UAE in Depth PESTLE Insights

Country Profile Series
United Arab Emirates

In-depth PESTLE insights
PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

REFERENCE CODE: ML00002-030
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OVERVIEW
Catalyst
This profile analyzes the political, economic, social, technological, legal and environmental (PESTLE) structure in the
United Arab Emirates (UAE). Each of the PESTLE factors is explored in terms of four parameters: current strengths,
current challenges, future prospects and future risks.
Summary
Key findings
The UAE is politically stable, but a government clampdown against Islamists has been
criticized for human rights violations
The UAE continues to maintain stability despite the political unrest witnessed in the Middle East and North African
regions. The UAE was ranked in the 67.62 percentile on the political stability and absence of violence indicator in 2017,
according to the Worldwide Governance Indicators (WGI) update published by the World Bank in 2018. The UAE is
ranked higher than Saudi Arabia (which scored in the 23.81 percentile) and Kuwait (which scored in the 43.81
percentile). This indicator measures perceptions of the likelihood that the government will be destabilized or overthrown
by unconstitutional or violent means, including domestic violence and terrorism. The UAE follows a unicameral legislative
system. The legislature is headed by the Federal National Council (FNC), which functions as a consultative assembly
responsible for assessing and amending proposed federal legislation.
The beginning of the Arab Spring and the Muslim Brotherhood’s rise to power concerned officials in Abu Dhabi and they
are prepared to counter any political unrest, as unlikely as it may seem. A climate of fear has taken hold of the country
since 2011, with authorities going to any length to put out calls for reforms in the wake of popular uprisings in the Middle
East. In 2012, many Emirati nationals were arrested as they were accused of being part of al-Islah, an Emirati Islamist
group that is sympathetic towards the Egyptian Muslim Brotherhood. In July 2013, out of 94 arrested, 70 were convicted
and given lengthy jail terms. Human rights groups have argued that there were flaws in the entire procedure. In March
2014, nationals from Qatar and the UAE were sentenced to jail in the UAE for their involvement in the transfer of money
to Emirati Muslim Brotherhood fugitives. The UN criticized the judgments as well as the lack of independence of the legal
system. In 2017, UAE officials detained a well-known Emirati human rights activist, Ahmed Mansoor, over his opinions
expressed over Twitter and Facebook. In May 2018, he was sentenced to 10 years in prison for his offence of public
opinion sharing. The country has deployed surveillance software to target international human rights activists and has
continued to ban human rights organizations from visiting the country.
Despite ongoing economic diversification efforts, a comparatively high reliance on oil-

income can pose challenges to the UAE economy
The UAE has continued to expand its role as a hub for wholesale, retail trade, tourism and real estate destination. The
country’s continuous efforts to pursue economic diversification towards areas such as financial services, renewable
energy and tourism are prominent, with the non-oil sector’s share of GDP increasing from 68.9% in 2010 to 77.7% in
2017. The total non-oil trade was AED1,527.8 billion ($416.01 billion) in 2017, as per the UAE Federal Competitiveness
and Statistics Authority.
The UAE economy is significantly diversified when compared to the other GCC countries. However, the country is still

highly dependent on revenues from oil. Amidst its efforts to diversify its revenue sources, oil revenue’s share has
increased to 38.0% as a source of public finance in 2017, from 21.8% in 2016. During the same period, the share of non-
oil revenue declined to 65.0% from 74.0%. The decline in the fiscal deficit in 2017, to $0.9 billion from $4.6 billion in
2016, was mainly due to an increase in oil revenues, from $23.6 billion in 2016 to $38.0 billion in 2017.
The government is improving in terms of the education quality parameter, including female
enrolment, but a low number of women in comparison to men is a serious challenge for the
nation
According to the ‘Global Competitiveness Report 2017–2018’, the UAE ranked 12th among 137 nations on the ‘quality of
education’ parameter. The quality of math and science education was ranked 13th, while the quality of management
schools was ranked 15th out of 137 nations. The enrollment of students for technical education is gradually increasing.
The enrollment of females in technical education is also showing an upward trend; for the academic year 2013–2014, the
female enrollment share was 30.62%, which increased to 37% in the 2016–2017 academic year.
The Emirates has one of the worst gender ratios in the world. According to MarketLine, only 27.65% of the population
was female in 2017. According to MarketLine, the gender ratio (the number of males per 100 females) was as high as
261.65. No significant change has been seen in the last decade.
While the UAE’s biotechnology sector is improving, rising piracy is a challenge

The UAE’s interest in biotechnology started with the launch of the Dubai Biotechnology and Research Park (DuBiotech)
in 2005 as a part of Dubai’s 2010 vision to establish a knowledge economy. It is the world’s first free trade zone
dedicated to life sciences. The UAE is ahead of the rest of the Arab world in terms of its progress in the field of
biotechnology. The Scientific American Worldview Report and Bio-Innovation Scorecard issued by the Biotechnology
Industry Organization (BIO) ranks countries based on their growth in biotech industries. In 2013, the UAE was included
for the first time and placed 40th out of 54 countries. In 2016, the UAE ranked at 26th, ahead of Spain (29th), Saudi
Arabia (40th) and China (41st).
According to the ‘2018 BSA Global Software Piracy Study’, the country’s software piracy rate was 32% in 2017 with
losses amounting to $210 million. Compared to other nations in the Middle East and Africa, the country’s performance
was better, but the commercial value of unlicensed software has been increasing from $155 million in 2009 to $210
million in 2017. The UAE is also kept on the priority watch list of the Office of the United States Trade Representative
(USTR) over increasing concerns regarding the re-exportation and transshipment of infringing goods.
The UAE has an easy tax structure, but stringent laws are a matter of concern
According to the ‘Paying Taxes 2018’ report by the World Bank, companies in the UAE enjoy a very simple tax
framework. The country has one of the easiest tax structures with a total tax and contribution rate of 15.9% with four
payments a year. The number of payments made in a year and the time taken to comply (12 hours) are below the Middle
East and World averages. A simple tax framework enhances the ease of doing business and is likely to draw more
businesses to the country. In terms of paying taxes, the UAE comes top among 190 nations in 2016, along with Qatar,
according to ‘Paying Taxes 2018’.
Many times, the complexity of the rules and regulations in the UAE results in unwarranted arrests and legal proceedings
against the expats working in the country. The amendments to the UAE Cybercrimes Law in August 2018 aim to tighten
the existing cyber laws to combat terrorism more efficiently. However, it is widely argued by human right activists that the
provision in the amended laws can be misused to restrict the already suppressed freedom of opinion and criticisms
against the government. Similarly, defaulting on payments is a very serious issue in the Emirates. A lot of banks are

using article 401 of the penal code to collect unpaid loans, which can lead to the initiation of criminal proceedings, travel
bans, and long imprisonments. These scenarios can negatively impact the business environment in the long run.
The country has rolled out an ambitious green agenda, but increasing emission levels
remains a threat
The UAE has rolled out a plan called the Green Agenda 2015–2030 which aims to transform the country into a green
economy. Green initiatives have been undertaken at the regional level, including buildings powered by sunshine,
desalinization without fossil fuels, new business models for clean energy, and turning air into water, among others. The
country also annually publishes the ‘UAE - State of Green Economy Report’ detailing the status of the transformation into
a green economy.
Emissions in the UAE have been increasing in recent years. According to MarketLine, during 2008–2015, CO2 emission
growth rates were recorded at an average of 4.3%. In 2015, CO2 emissions increased by 4.1% to reach 238.9 million
metric tons, from 229.55 million metric tons in 2014.

PESTLE highlights
Political landscape
 There is no organized political opposition in the UAE, either at a federal level or to the ruling families within the
individual emirates. Like many of its Gulf neighbors, the UAE has concerns about the rise of hardline Islamist
groups in the region.
 In November 2012, the UAE obtained membership to the UN Human Rights Council for 2013–2015 and got
reelected for the 2015–2018 period.
 The UAE was ranked in the 18.23 percentile on the voice and accountability indicator in 2017, according to the
WGI 2018. Voice and accountability measures the extent to which a country's citizens are able to participate in
selecting their government, as well as freedom of expression, freedom of association, and freedom of the
media.
Economic landscape
 There are 59 insurance companies in the UAE, of which 33 are national insurance companies and 26 are
foreign insurance companies, as of 2018. According to the UAE Insurance Authority, gross written premiums
amounted to AED44.82 billion ($12.2 billion) in 2017, an increase of 12.03% over the previous year.
 The UAE government states that 5.4% of the country’s total employment is directly aligned to the travel and
tourism sector in 2017, and this is expected to rise by 2.4% per annum over the next three years (2018-2020).
 According to the IMF, the general government deficit in 2017 was 1.79% of GDP. It is forecast to reach a
surplus of 0.71% of GDP by 2023.
Social landscape
 The UAE’s population was 9.4 million in 2017, according to MarketLine. According to CIA - The World Factbook,
life expectancy was 77.7 years in 2017; it is 75 years for males and 80.4 years for females.
 In the ‘2018 Human Development Index’ (HDI) report, the UAE was ranked 34th out of 189 countries in 2017.
With a value of 0.863, the country is in the very high human development category.
 Diseases related to cardiovascular problems have been one of the main causes of death in the UAE. Other
major causes are accidents and injuries, and malignancies.
Technological landscape
 In 2017, the UAE had 19.82 million cellular telephone subscribers. The country has one of the highest
penetration ratios for mobiles in the world, with 210.91 mobiles per 100 people.
 The World Economic Forum publishes the ‘Networked Readiness Index’ (NRI) that measures the extent to
which an economy is prepared to use ICT to accelerate competitiveness and well-being. The UAE was ranked
26th among 139 nations in 2016, in terms of the NRI.
 According to the World Bank, Iran published 40,974 journal articles in 2016, while the UAE published a mere
2,181 articles. According to the ‘Global Innovation Index 2018’, the UAE ranked 38th out of 126 countries.
Legal landscape
 There is no corporate tax rate at the federal level in the UAE. However, each of the seven emirates in the UAE
has issued their own income tax decrees. As of 2018, the corporate tax rate in general ranges from 0%-55%.

 The UAE was ranked the 10th freest economy among 180 nations in the ‘2018 Index of Economic Freedom’
published by the Heritage Foundation and the Wall Street Journal. The UAE recorded an economic freedom
score of 77.6, which categories country as “mostly free” and indicates a favorable environment for business.
 In the World Bank’s ‘2018 Doing Business’ report, the UAE ranked 21st out of 190 economies in terms of ease
of doing business; however, for the resolving insolvency parameter, the country ranked 69th.
Environmental landscape
 The Dubai municipality launched its Dubai integrated waste management master plan in 2012 and aims to
achieve a 75% reduction in landfills by 2021, then zero landfills by 2032.
 In June 2015, the Emirates Green Development Council (EGDC) was established to oversee the
implementation of the Green Agenda (2015–2030) and to ensure effective collaboration between federal and
local authorities.
 The Emirates Nuclear Energy Corporation (ENEC) projects that the country will produce at least one quarter of
its power using nuclear energy by 2020.

Key Fundamentals
Table 1: The UAE - Key Fundamentals, 2015–2022f
2015 2016 2017 2018f 2019f 2020f 2021f 2022f
GDP, constant 2010 prices ($ billion) 367.63 378.80 380.82 388.26 400.08 412.83 425.42 438.51
GDP growth rate (%) 3.83 3.04 0.53 1.96 3.04 3.19 3.05 3.08
GDP, constant 2010 prices, per capita 40,159.56 40,864.25 40,511.58 40,691.71 41,321.41 42,069.39 42,809.56 43,580.93
($)
Inflation (%) 4.07 1.62 2.00 4.24 2.55 2.54 2.48 2.08
Exports, total as a percentage of GDP 88.86 88.44 87.57 86.71 85.84 84.97 84.11 83.24
Imports, total as a percentage of GDP 83.64 82.68 83.66 84.66 85.67 86.68 87.71 88.76
Mid-year population, total (million) 9.15 9.27 9.40 9.54 9.68 9.81 9.94 10.06
Unemployment rate (%) 2.10 1.64 1.72 1.70 1.70 1.69 1.68 1.67
Mobile penetration per 100 people 196.00 214.73 210.91 213.00 214.90 216.63 218.21 219.64
Source: Country Statistics, MarketLine MARKETLINE

TABLE OF CONTENTS
OVERVIEW .................................................................................................................................................................. 2
CATALYST ................................................................................................................................................................... 2
SUMMARY .................................................................................................................................................................. 2
Key findings .......................................................................................................................................................... 2
PESTLE highlights.................................................................................................................................................. 5
Key Fundamentals ................................................................................................................................................ 7
KEY FACTS AND GEOGRAPHIC LOCATION ..................................................................................................................15
KEY FACTS .................................................................................................................................................................15

GEOGRAPHIC LOCATION ................................................................................................................................................16
PESTLE ANALYSIS .......................................................................................................................................................17
SUMMARY .................................................................................................................................................................17
POLITICAL ANALYSIS .....................................................................................................................................................18
Overview .............................................................................................................................................................18
Current strengths ................................................................................................................................................18
Current challenges...............................................................................................................................................19
Future prospects..................................................................................................................................................21
Future risks..........................................................................................................................................................22
ECONOMIC ANALYSIS ....................................................................................................................................................23
Overview .............................................................................................................................................................23
Future risks..........................................................................................................................................................27
SOCIAL ANALYSIS .........................................................................................................................................................30
Overview .............................................................................................................................................................30
Future risks..........................................................................................................................................................34
TECHNOLOGICAL ANALYSIS .............................................................................................................................................35
Overview .............................................................................................................................................................35
Future risks..........................................................................................................................................................39
LEGAL ANALYSIS ..........................................................................................................................................................41
Overview .............................................................................................................................................................41

