (DIFC) are the top free zones that offer startups with an innovative ecosystem of business setup in Dubai. These free zones feature prominently among the recommendations of reputed business setup consultants in Dubai. Further, the DIFC has a specialized license for innovative startups called Innovation License.
2. Pivotal Role Played By the Private Sector
Dubai is now recognized around the world as a flagship centre of innovation after more and more startups and innovative companies commenced setting up businesses in the emirate. And no one can ignore the vital role played by the private sector in adding the tag of innovation to Dubai. The innovation aspect of business setup in Dubai gained prominence mainly after the establishment of incubators, startup accelerators, and other tech hubs.
The ImpactHub, which started in 2015, was one of the very first organizations to spearhead this movement. It was followed and further strengthened by other incubators and accelerators such as Cribb, In5 Flat6labs, and Astrolabs. The rise of such startup incubating hubs led to crowning glories such as the acquisition of Souq.com by Amazon and the acquisition of Careem by Uber. These two acquisitions are considered watershed moments that enabled an innovative ecosystem of business setup in Dubai.
3. Different Channels for Financing Innovators
Finding adequate funding for setting up a business is, without doubt, the biggest obstacle that dogs every startup entrepreneur focusing on innovation. Getting strong financial backing for an innovative idea is challenging because the banks find such ideas as either risky or consider them pricey concepts. It is at this stage that financing through Venture Capital (VC) and angel investors became absolutely necessary for innovation to take wings.
The first of many startups that broke the ground of innovation found the process of company formation in Dubai tough as the number of VCs and angel investors were sparse at the time. However, the trend reversed as such startups shown signs of success (flashback to the acquisition of Maktoob.com by Yahoo in 2009).
4. Regulatory Reforms Transform Business Setup Environment
The success of the startups who pioneered in setting up an innovative business in Dubai instilled a copious amount of confidence among other young entrepreneurs. However, the difficulties they faced in the initial days were a turn off for them until the government eased the process of company formation in Dubai with its commitment to implement strong regulatory reforms. A key instance where this commitment came in favour of innovative entrepreneurship was when the government in 2009 removed the minimum capital requirement for the LLC company set up in Dubai and across the UAE. Another revolutionary reform came when the UAE government reformed the archaic bankruptcy law in 2016.
The government also simplified the procedures of company registration in Dubai and the UAE thereby attracting more foreign startup entrepreneurs. The key objective of such ground-breaking reforms is to make the business setup process easier for the entrepreneurs and extend a supportive hand to commercialize their ideas thereby prompting them to initiate company formation in Dubai. The government also digitalized the process for applications and permissions to ease the process. The entrepreneurs can use the benefits of these reforms to set up businesses with the assistance of prominent business setup consultants in Dubai.
5. Accelerating Innovation with Vision 2021 & National Innovation Strategy
The infamous financial crisis of 2008 has had a huge impact on the UAE especially Dubai. Dubai was particularly affected as the emirate’s economic growth was propelled by the property boom. To weather the crisis, the UAE government rolled out Vision 2021. The primary objective of Vision 2021 is to bring drastic changes in the UAE by promoting innovation and entrepreneurship.
In 2014, the UAE announced the National Innovation strategy aimed at converting the Vision 2021 policy to action. A key aim of the Strategy is to elevate the rank of the UAE within the top 10 spots of the Global Innovation Index by 2021. The strategy aims to encourage in all aspects of life encompassing individuals, companies, and the public sector. It ushered in innovation in sectors such as education, health, transportation, water, renewable energy, technology, and space.
Never Forget to Consult With The Business Setup Consultants in Dubai
The economic growth and technological advancements accomplished by the UAE, especially Dubai, owes largely to the government’s commitment to focus its energy on creating and developing the right environment for innovation. The UAE government reformed its outdated laws and policies to enable an efficient ecosystem of innovation. The free zones provided the startups with the best environment of business setup in Dubai through its easy regulations, incubation programs, and Innovation Licenses. All these factors contributed to making Dubai a regional hub of innovation and startups. Now, as the stage is ready for the businesses to form their innovative startup companies in Dubai utilizing multiple options such as mainland and free zones.
A choice between the two is a strategic decision for the entrepreneurs but the assistance of reputed business setup consultants in Dubai such as Jitendra Business Consultants (JBC) saves them from this dilemma. JBC’s highly qualified business setup consultants assist the entrepreneurs by imparting their expertise in the labour laws and immigration laws as well as the experience of handling the authorities. Obtaining the right license, processing the visas, completing the documentation on time is no longer a challenge as JBC is with the investors.