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Artificial Intelligence & its Impact on Business
Raju Menon, Chairman and Managing Partner - Kreston Menon
Technological Innovations have been the fundamental drivers for economic growth for more than 150 years. The most important of these are what economists call generalpurpose technologies like steam engine, electricity, engines run on petroleum variants, etc.
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Doing Business in UAE, Why Dubai & Abu Dhabi Become Good Places?
Kreston Menon
Doing business in UAE is an uncomplicated and hassle-free. The visionary government has always had pro-investment and pro-business policies, and has encouraged foreign investment. In fact, in the UAE, those who setup business are even offered incentives. Redtape is minimal, procedures are simple, and is taxation is almost non-existent. The government of the UAE had the foresight to realise that backing new businesses will help sustain their economy in the long run. Due to all these reasons, Dubai and Adu Dhabi are ideal places for business setup UAE and open an offshore branch.
Let’s examine the reasons for Doing Business in Dubai & Abu Dhabi, UAE in some detail:
Growing and Diverse Economy: The economy of Dubai is a dynamic and constantly growing one, which is why it is so attractive to companies from all over the world who are interested in company formation in an offshore location. This wealthy Emirate has a stable financial climate which helps a wide range of businesses from start-ups to multimillion dollar conglomerates to operate successfully.
Legal Framework: Entirely different set of rules and regulations (except for criminal law) are applicable to foreign investors who want to set up business in Dubai. Paperwork is minimal and procedures are fast tracked so that it becomes extremely easy for company setup, licensing and registration and so on.
Physical Infrastructure: The governing bodies of the free zones provide excellent infrastructure and warehousing, office spaces, power supply, connectivity, and so on.
Availability of Manpower: There is no shortage of manpower in the UAE and especially so in Dubai. Both skilled and unskilled labour flock to the UAE in search of opportunity as wages are high and taxes low, or non-existent. It is therefore easy for a new company to find the requisite manpower for their operations.
Investment Support and Promotion by the Government: The government provides several pre-and post-support services to investors doing business in Dubai or elsewhere in the UAE, like help with documents, licenses, certificates, postcodes and so on.
There are several special areas within the UAE which have special tax customs and imports rules and regulations; these are called Free Zones. In the UAE are over 35 free zones which are spread across Dubai, Abu Dhabi, Sharjah, Ras Al Khaima, Fujaira, Ajman, and Um Al Quwain. These free zones are also spread across the mainland airports and seaports.
The special benefits of these free zones are:
- Complete exemption from import and export tax
- Possibility for complete foreign ownership of the company
- No corporate tax for up to 50 years
- Exemption from personal income taxes
- Possible to repatriate the entire capital and profits
- Support services like assistance with hiring, sponsorship, housing, and so on.
Generally a Free zone is meant for certain specific categories of industry and licenses are provided only to those companies functioning under those categories. Probably the most famous of these is the Dubai airport free zone.
Open Trading Hub: being a member of the World Trade Organisation, Dubai encourages open trade and has established stable trade relations with several countries in Asia and Europe and North America. In fact, it is a kind of meeting point between the east and west as far as international trade is concerned.
Quality Lifestyle and Culture of Excellence: Dubai is perhaps the most cosmopolitan of all the emirates within the UAE, thus making it a popular destination for tourism and business alike. Home to many of the world’s biggest brands, it is a shoppers’ paradise. Dubai also hosts several trade shows and exhibitions, allowing businesses to showcase their best to the world.
Visionary Leadership: early on itself, the rulers foresaw the potential this tiny island nation had to be a business hub and accordingly, introduced legislation’s that set the wheels in motion.
Let’s look at the best places for doing business in UAE:
Dubai: Probably the most popular destination for starting a company in UAE due to its liberal cultural atmosphere. The DAFZ, or Dubai Airport Free Zone, is the leading Free zone service provider in the UAE. Established in 1996, the governing body of the DAFZ provides organisations with a modern and inclusive base to conduct business. Other free zones in Dubai include the International Finance Center, Gold And Diamond Park, Industrial City, Internet city, and so on.
Abu Dhabi: The Khalifa Industrial zone, or KIZAD, is the largest and one of the best planned industrial free zones in Abu Dhabi. It supports manufacture, logistics, and trade. Companies can enjoy low operating costs and comprehensive and innovative infrastructure. The Abu Dhabi Airport Business City owns, operates, develops, and manages free zones around the airports.