Future risks..........................................................................................................................................................44
ENVIRONMENTAL ANALYSIS ............................................................................................................................................46
Overview .............................................................................................................................................................46
POLITICAL LANDSCAPE...............................................................................................................................................50
SUMMARY .................................................................................................................................................................50
EVOLUTION ................................................................................................................................................................50
STRUCTURE AND POLICIES ..............................................................................................................................................51
Key political figures .............................................................................................................................................51
Structure of government ......................................................................................................................................51
Key policies..........................................................................................................................................................52
Economic.............................................................................................................................................................52
Social ..................................................................................................................................................................52
Foreign ................................................................................................................................................................53
PERFORMANCE ...........................................................................................................................................................53
Governance indicators .........................................................................................................................................53
OUTLOOK ..................................................................................................................................................................54
ECONOMIC LANDSCAPE .............................................................................................................................................55
SUMMARY .................................................................................................................................................................55
EVOLUTION ................................................................................................................................................................55
Financial system ..................................................................................................................................................56
Insurance ............................................................................................................................................................57
PERFORMANCE ...........................................................................................................................................................57
GDP and growth rate ...........................................................................................................................................57
Fiscal situation ....................................................................................................................................................62
International investment position ........................................................................................................................63
Monetary situation ..............................................................................................................................................64
Banking sector.....................................................................................................................................................65
Employment ........................................................................................................................................................66
OUTLOOK ..................................................................................................................................................................66
SOCIAL LANDSCAPE ...................................................................................................................................................67
SUMMARY .................................................................................................................................................................67
EVOLUTION ................................................................................................................................................................67
Demographic composition ...................................................................................................................................67

Education ............................................................................................................................................................69
Healthcare ..........................................................................................................................................................70
Social welfare ......................................................................................................................................................70
PERFORMANCE ...........................................................................................................................................................70
Healthcare ..........................................................................................................................................................70
Income distribution..............................................................................................................................................71
OUTLOOK ..................................................................................................................................................................71
TECHNOLOGICAL LANDSCAPE ....................................................................................................................................73
SUMMARY .................................................................................................................................................................73
EVOLUTION ................................................................................................................................................................73
Intellectual property ............................................................................................................................................73
Research and development ..................................................................................................................................74
PERFORMANCE ...........................................................................................................................................................75
Opportunity sectors .............................................................................................................................................75
OUTLOOK ..................................................................................................................................................................76
LEGAL LANDSCAPE .....................................................................................................................................................77
SUMMARY .................................................................................................................................................................77
EVOLUTION ................................................................................................................................................................77
Judicial system ....................................................................................................................................................77
Legislation affecting business ..............................................................................................................................77
Tax regulations....................................................................................................................................................78
Tax rates .............................................................................................................................................................78
PERFORMANCE ...........................................................................................................................................................78
Effectiveness of the legal system ..........................................................................................................................78
Legal indicators ...................................................................................................................................................78
OUTLOOK ..................................................................................................................................................................78
ENVIRONMENTAL LANDSCAPE ..................................................................................................................................79
SUMMARY .................................................................................................................................................................79
EVOLUTION ................................................................................................................................................................79
Environmental regulations ...................................................................................................................................79
Environmental actions .........................................................................................................................................80
Participation in global efforts, agreements, and pacts ..........................................................................................81
PERFORMANCE ...........................................................................................................................................................81
Environmental impact .........................................................................................................................................81
OUTLOOK ..................................................................................................................................................................82
APPENDIX ..................................................................................................................................................................83
ASK THE ANALYST ........................................................................................................................................................83

DISCLAIMER ...............................................................................................................................................................83

LIST OF FIGURES
Figure 1: Map of the UAE ..............................................................................................................................................................................16
Figure 2: Business Confidence Index, Q2 2011–Q1 2018 .........................................................................................................................20
Figure 3: Net Official Development Aid ($ Billion), 2011–2017 ................................................................................................................21
Figure 4: Non-Oil Foreign Trade (AED Billion), 1998–2017 ......................................................................................................................25
Figure 6: Foreign Investments in the UAE ($ Billion), 2008–2017 ...........................................................................................................27
Figure 7: Public Finance – Oil, Non-Oil Revenue and Expenditure ($ Billion), 2010–2017 ..................................................................28
Figure 8: Public Finance - Sources of Budget Expenditure (%), 2010–2017..........................................................................................29
Figure 9: UAE Doctor Statistics (Number Of Doctors/Per 1,000 People), 2006–2015 ...........................................................................31
Figure 10: UAE Technical Education Status (Enrolled Students/%), 2013–2014 to 2016–2017 ..........................................................32
Figure 11: Gender Ratio (% Of Population/Males per 100 Females), 2008–2017...................................................................................33
Figure 12: Number and Value of Banking Transactions (Million/AED Million), 2015 ............................................................................36
Figure 13: Number Scientific and Technical Journal Articles, 2003–2016 .............................................................................................38
Figure 14: Patent Applications by Residents and Non-Residents (Number of Applications/% Share by Residents), 2016 ...........40
Figure 15: Total UAE Banks’ Credit to and Deposits from Gres (AED Billion), 2017–2018 .................................................................42
Figure 16: Total Cases at The Court of First Instance, 2008–2016 ..........................................................................................................43
Figure 16: Renewable Internal Freshwater Resources per Capita (Cubic Meters), 2014 ....................................................................47
Figure 17: The UAE - Political Events Timeline .........................................................................................................................................50
Figure 18: The UAE - Key Political Figures ................................................................................................................................................51
Figure 19: Evolution of GDP Growth in The UAE (%), 2007–2017 ...........................................................................................................56
Figure 20: GDP and Gdp Growth Rate of the UAE ($ Billion/%), 2012–2022f.........................................................................................58
Figure 21: GDP Composition By Sector in the UAE, 2017........................................................................................................................59
Figure 22: Agricultural Output In the UAE (Aed Billion/%), 2012–2017 ..................................................................................................60
Figure 23: Industrial Output In the UAE (Aed Billion/%), 2012–2017 ......................................................................................................61
Figure 24: Services Output In the UAE (Aed Billion/%), 2012–2017 ........................................................................................................62
Figure 25: The UAE’s External Trade Position ($ Billion), 2012–2017 ....................................................................................................63
Figure 26: Consumer Price Index and Consumer Price Inflation in The UAE, 2012–2022f .................................................................65
Figure 27: Unemployment in the UAE (Thousands/%), 2012–2022f ........................................................................................................66
Figure 28: Major Religions in the UAE ........................................................................................................................................................69
Figure 29: Total Healthcare Expenditure in the UAE ($ Billion/%), 2008–2017 ......................................................................................71

Figure 30: Internet Users in the UAE (Millions/%), 2012–2017 .................................................................................................................75
Figure 31: Carbon Dioxide Emissions in the UAE (Metric Tons/%), 2008–2015 ....................................................................................82

LIST OF TABLES
Table 1: The UAE - Key Fundamentals, 2015–2022f 7
Table 2: The UAE - Key Facts, 2018 15
Table 3: Analysis of the UAE’s Political Landscape 18
Table 4: Analysis of the UAE’s Economic Landscape 23
Table 5: Analysis of the UAE’s Social Landscape 30
Table 6: Analysis of the UAE’s Technology Landscape 35
Table 7: Analysis of the UAE’s Legal Landscape 41
Table 8: Analysis of the UAE’s Environmental Landscape 46
Table 9: Mid-year Population by Age (As a Percentage of Population, by Gender), 2017 68
Table 10: Patents Granted by the USPTO, 2010–2015 74
Table 11: Major International Environmental Treaties Signed and Ratified by the UAE 81

Key Facts and Geographic Location
KEY FACTS AND GEOGRAPHIC LOCATION

Key facts
Table 2: The UAE - Key Facts, 2018
Country and capital

Full name United Arab Emirates
Capital city Abu Dhabi
Government
Government type Federation with specified powers delegated to the UAE federal
government and other powers reserved to member emirates
Head of state President Sheikh Khalifa bin Zayed Al Nahyan
Head of government Prime Minister Sheikh Mohammed bin Rashid Al Maktoum
Population (2017) 9.40 million
Currency Emirati dirham (AED)
GDP per capita (PPP, 2017) $73071.7
Internet domain .ae
Demographic details
Life expectancy (2017) 77.7 years (total population)
75 years (men)
80.4 years (women)
Ethnic composition Emirati (11.6%), South Asian (59.4%) [Includes Indian (38.2%),
Bangladeshi (9.5%), Pakistani (9.4%), other (2.3%)], Egyptian
(10.2%), Philippine (6.1%), Others (12.8%)
Major religions Muslims (76%), Christian (9%), others (15%)
Country area 83,600 sq. km
Language The official language is Arabic. Other commonly used languages

include Persian, Hindi, Urdu, and English
Exports Crude oil (45%), natural gas, re-exports, dried fish, dates
Imports Machinery and transport equipment, chemicals, food
Source: Country Statistics, MarketLine and CIA - The World Factbook MARKETLINE

Key Facts and Geographic Location
Geographic location
The UAE is located in the Middle East, bordering the Gulf of Oman and the Persian Gulf, and the country is between
Oman and Saudi Arabia.
Figure 1: Map of the UAE
Source: CIA - The World Factbook MARKETLINE

PESTLE Analysis
PESTLE ANALYSIS
Summary
The UAE is a federal state that was established in 1971. It consists of seven emirates, namely, Abu Dhabi, Dubai,
Sharjah, Ajman, Um Al Quwain, Ras Al Khaimah and Fujairah. In order to ensure effective governance, the rulers of
the seven emirates, which together formed the federation, agreed to draw up a provisional constitution that specified
the powers allocated to the new federal institutions. Similar to many federal structures around the world, few powers
remained with each of the individual emirates. The UAE’s political system – especially the way its federal and local
governments operate – is a combination of both traditional and modern governance models. The UAE has achieved
steady progress over the past four decades and has emerged as a significant global player in both the political and the
economic arena. It is considered one of the leading political forces in the Middle East and is a member of a number of
regional organizations including the Gulf Cooperation Council (GCC), the Arab League, and the Organization of the
Islamic Conference. Under the leadership of former President Sheikh Zayed, the UAE was transformed from a nation
affected by large-scale poverty to a highly developed and prosperous country.
The UAE is one of the largest oil producers in the world and maintains a free-market economy with minimum
restrictions on private sector activities. Higher oil prices, increased government spending, resurgence in tourism and
sound infrastructures have contributed to the country’s upswing. However, the fall in international oil prices in the past
few years, especially during 2014–2016, led to a slowdown of the economy. Abu Dhabi is the largest emirate, followed
by Dubai. These two emirates have been the major centers of economic activity over the years. Abu Dhabi is the
capital and houses federal government offices. It is also home to important financial institutions such as the Central
Bank of the UAE, Abu Dhabi Securities Exchange and the corporate headquarters of many companies and
multinational corporations. Dubai, which is ruled by the Al Maktoum family, has occupied an important position on the
trade map by virtue of its location and trade policies.
The country has a low unemployment rate and an abundance of semi-skilled workers for its labor markets. The Ministry
of Social Affairs has taken steps to improve social security, but a deteriorating human rights situation remains an area
of concern. In addition, the UAE has one of the lowest ratios of females per male in the world.
The country has a strong telecommunications network and is attracting new entrants to its IT market at a rapidly
increasing pace. However, a lack of research and development (R&D) facilities hinder technological development.
The country has a fairly solid political and legal system. The crime rate is declining and there are initiatives which aim
to speed up the decreeing of pending cases. However, a new amendment to the cybercrime law is alleged to infringe
upon the rights of the people.
Continued economic growth has led to the rapid development and improvements to the standard of living. The
development was driven by the massive consumption of natural resources such as food, timber, energy and fiber
obtained from both within and outside the UAE. There is an increasing concern over the sustainability of the country’s
freshwater resources. The UAE has been active in designing measures to prevent water wastage. However, increasing
CO2 emissions continue to pose a challenge.

