Dubai’s private sector has proposed government interventions including state subsidised loans, assistance in covering salaries and lower taxes, to help businesses survive the fallout from coronavirus.
Representatives of the Gulf hub’s family-owned business community called for the government to speed up payments to contractors and suppliers and to cut sales tax from 5 per cent to 2 per cent.
The proposals, seen by the Financial Times, also ask for the reduction of utility costs and customs duties by 50 per cent, lowering residency fees for expatriates and cancelling government fines for the remainder of 2020.
The suggestions were sent to the emirate’s top strategic council on Sunday after the chamber of commerce hosted a “positive” meeting last month between senior private sector representatives and Sheikh Mansour bin Mohammed Al Maktoum, a son of Dubai’s ruler.
“The government, the private sector and society should work hand in hand to overcome challenges and create a flexible economy that enables us to pass this stage and move forward stronger,” said the letter, signed by Majid al-Ghurair, chairman of Dubai Chamber of Commerce and Industry.
The Dubai government did not immediately respond to a request for comment.
Dubai’s open economy, which relies on trade, tourism, transportation and retail, has been hit hard by the global lockdown and last month’s 24-hour curfew imposed by the emirate to suppress the spread of Covid-19. The city’s hosting of the Expo 2020 world fair, like many global events, has been pushed back by a year.
Dubai lacks the oil riches of the United Arab Emirates’ capital Abu Dhabi, leaving it with fewer available funds for direct stimulus measures. In March, the emirate launched a $408m, three-month stimulus package, including reductions on various commercial fees, and has told businesses it is exploring further action to assist the private sector, people briefed on the discussions said.
If enacted, the new proposals would mark a significant expansion of direct support for affected sectors.
The bulk of the UAE’s response to the economic impact of coronavirus comprises a $70bn central bank financial package to allow commercial lenders to provide debt relief. But many smaller businesses are struggling to secure loan extensions or are wary of loading themselves with liabilities given the uncertain outlook.
The letter from the chamber of commerce also called for the government to ensure that borders were open for exports and to assist companies with the cost of repatriating staff. Hundreds of thousands of expatriate workers, many of whom have been made redundant or placed on unpaid leave, are seeking to return home, but the cost of evacuation flights is expensive.
Dubai’s economy had already been struggling before the pandemic struck, buffeted by the impact of the 2014 oil price collapse. The geopolitical situation in the region, including the war in Yemen, rising tensions with trade partner Iran and the Saudi-led boycott of Qatar, had also dented investor confidence.
Restaurateurs, representing half of the city’s food and beverage sector, late last month separately lobbied the government for “urgent” relief, including deferring rental costs and sales tax repayments, to cushion estimated monthly losses of $270m.
“The key here is landlord greed,” said one owner. “They have become used to disproportionately high returns on real estate — the high percentage of rent compared to turnover will kill the business.”