Sharjah: The Airport International Free Zone is the premier Free Zone in Sharjah that encourages foreign investments.
Ras Al Khaima: This Emirate chiefly provides the RAK Investment Authority Free zone, the Ras Al Khaima Free Trade Zone, and the Ras Al Khaima Media Free Zone to foreign investors.
Jebel Ali: This Free Zone located at the western end of Dubai. Started in 1985, it provides ready-made facilities to customers, and has now expanded to include light industrial units.
Other convenient free zones in the UAE for business setup include Hamriyah, Jumeirah Lakes Towers free zone, Fujaira Creative City and so on.
How does Kreston Menon help for starting a company in UAE?
Before starting any business anywhere in the world, it is important to conduct a feasibility study to know what your prospects for success in that particular industry and geographical location are. This is the first step in the process of business setup Dubai. This is where we, Kreston Menon, step in as business consultants. We help by conducting market research and a feasibility study, and can offer expert advice throughout the way. This includes guidance and/or assistance with the following:
- Legal issues relating to the business structure
- Finding the appropriate location for the new venture
- The preparation and submission of the requisite documents
- Liaising with the authorities to obtain the requisite approvals and certificates
- Visa, immigration and labor card support services
- License renewal reminders and liaising with authorities for the same
- Provision of secretarial services for the new company
Our in-depth knowledge of offshore company formation UAE has enabled us to assist in the incorporation of over 500 companies in the UAE Free Trade Zones. We believe in delivering comprehensive service to our clients after understanding the exact requirements. We are happy to stay that with our professional and client centric approach we have been able to build long-lasting relationships with our clients. The expertise and dedication shown by our team will ensure that you have smooth sailing as far as your company incorporation in Dubai or elsewhere in the UAE is concerned. We take care of the nitty-gritty so that you can just focus on your core business and in growth. We are passionate about our work and take pride in delivering customised solutions that not just meet client expectations but exceed them.
Our expertise includes the following areas:
- Accountancy, analysis, financial consultancy, taxation, corporate finance, property and HR consultancy
- Turnkey solutions for clients requirements
- In-depth knowledge of the Middle East market especially the UAE, and regulations connected with company registration in the region
Our team is not only focused and professional, but is consistent in offering tailor-made solutions and getting results that are time bound and cost-effective. Kreston Menon also has excellent working relations with government agencies, decision-makers and others in power.
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Inheritance in UAE – Way forward for expatriate investors
Kreston Menon
Matters of inheritance in the UAE are governed by Federal Law No. 5 of 1985 (amended in 1987) regarding the Civil Transactions in the UAE (“the Civil Code”), and by Federal Law No. 28 of 2005 regarding the UAE Personal Affairs Law (“The Personal Affairs Law”). However, as a general rule, inheritance issues for Muslims are dealt with in accordance with Sharia’h, whereas for non-Muslims, the law of the deceased’s home country may apply provided there is a Will or a corporate structure in place to address an eventuality. Accordingly, it is highly imperative for the investors or residents of UAE to have a Will in place absence of which directly attracts provisions of Sharia’h law with respect to the inheritance of their assets. Upon death, the personal assets of the deceased, including local bank accounts, shall be frozen (Article 379 (4) of the Commercial Transactions Law, UAE Federal Law No. 18 of 1993) till the local court releases the order of succession.
As a matter of reference, when Sharia’h law is applied to the properties of the deceased, the wife of the deceased receives one-eighth of the total estate, while the children receive one-sixth of the share. For every share received by the daughters, the sons receive twice as much. Amendments were made to the Civil Code in the year 1987 and the Article 17/1 further states that inheritance shall be subject to the law of the deceased’s home country at the time of death. This law was promulgated to curtain the confusion surrounding inheritance issues for expatriates. Therefore the law of the domicile country of the deceased would apply. However, as per Article 5 of the Code, provisions have been made to apply the law of the United Arab Emirates to the Wills made by aliens disposing of their real property located in the State. Further, the Personal Affairs Law (No 28 of 2005) made it clearer that, a non- Muslim expatriate who is resident in the UAE can opt for the law of their Domicile Home Country to be applied to the distribution of their UAE assets, provided they have a legally recognized Will.