PESTLE Analysis
Political analysis
Overview
The UAE government has a consistent policymaking agenda and continues to maintain stability despite the political
unrest gripping the Middle Eastern and North African regions. The country was one of the first Gulf countries to conduct
partial elections. However, the absence of democratic institutions and fragile relations with Qatar pose problems for the
government.
Table 3: Analysis of the UAE’s Political Landscape
Current strengths Current challenges

▪ A prosperous country ▪ Absence of democracy
▪ Political stability amidst regional instability ▪ Government clampdowns
▪ Subdued investment sentiment
Future prospects Future risks

▪ Strong foreign relations ▪ Unresolved issues with neighboring nations
▪ Emergence as an independent geopolitical power
Source: MarketLine MARKETLINE
Current strengths
A prosperous country
The government is known for its consistent implementation of policies. Under the leadership of former President Zayed
bin Sultan Al Nahyan, the UAE was transformed from a nation affected by large-scale poverty to a highly developed
and prosperous country. Following the death of President Zayed in 2004, his son Khalifa bin Zayed Al Nahyan took
over as president. While the government is not democratic, both Zayed and Khalifa are believed to be directly
responsible for the country’s progress. In general, like his father, Khalifa is viewed as a modern ruler with a pro-western
attitude. The UAE ranked 5th among 137 nations for the institutions parameter, according to the ‘Global
Competitiveness Report 2017-2018’ published by the World Economic Forum. The UAE ranked 1st in terms of the
efficiency of government spending parameter; and the parameters such as burden of government regulation and public
trust in politicians are ranked 2nd. The UAE also ranked 20th out of 156 countries in the ‘2018 World Happiness
Report’ published by the UN Sustainable Development Solutions Network (SDSN).
Political stability amidst regional instability

The UAE continues to maintain stability despite the political unrest that countries in the Middle Eastern and North
African regions have witnessed. The UAE was ranked in the 67.62 percentile on the political stability and absence of
violence indicator in 2017, according to the Worldwide Governance Indicators (WGI) update published by the World
Bank in 2018. This indicator measures perceptions of the likelihood that the government will be destabilized or
overthrown by unconstitutional or violent means, including domestic violence and terrorism. The UAE has a very
straightforward procedure for changes in government, and the king’s choice is accepted across the country. The UAE
PESTLE Analysis
is ranked higher than Saudi Arabia (which scored in the 23.81 percentile) and Kuwait (which scored 43.81 in the
percentile) in the 2018 WGI ranking on the political stability and absence of violence parameter.
Current challenges
Absence of democracy
Despite several changes in the international sphere, the regime in the UAE has done little towards adopting
democracy. According to the WGI 2018, the country had a percentile rank of just 18.23 on voice and accountability in
2017. Kuwait has a relatively higher percentile rank of 30.34 in 2017. This parameter measures the extent to which a
country's citizens are able to participate in selecting their government, along with freedom of expression, freedom of
association and freedom of the media. The present regime does not tolerate an interventionist media and tightly
controls news outlets. Private media outlets are not allowed to operate from the UAE. There are no political parties and
no official opposition exists. The delay in the implementation of democratic laws has led to increasing unrest among
both the public and the media. Family rulers have historically dominated the country. Although such a system ensures
that power is concentrated within the large ruling families, inter-family relations are sometimes fractious. There is no
formal or recognized legal structure for determining family seniority or claims on power. Although there was much talk
about extending the Federal National Council's powers and moving towards universal suffrage, there has been no
tangible progress in terms of realizing these goals, in part because of a negative perception of the more advanced
parliamentary system in Kuwait, which is quite fractious and has developed a strong Islamist bloc.
Government clampdowns
The beginning of the Arab Spring and the Muslim Brotherhood’s rise to power concerned officials in Abu Dhabi and
they are prepared to counter any political unrest, as unlikely as it may seem. A climate of fear has taken hold of the
country since 2011, with authorities going to any length to put out calls for reforms in the wake of popular uprisings in
the Middle East. This was evident from the government’s reaction following a petition in March 2011 signed by 133
prominent Emiratis. The petition requested that all citizens of the UAE should be given the right to vote and legislative
powers should be vested in the Federal National Council (FNC). The demands were moderate compared to those in
other Arab states where the demands were for regime change. The authorities in the UAE responded by arresting five
well-known advocates for reform and accused them of various charges such as undermining public order, breaking
laws and others. The authorities even replaced the leadership of civil organizations such as the Jurists’ Association and
the Teacher’s Association with government appointees. Also, branches of international think tanks and research groups
such as the National Democratic Institute, Konrad Adenauer Foundation and RAND were ordered to leave the country.
In 2012, many Emirati nationals were arrested as they were accused of being part of al-Islah, an Emirati Islamist group
that is sympathetic towards the Egyptian Muslim Brotherhood. They were even accused of conspiring to topple the
government. In July 2013, out of 94 arrested, 69 were convicted and given lengthy jail terms. Human rights groups
have argued that there were flaws in the entire procedure. Critics argue that there is a lack of published evidence to
prove that a conspiracy to bring down the government was taking place. Furthermore, many were critical of the harsh
sentences given, especially the 15-year sentences given to the eight accused in absentia (a situation when a person is
subjected to criminal proceedings but is not present physically). The fact that defense lawyers were denied access to
the sentencing drew additional criticism. In March 2014, nationals from Qatar and the UAE were sentenced to jail in the
UAE for their involvement in the transfer of money to Emirati Muslim Brotherhood fugitives. The UN criticized the
judgments as well as the legal system’s lack of independence.
In May 2015, the authorities restricted a representative from Amnesty International from speaking at the construction

PESTLE Analysis
industry conference in Dubai. The UAE government’s intolerance on the right to freedom of expression continued with
the prosecution of a Jordanian journalist and Emirati academic in 2016. In the midst of the growing frictions with Qatar,
the attorney general of UAE warned UAE residents of possible convictions of large fines and jail terms up to15 years
for expressing sympathy with Qatar. In 2017, UAE officials have detained a well-known Emirati human rights activist,
Ahmed Mansoor, over his opinions expressed over Twitter and Facebook. In May 2018, he was sentenced to 10 years
in prison for his offence of public opinion sharing. The country has deployed surveillance software to target international
human rights activists and continued to ban human rights organizations from visiting the country.
Subdued investment sentiment

Confidence among the investor and business community stays comparatively low amidst increasing oil prices and trade
prospects in 2018. Political tension in the Middle East, challenging global economic conditions including trade wars
between the US and China, and uncertainties prevailing around global economic growth continue to overshadow the
UAE’s investment sentiment. The ‘Quarterly Dubai Business Survey’ conducted by the Department of Economic
Development, Government of Dubai indicates a declining trend in terms of the business confidence index over the past
few years. The business confidence index stood at 111.2 in Q1 2017, down from 116.5 in Q1 2016. The index
increased to 121.4 in Q3 2017 and declined to 116.7 in Q1 2018. The confidence index reached a high of 144.3 in Q4
2013. The ‘Dubai Business Survey 2018’ indicated a less optimistic outlook for Q2 with lower demand scenarios for the
country’s products and services.
Figure 2: Business Confidence Index, Q2 2011–Q1 2018
150.0
145.0
140.0
135.0
130.0
Index
125.0
120.0
115.0
110.0
105.0
100.0
Q2 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q1 2018
Q3 2011
Q4 2012
Q1 2014
Q2 2015
Q3 2016
Q4 2017
Overall Business Confidence Index Linear (Overall Business Confidence Index )
Source: Department of Economic Development, Government of Dubai MARKETLINE

PESTLE Analysis
Future prospects
Strong foreign relations
The UAE has strong economic and political ties with all the major economies around the world. From the time of
President Zayed, the country has followed a policy of non-interference in the internal affairs of other nations, effectively
using the frameworks of international bodies such as the UN. As a part of its foreign policies, the UAE maintains strong
relationships with the US, the UK and the European Union (EU). UN and NATO forces are often provided with greater
access to its ports and territory. The country has diplomatic ties with more than 50 nations across the world. It is also a
member of the UN and its major various specialized agencies. The country is also a member of the World Bank,
International Monetary Fund (IMF), Arab League, Organisation of Islamic Cooperation (OIC), Organization of the
Petroleum Exporting Countries (OPEC), Organization of Arab Petroleum Exporting Countries, and the Non-Aligned
Movement. In 2010, the UAE was granted observer status at the Organisation Internationale de la Francophonie (OIF).
Though the country follows a non-interfering policy towards the internal affairs of other nations, the nation is one of
Saudi Arabia’s major allies in war against Al-Qaeda and the Houthi militants in Yemen. The country also cooperates
with the Afghan government regarding the rebuilding of Afghanistan. The UAE is also active in extending its reach to
the world’s nations through foreign aid. According to the OECD, the UAE was the 11th largest donor state in terms of
official development aid (ODA) in 2017. The UAE is one of the top donor nations in terms of its percentage share of
ODA to gross national income (GNI), with its 2017 net assistance accounting for 1.31% of the GNI.
Figure 3: Net Official Development Aid ($ Billion), 2011–2017
6.0
5.0
4.0
$ Billion
3.0
2.0
1.0
0.0
2011 2012 2013 2014 2015 2016 2017
Source: OECD MARKETLINE

PESTLE Analysis
Emergence as an independent geopolitical power

The UAE is often considered to be one of Saudi Arabia’s regional allies. However, the UAE is also working towards
becoming an independent geopolitical power in the Arab region by actively engaging in regional politics. A large
increase in its official development aid is one of its major strategies. The UAE has also taken a strong stance in the on-
going Qatar-Gulf crisis since 2017 and cut its diplomatic ties with Qatar in June 2017. Moreover, the nation is
developing its political stance against the extremist groups, including various Islamic terrorist organisations, and is
urging Saudi Arabia to make its stand more concrete against the extremist groups.
Future risks
Unresolved issues with the neighboring nations
A long-standing dispute exists between the UAE and Iran over the three islands – Abu Musa, and Greater and Lesser
Tunbs – located near vital shipping channels at the mouth of the Strait of Hormuz. The UAE has been claiming
ownership of the islands since 1971 and Iran continues to deny this claim. The problem has persisted over the years,
and the failure to resolve the issue has become an important source of bilateral tension. This was evident when the
UAE recalled its ambassador from Tehran as a result of the then Iranian president Mahmoud Ahmadinejad’s April 2012
visit to Abu Musa. Iranian officials visited the disputed islands in February 2013, this prompted the UAE to denounce
the visit and demand the restoration of the islands to them.
In December 2013, Javad Zarif, the Iranian foreign minister, said in a press conference that Iran is ready to discuss its
dispute with the UAE over the Abu Musa island. In January 2014, it was reported that authorities in both countries had
reached a tentative agreement to end the four decade-long dispute. According to the agreement, sovereignty over the
Greater and Lesser Tunbs was expected to be handed over to the UAE while the fate of Abu Musa would be decided
later. A few days later, Iran denied any such agreement. The Arab League intervened and slammed Iran for its denial
of the UAE’s sovereignty over the islands. The possibility of a solution to this longstanding problem seems bleak with
Iran’s firm stance on its policies over the islands.
The on-going Qatar - Gulf crisis, which started in 2017, is also a major concern. Qatar has been alleged to be
supporting terrorism and there is tension over its friendly relations with Iran. The UAE severed all diplomatic ties with
Qatar in June 2017. Since then, there have been increasing instances where both nations have alleged that the other
infringed on their respective airspace with their fighter jets. With little progress being made in terms of negotiations, the
crisis is expected to deepen, with both nations affirming their allegations and policy stances.

PESTLE Analysis
Economic analysis
Overview
The current account surpluses that the UAE enjoys have been driven by high oil prices, as the majority of the nation’s
revenues come from oil and gas sales. The high dependency on these exports makes the economy vulnerable to oil
price movements and the government has realized that, in the long term, other sources of taxable revenue will be
required. With the slowly increasing oil prices, the UAE has proposed a balanced fiscal budget for 2018. Though there
is no corporate tax on business entities in the UAE, the government introduced a value added tax system in January
2018.
Table 4: Analysis of the UAE’s Economic Landscape

▪ Expanding tourism sector ▪ Downward trends in property prices and increasing lending to the
real estate sector
▪ Sound banking sector
▪ Ongoing economic diversification

▪ Improving economic ties ▪ Volatile oil prices and dependency on oil revenues
▪ Attracting foreign investments
▪ Free trade zone
Current strengths
Expanding tourism sector
Tourism has played a crucial role in the growth of the UAE and the sector is expected to remain important. Tourism
drove Dubai’s economic revival and helped Abu Dhabi to diversify its economy away from oil. The industry has
benefitted largely from the 2011 Arab Spring uprisings, as tourists shunned popular destinations such as Bahrain,
Egypt and Tunisia in the wake of civil disturbances. Both Dubai and Abu Dhabi are investing substantially in high profile
leisure and retail projects to support the future growth of this sector.
The opening of new theme parks, investments in aviation infrastructure and a large number of leisure projects over the
next few years, especially in Dubai, Abu Dhabi and Sharjah, is expected to increase the number of visitors. A number
of tourism-related projects that were halted have resumed after the revival of the property sector. In Abu Dhabi, the
Saadiyat Island project hosts Guggenheim Abu Dhabi, Louvre Abu Dhabi, and the Zayed National Museum, along with
resorts and other cultural attractions. Sharjah and Ras Al Khaimah are also orienting their cities to their cultural
foundations so that together with Dubai and Abu Dhabi, the UAE will position itself as a hospitality hub with diverse
appeal. According to the ‘2017 World Travel and Tourism Council Report’, the direct contribution of the travel and
tourism sector to GDP amounted to AED69.1 billion (USD18.82 billion) in 2017 and is forecast to increase by 5.0% in
2018, and by almost 4.1% per annum over 2018–2028. The UAE government states that 5.4% of the country’s total
employment is directly aligned to travel and tourism sector, and that its share is expected to rise by 2.4% per annum

PESTLE Analysis
over the next three years (2018-2020). Although there are risks to demand and the property market due to the
uncertainties in the global market, the tourism sector is expected to remain robust.
Sound banking sector

The country’s banking sector has been resilient to the fluctuating oil prices. Driven by the rise in deposits by the
government, and corporates, the foreign currency dominated loan to deposit ratio declined to 69% in 2017, compared
to 75.1% 2016, according to the Central Bank of the UAE. The total loan to deposit ratio also declined from 99.4% in
2016 to 97.1% in 2018. The UAE’s banks keep prudent total loan loss provisions, above 100% of total nonperforming
loans. The provision coverage ratio stood at 107.1% in 2017. Though the non-performing loans (NPL) ratio has
minimally increased to 6.7% in 2017, compared to 6.4% in 2016, the total risk weighted assets also witnessed 4.2%
growth during 2017. The profitability of the UAE banking system also increased to around 10% during 2016–2017, to
AED38.6 billion ($10.5 billion) in 2017 from AED35.1 billion ($9.6 billion) in 2016.
Ongoing economic diversification and non-oil trade

The UAE has continued to expand its role as a hub for wholesale, retail trade, tourism and real estate destination. The
country’s continuous efforts to pursue economic diversification towards areas such as financial services, renewable
energy and tourism are prominent, with the non-oil sector’s share of GDP increasing from 68.9% in 2010 to 77.7% in
2017. Total non-oil trade was AED1,527.8 billion ($416.01 billion) in 2017, according to the UAE Federal
Competitiveness and Statistics Authority.

