International Finance

Jafza plans to return $354 mn to stimulate UAE economy

Jafza, UAE economy, DP World
The money will be returned in cash and bank guarantees to companies operating in its jurisdiction, according to reports

A subsidiary of DP World, Jabel Ali Free Zone (Jafza) plans to return $354 million in cash and bank guarantees to companies operating in its jurisdiction, Bloomberg reported.

Jafza will execute the proposed plan from September in an effort to boost the UAE economy. It said in a statement that the refund is intended to help companies invest in their operations and expand their businesses.

For the same reason, last year, the UAE reduced fees required to hire foreign workers. It slashed the annual cost to just Dh60 from Dh3,000 per employee. This measure was to reduce the impact of low oil prices and weak regional economies. In total, the weakened economies have affected growth in the UAE, where 80 percent of the population comprises expatriates.

Abu Dhabi Commercial Bank’s chief economist, Monica Malik, said, “The reduction in fees on companies is a sign the government is looking to help business after realising they have come under pressure with lower demand and increased costs.”

Last year, the UAE’s growth fell to an inflation-adjusted 0.5 percent. This was after OPEC nations had agreed to crude production cuts, down from 3 percent in 2016, Bloomberg said.

“These changes signal that the government continues to show flexibility and make it easier to live and do business,” Hasnain Malik, Dubai-based global head of equity research at Exotix Capital told Bloomberg. “But what is really needed for the economy to fly again is some combination of much lower cost of living, sustained higher oil prices or sufficient peace to drive intra-regional higher trade.”

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