Freehold Property & Corporate Structure
Though the freehold property is governed by the inheritance laws of Sharia’h and may not be distributed in accordance to the conditions of the Will, the recent practices show the local authorities treat the inheritance of ownership of the freehold property favorably in the case of non-Muslim investors provided there is a Will or corporate structure in place. However, the local fraternity is of the opinion to examine the application of Sharia’h closely in the case of real properties owned by the foreigners. Considering the possibility of application of Sharia’h laws, the investors may seek the option of corporate structure in place to own real estate properties in UAE in addition to have a Will.
Special Purpose Vehicles for holding shares in UAE registered companies (Limited Liability Company/Free Zone Company)
Similar treatment shall be applicable to the inheritance of ownership of shares in a locally registered limited liability company as well as a company registered in a Free Trade Zone. It may be considered to own the shares of a local mainland company or a free zone company by an offshore entity formed outside UAE. Among other basic advantages, bringing an offshore structure in the line of ownership of locally registered company offers convenience in inheritance since amendments in the documents of the local company is not warranted unless there is change in management.
The beneficial owner of an offshore entity formed outside UAE, may further opt for establishing a trust structure in place to ensure a smooth succession in case probating a Will at the court in an offshore jurisdiction is affected by the residence status of the deceased. In light of the above, considering British Virgin Islands as the preferred offshore jurisdiction for the time being, the trust may be established in accordance to the Virgin Islands Special Trust Act – Vista Trust – by which no probate is required and the director of underlying BVI Company has freedom to control the assets owned by the BVI Company.
It may also be considered the shares of the BVI Company be held in the joint name of the tenancy of the survivorship with the family members (wife/children) which will allow smooth succession from father to children. However, the other side is immediate ownership to the shares and thereby acquires rights.
Guardianship of Minor Children
It is worth noting and should consider in line with the inheritance, the custody and guardianship of minor children. The legal way to address this vital matter is to appoint individual(s) to care the children by naming them as testamentary guardian(s) in the Will. Accordingly guardian(s) can step in to the shoes and care the children till they become adults if they were minor at the time when the parent dies.
Conclusion:
The UAE Civil Code requires the immovable assets should be distributed to the legal heirs as per the provisions of Sharia’h law
Owning real estate is considered as owning an immovable asset and technically this should be distributed as per Sharia’h law
It is widely being debated and there are tested cases that foreign law applied and the real property distributed as per the deceased’s Will
The UAE Courts are likely to decide on the applicable law on a case by case basis.
It is always advisable to execute and register a Will in UAE which has been written under the laws of home country or have the corporate structure in place in an offshore jurisdiction outside UAE which ultimately owns UAE situs assets and properties.
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Next Generation Leader: Ready to Step up, or Step out…?
Shibu Abraham, Director – Human Resources & Administration - Kreston Menon and Chair of the Leadership Team, HR & People Network - Kreston Global
It is said that on the inside of every leader lies a sleeping “superhero-like” quality to lead the Millennials.
In this social media era where one won’t wait 3 seconds for a webpage to load before moving on to something else, it’s no wonder Millennials born in the 80s and 90s constantly seek instantaneous gratification. They were born into this digital environment. They’ll post a video on YouTube and anxiously await the viewing numbers to start climbing. They expect photos on Facebook to receive likes immediately, and their tweets to be viewed and re-tweeted most. Well, in their world, things move fast.
It is a challenge for a person in the leadership role, who is from the baby boomer generation to meet up the aspirations of the younger team he leads. He needs to be a superhero to live up to the expectations of his followers.
Also Read: Employee Engagement as Vital Customer Centric Innovation
So, what is this out-of-the-world quality we are talking about? It’s the ability to save time while continuing to exceed productivity across an entire team. Now, this quality; the dynamic super power, is within your reach. It’s available to the bold leaders who are brave enough to go after it.
Social media has created a pseudo-realistic world; one in which Millennials are able to receive feedback as soon as they post something! This state of instant acknowledgement creates unrealistic expectations when they get to work. There’s no way the real world would be able to keep interactions at the same speed as the social media universe. Or, is there?