PESTLE Analysis
Figure 4: Non-Oil Foreign Trade (AED Billion), 1998–2017
1,800.0
1,600.0
1,400.0
1,200.0
AED Billion
1,000.0
800.0
600.0
400.0
200.0
0.0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Imports Non-oil Exports Re-exports Total Non-oil Export Total Trade
Source: Federal Competitiveness and Statistics Authority - UAE MARKETLINE
Current challenges
Downward trends in property prices and increasing lending to the real estate sector
The UAE’s real estate prices have experienced a downward trend due to the “lower-for-longer” oil price scenario.
Property prices in the UAE, including that of residential and commercial, declined in 2017 as well for the third
consecutive year. The residential properties prices declined by 3.8%, while commercial space rents declined by 3.3%
in 2017 in Dubai, according to the Central Bank of UAE. Abu Dhabi witnessed a decline of 7.3% in terms of office
space rent for 2017, while the decline in residential property prices stood at 9.1% for the same year. Irrespective the
falling trend in prices, the supply of completed office space increased in 2017, by 2.9% in Dubai and by 6.3% in Abu
Dhabi. 2017 also witnessed an increase in banks’ lending to real estate at a 18.1% growth rate. The UAE banks’ real
estate lending as a percentage of total lending increased to19.9% in 2017, from 16.4% in 2016. The prolonged lower oil
prices have affected the property markets and signs of any improvement are meek in 2018, according to the latest
industry trends. By mid-2018, oil prices witnessed an increase per barrel to above $75, indicating a slow recovery from
the “lower-for-longer” oil price scenario. However, a crisis could emerge if the slowly improving oil price scenarios fail to
improve the real estate price indexes through its positive externalities. The continuing oversupply of properties, along
with increasing lending shares to the country’s volatile real estate, is also to be handled with extreme caution and
prudence.

PESTLE Analysis
Future prospects
Improving economic ties
The government is making consistent efforts to improve its economic ties internationally. To this end, the country has
participated in many successful negotiations with China, Italy, Ireland and Kazakhstan, as well as other Gulf countries.
The UAE attributes great importance to its economic and trade co-operation with China and is set to work with the
country to boost co-operation in the financial sector and to invest in the Chinese petrochemical industry. China and the
UAE have seen comprehensive and fruitful co-operation in terms of economy and trade since 2002, and the UAE has
become one of China's most important trade partners in the Middle East. According to CIA - the World Factbook, China
was the UAE’s fourth largest export partner and the largest import partner as of 2017.
The UAE is a part of the US-GCC Framework Agreement for Trade, Economic, Investment and Technical Cooperation
signed in 2012; the UAE ratified the agreement in 2014. The UAE has free trade agreements with Syria, Lebanon, Iraq,
Morocco, Jordan, Singapore and New Zealand. It also has trade treaties with Pakistan, Algeria, Azerbaijan, India,
Kazakhstan, Armenia and the Maldives. The UAE signed trade agreements with South Korea and the Netherlands in
2015. It is also a part of the free trade agreement (FTA) signed between the Gulf Cooperation Council (GCC) and
European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland) in 2009, which has been
implemented since 2015.
The UAE and Italian governments are keen to explore opportunities regarding co-operation, and both sides may benefit
from increased trade and investment in the future. The country is also holding negotiations regarding the establishment
of free trade zones with Argentina, Australia, Brazil, China, the European Union (EU), India, Japan, New Zealand,
Pakistan, Paraguay, South Korea, Turkey, and Uruguay. Improving international ties are gradually integrating the
UAE’s economy with other parts of the world, which will have a positive impact on its economic performance.
Attracting foreign investments

Foreign investments in the Emirates are increasing. According to the ‘UNCTAD World Investment Report 2018’, FDI in
the UAE increased to $10.35 billion in 2017, compared to $9.6 billion in 2016. The country’s FDI stock increased from
$119.58 billion in 2016 to $129.93 billion in 2017. During 2008–2017, its FDI stock witnessed a CAGR of 10.26%, while
FDI inflows witnessed a CAGR of 8.27% during the same period.

PESTLE Analysis
Figure 6: Foreign Investments in the UAE ($ Billion), 2008–2017
140.0 12.0
120.0 10.0
100.0
8.0
$ Billion
$ Billion
80.0
6.0
60.0
4.0
40.0
20.0 2.0
0.0 0.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
FDI Stocks (LHS) FDI Inflows (RHS)
Source: UNCTAD MARKETLINE
Free trade zone

The UAE is fast developing specialized free trade zones to establish itself as one of the prime destinations for business
hubs. The free trade zones have been created in response to demand for the ability to operate without restrictions
regarding either foreign ownership or the remittance of dividends and profits. There are more than 35 free trade zones
in the UAE, many of which are being developed of expanded. These free trade zones are expected to attract more
foreign investment and contribute to the economic diversification of the UAE in the medium term.
Future risks
Volatile oil prices and dependency on oil revenues
The UAE’s economy is significantly diversified when compared to the other GCC countries. However, the country is still
highly dependent on oil revenues. Despite its efforts to diversify its revenue sources, oil revenue’s share increased to
38.0% as a source of public finance in 2017, from 21.8% in 2016. During the same period, non-oil revenue’s share
declined to 65.0% from 74.0%. The decline in the fiscal deficit in 2017 to $0.9 billion, from $4.6 billion in 2016, was
mainly due to an increase in oil revenues, from $23.6 billion in 2016 to $38.0 billion in 2017.

PESTLE Analysis
Figure 7: Public Finance – Oil, Non-Oil Revenue and Expenditure ($ Billion), 2010–2017
450.0
400.0
350.0
300.0
$ Billion
250.0
200.0
150.0
100.0
50.0
0.0
2010 2011 2012 2013 2014 2015 2016 2017
Crude Oil Revenue Other Revenue Total Public Revenue Total Public Expenditure
The increased share of crude oil revenue as a source of finance is also due to the gradual increase of oil prices since
July 2017. The increasing crude oil price is attributed to the sanctions on Iranian oil supply, uncertainties in Venezuela
and controlled oil production by the OPEC nations. However, oil production from the OPEC nations, as well as from the
US and Russia, is expected to increase in the medium term, which will moderate the increasing oil prices. A decline in
oil prices, or even moderation, has the possibility to increase the strain on the UAE’s public finances and budget
balance sheets.

PESTLE Analysis
Figure 8: Public Finance - Sources of Budget Expenditure (%), 2010–2017
100%
90%
80%
Percentage (%) Share in Total Expenditure
70%
60%
50%
40%
30%
20%
10%
0%
2010 2011 2012 2013 2014 2015 2016 2017
Deficit as Percentage (%) of Total Expenditure Percentage (%) of Other Revenue in Total Expenditure
Percentage (%) of Oil Revenue in Total Expenditure
The fluctuations in the oil prices also tend to influence the real estate markets through the local equity markets, which
have fallen significantly due to the low oil prices in recent years. There has historically been a positive correlation
between the equity markets and residential prices and losses on the equity markets tend to lower demand for
residential units, as buyers in both the markets remain the same. The buyers who have lost money in the equity
markets will be short on liquidity, which is expected to depress house prices. If oil prices shift back to lower levels in
2019, it is projected to impact government spending. This is expected to affect economic growth over the medium term.

PESTLE Analysis
Social analysis
Overview
The country has a low rate of unemployment and an abundance of semi-skilled workers for its labor markets. The
Ministry of Social Affairs has taken steps to improve social security, but a stringent human rights situation remains an
area of concern.
Table 5: Analysis of the UAE’s Social Landscape

▪ Comprehensive health insurance policies ▪ Stringent human rights situation
▪ Quality education system ▪ Low number of women compared to men

▪ Social improvements as a part of UAE Vision 2021 and beyond ▪ Lack of freedom of expression
Current strengths
Comprehensive health insurance policies
The UAE’s constitution guarantees access to healthcare. The ruler of Dubai approved the Health Insurance Law of
Dubai No 11 of 2013, which stipulates the mandatory minimum level of health insurance provision to all residents in the
emirate. The law came into force in February 2014 and requires Dubai employers to provide medical cover for their
employees, and their dependents under the Essential Benefit Plan (EBP), rolled out by the Dubai Health Authority
(DHA). The deadline for the mandatory health insurance adoption was March 31, 2017 and failure to comply will result
in fines. Emiratis in Abu Dhabi are covered under the Thiqa scheme, while the resident employee and their dependents
are provided with mandatory medical cover through their employers. The Health Authority Abu Dhabi (HAAD) is the
regulator of the healthcare sector in Abu Dhabi. The National Health Insurance Company (Daman) has provided the
Abu Dhabi Basic Plan which stipulates the minimum level of health insurance cover required for expats in the emirate.
The emirates of Ras Al Khaimah, Ajman, Umm al Quwain, Sharjah and Fujairah have their own healthcare institutions
and policies; however, they are mostly governed under the Ministry of Health, UAE. Healthcare facilities have also
improved over the last few years. The total number of doctors was estimated to be around 20,481 in 2015, while
doctors per thousand persons was 2.23 in the same year, according to MarketLine.

PESTLE Analysis
Figure 9: UAE Doctor Statistics (Number of Doctors/Per 1,000 People), 2006–2015
21,000.0 2.4
19,000.0 2.2
Doctors per 1,000 People

17,000.0
2.0
Number of Doctors
15,000.0
1.8
13,000.0
1.6
11,000.0
1.4
9,000.0
7,000.0 1.2
5,000.0 1.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total Doctors Doctors per 1,000 People
Source: Marketline MARKETLINE
Quality education system

According to the ‘Global Competitiveness Report 2017–2018’, the UAE ranked 12th among 137 nations on the ‘quality
of education’ parameter. The quality of math and science education was ranked 13th, while the quality of the
management of schools was ranked 15th out of 137 nations. The enrollment of students for technical education is
gradually increasing. The enrollment of females in technical education is also showing an upward trend; for the
academic year 2013–2014, the female enrollment was 30.62%, which increased to 37% in the 2016–2017 academic
year.

PESTLE Analysis
Figure 10: UAE Technical Education Status (Enrolled Students/%), 2013–2014 to 2016–2017
12,000.0 40.0
Number of Enrolled Students
35.0
10,000.0
30.0
8,000.0
Percentage (%)
25.0
6,000.0 20.0
15.0
4,000.0
10.0
2,000.0
5.0
0.0 0.0
Male
Male
Male
Male
Total
Total
Total
Total
Female
Female
Female
Female
2013 -2014 2014 -2015 2015 - 2016 2016 - 2017
Number of Enrollment for Technical Education

Percentage (%) Share of Females in Total Enrollment for Technical Education
Linear (Number of Enrollment for Technical Education)
Note: Male – female split enrollment information is not available for the academic year 2016-2017
Current challenges
Stringent human rights situation
The human rights situation in the UAE continues to remain bad, especially for migrant workers. There are millions of
construction workers in the UAE; most workers were brought over from South Asia. The immigration sponsorship law
allows employers extraordinary power over the lives of such workers. Migrant workers face unsafe working
environments, poor living conditions in labor camps and, in some cases, travel documents are allegedly held by the
employers. It is estimated that more than five million migrant workers live in the country and though the government
has reformed Emirati labor laws, implementation remains patchy. Consequently, there is an ongoing exploitation of
workers’ basic rights in the UAE.
Under the kafala sponsorship system, individual employers act as the visa sponsor of employees in the country. The
employer can revoke the migrant sponsorship at will, which means that migrant workers can’t change jobs as they may
end up being deported. Under the new law established in 2010, employers can be changed under certain conditions,
but more needs to be done to improve the plight of foreign workers.
It is argued that the country’s intolerance of criticism led to the prosecution of a Jordanian journalist and an Emirati
academic in 2016. The country’s counterterrorism law is often used against those who speak out publicly about the
cruelties. The ‘Universal Periodic Review 2018’ on the UAE by the Office of the United Nations High Commissioner for
Human Rights (OHCHR) expressed concerns over the stringent restrictions regarding the freedom of expression and

PESTLE Analysis
association, the use of anti-terror laws over vague crimes, the detention of human rights activists and the tightening of
censorship in the UAE. Osama Al-Najjar (son of the activist Hussain Al-Najjar who was arrested for his participation in
the human rights activist group “UAE 94”) was sentenced to three years in prison over his tweets regarding his father’s
imprisonment in 2014. His detention was extended with no specific time limits on the pretext of a potential threat in
2017, based on a request from the public prosecution. Ahmed Mansoor, another activist, has been held since March
2017 over charges of using social media to “harm national unity”, and was sentenced to imprisonment for 10 years in
2018. OHCHR also notes that there is no law in the UAE which covers freedom of information as a basic right.
Low number of women compared to men

