Emirates & Europe Business Development Cluster - a unique cooperation scheme.

For several years, Poland has been a country with the strongest economy in Europe, characterized by a stable GDP growth and political situation. Consequently, it has recently started to be perceived as a gate for business and investment to Europe, which attracts investors and traders from all over the world.

In the last several years, investment and trade relations between Poland and the United Arab Emirates (UAE) have been systematically increasing. Poland offers its Partner mostly electronic technologies. However, agricultural technology and products, biotechnology, renewable energy sources and broadly defined modern technologies are the most prospective sectors, which can contribute to strengthening economic ties between the two countries. There are also other mutually attractive areas for cooperation, which include environment technology, transport equipment and energy. Trade in IT applications may also be very interesting for both partners. Other opportunities include, apart from oil and gas industry, chemical industry, automotive energy, industrial and residential construction and food processing.

UAE is the 2nd largest trade partner of Poland among Arab League countries after Saudi Arabia. In 2011 - 2012, Polish export to the UAE increased from USD 342 million to USD 440 million, the total trade value increased from USD 458 million to USD 542 million. The total value of Poland’s direct investments in UAE in 2012 constituted about USD 150 million. In 2013 and 2014, further growth was recorded. In 2014, as shown by the Poland’s Central Statistical office, its total export to the UAE amounted to USD 1.1 billion, while total commercial exchange was more than USD 1.3 billion. It was about 50% higher than in 2013. In total, during the last five years, mutual trade between these countries has quadrupled. The forecasts for 2020 are even more encouraging.

Trade and investment between the UAE and Poland are expected to significantly increase in the years to come, since both partners have recently started a number of strategic cooperation initiatives. By and large, thanks to high dynamics of commercial exchange and growing economic potential, the United Arab Emirates and Poland are considered to be very promising trade partners for the coming years.

 

THE United Arab Emirates as a Reliable business partner

Business environment

As indicated by PriceWaterhouseCoopers (PWC) and the World Bank analytical reports1, successful efforts at economic diversification in trade, logistics, banking, tourism, real-estate and manufacturing have reduced the portion of GDP based on oil and gas output to 25%. Since the discovery of oil in the UAE more than 31 years ago, country has undergone
a profound transformation from an impoverished region of small desert principalities to a modern state with a high standard of living. The government has increased spending on the creation of workplaces and infrastructure expansion and is opening up utilities to greater private sector involvement.

PWC and the World Bank indicate that, the UAE has one of the most liberal trade regimes in the Gulf and attracts strong capital flows from across the region. In common with most Gulf states, there is a high number of expatriate workers at all levels of the economy. The UAE is progressively diversifying its economy, minimizing vulnerability to oil price movements. The UAE is very well connected to the rest of the world, mainly thanks to Ethihad, the UAE’s national carrier and Emirates, Dubai’s airline, rapidly expanding their fleet networks.

What is more interesting, the UAE is the 30th largest economy in the world and No.2 in the Middle East and the North Africa. The UAE ranks 33rd out of 183 countries for the overall Ease of Doing Business. The absence of income tax compensates for the regulated investment environment. The UAE’s substantial hydrocarbons resource revenues means government has no pressing need to raise income via direct taxes. There are also several benefits to corporates and their employees in relation to taxation. The UAE is located favorably in terms of transport and logistics, providing excellent background for production and intercontinental transport of goods, what is already appreciated by logistics companies.

 

Key UAE markets and trade

The major trading partners of the UAE include the European Union, India, Japan, China, South Korea, United States of America, Thailand, Singapore and Oman. Export commodities include crude oil (45%), natural gas, re-exports and fish to Japan (17.1%), India (13.6%), South Korea (6.1%), and Thailand (5.1%). Import commodities include machinery and transport equipment, chemicals and food from India (17.5%), China (14%), United States of America (7.7%), Germany (5.6%) and Japan (4.8%).

The existence of free trade zones with 100% ownership, zero taxes, excellent infrastructure, a relatively stable outlook on country risks, and a very convenient geographical location almost midway between east and west are attractive aspects for foreign investments. Around 80% of Fortune 500 companies (including all of the top 10) have established a presence in the UAE according to The Economist, and the UAE’s 25 plus free zones are now host numerous multinational and regional companies – including over 6,400 companies from over 120 different countries located in Dubai’s Jebel Ali Free Zone.