Those from the older generation will agree with me, when I say they were happy when leaders were not engaging with them. They know the lack of conversation means everything is going well. But the present generation however, would fall apart if they were not receiving constant feedback from those in leadership positions. They would assume they’re not making the cut. I should say – neither view is right or wrong. They’re just different.
When I talk about instant, consistent feedback many of you might say, “I don’t have time to pat every young chap on the back and say “good job” every day.” That is true to a great extent, though, I don’t believe leaders are limited by time, I think they’re limited by their traditional approach.
Traditional minds would tell us that feedback is only needed for annual or quarterly reviews. Let me warn you! If you continue to give in to this traditional way of thinking the turnover rate of Millennials will make you wish you had chosen otherwise. Nothing will get your new generation employees hustling harder than quick direction and immediate correction. Your feedback doesn’t have to be lengthy or formal but it just has to be on time. Picture it this way: your feedback can happen as quickly as it takes to press the “like” thumbs up on a Facebook post. They will love it!
Instant feedback doesn’t require complex thinking. It can be as simple as: “Hey Ahmed, you did a great job on this assignment. Your attention to detail adds value and our client is happy with you. Keep it up!” You’ve just stroked his ego at the right time. It took mere seconds and those words will motivate him to focus and work even harder. To say those few sentences, you don’t even have to stop walking. You can say it as you’re passing by his desk. Trust me – a little appreciation goes a long way!
Apart from these instant recognition steps, you have to have solid long term plans to retain them. To develop the Gen Y resources, organizations need to understand their deep desire for personal and professional development. In The Hartford’s 2014 Millennial Leadership Survey, Millennials said employers can most demonstrate their investment in them as a future leader by offering training and development (50%), a clear career path (35%), and ongoing coaching and feedback (34%). If you give importance to the above said factors, you can be assured of a robust high-performing young team.
Have you ever thought what your young employees expect of you? Millennials have a very different perspective and expectation of the role and behavior of managers, seeing them more in an encouraging, coaching, and peer capacity, something that is currently at odds with the current generation of managers who see their role as one associated more with power and position. They want a leader who is very supportive, on their side, and has their best interests at heart.
A word of warning to all managers out there! Millennials are ambitious to move up in their careers. More than 45 percent of this generation is expected to be in a management position within two years. It’s high time that you make a small but effective change and adapt to the changes brought into the work atmosphere by the new generation!
As a leader today, you do have a choice. You can throw a tantrum about the young generation’s need for instant, consistent feedback, or you can meet their desire and can be seen as a leader who cares. By adjusting, you’ll be creating a more productive team and you’ll be viewed as their Superhero leader.
The pat on the back matters!
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Dubai Airport Freezone Services
Kreston Menon
Seventeen years ago, Dubai Airport Freezone (DAFZA) was established as part of Dubai Government’s strategic plan to move the emirate towards an investment driven economy. Today, it accommodates over 1,600 international companies in various activities and industries including aviation, pharmaceutical products, logistics, cargo & freight, jewellery, electronics and electrical materials.
Dubai Airport Freezone Provides a Service-centric Dateway to the Middle East
Dubai Airport Freezone’s steadfast ambition is to be a premier provider of business services for demanding international customers. Its mission is to be the region’s ultimate free zone destination by adding value to the UAE economy and providing integrated business solutions to attract regional and international investors through service excellence in a customer centric business environment.
In 2013, DAFZA witnessed a 42 per cent increase in revenue compared to 2012. The Freezone saw the percentage of Asian tenants operating out of the Freezone increase by almost one fifth (17 per cent). This figure stems from Dubai Airport Freezone’s business seminars in the region, focused on growing bilateral relations between countries in the Far East and the UAE. DAFZA plays a vital role in facilitating commercial ties between international trade partners and the UAE by developing investment opportunities and foreign ownership policies.
Dubai Airport Freezone has worked to create a unique opportunities for business setup in UAE. Located next door to Dubai International Airport, one of the world’s busiest airports, tenants have access to 24-hour logistics and customs procedures and an international gateway on their doorstep. All of DAFZA’s unique series and facilities have brought about unprecedented growth, and 2013 was one that saw a significant interest from international organisations looking to invest in the Middle East.
Dubai Airport Freezone Services : International Influence
DAFZA issued 196 licenses for global organisations to operate from the Freezone in 2013, and has consistently supported international investors.