The Emirates has one of the worst gender ratios in the world. According to MarketLine, females accounted for 27.65%
of the population in 2017. The gender ratio, i.e. the number of males per 100 females, was as high as 261.65. No
significant change has been seen in the last decade.
Figure 11: Gender Ratio (% of Population/Males per 100 Females), 2008–2017
100.00 350.00
90.00
300.00
Percentage (%) of Total Population
80.00
Males per 100 Females

70.00 250.00
73.60 74.21 74.50 74.50 74.30 73.94 73.53 73.13 72.76 72.35
60.00
200.00
50.00
150.00
40.00
30.00 100.00
20.00
26.40 25.79 25.50 25.50 25.70 26.06 26.47 26.87 27.24 27.65 50.00
10.00
0.00 0.00
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Female Population (%) Male Population (%) Gender Ratio
Source: Marketline MARKETLINE
Future prospects
Social improvements as a part of UAE Vision 2021 and beyond
The UAE’s Vision 2021 was launched in 2010 with the aim of bringing in comprehensive developments across all the
country’s sectors, including the social sector. As a part of Vision 2021, the government aims to improve the country’s
human development scores. There are plans to improve some of its key performance indicators (KPIs), which include
national happiness, human development, family cohesion, and social cohesion. The program also aims to strengthen
national identity parameters and make improvements to the sports sector. Furthermore, it is also prioritizing

PESTLE Analysis
improvements to life expectancy, healthcare facilities and education. The government is encouraging investments in
healthcare infrastructure to support its aim of increasing medical tourism. The ‘Dubai Health Strategy 2016-2021’
specifically prioritizes plans to make Dubai a leading healthcare destination, which will protect the population’s heath
and enhance patient happiness. The UAE also aims to sustain its position as an expat friendly destination for work and
leisure.
Future risks
Lack of freedom of expression
In the 2017 worldwide governance indicators, the UAE was ranked in the 19.21 percentile in terms of the voice and
accountability indicator. Voice and accountability measures the extent to which a country's citizens are able to
participate in selecting their government, as well as freedom of expression, freedom of association and freedom of the
media. The UAE has a low rank due to its conservative and restrictive attitude toward the press. Its restrictions on
freedom of expression and association are a key social issue. Human rights organizations have accused the
government of treating prison inmates poorly. The authorities have also faced criticism for allowing companies to retain
employee’s passports. In 2018, the Office of the United Nations High Commissioner for Human Rights (OHCHR)
expressed its concerns over the stringent human rights situation and tightening censorship. The UAE’s government
needs to address the democratic aspirations of its people.

PESTLE Analysis
Technological analysis
Overview
The country has a strong telecommunications network with state-of-the-art technology. As a result, it is attracting
entrants to its IT market at a rapidly increasing pace. However, weak IP laws in the bio-medical field, costly trademark
protection, the sale of counterfeit luxury brands products and the high level of piracy are matters for concern.
Table 6: Analysis of the UAE’s Technology Landscape

▪ Improving biotechnology sector ▪ Poor scientific outputs
▪ Improving e-commerce segment ▪ Rising piracy and inefficient IP law enforcement

▪ Growing market for information technology ▪ Low level of intellectual property registration
▪ Fourth Industrial Revolution Strategy
Current strengths
Improving biotechnology sector
The UAE’s interest in biotechnology started with the launch of the Dubai Biotechnology and Research Park (DuBiotech)
in 2005 as a part of Dubai’s 2010 vision to establish a knowledge economy. It is the world’s first free trade zone
dedicated to life sciences. The UAE is ahead of the rest of the Arab world in terms of its progress in the field of
biotechnology. The ‘Scientific American Worldview Report and Bio-Innovation Scorecard’ issued by the Biotechnology
Industry Organization (BIO) ranks countries based on their growth in biotech industries. In 2013, the UAE was included
for the first time and placed 40th out of 54 countries. In 2016, the UAE ranked at 26th, ahead of Spain (29th), Saudi
Arabia (40th) and China (41st). The UAE’s improvement in BIO rank reflects the country’s improving level of innovation.
Improving e-commerce segment

The number of internet users and cashless transactions is constantly increasing in the UAE. As reported by the Central
Bank of the UAE, the number of ATM and POS transactions in 2015 was 171.49 million and 370.357 million,
respectively, and the value of transactions by ATM and POS was AED270.71 billion ($77.7 billion) and AED169.44
billion ($46.14 billion), respectively, in the same year. Noon (an e-commerce venture with around 20 million items for
sale in its listing) started its operations in September 2017. Amazon also entered the UAE market in 2017 by acquiring
Souq.com (the largest e-commerce venture for the region) for $580 million. According to statistics quoted by the
International Trade Administration (ITA), US Department of Commerce, the UAE’s e-commerce industry is expected to
reach $10 billion by the end of 2018 and accounts for around 50% of the GCC e-commerce market.

PESTLE Analysis
Figure 12: Number and Value of Banking Transactions (Million/AED Million), 2015
Number of Transactions
Point of Sales
Transactions
400.0
300.0
200.0
100.0
0.0
UAE SWITCH
ATM Transactions
Transactions
Value of Trasactions
Point of Sales
Transactions
300.0
200.0
100.0
0.0
ATM UAE SWITCH

Transactions Transactions
Note: UAESWITCH service links the ATM networks of all banks in the UAE, as well as GCC countries. Customers can withdraw
cash from any ATM anywhere in the GCC by using this service
Source: Central Bank of United Arab Emirates MARKETLINE

PESTLE Analysis
Current challenges
Poor scientific outputs
The education system in the UAE has proven inadequate when it comes to meeting the country's technological
development needs. Since laws are based on Islamic principles, schools have traditionally focused more on customary
subjects than on science and mathematics. There were no centers for higher technical education until 1988, which has
considerably restricted the entry of UAE residents into technologically intensive industries. Firms operating in the UAE
have had to rely extensively on expatriates to meet their staffing needs; this has proven to be expensive. This scenario
is gradually changing; the UAE ranked 13th among 137 nations for the quality of math and science education,
according to the ‘Global Competitiveness Report 2017–2018’. However, the country still lags behind its regional peers,
such as Iran, Egypt and Saudi Arabia, in terms the production of scientific and technical journal articles. According to
the World Bank, Iran published 40,974 journal articles in 2016, while the UAE published a mere 2,181 articles.
According to the ‘Global Innovation Index 2018’, the UAE ranked 38th out of 126 countries. In terms of the innovation
input sub-index ranking, the UAE ranked 24th, however, in terms of the innovation output sub-index, the country ranked
54th. The country needs to design policies to improve its scientific outputs and scientific education base.

PESTLE Analysis
Figure 13: Number Scientific and Technical Journal Articles, 2003–2016
50,000.0
45,000.0
40,000.0
35,000.0
Number of Publications
30,000.0
25,000.0
20,000.0
15,000.0
10,000.0
5,000.0
0.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Arab Nations Average Egypt Iran Qatar Saudi Arabia UAE
Source: The World Bank MARKETLINE
Rising piracy and inefficient IP law enforcement

Rising software piracy has emerged as an important problem globally. Companies have suffered huge losses due to
piracy and measures to control it have yielded limited results. According to the ‘2018 BSA Global Software Piracy
Study’, the UAE’s software piracy rate was 32% in 2017, with losses amounting to $210 million. Compared to other
nations in the Middle East and Africa, the country’s performance was better, but the commercial value of unlicensed
software increased from $155 million in 2009 to $210 million in 2017. Rising software piracy is a significant challenge
and the government needs to tighten its policies to counter this. The UAE has also been kept on the priority watch list
of Office of the United States Trade Representative (USTR) over increasing concerns regarding the re-exportation and
transshipment of infringing goods. The country is identified as a global hub for trade in counterfeit goods, along with
Hong Kong and Singapore. The country’s intellectual property (IP) protection and enforcement laws are identified as
market restrictive, especially for sectors such as pharmaceuticals and medical devices, and the country is also
identified as one of the costliest nations regarding brand protection and the registration of trademarks. It is also argued
that IP enforcements are often not effectively carried out by the customs officials at the free trading zones (FTZs) and
the country is reluctant to engage in bilateral negotiations to change such issues.

PESTLE Analysis
Future prospects
Growing market for information technology
The UAE is becoming a lucrative destination for IT development, in part due to the strong telecommunications network
at its disposal. Considering the size of the population and its demographics, the country favors investments in the IT
industry, and provides cost-effective structures that are beneficial to interested parties. The country’s proximity to Asia
gives it access to a potential market of almost two billion individuals. Basic computer skills are becoming a part of the
curriculum in education institutions, while major universities and education facilities are now promoting and offering
courses in telecommunications and IT. With the presence of many free trade zones, including the Dubai Internet City
(DIC) and Dubai Outsource City (DOC), the IT industry enjoys unique advantages in the UAE. The increasing demand
for Arabic software among businesses in the UAE and neighboring Arabic-speaking nations also creates strong
prospects for further development. In terms of ICT and business model creations, the UAE ranked 11th out of 126
countries, which is better compared to other Middle Eastern nations including Qatar (27th), Saudi Arabia (46th),
Bahrain (39th) and Iran (72nd) in the ‘Global Innovation Index 2018’. In terms of ICT services exports as a percentage
of total trade, the country is one of the frontrunners from the Middle Eastern region. The UAE ranked 57th out of 126
countries compared to its Middle East peer group nations such as Qatar (84th), Saudi Arabia (117th), and Iran (116th)
in the ‘Global Innovation Index 2018’.
Fourth Industrial Revolution Strategy

In September 2017, the UAE’s government launched a strategy to make the country a global hub for the fourth
industrial revolution (4IR) by implementing advanced innovation and future technologies. The country aims to transform
the health sector through the introduction of intelligent genomic medicine that will enhance the country’s position as a
global center for health care and medical tourism. Based on the use of bio-engineering sciences and advanced
renewable energy technologies, the country aims to ensure future food and water security. The strategy also focuses
on the development of national industries in the field of autonomous vehicle technologies and robotics and plans to
utilize satellite data to plan future cities. An improvement in the education sector is also envisaged under the strategy,
especially related to the areas of nanotechnology and artificial intelligence.
Future risks
Low intellectual property registration
The number of patents registered by the UAE is extremely low compared to other developing and developed countries
around the world. In 2015, the UAE registered a mere 45 patents with the US Patent and Trademark Office (USPTO),
compared to 3,628 by Israel and the 360 filed by Saudi Arabia. The number of patent applications by residents as well
as non-residents was around 1,753 in 2015, with resident applications accounting for 0.9%, according to the World
Bank. The UAE’s numbers are considerably low compared to the number of patent applications from Israel (6,419 for
2016, with a resident application share of 20.3%), Iran (15,632 in 2016, with a resident application share of 95.5%) and
Saudi Arabia (3,266 for 2016, with a resident application share of 32.8%).

PESTLE Analysis
Figure 14: Patent Applications by Residents and Non-Residents (Number of Applications/%

Share by Residents), 2016
14,000.0 120.0
12,000.0
100.0
Resident Applicants Share (%)

10,000.0
Number of Applicants
80.0
8,000.0
60.0
6,000.0
40.0
4,000.0
20.0
2,000.0
0.0 0.0
Iran Israel Saudi Arabia Egypt Qatar UAE *
Resident Application Non-resident Application Resident Application Share (%)
Note: The latest data available for the UAE is for 2015.

PESTLE Analysis
Legal analysis
Overview
The UAE is the best in the world in terms of the overall paying taxes indicator according to ‘Paying Taxes 2018’,
published by the World Bank. Being a federation, the UAE does not have a federal income. However, income tax
decrees are produced by each emirate, which are mostly applicable to oil companies and foreign banks. From January
1, 2018, the UAE implemented a value added (VAT) system. The federation’s company ownership laws are to be
considered a major hurdle to FDI inflows, and the nation is in the process of adopting a new UAE Foreign Ownership
Law which aims to attract more foreign capital in certain sectors, such as information technology (IT). A new
amendment to the UAE Cybercrimes Law was made in August 2018 and has been criticized for its infringement upon
the peoples’ rights.
Table 7: Analysis of the UAE’s Legal Landscape

▪ Solid corporate governance of government related entities (GREs) ▪ Judicial independency
▪ Easy tax structure ▪ Lack of a proper insolvency regime
▪ Strong internal security and efficient legal system

▪ Zero income tax as way of attracting talent ▪ Stringent laws
▪ Improvement to punishment structure for minor offences
▪ UAE as a center of arbitration
Current strengths
Solid corporate governance of government related entities (GREs)
Sound corporate governance is crucial for the proper functioning of corporations. The UAE’s economy contracted
following the global financial crisis and, keeping in mind the role of GREs in the 2009 crisis, the government has taken
steps to strengthen the resilience of this sector. Since 2009, many GRE boards of directors were replaced with
important government officials. Another priority was the reduction of GRE related debt. Furthermore, prior approval by
the Supreme Fiscal Committee for any new GRE borrowing was introduced. Gross credit from UAE banks to GREs
observed a constant decline during 2017–2018, while deposits from the GREs witnessed a gradual increase. Focusing
on certain areas, such as improving risk management practices, clearly outlining commercial and noncommercial
operations, and allowing autonomous decision-making by company boards is expected to strengthen corporate
governance of the country’s GREs.

