Abu Dhabi economy - Assignment Example

? Abu Dhabi economy Introduction Abu Dhabi, a Muslim dominated society, believes Ramadan is a moment of reflection which gives corporate cultures and entities a chance to exemplify the religious implication of the Holy Month. Majority of Islamic Foods tries to fulfill the perspective associated with this philosophy by fulfilling the religious responsibility and commitments to their employees and customers. All Islamic adherents imbue involving social and religious attachment on the work culture while guiding employees accordingly. The guidance starts at the beginning of employment when a prospective employee is given a contract that shows a modern Islamic culture in the workplace. In the holy month of Ramadan, companies advise their staff to follow internal cultural transformation. The opportunity offers a comfortable environment which encourages all employees not to miss the chance to fast without official Islamic grounds to perform appropriate obligatory prayers, and offer charity to their best. Halal food products The Muslim staff is not allowed to eat, smoke and drink in the month of Ramadan, however, non-Muslims are allowed to use hidden office spaces to take lunch, and tea breaks dressing conventionally is encouraged to adhere to religious observances of other people, and music is banned across all the premises. The month of Ramadan is celebrated by special foods in baskets to each employee at an elaborate Iftar party festival. In addition, office working hours have been shortened to six hours from 8:00 AM to around 2:00 PM. Ramadan is not only a significant month in the marketing activities of the company but also the busiest one (Davidson, 2009, p.256). The company’s warehouse is often active all round the clock as regional distribution processes and production degrees rise significantly. In each month of Ramadan, the Al Islam’s sales have increased from twenty to approximately forty percent in comparison to other months. Laudable remains the fact that demand increase is not entitled to only individuals, but for family consumption with massive number of donations meals arranged for the under-privileged. Each year, Ramadan brings an aggressive feeling of competition among other food companies. On its part, Al Islamic has introduced a range of marketing as well as theme founded promotions to encourage its sales by increasing up its distribution activities. The company focused on unique and Ramadan specific commodities offerings with exceptional discounts given to consumers, and iftar and suhur made available. As a leader in the halal segment, the firm has undertaken the social role of educating the general public on the halal meat process together with innate difference between halal and the genuine halal. The company launched a Ramadan’ promotional strategy on creating awareness on animal’s electric stunning, which is associated with the slaughtering process. On the other hand, stunning is a practice associated with the food industry as “real halal” slaughtering takes place without stunning (Davidson, 2009, p.456). Al Islami has undertaken an initiative to educate consumers on different slaughtering practices, as well as informing them that the firm does not make use of stunning, and deploys a hygienic method of slaughter using hands. Al Islami makes use of representatives at various slaughterhouses and abattoirs in the world. Al Islami Foods believe that they have to be an example with successful management that blends religious obligations in the working culture. They provide a healthy corporate, as well as social environment, reflects the holiness of the Holy month. Advantages of Abu Dhabi business environment Abu Dhabi has become a competitive business location in attracting foreign investments by ensuring updating of business legislation to establish an optimum environment for investments to flourish. Present legislation in terms of tax, property rights, corporate governance, ownership and corporate governance have been evaluated and amended to promote new investors. The activities are aimed at bringing the business world in line with the aspirations of Abu Dhabi. The judicial mechanism has speed up legislation to change and instill investor confidence. Favorable tax regulations are among Abu Dhabi’s main competitive advantages in terms of attracting business. The Government levies have no corporate and income tax, which rounds up to 1.8% of GDP, and tax payment taxes which seem to be the lowest in the entire world (Dodge & Higgott, 2002, p.567). Overall, the tax system in Abu Dhabi is considered transparent and straightforward. Most foreign investors enjoy low taxation policies as a major incentive in choosing where to establish an investment. The UAE Government has in the past expressed its intention to evaluate restrictions on foreign