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Importance of Small and Medium Enterprises

Officials and business leaders have affirmed that the UAE’s economy will witness positive changes contributing to the overall development of local investments, particularly small and medium enterprises (SMEs). They emphasized that these projects will be a significant driver in the state’s economy in the post-oil era.
They anticipate that the UAE economy will continue to achieve strong growth rates, driven by income diversification and support for innovative youth projects. They also stated that the SME sector is a top priority due to its vital role in promoting growth, solidifying economic diversification policies, and transitioning towards a knowledge-based economy driven by creativity and innovation, in line with the UAE Vision 2030.

They pointed out that the Ministry of Economy is harnessing all efforts and resources to support this vital sector, recognizing its importance in enhancing national economic performance and increasing the country’s competitiveness both regionally and internationally.

Statistics from the Ministry show that the UAE has around 400,000 SMEs, representing 94% of the total companies operating in the country, providing employment for about 86% of the private sector workforce. These companies contribute 60% of the UAE’s non-oil GDP.

The UAE Vision 2030 National Agenda aims to increase the contribution of SMEs to 70% of the non-oil GDP by 2030.

The issuance of Federal Law No. 2 of 2014 regarding SMEs marked a significant achievement in developing and regulating this sector, establishing a unified definition for these projects, and specifying multiple benefits for national SMEs.

Among the federal incentives and advantages are the commitment of federal entities to contract with SMEs for at least 10% of their total procurement, and the obligation of companies in which the federal government owns at least 25% of the capital to contract with SMEs for at least 5% of their total procurement.

Incentives and facilitations include simplifying procedures, reducing licensing fees, providing land for industrial or agricultural purposes to project owners according to current regulations and in coordination with relevant authorities. Additionally, space allocation in international exhibitions where the state participates to showcase national products, participation in local exhibitions, and the potential exemption of production equipment, raw materials, and intermediary goods from customs duties, as decided by the Cabinet and relevant authorities in the seven emirates based on the recommendation of the Minister of Economy. Furthermore, SMEs can be exempt from the bank guarantee for their employed labor, subject to the necessary conditions and regulations for exemption, which will be set by the SME Council in coordination with the Ministry of Labor.