PESTLE Analysis
Figure 15: Total UAE Banks’ Credit to and Deposits from GREs (AED Billion), 2017–2018
205.0
200.0
195.0
190.0
185.0
AED Billion
180.0
175.0
170.0
165.0
160.0
155.0
150.0
2018-01
2017-01
2017-02
2017-03
2017-04
2017-05
2017-06
2017-07
2017-08
2017-09
2017-10
2017-11
2017-12
2018-02
2018-03
2018-04
Credit to GREs Deposit from GREs
Easy tax structure

According to the ‘Paying Taxes 2018’ report by the World Bank, companies in the UAE enjoy a very simple tax
framework. The country has one of the easiest tax structures in the world, with a total tax and contribution rate of
15.9%, with four payments a year. The number of payments made in a year and the time taken to comply (12 hours)
are below the Middle East and World averages. A simple tax framework enhances the ease of doing business and is
expected to draw more businesses to the country. Overall, in terms of paying taxes, the UAE is top among 190 nations,
along with Qatar, according to ‘Paying Taxes 2018’. From January 1, 2018, 5% VAT is to be implemented on goods
and services at the point of sale in the UAE.
Strong internal security and efficient legal system

The Emirates have one of the most efficient police and legal systems in the world. Despite political and social issues in
neighboring countries, the UAE maintains its internal security at a world class level. According to the ‘Global
Competitiveness Report 2017–2018’, the country ranked seventh out of 137 nations in terms of the organized crime
parameter, under the institutions pillar, and fifth in terms of the reliability of police services. The country also ranked fifth
th
and 13 , respectively, for the efficiency of legal framework in settling disputes and efficiency of legal framework in
challenging regulations parameters. According to the Ministry of Justice, in the UAE, the instances of cases at the court
of first instance have been showcasing a declining trend since 2011. Pending cases have also been settled at a faster

PESTLE Analysis
pace since 2012, with decreeing cases having overtaken the number of cases registered. In 2008, the number of cases
registered at the court of first instance was 10,087, while the same declined to 9,084 by 2016. In 2016, decreed cases
accounted for 10,464.
Figure 16: Total Cases at the Court of First Instance, 2008–2016
14,000.0
13,000.0
Number of Cases
12,000.0
11,000.0
10,000.0
9,000.0
8,000.0
2008 2009 2010 2011 2012 2013 2014 2015 2016
Registered Decreed
Current challenges
Judicial independency
In 2014, following her visit to the UAE as the UN’s special rapporteur on the independence of judges and lawyers,
Gabriela Knaul criticized the country in her report for its failure to ensure judicial independence. In the report, it was
pointed out that although the constitution provides judicial independence in letter, in reality, it is a myth. It was observed
that the country’s foremost judicial body, the Supreme Council for the Federal Judiciary, comprised government
officials, instead of judges. The judicial system is considered to be under the de facto control of the executive branch of
government. Under the criminal justice system, the prosecution exerts enormous power, and judicial oversight is often
sidelined to the minimum. The operation of the city security court is under pressure as a relevant law regarding its
operation is not available for public scrutiny. Regarding the allegations of the unlawful detention of personals (often
human rights activists) and their inhumane torture by the police and similar law enforcement agencies, no proactive
measures towards an enquiry into these allegations are made by the judiciary. Gabriela Knaul recommended that, in
order to achieve complete judicial independence, there had to be the equal treatment of women in the eyes of the law
and an investigation into the allegations of torture. However, the UAE questioned the creditability of the report and
PESTLE Analysis
accused it of being influenced by political opponents. The country needs to initiate and implement judicial reforms.
Lack of a proper insolvency regime

A strong bankruptcy system is able to ensure the survival of economically efficient and healthy companies and
reallocate the resources of inefficient ones. Fast and economical insolvency proceedings ensure the quick return of
businesses to normal operation. The UAE’s overall performance in the ‘Doing Business 2018’ report is commendable
as it ranks 21th out of 190 countries and comes top in the MENA region. However, it ranks 69th in the area of resolving
insolvency. The government proposed a new bankruptcy law in 2016, which addresses issues such as delays in
insolvency procedures and the low recovery rate. The new law primarily deals with corporations as well as business
entities in the free trade zones. Though some uncertainties are reduced through the new law, there is still much scope
for improvement in the related laws and its enforcement. According to ‘Doing Business 2018’, the recovery rate in the
UAE was 28.7 cents per dollar, while the same for Qatar and Bahrain were 30.7 cents per dollar and 41.9 cents per
dollar, respectively.
Future prospects
Zero income tax as a way of attracting talent
Salaries in the UAE are among the highest in the world. One of the reasons for the high salaries is the zero income tax,
which makes the country’s take away component one of the highest in the world. Salaries in the UAE are expected to
show positive trend. The expatriate average annual package is around $135,000, which makes them the best in the
world. High salaries and political stability are attracting more and more intelligent minds into the region.
Improvement to punishment structure for minor offences

Laws in the UAE are often considered stringent, even for minor offences, such as bouncing checks or defaults in rent
submission. Bounced checks and defaulting used to land the issuer or defaulter in jail. This caused many businesses to
leave the country without paying the unpaid debts. In July 2015, some changes were made to the insolvency laws, to
decriminalize the bouncing of checks and also facilitate better bankruptcy procedures. Accordingly, a range of minor
offences, including bouncing checks and defaulting on rent, are now treated as a misdemeanor and will be subject to a
financial penalty. These changes to the laws will create an attractive environment, especially for small and medium
enterprises.
UAE as a centre of arbitration

The UAE aims to become an advanced international center for business arbitration. The Dubai International Arbitration
Centre (DIAC), established in 1994, is considered a pioneer for arbitration business in the Middle Eastern region. In
June 2018, the New Arbitration Law was published in the official gazette, which is broadly modeled in reference to the
United Nations Commission on International Trade Law (UNCITRAL) Model Law. The law replaced the provisions of
the Civil Procedures Law, which served as a basis for UAE-seated arbitrations since 1992. These changes are
expected to bring in better business opportunities to the UAE.
Future risks
Stringent laws
Defaulting on payments is still serious issue in the Emirates. A lot of banks are using article 401 of the penal code to
collect unpaid loans, which can lead to the initiation of criminal proceedings, travel bans, and long imprisonments.
Similarly, the illegal consumption of alcohol is strictly prohibited, even if it is done in the privacy of the person’s home.

PESTLE Analysis
Article 313 of the Penal Code punishes people for eating or drinking during the daytime in the month of Ramzan. In
addition, live-in relationships and sex outside marriage is considered illegal in the Emirates, similar to many gulf
nations. Proof of marriage is required before a child born in the UAE can obtain a birth certificate. A more conservative
dress code is also often followed in the public. The complexity of these rules and regulations often results in
unwarranted arrests and legal proceedings against the expats working in the UAE. Amendments to the UAE
Cybercrimes Law in August 2018 aim to tighten existing cyber laws in order to combat terrorism more efficiently.
However, it is widely argued by human right activists that the provision in the amended laws can be misused to further
restrict the already suppressed freedom of opinion and criticisms against the government.

PESTLE Analysis
Environmental analysis
Overview
Continued economic growth has led to rapid development and an improved standard of living. The development came
at the expense of a huge amount of consumption of natural resources, such as food, timber, energy and fiber obtained
from both within and outside the UAE. Steps have been taken to reduce the resulting high ecological footprint. The
UAE has been active in designing measures to prevent water wastage. Increasing CO2 emissions continue to pose a
challenge.
Table 8: Analysis of the UAE’s Environmental Landscape

▪ Proactive government policies ▪ Increasing emissions levels
▪ Lack of natural fresh water resources

▪ Measures to reduce water wastage ▪ Adverse impact of climate change
▪ Cooperation on environmental issues
▪ Green Agenda
Current strengths
Proactive government policies
The Ministry of Climate Change and Environment (MOCCAE) was formed in 2016 as a successor of its predecessor
agencies such as the Supreme Committee for Environment, the Federal Environment Agency and then the Ministry of
Environment and Water. MOCCAE is proactive in developing and amending the required environmental legislation.
In 2015, the UAE government launched the I’MPERFECT initiative which aims to encourage the use of ‘imperfect’ fruits
and vegetables to reduce food loss at the source level, i.e. farms. The launch was attended by representatives from
international and local organizations, including the UN Food and Agriculture Organization (FAO), the UAE Ministry of
Social Affairs, the UAE Ministry of Education, the Khalifa Fund, and the Dubai SME. As well as framing legislation, the
MOCCAE also conducts awareness programs. At least 20 environmental events are considered under the ministry,
including the “day without paper”, Arab environmental day, and Arabian water day. The UAE joined the rest of the world
in making the 2017 and 2018 Earth Hour a success. Dubai achieved remarkable results during the 2017 Earth Hour,
where a reduction of 244MW of energy use (equivalent to 107 metric tons of carbon emissions) was recorded by the
Dubai Electricity and Water Authority (DEWA).
UAE Vision 2021, developed in 2010, aim to promote the sustainable use of resources, and environmental accounting
is considered crucial to achieve the country’s environmental goals. Dr Thani bin Ahmed Al Zeyoudi (Minister of Climate
Change and Environment), during his visit to the Global Summit on Climate Action held at San Francisco during
September 2018, indicated that the UAE is in the process of adopting policies that aim to hit a 27% clean energy target

PESTLE Analysis
by 2021, and 50% by 2050. The country also aims to achieve energy efficiency of 40% by 2050.
Current challenges
Increasing emissions levels
Emissions in the UAE have been increasing in recent years. According to MarketLine, during 2008–2015, CO2
emission growth rates were recorded at an average of 4.3%. In 2015, CO2 emissions increased by 4.1% to reach
238.9 million metric tons. The petroleum and manufacturing industries, along with vehicular emissions, account for the
majority of the country's overall greenhouse gas emissions. Rising emissions levels are a cause for concern as it
makes the country vulnerable to adverse environmental changes.
Lack of natural fresh water resources

The country has very limited fresh water resources, which hampers afforestation and greening projects. Most of these
projects are compensated by the water desalination and the treatment of sewage water for use in irrigation. According
to the World Bank, the per capita renewable internal freshwater resources for the UAE were a mere 16.5 cubic meters
in 2014, while the world average was 5,920.51 cubic meters for the same year.
Figure 16: Renewable Internal Freshwater Resources Per Capita (Cubic Meters), 2014
400.0
350.0
300.0
Cubic Meters
250.0
200.0
150.0
100.0
50.0
0.0
UAE Egypt Qatar Saudi Arab Region Oman
Arabia Average
Future prospects
Measures to reduce water wastage
As water conservation has become important due to shortages, the government has stepped up its efforts to prevent
PESTLE Analysis
water wastage. The government, in order to save water, is encouraging the replacement of taps with water saving
fixtures by 2030. The QCC (Quality and Conformity Council) included bathroom taps, showerheads, bidets, hoses,
kitchen sink taps, urinals and toilet flushers under the water saving fixtures agenda. Since October 2012, the
government has initiated promotional campaigns to persuade people to switch to water saving fixtures. Tap fixtures are
expected to save 64 billion liters of water per year. The traditional toilet uses 15 liters of water per flush, whereas
fixtures approved by the QCC will only consume four to six liters per flush.
Cooperation on environmental issues

In March 2014, an agreement was signed between the United Nations Environment Programme (UNEP) and the UAE
to cooperate on important environmental issues. The agreement was signed during the first international Partnership
for Action on Green Economy (PAGE) conference, which took place in Dubai. PAGE is one of the latest UN initiatives
that will help countries to build national green economy strategies. The UNEP’s priority areas under the PAGE include
disasters and conflict, resource efficiency, climate change, harmful substances and hazardous waste. The UAE will
receive help from the UNEP on issues related to the environment, assistance in implementing programs and joint
projects, and cooperation in building institutions and local communities. The deal is expected to help the country to
implement its Vision 2021 and Green Agenda strategies.
Green Agenda
To transform the UAE into a green economy, the government approved the UAE Green Agenda 2015–2030 in January
2015. The country also unveiled the “UAE - State of Green Economy Report”, which details the country’s progress
towards transforming itself into a green economy. In June 2015, the Emirates Green Development Council (EGDC)
was established to oversee the implementation of the Green Agenda and to ensure effective collaboration between
federal and local authorities. The country’s innovation initiatives to support the Green Economy transformation include:
1. Public buildings powered by sunshine
2. Turning air into water
3. Desalinization without fossil fuels
4. Flight fueled by slat-tolerant plants
5. New business models for clean energy
6. Price reforms for rational consumption
7. Tagging tires for safety
8. Sustainable fishing by remote monitoring
9. Preparing infrastructure for remote vehicles
10. Spatial planning by satellite images
According to the ‘State of Green Economy Report 2017’, the rate of non-fossil energy generation in 2016 was a mere
0.36%, including energy generated from nuclear sources. The rate of waste recovery from municipal solid waste in
2016 was 22.6%; under its green strategy, the UAE aims to reach a 75% rate of waste recovery by 2021.
Future risks
Adverse impact of climate changes
According to studies undertaken by Environment Agency of Abu Dhabi (EAD), 85% of the population and 90% of the
infrastructure in the UAE are located in low lying sea areas. The EAD-commissioned Stockholm Environment Institute's

PESTLE Analysis
2010 study indicates that rising sea levels could lead to a land loss of around 6% by 2100. According to an article
published in the Proceedings of the American Academy of Sciences (PNAS) in 2018, the sea level rise from the melting
ice sheets will accelerate from about 3mm per year at present to 10mm per year by 2100. A one meter rise in sea level
by 2050 will impact 1,155 square kilometers of the total 1,300 square kilometers that make up the country's coast. A
nine meter rise in sea level would result in flooding almost all parts of Abu Dhabi and Dubai. The climate changes are
also expected to increase summer temperatures, which exceed 50 degree Celsius regularly. The impact on agriculture
and fisheries are also a cause for concern due to the rising temperatures on land and in the sea.