The Freezone companies cover a diverse spectrum of industries that meet the needs of international investors looking to access the Middle Eastern and African markets. This alignment will in turn lead to on-going business integration and boost economic relationships between the UAE and other countries worldwide. Tenants have always been an integral focus in DAFZA’s mission and vision since its foundation. The Freezone has worked hard to ensure that the facilities, infrastructure and services available to tenants meet international standards, and provide a productive environment from which companies can grow their business.
The Freezone works hard to support its tenants and work in alignment with their business objectives, as well as providing a variety of services on site that make business run more efficiently across the board, including immigration, medical services, and banking. DAFZA strives to provide access to as many logistical and operational requirements as possible.
Tenants can effectively set up their operations at DAFZA within two weeks, provided all paper work is submitted accordingly. There are fully functional office spaces that companies can move into and begin work from the minute they have the key. Telecommunications and internet services are installed, furniture and décor are in place and licenses and visas are processed.
Dubai Airport Freezone Services Focus on Core Business
In addition to the location and services, DAFZA’s infrastructure has added significant value to tenants’ day-to-day business activities. With ease of access in and out of the Freezone, and to some of Dubai’s main business hubs, the Freezone constantly works to ensure that its clients can work safe in the knowledge that any non-core-business related activities can be taken care of by DAFZA, including maintenance, conference facilities, etc.
DAFZA is also committed to adding value to the UAE economy, by providing integrated business solutions, capitalising on the opportunities offered by this region and the ever increasing interest from both Eastern and Western markets.
Despite its continual growth and expansion, DAFZA has worked hard to ensure that its development doesn’t come at the cost of the environment. In compliance with Dubai’s vision to be a role model to the world in energy security and efficiency, DAFZA has successfully obtained an international standard for energy management (ISO 50001:2009).
DAFZA treats sustainable energy very seriously, and is very keen to adopt the best international practices. Saving energy is one of DAFZA’s strategic objectives, and it has adopted the latest technologies and equipment to help reduce energy consumption in all its facilities. Two years ago, DAFZA successfully implemented the green building technology initiative and it constantly encourages its tenants to implement standards for environment protection by assigning a reward for the best company in preserving the environment.
DAFZA’s commitment to delivering excellent services is derived from its leadership vision, dedicated team work and the competency of the people working at the Freezone. This is recognized by the many international certificates and awards DAFZA received over the years, which continues maintaining its competitive edge and leading position.
Dubai Airport Freezone Authority believes in the continuous development and growth of its services and facilities and ensures the needs of each tenant are met, holding its position as the premier business destination in the Middle East. Every three years, the Freezone works on developing a solid strategic plan with the purpose of working towards its vision, to be the region’s ultimate free zone destination.
Meeting tenants needs
In working to meet its tenants’ needs through its customer-centric philosophy, DAFZA is transforming into a wireless smart city, becoming the first free zone in the region to integrate free WiFi connectivity and smart services in its territory. The wireless development process is done in collaboration with GOWEX, Leader Company in creating Wireless Smart Cities®.
Additionally, in 2014, Dubai Airport Freezone Authority built facilities and services to meet its tenants’ day-to-day needs. As part of a larger multi-purpose centre for its tenants, DAFZA plans on opening a new food court and expects the larger project to be completed by Q1 2015, inclusive of 20 new food outlets, 11 shops, a gym and business centre. Additionally, the Freezone will add 1,192 new parking spaces.
Looking forward, in line with the Dubai government’s strategic direction, DAFZA will continue to contribute to the welfare and betterment of the community, observing international standards in all its practices. The Freezone plans to do this by enhancing its profitability through new value-added products and services, seeking opportunities for diversification. DAFZA expects to maintain and expand its market share through attracting investors from primary and secondary markets.
DAFZA was recognized with seven international awards. These awards included the world’s premier business awards, the Stevie Awards, in three different categories: new services and products award, best IT department award and the best marketing department award. In addition to American Richard Goodman Strategic Planning Award, the number one Free Zone in the World by Foreign Direct Investment (FDI) magazine, the Quality and Distinctive Performance Award, the Comprehensive Quality in Client Satisfaction Award, DAFZA also obtained the ISO:50001 certificate in energy management as it managed to reduce energy consumption by eight per cent; and ISO:28000 for its effective security management.