ownership. Presently, however, free zones enjoy some immunity and flexibility linked to foreign possession rights which are the main tools to promote foreign investment in the region. Such zones assist in bringing foreign expertise as well as technology to stimulate investment and trade. Abu Dhabi has started creating free zones like Khalifa Port together with Industrial Zone (KPIZ), and is looking for innovative and inventive ways to spark foreign investor’s interest and companies. In cases of property rights the passage of latest legislation on formalizing the foreigners rights, to possess real estate, which shows that Abu Dhabi is aggressively seeking to defend the property rights of all people. Foreign nationals are now allowed to buy real estate in the Abu Dhabi in specially designated regions. The Government aims at expanding property rights for foreign investors to enhance the attractiveness of the Abu Dhabi as an investment destination. Disadvantages of Abu Dhabi business environment The establishment of Abu Dhabi Company is difficult and expensive because of inconsistent and complicated company laws and high government fees coupled with inefficient bureaucracy. An example of such a scenario of formation of a company in Abu Dhabi such as an Abu Dhabi LLC needs a minimum of 51% shareholding in cases of UAE citizens with a minimum of two shareholders. In addition, the business documents have to be legalized at the foreign ministry in Abu Dhabi and then later translated into Arabic. These requirements result to the complication and expensive costs in terms of formation of a company in Abu Dhabi. Other case that highlights the expensive costs of forming a company in the region involves government fees. The incorporation of LLC and investors to pay the government around 5% of the yearly lease rent in terms of office premises makes company formation expensive (Low, 2005, p.265). At that time, the yearly renewal an additional to 5% of the annual lease of rent for the residence of the manager becomes payable. To highlight the issue in accordance with the World Bank's methods of conducting business in the 2012 Survey states that the UAE is ranked as 33rd, in terms of the negative regions of conducting business. The survey measures comprise of factors such as business start up measures, time, minimum capital, and cost required to conduct a business. Heritage Organization’s of the 2012 Index in terms of Economic Freedom list freedom enjoyed in business, monetary, trade, investment, financial, investment as well as labor markets (Dodge, & Higgott, 2002, p.378). Abu Dhabi is ranked poorly at position 27th place according to World Economic Forum's on global Competitiveness of the year 2011 to 2012 report. An Abu Dhabi LLC is often unable to conduct insurance, banking and investment of money for a third party. In cases of Abu Dhabi company formation, many entities are needed to submit yearly audited accounts to the government that becomes a challenge. Conclusion In cases of reviewing, whether is advantageous or not on choosing whether to have an investment in the Gulf region, the relevant indicator is to consider the question asked by many investors and business people. The query has always been how easy the process of conducting business in Abu Dhabi as many business expatriate, and business professionals in Abu Dhabi recommend investing one’s time, as well as, an effort to understand both the business and social culture in the Gulf region. All of the six GCC countries seem exceptional in their own way in spite of several commonalities. The transplanting of business practices associated with the western world, however, successful a business man may think of the region plays a crucial role in the establishment of a business venture. Religion plays a prominent role in all elements of life in the Gulf region and the extensive Middle East region and, so it is vital to learn about Islam. It is essential to spend time with Gulf Arabs and understand their culture by exchanging ideas to get a feel of the social and business world. The process helps in doing business in Abu Dhabi less challenging. The World Bank ranks the GCC economies as regions that encourage business ventures with the regulatory reforms undertaken, in the country to make it business friendly regardless of the challenges. Bibliography Davidson, C. M. (2009). Abu Dhabi: oil and beyond. New York, Columbia University Press. Dodge, T., & Higgott, R. A. (2002). Globalization and the Middle East: Islam, economy, society and politics. London, Royal Institute of International Affairs, Middle East Programme, in association with Division of Research and Studies, Crown Prince Court of Abu Dhabi. Low, L. (2005). Policy lessons in development: small, open economies of Singapore and Abu Dhabi in the United Arab Emirates. Singapore, Institute of Southeast Asian Studies. Read More