Political Landscape
POLITICAL LANDSCAPE
Summary
The UAE’s government has been widely lauded for the judicious use of its oil revenues to realize exponential growth.
This growth has transformed an impoverished conglomeration of small desert provinces into a prosperous federation
with a standard of living comparable to the leading developed nations. Successful monetary and fiscal policies have
ensured the development of the nation as a dominant player in the Middle East. The UAE has attracted substantial
foreign investment, primarily from the US, Western Europe and Asia. Although the absence of democracy has been
criticized, the hereditary system of governance appears to have benefited the country. While border alignments with
Oman and Saudi Arabia have not been delineated, disputes with Iran and deteriorating relations with Qatar have not
deterred the country’s progress.
Evolution
The following figure Error! Reference source not found.highlights key political events in the UAE during the last two
centuries.
Figure 17: The UAE - Political Events Timeline
Pre-1950 1951–1980 1981–1995 1996–2005 2006 onwards
• In 1820, Britain • In 1952, the seven • The UAE became the • In 1996, Iran fuelled a • Mohammed bin Rashid Al
and local rulers Emirates formed a Trucial founding member of dispute over Abu Maktoum was sworn in as
signed a treaty to Council. the Gulf Cooperation Musa and Greater the UAE's prime minister in
combat piracy Council in 1981. and Lesser Tunb by February 2006.
along the Gulf • In 1966, Sheikh Zayed bin building an airport in
coast. From then Sultan Al Nahyan took over • In 1986, Sheikh Abu Musa and a • In December 2006, the
on the area was as the ruler of Abu Dhabi. Zayed was re-elected power station in first-ever national elections
known as the as the president for Greater Tunb. were held.
Trucial Coast. • In 1968, as independence the fourth time.
loomed, Bahrain and Qatar • In 1998, diplomatic • In January 2008, France
• In 1892, a deal joined the Trucial States. • In 1991, the UAE relations with Iraq, and the UAE signed a deal
between the Differences caused the joined the allies which were severed allowing France to have a
Trucial States union to crumble in 1971. against Iraq after the following the permanent military base in
and Britain gave invasion of Kuwait. outbreak of the Gulf the UAE’s largest Emirate,
the latter control • In December 1971, War in 1991, were Abu Dhabi.
over foreign following independence • In 1991, the Bank of restored.
affairs and each from Britain, Abu Dhabi, Credit and • In May 2009, the country
emirate control Ajman, Dubai, Fujayrah, Commerce • In 2001, President withdrew from plans for a
over internal Sarjah, and Umm al- International (BCCI) Sheikh Zayed Gulf monetary union,
affairs. Quwain came together as collapsed. Abu pardoned 6,000 reducing the scope for
the United Arab Emirates Dhabi’s ruling family prisoners. integration in the region.
• In 1948, Sheikh (UAE). owned 77.4%.
Saqr bin • In 2004, UAE • In September 2014, the
Moḥammed Al • Sheikh Zayed presided • In 1994, 11 of the 12 president Sheikh UAE and four Arab states
Qasimi became over the federation. former BCCI Zayed died and was took part in US led air
the Ruler of Ras executives accused succeeded by his strikes on ISIS militants in
Al Khaimah. • The UAE joined the UN of fraud were given son, Sheikh Khalifa Syria.
and Arab League in 1971. jail sentences and bin Zayed Al Nahyan.
• In the 1950s, oil • In 2017, the UAE severed
ordered to pay
fields were • Ras Al Khaimah joined the • In 2005, Sheikh ties with Qatar on the
compensation.
discovered in the federation in 1972. Khalifa announced grounds of the latter's
region. the UAE’s first alleged liberal attitude
elections. towards terrorism.

Political Landscape
A selection of the UAE’s political developments are listed below.
 Sheikh Zayed bin Sultan Al Nahyan, considered the chief figure in terms of the development of the UAE,
presided over the country from the time of its independence in 1971 until his death in 2004. Zayed was
popular among a majority of the people residing in the UAE, primarily because of his ability to create a
distinctly positive impression of his country within the global context while preserving native traditions and
culture.
 Zayed's tolerance of other religions and cultures, combined with his encouragement of women’s rights and the
involvement of women in the economy, helped him to garner the support of the majority of the population; 80-
85% of which consist of immigrant employees.
 Immediately after Zayed's death in 2004, the Federal Supreme Council elected his son Sheikh Khalifa bin
Zayed Al Nahyan as the president.
 Mohammed bin Rashid Al Maktoum, who served as the defense minister since 1971, was sworn in as the
prime minister in February 2006.
Structure and policies
Key political figures

 Chief of state: President Sheikh Khalifa bin Zayed Al Nahyan
 Head of the government: Prime Minister Sheikh Mohammed bin Rashid Al Maktoum
Figure 18: The UAE - Key Political Figures
Sheikh Khalifa bin Zayed bin Sultan Al Nahyan, ruler of Abu Dhabi, was elected as
president to succeed his father, Sheikh Zayed bin Sultan Al Nahyan. Sheikh Khalifa held
a number of major posts and served as the main executive leader in his late father's
government. He oversaw the implementation of all his major projects, at both the local
and federal levels, in the early historic stages of the founding the state.
Sheikh Mohammed bin Rashid Al Maktoum became the ruler of Dubai following the
death of Sheikh Maktoum bin Rashid Al Maktoum on January 4, 2006. Sheikh
Mohammed was chosen as the vice-president and the prime minister of the country by
the members of the Supreme Council. Previously, he held several positions in the
country’s government, including the Minister of Defense position since 1971. Sheikh
Mohammed is also known for his poetry in classical Arabic as well as in the Bedouin
Nabati style.
Structure of government
The UAE is a federation of seven self-governing emirates (Abu Dhabi, Dubai, Sharjah, Ajman, Ras Al Khaimah, Umm
Al Quwain and Fujairah).

Political Landscape
Legislative branch of government

The UAE follows a unicameral legislative system. The legislature is headed by the Federal National Council (FNC),
which functions as a consultative assembly responsible for assessing and amending proposed federal legislation. It
comprises 40 seats. Rulers of the constituent states appoint 20 members for two years and the other 20 members are
directly elected to serve four-year terms. The two most populous emirates, Abu Dhabi and Dubai, have the most
members (four each); while Sharjah and Ras Al Khaimah have three members each and the remaining emirates have
two members each. In October 2006, the UAE cabinet established an electoral college of notables in each emirate to
elect half the members of the FNC. Rulers and advisors select the candidates.
Executive branch of government

The uppermost federal power is the Supreme Council of Rulers, consisting of the rulers of the seven emirates. This
executive body elects the president and the vice president. Conventionally, the president has always been the ruler of
Abu Dhabi and the vice president has always been the ruler of Dubai. The president appoints the prime minister and
council of ministers. The Supreme Council is vested with legislative and executive powers. It approves federal laws and
decrees and formulates central policy.
Key policies
Economic
The government has consistently received recognition for its efforts to create business opportunities over the past
decade. The oil price depression in 1998 called for urgent economic reforms, so Sheikh Zayed worked to make the
country's economy less dependent on oil revenues by actively promoting infrastructural development and industrial
diversification. Private sector investment in energy, communications, telecommunications, transport and ports – all of
which have traditionally been closely guarded – is being encouraged. Significant efforts have been made to create new
productive sectors, to simplify administrative procedures, and to modify commercial laws and make them consistent
with international norms. In October 2016, the UAE cabinet approved a five year federal draft budget for 2017–2021,
with an estimated allocation of AED247.3 billion ($67.34 billion) over five years. The federal budget for 2018 was
AED51.4 billion ($14.0 billion). The budget’s major focus was on health and education along with social development. A
major share (51.2% or AED26.3 billion ($7.16 billion)) of the budget has been allocated to social sector development,
followed by 43.0% or AED22.1 billion ($6.0 billion) for government affairs. Federal projects were assigned AED3.5
billion ($0.95 billion) in the 2018 budget.
Social
Social and human resources policy is the main source of social development in the UAE. It includes a wide range of
goals and initiatives that the government considers its most important objectives. Key elements of the UAE’s vision for
the development of social and human resources include the creation of excellent healthcare, education and other
services, whereby individuals (both nationals and expatriates) are valued and their unique skills and contributions are
ethically leveraged toward achieving a better quality of life for all. More than 51.2% of the 2018 federal budget has
been allocated to social development, education, public services and health. Of the total AED26.3 billion ($7.16 billion)
budget for social development and benefits, higher education received AED10.4 billion ($2.83 billion), followed by
healthcare and social protection with AED4.5 billion ($1.23 billion), pensions with AEA4.4 billion ($1.2 billion), social
rights and community development with AED3.5 billion ($0.95 billion) and housing with AED1.61 billion ($0.44 billion).

Political Landscape
Foreign
The UAE maintains friendly relations with a number of countries, including Russia, Japan, China, the US and several
Western European countries. Of notable significance was the stance that the UAE took as a key ally of US-led
coalitions in their efforts to end Iraq’s 1990–1991 occupation of Kuwait and in the more recent War on Terror. By way of
its moderate foreign policy – and through considerable development assistance to a number of countries – the UAE
has grown into an influential force in the region. According to UAE government sources, the country has provided an
ODA of AED173 billion ($47.1 billion) to 178 countries, as of 2014. According to the OECD, the UAE comes top of all
donor nations in the world in terms of its percentage share of official development aid (ODA) to gross national income
(GNI), with its 2017 net assistance accounting for 1.31% of its GNI.
The federation signed a boundary agreement with Oman in 2003, although the contents of this agreement and maps
illustrating it have not been released. The UAE has no such agreement with Iran, and the two states are involved in a
dispute over the latter's claim to Abu Musa Island, and the Greater and Lesser Tunb Islands. In February 2010, the US
signed an agreement with the UAE to develop the latter’s civilian nuclear energy program. In August 2012, Australia
and the UAE moved their relationship to a strategic level by reaching an agreement that Australia would provide
uranium as fuel for the UAE’s future nuclear power projects.
The UAE is a member of a number of international organizations such as the United Nations and several of its
specialized agencies, the Organization of Petroleum Exporting Countries, the Organization of Arab Petroleum
Exporting Countries, the Arab League, the Organization of the Islamic Conference, the Non-Aligned Movement, the
World Bank, and the International Monetary Fund. In November 2012, the UAE became a member of the UN Human
Rights Council for 2012–2015 and was reelected for 2015–2018. In August 2014, the Emirates targeted Islamist
militants by intervening in Libya, according to US official reports. Since 2015, the country has taken part in air strikes
against Houthi rebels in Yemen along with four other GCC nations, which was led by Saudi Arabia. In 2017, the UAE
government severed its ties with Qatar on the basis of Qatar’s alleged leniency towards terrorist groups such Al-Qaeda
and fundamentalist groups such as the Muslim Brotherhood.
In February 2018, the UAE signed five bilateral agreements with India, which aim to provide better cooperation in the
areas of oil and energy, railway infrastructure and financial services. The UAE signed 13 agreements and MOUs with
China in July 2018 which will work to strengthen the two countries’ ties in the fields of agriculture development and
energy cooperation. Among them was also an MOU regarding the UAE’s cooperation in China’s 21st Century Maritime
Silk Road Initiative.
Performance
Governance indicators
The World Bank's report on governance used voice and accountability, political stability and absence of violence,
government effectiveness, regulatory quality, rule of law and control of corruption as indicators to assess the quality of
governance in over 200 countries and territories and is measured over 1996–2017. Daniel Kaufmann of the Brookings
Institution, Massimo Mastruzzi of the World Bank Institute, and Aart Kraay of the World Bank Development Economics
Research Group carried out the study. For any country, a score of zero equates to the lowest possible ranking and a
score of 100 equates to the highest possible ranking.
The UAE was in the 18.23 percentile rank on the voice and accountability indicator in 2017. Voice and accountability
measures the extent to which a country's citizens are able to participate in selecting their government, as well as
freedom of expression, freedom of association, and freedom of the media. The UAE ranks low due to its conservative
Political Landscape
and restrictive attitude toward the press. It was placed ahead of neighbors such as Saudi Arabia (5.91) but lower than
Oman, which scored in the 19.21 percentile rank.
The UAE was in the 67.62 percentile rank on the political stability and absence of violence indicator in 2017. This
indicator measures perceptions of the likelihood that the government will be destabilized or overthrown by
unconstitutional or violent means, including domestic violence and terrorism. The UAE has a very straightforward
procedure for changes in government, and the ruling king’s choice is accepted across the country. The country ranked
higher than Saudi Arabia, which scored 23.81, and lower than Oman, which scored 71.43.
The UAE was in the 90.38 percentile rank on government effectiveness in 2017. Government effectiveness measures
the quality of public services, the quality of the civil service and the degree of its independence from political pressures,
the quality of policy formulation and implementation, and the credibility of the government's commitment to such
policies. The UAE’s rank in this indicator has been consistent over the last decade. The country was ahead of both
Saudi Arabia and Oman, which scored 62.5 and 61.54 percentile ranks, respectively.
The UAE was in the 80.77 percentile on regulatory quality in 2017. Regulatory quality measures the ability of the
government to formulate and implement sound policies and regulations that permit and promote private sector
development. Both Saudi Arabia and Oman were ranked lower than the UAE with scores of 54.81 and 68.27,
respectively.
The UAE was in the 77.4 percentile rank on rule of law in 2017. Rule of law measures the extent to which agents have
confidence in and abide by the rules of society, and in particular the quality of contract enforcement, the police, and the
courts, as well as the likelihood of crime and violence. The UAE was placed higher than Oman, which was in the 57.21
percentile rank, and Saudi Arabia, which was in the 65.87 percentile rank.
The UAE was in the 82.69 percentile rank on control of corruption in 2017. Control of corruption measures the extent to
which elite and private parties exercise public power for private gain, including both petty and grand forms of
corruption, as well as the appropriation of the state. The UAE has tough laws against corruption and as a result is
ranked highly in this category. It is ahead of both Saudi Arabia and Oman, which are placed in the 65.87 and 63.46
percentile ranks, respectively.
Outlook
The UAE’s government faces no political threat. There is no organized political opposition either on a federal level or to
the various ruling families within the individual emirates. Like many of its Gulf neighbors, the UAE has been concerned
about the rise of hardline Islamist groups, and although there have been no significant incidents of terrorism to date,
the government keeps a close eye on potential developments. Initially, the government was concerned about the
growing influence of the Muslim Brotherhood, but it has taken steps to curb its growth. Though the country won a place
in the UN Human Rights Council during 2012–2015 and got re-elected for the 2015–2018 tenure, the deteriorating
human rights situation remains an area of concern. Increasing tensions in the Middle East, as well as the attempted
coup attempt in Turkey in 2016, deteriorating diplomatic relations with Qatar since 2017, and repeated terror attacks in
Saudi Arabia (latest incident in July 2018) causes concern for the emirates as well. Internal politics seems stable and
equipped to tackle difficult situations should they arise.

