Spending a full hour in the company of Souad Al Hosani, president of Nexus Business Services, is a luxury not many people can afford. The young and bubbly Emirati is always on the move, her schedule jam-packed with client meetings and events which often start at 8.00 in the morning and continue until late at night. So when we managed to grab her for a chat one late evening in downtown Dubai, we knew we had to be straight to the point.
As headlines continue to spell doom and gloom over the fallout of oil prices in the GCC, the first question that came to mind was: has investment been affected? Her answer quite simply was ‘no’.
“The UAE economy is diversified. Dubai has always been focused on tourism and services. We have a huge market for other sectors, and that’s what our 2020 Vision says – you have to focus on services not only on oil.”
Souad, whose business provides support to new investors looking to open their own firm in the UAE, says interest has been particularly high in the sectors of healthcare and education, followed by steady demand for technology and professional services in oil and gas.
Since March this this year, the number of inquiries have significantly increased, setting the stage for even busier next couple of years, with plans to open an office in Dubai by 2018 that would cater to the much-anticipated growth in the run up to World Expo 2020.
“I think there will be a lot of interest. Just think how many companies will come to town, companies from all sectors from hospitality to food and beverages to tourism and more,” she says buzzing with excitement.
Since its inception, Souad’s business has helped set up over 60 companies in seven years — that’s almost ten a year. With time, some of the firms have done so well, they were later on acquired by larger players on the market, while others managed to attract outside investment and form new partnerships.
But setting up a business in the UAE can be a costly and time-consuming commitment. Sometimes it can take years just to get the right permit, and though rules and regulations have eased significantly in the last few years, having a local partner can prove absolutely invaluable, as Souad explains.
“The advantage of having an Emirati partner is that if I as an Emirati I was going to Switzerland, I would definitely want to have a Swiss partner going with me to explain to me the market, to connect me with his contacts, etc.
“It’s similar to you coming to the UAE and investing here. You need an Emirati who is well-connected, who will finish all the PR work, UAE visas and introduce you to clients. The UAE is very small, we all know each other. How can you do business if you don’t have contacts?”
For a foreign investor who wants to open a business in the UAE, the options are two – he can either have his firm onshore as a limited liability company or a branch office, or establish presence offshore in the so called Free Zones. Within the UAE, you need to have an onshore license to be able to register as a vendor with the government, in order to export and import, to hire employees, pay salaries, etc.
An onshore type of ownership also requires you to have an Emirati partner or a sponsor, who can be an active or a silent stakeholder. The only catch is they are entitled to half of your business. But according to Souad, there are many ways around that.
“You can design the legal documents in such a way that they don’t have any authority on the company. Within the memorandum of association, what they usually do is the Emirati partner would own 51% of the company but the foreign owner has 100% management share.
“And [the partner] can get a 10% minimum profit so the lottery would approve it, but this 10% can be a fixed fee,” she adds.
In contrast, an offshore investment allows for 100% foreign ownership, it exempts you from paying tax and has no restriction on doing more than one activity.
“Some clients need to have the company onshore, to make sure there is credibility and transparency. Usually we advise clients to set up a business offshore if they want to do business within the region but not within the UAE,” Souad explains.
“There is a good aviation district. The UAE is in where east meets west, it is the middle hub seven hours from the UK, seven hours from Bangkok.
“If clients wish to have the UAE as their hub but want to do business all over the region, then we advise them to go to a free zone,” she adds.
The UAE’s advantageous geographical location has for years served as gateway for business looking to expand into Europe and Asia, and even Africa. Currently, it houses over 37 free trade zones spread across its seven emirates. Each zone focuses on a specific sector and most importantly offers a very competitive price.
“In free zones they offer you virtual offices which means only an address where you can be licensed for AED 20,000 ($5,445), onshore it would be five times that price,” Souad explains.
For Souad a business partnership is like marriage — she is in it for life.
“Whenever I start with a client, I marry him mentally, I provide him with all the support, I am there whenever he needs me.” But just like in marriage, trust plays a key role and “you don’t want that marriage to end up in a divorce,” she says jokily.
Interview for the Swiss Arab Entrepreneurs International Platform