The labor workforce is 4.1 million and expatriates account for about 85% of the workforce with over 150 nationalities working and living harmoniously in a safe, almost entirely crime-free environment. The UAE attracts a highly skilled workforce, which is absorbed by the growing number of international companies, professional service firms and financial institutions. Expatriates enjoy tax-free salaries, schools accredited to international standards, a high standard of health care and excellent recreational facilities – including
a number of championship golf courses.

Besides of that, the UAE’s investment climate is becoming more favorable for foreign direct investors: the federal government, led by Abu Dhabi, has made significant headway in the past five years in increasing the role of the private sector. A number of incentives for foreign investors have been recently introduced.

 

Initiatives for cooperation

The above stated indicates that, the United Arab Emirates has been transformed from manufacturer of fuels to huge business and financial terminal. European entrepreneurs, including Polish companies, search for new, prospective trade areas. Investors, who notice favorable economic situation, find UAE as a place where unique business opportunities can be found.

The Polish government has already started to enhance multifaceted cooperation with UAE by signing mutual agreements, from which one of the most important is the agreement signed in June 2015 between Bronisław Komorowski, the President of Poland, and Sheikh Mohammed Bin Rashid Al Maktoum, the Honorable Emir of Dubai. Agreements concluded between Poland and the United Arab Emirates include, among others, the agreement of cooperation on tourism, the memorandum of cooperation on innovation and small and medium-sized enterprises, the memorandum of cooperation on higher education and science research, the memorandum of cooperation between Sharjah University and Medical University in Lublin, and the letter of intent on cooperation in the area of agriculture and food safety. All of them aim to remove procedural and business obstacles appearing in a way to free trade and business as well as free movement. Technological development and education are, however, equally important.

 

Clusters – an option for profitable cooperation

If cooperation between these two countries always runs like a clockwork, why not make it even better? Due to the highest economic growth in the region, Poland is now recognized as a country with strong and stable economy. It became an interesting alternative for the whole business world, which was also observed by investors from the UAE. The quality of economic contacts between the countries is not just theoretical, but corresponds to a real situation. Strengthening of economic bonds should be, therefore, in the interest of both parties and the success depends on cooperation. Business and political activities are not the only factors that stand behind proper market functioning in
Poland and the UAE.

Activities, which combine almost all authority levels, business industries and the world of science turned out to be a recipe for success - and here comes the idea of clustering. It allows for systematizing and coordinating of many activities. As business practice often proves, the way of combining entities enables them to make a breakthrough in a given industry. Clusters consist of enterprises operating in the same or similar industries, which do not compete with each other and are not tied with any commitments. They cooperate in terms of commonly selected areas on a voluntary basis, which allows them to reduce costs, increase production effectiveness and gain access to the market of qualified specialists, as well as to exchange competencies and resources in order to implement mutual undertakings.

Emirates & Europe Business Development Cluster
(www.eebd.eu)

To cater for the above challenges, Emirates & Europe Business Development Cluster (hereinafter: EEBDC) was created. It is an initiative of the Polish private sector, supported by government. The goals and objectives for this initiative have already been discussed with the UAE officials and entrepreneurs, raising genuine business interests. The main objective of EEBDC is to integrate and improve communication between UAE and European business environment, and amonga Cluster’s members.

How does the Cluster function? EEBDC is a technology broker, which serves as development advisory body and specializes in connecting business partners. The Cluster is comprises of business representatives, local government authorities and agencies, universities, institutions, legal offices and consulting firms working together on various business facilitation initiatives. The Cluster is open to any entity interested in contributing to its activities and to be actively involved in economic relations between Poland and UAE. This form of cooperation insures effective addressing and responding to trade and investment opportunities in both countries, providing an access to knowledge, mutual experiences, and the most recent market and financial-economic information, which constitute indispensible elements for the promotion of business ties, commercial exchanges, as well as legal, trade, scientific, technical and industry cooperation. This provides a significant competitive advantage to the Cluster members.