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The Seven Essentials of Successful Business Innovation
Kreston Menon
Need for organizations to be innovative is a critical requirement for organic growth. Organizations can run innovation programmes the same way they run their factories – with inputs, transformation processes and desired outputs. Of course there would be non-financial and financial measurements to verify the effectiveness of the innovation programme. Innovation no doubt is risky but like many other business risk can be quantified, calibrated and managed.
Many organizations think of innovation as limited to products, technology or services which is not the case. Innovation can be extended to other areas of the business such as procurement, supply chain, manufacturing, costing and business models. Innovation also need not be unsettling and big ticket, but can be incremental and less glamorous.
There are several examples of businesses successfully innovating not in product. US retailer Walmart’s claim to success is really their inventory management and Indian e-tailer Flipkart’s innovation is about delivery and payment options.
I don’t have geniuses, can I innovate is a question that haunts many leaders. Such thoughts are dangerous and fatal for creation of innovative organization. Innovation can happen by taking advantage of skills of ordinary knowledge workers. Leadership need to structure, manage, measure and improve innovative processes to produce stream of innovation.
Essentials required for organization to be successfully innovative:
First and foremost requirement for organization to be successfully innovative is inspiring leadership and customer centric approach. Other important aspects to consider would be, purpose, stretched goals, innovation culture and enabling structures, reliable systems and processes.
1. Inspiring Leadership
Inspiring leadership has to set organic growth goals which cannot be achieved without innovation. Leader has to ensure that consumer / customer is keenly observed and listened in the process of innovation. Leader has to tie-up teams across the organization into the innovation path. There has to be a structured mechanism to constantly review and assess the progress of innovation. Small experiments have to be carried out and experiments that fail have to be erased. Leader also has to mould diverse individuals into innovation team. Lastly leaders need to ensure a strong idea pipeline by encouraging idea flow though strong process.
2. Customer-led
Innovation to be successful has to be customer-led. Sales and marketing team has to make extraordinary efforts to constantly know the needs, expectations and desires of their customer- both stated and unstated. The focus should be to know the gaps consumers perceive in the product / service offering and what the customer want and the impact of the offering for the customer. Sales should also find out the reason for customer, many times, not buying their entire requirement from single supplier and why, many times, customer buys the product only first time.
3. Innovation culture
Organizations need to ensure that idea flow is not encouraged only from perceived geniuses within the organization or from R&D team. Idea flow has to be encouraged from ordinary knowledge workers with system of rewards and appreciation. The fear of failure is stumbling block for ordinary worker to participate actively in idea flow and pipeline. Organization culture should be such that fear of failure has to be eliminated. The organization culture should foster curiosity, openness, collaborative work and experimentation. Employees should be trained to become innovators.
4. Enabling structures
There should be a framework in the organization that makes innovation a routine affair. Idea flow can be from internal people or from customers, suppliers, JV partners and other stakeholders. Ideas can be incremental or disruptive. Idea flow has to be perpetual.
5. Short listing ideas for next stage
Ideas selected should have clear linkages to organization revenue and growth goals. The shortlisted ideas should be a mix of incremental and disruptive. The idea pipeline should have ideas, both low and high risk ideas and flowing from internal and external stakeholders. The ideas need to be prototyped passed through stage-gate process and finally tested at customer-end for feedback.
6. Idea ownership
Every idea needs to have an owner who will be responsible to identify the resources, arrange fund, allocate them, pilot the idea through stage-gate process, subject the idea to review, reward success and deal with failures.
7. Go to market
Go to market of an idea does not mean only sales and marketing team would be responsible. Such a step is sure way to kill an idea. Innovation team has to involve the manufacturing, applications and sales and marketing team together at every stage of the process to ensure successful transfer of idea to the customer. To conclude organizations need to understand that innovation is the best form of defence for organizations to maintain consistent growth trajectory. Growth through inorganic acquisitions can at best be short-term defence strategy. Innovation will help organization to enter new markets faster and deeper with better price margins. Innovation puts sales team in offensive mode in the market and provides them an edge against competitors. Lastly there is no choice if organizations don’t innovate. Failure due to non-innovation is a certainty and hence it is every leader’s priority to build an organization that supports and fosters innovation and delivers it.
This article was originally published in Kreston Menon April-June Newsletter.
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