In the area of business facilitation major tasks of EEBDC are: support in identifying trade partners, help in establishing direct contacts with European companies in UAE, attracting foreign capital, exchange and provision of information on economy and local markets. All these activities create transparent cooperation conditions for the Cluster’s members. The Cluster through its associates also provides comprehensive support in obtaining European Union grants.

The Cluster also promotes benefits of business development between UAE and Europe. This provides a basis for future expanding of the Cluster’s scope of activity. The Cluster conducts promotion of members’ businesses, organizes participation in trade fairs in Europe and UAE, and represents members in trade and investment conferences and other related events. Currently, the Emirates & Europe Business Development Cluster concentrates its activities on four subject areas:

1) Technology Transfer. In the current global economy and marketplace, technology is an important factor creating business competitive advantage. As the consumers’ needs and market competition are constantly growing, to stay competitive, the companies need to strive for the introduction of innovations, news solutions and technologies. The effectiveness of these activities is decisive for benefiting from global economic opportunities. Therefore the Cluster supports and promotes new technologies and innovation with special focus on:

  • Green Energy,
  • Recycling and waste management,
  • Sustainable transport,
  • Smart Cities,
  • Raw material management,
  • Medicine and pharmacy,
  • Environment protection technologies and innovative solutions.

2) Investment Projects. The Cluster facilitates and stimulates development of investment projects. Using its vast network of contacts and associates in the private and public sectors of the EU member states countries and Dubai, the Cluster supports relations between entrepreneurs and potential investors from all over the world. It evaluates investment prospects, provides advices on their acceptance and financing schemes. These activities provide tangible benefits to the Cluster members helping them to select and implement high profit and low risk investments with significant growth potential.

3) Trade and Economic Development. The Cluster also promotes mutual and bilateral initiatives contributing to expansion of trade and economic development activities. This involves identification and creation of new opportunities for beneficial exports and imports of goods, services. The Cluster is a platform for exchange of business experiences, partner matching and idea exchange. This provides opportunities for cluster members and their business partners to more efficiently explore development options and impact regional economic development. The Cluster conducts various activities in this area such as:

  • Identifying and expanding international markets for local products, manufacturing, technology, and services,
  • International promotion of multidisciplinary innovative solutions,
  • Developing investments and other initiatives contributing to modernization of national and regional economies.
  • Promoting industry and manufacturing potential,
  • Improving labor skills and competence,
  • Reducing unemployment,
  • Providing access to new goods and services,
  • Contributing to efficient usage of natural resources and national production capacities.

4) Reducing Poverty and Social Exclusion. The Cluster carries out a variety of activities contributing to increasing standards of life, economic and social satisfaction, and capacities, reducing social and economic exclusion, and intensifying economic development. This provides a basis for increased trade and investment, and the overall economic potential. This involves such initiatives as:

  • Organization of temporary accommodation centers (public housing) for less privileged in Europe,
  • Creating jobs at local markets for various types of labor,

Providing and distributing products. This, for example, concerns distribution of mobile phones functioning as digital wallets. Individuals using these devices are able to do shopping in various points of sale, maintain and manage account funds and monitor their expenses and transactions. This system results in reducing transaction and account maintenance costs, and faster funds availability. Additionally, the devices will provide various options for better access to telemedicine services. Also, availability of many services based on localization system will be provided.

Historical data and experiences, and projected growth of opportunities and demand for cooperative relations create a sound basis for developing various forms of cooperation between UAE and Poland and other EU member states. EEBDC provides an effective form of cooperation, which creates a sound framework for developing long-term cooperative relations among these partners. It provides a proven and effective formula and instrument for trade and investment, and innovation promotion and development. EEBDC is an attractive solution to increase beneficial relations for all cooperating partners in UAE, Poland and Europe. No matter what the future holds, by doing our best, we can shape it better (to our mutual benefits in the UAE, Poland, and EU).

EEBD is open for cooperation with new business and institutional partners from UAE and Europe. Further information about EEBD activities and membership is available at www.eebd.eu.

 

Source: Green Economy

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