Economic Landscape
ECONOMIC LANDSCAPE
Summary
Since the early 1990s, the government has gradually attempted to address the economy's dependence on oil
production. Vision 2021, which launched in 2010, aims to focus on non-oil industries such as tourism, international
finance, and manufacturing through a long-term agenda. The country’s dependence on oil exports for fiscal revenues
has been identified as a key issue that needs to be addressed on a priority basis to ensure that a more dependable,
long-term system of tax revenue is in place. The construction, manufacturing and tourism sectors have been promising
sectors over the past few years. There is no personal income tax in the country. From January 2018, VAT at 5% was
introduced at the point of sale on goods and services.
Evolution
The evolution of the UAE’s economy is described below:
 Historically, with oil prices rising continuously since the 1970s, the UAE’s economy has been highly
dependent on its oil and gas outputs. The contribution of this sector was estimated at around 30% of GDP
during 2000–2007.
 The UAE possesses huge oil and gas reserves that are expected to last for well over 100 years at present
rates of output. According to the OPEC Annual Statistical Bulletin 2018, the country had 97.8 billion barrels of
proven reserves of crude oil as of 2017.
 However, government policies since the early 1990s have attempted to address the issue of the economy's
dependence on crude oil production and its susceptibility to the vagaries of the international oil markets.
 Efforts to this effect gathered momentum towards the end of the 1990s, with a significant proportion of
revenues redistributed towards the development of centers with high quality infrastructure capable of
attracting significant foreign investment.
 During the 1980s, the country experienced an average GDP growth rate of 1.56% and in the 1990s it rose to
5.46%.
 The government's macroeconomic policy was rewarded with an average growth rate of 6.01% during 2000–
2008.
 The UAE did not escape unscathed from the global economic crisis; the country's economy contracted by
5.24% in 2009, after registering 3.19% GDP growth in 2008.
 Since 2010, the UAE has been registering a positive growth rate and grew at an average annual rate of 4.15%
during 2010–2016. In 2017, the real GDP growth rate stood at 0.53% compared to the 3.04% growth recorded
in the previous year. The reduction in oil supply, as a part of the OPEC agreement, led to lower growth in
2017 amidst a marginal increase in oil prices.

Economic Landscape
Figure 19: Evolution of GDP Growth in the UAE (%), 2007–2017
8.0
6.0
4.0
Growth Rate (%)
2.0
0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
-2.0
-4.0
-6.0
Year
Financial system
Overview
The financial system in the UAE is strong and well administered. The system is not affected by short-term
disturbances, which is largely due to improved macroeconomic conditions and historically low interest rates. The
country has prudent and transparent macroeconomic policies. The financial system is chiefly made up of commercial
banks and insurance companies.
Financial authorities and regulators

The Central Bank of the UAE plays a very important role in the national economy. Its main responsibility is to formulate
and implement banking, credit and monetary policies to ensure price stability and to support the dirham and its free
convertibility. The bank also provides financial assistance to all of the country's commercial banks and acts as a
financial advisor to the government. Through the application of effective governance, the Central Bank of the UAE aims
to establish and maintain a sound-banking sector. The bank supports the financial system and adopts an effective
monetary policy that ensures stable economic growth, lower unemployment rates as well as low inflation rates.
The Abu Dhabi Securities Exchange (ADX) was established in November 2000. The provisions formulated under stock
exchange laws authorize the ADX as a legal entity of autonomous status, independent finance and management, and

Economic Landscape
give the exchange the necessary supervisory and executive powers to exercise its functions. The ADX provides
opportunities to invest savings and funds in securities, ensures the soundness and accuracy of transactions, and
imposes stringent controls on securities transactions in order to ensure sound conduct. NASDAQ Dubai (formerly
known as the Dubai International Financial Exchange) is the international stock exchange for the Middle East. It was
formed in September 2005 with principles similar to those of leading international exchanges in New York, London and
Hong Kong. Through the exchange, regional and international issuers can access regional and international
investments. International issuers can access investments from the region through primary or dual listings. The
NASDAQ Dubai region includes the UAE and the rest of the Gulf Cooperation Council (GCC), the wider Middle East
and North Africa, Turkey and the Indian subcontinent.
Insurance
There are 59 insurance companies in the UAE, of which 33 are national insurance companies and 26 are foreign
insurance companies as of 2018. According to the UAE Insurance Authority, the gross written premium amounted to
AED44.82 billion ($12.2 billion) in 2017, an increase of 12.03% over the previous year. During the same period, the
value of invested assets rose from AER52.5 billion ($14.3 billion) in 2016 to AER60.66 billion ($16.52 billion) in 2017. In
terms of asset class, cash and deposits accounted for 26.4%, while the equities and debt securities accounted for
37.1% in 2017. Real estate investments accounted for 8.5%, while ‘A-rated’ loans, deposits and other similar
instruments accounted for 8.2% in 2017, according to the UAE Insurance Authority. Property and liability insurance
accounted for 73.8% of gross written premiums, while personal insurance and fund accumulation accounted for 26.2%.
Performance
GDP and growth rate

Overview
During 1991–2000, the country grew at an average of 4.71%. The economy slowed during 2002 in response to the
relatively tight monetary stance adopted during the previous year. Output growth was 2.43% in 2002, compared to
10.85% in 2000, reflecting a less expansionary fiscal stance and a further decline in investment. Economic activity
rebounded strongly in 2003, with real GDP growth increasing to 8.80%. The upswing in the UAE's economy was driven
primarily by domestic factors and a reduction in oil prices that bolstered international consumption and investment. The
economy grew at a rate of 3.18% in 2007 and 3.19% in 2008. According to MarketLine, the economy contracted by
5.24% in 2009, before recovering to record a growth of 1.64% in 2010. In 2011, the economy registered growth of
6.36%. During 2012–2013, the economy grew by 5.45% due to favorable oil prices, huge non-oil sector investments, a
booming tourism sector, and a buoyant trade and service sector. The economy grew at an average annual rate of
3.56% in during 2014–2015. In 2016, the economic growth slowed down to 3.04% owing to the subdued economic
sentiment in the region and low oil prices, then declined further to 0.53% due to oil supply restrictions as a part of the
OPEC agreement and a comparatively low performance in the real estate sectors. MarketLine expects the economy to
recover in the coming years with slowly increasing oil prices, the recovering real estate and manufacturing sector, and
scheduled events such as Expo 2020.

Economic Landscape
Figure 20: GDP and GDP Growth Rate of the UAE ($ Billion/%), 2012–2022f
500.0 7.00
450.0
6.00
400.0
5.00
Growth Rate (%)

350.0
$ Billiion
300.0
4.00
250.0
3.00
200.0
150.0 2.00
100.0
1.00
50.0
0.0 0.00
2012 2013 2014 2015 2016 2017 2018f 2019f 2020f 2021f 2022f
Year
GDP Real GDP Growth Rate

Economic Landscape
GDP composition by sector

According to MarketLine, the service sector contributed 55.6% to GDP in the UAE in 2017. The industrial sector
accounted for 43.6% of the country's GDP. The agricultural sector contributed the rest.
Figure 21: GDP Composition by Sector in the UAE, 2017
Agriculture, 0.8%
Industry, 43.6%
Services, 55.6%

Economic Landscape
Agriculture
In the UAE, although agriculture accounted for just 0.8% of GDP in 2017, it continues to play a significant role in rural
areas. The country's main agricultural products include dates, vegetables, watermelons, poultry and dairy products.
The country’s agricultural output stood at AED10.58 billion ($2.88 billion) in 2017, according to MarketLine.
Figure 22: Agricultural Output in the UAE (AED Billion/%), 2012–2017
12.0 7.0
6.0
10.0
5.0
8.0
Growth Rate (%)

4.0
AED Billion
6.0
3.0
4.0
2.0
2.0
1.0
0.0 0.0
2012 2013 2014 2015 2016 2017
Year
Agriculture Output Growth Rate

Economic Landscape
Industry
The country's key industries are petroleum and petrochemicals, aluminum, cement, fertilizers, commercial ship repairs,
construction materials, boat building, handicrafts and textiles. Total industrial output in the UAE stood at AED604.31
billion ($164.55 billion) in 2017. Industrial output grew by 13.8% in 2017 following an 8% decline in the previous year.
Figure 23: Industrial Output in the UAE (AED Billion/%), 2012–2017
900.0 20.0
800.0 15.0
10.0
700.0
5.0
600.0
0.0
500.0
AED Billion
Growth Rate (%)

-5.0
400.0
-10.0
300.0
-15.0
200.0
-20.0
100.0 -25.0
0.0 -30.0
2012 2013 2014 2015 2016 2017
Year
Industry Output Growth Rate

Economic Landscape
Services
The growth in the services sector, particularly tourism, has had a major role in the growth of the UAE since the early
2000s. The services sector increased from AED576.7 billion ($157.0 billion) in 2012 to AED771.2 billion ($209.99
billion) in 2017, according to MarketLine.
Figure 24: Services Output in the UAE (AED Billion/%), 2012–2017
900.0 12.0
800.0
10.0
700.0
600.0 8.0
AED Billion
500.0
6.0
Growth Rate (%)

400.0
300.0 4.0
200.0
2.0
100.0
0.0 0.0
2012 2013 2014 2015 2016 2017
Year
Services Output Growth Rate
Fiscal situation
Overview
The guidelines for economic policy outlined by the UAE’s government and the Central Bank of the UAE require that the
fiscal plan of the federation be geared towards a gradual and sustainable use of petroleum revenues.
Fiscal deficit/surplus situation

The state budget surpluses in the UAE have been driven by high oil prices. However, the government's dependence on
exporting these resources makes it vulnerable to oil price volatility. The government has realized that, in the long term,
more dependable sources of taxable revenues will be required. The 2018 fiscal budget proposed a zero deficit, with
both revenue and expenditure expected to be AED51.4 billion ($14.0 billion). According to the IMF, the general
government deficit in 2017 was 1.79% of GDP. It is forecast to reach a surplus of 0.71% of GDP by 2023.
Economic Landscape
Current account
According to the IMF, the current account surplus narrowed from $17.55 billion in 2015 to $4.87 billion in 2016 due to
low oil prices, which significantly impacted the export earnings from oil. However, the current account surplus has
widened to $17.63 billion in 2017 with a marginal recovery of oil prices. The IMF estimates that the current account
surplus will widen further to $20.72 billion in 2023. The current account balance as a percentage of GDP is expected to
increase to 5.3% in 2018 from 4.7% in 2017.
Foreign trade
According to MarketLine, exports from the UAE totaled $383.1 billion in 2017. The UAE is dependent upon demand for
its oil and oil related products from Asian economies, with 10.1% of its exports accounted for by India, 9.9% by Iran,
9.3% by Japan, 5.4% by China, 5.0% by Oman, 4.4% by Switzerland and 4.1% by South Korea in 2017, according to
CIA - The World Factbook. Imports for 2017 were $357.9 billion. The UAE's import demand is more evenly spread, with
China accounting for 8.5% of total imports, followed by the US (6.8%), and India (6.6%) in 2017.
Figure 25: The UAE’s External Trade Position ($ Billion), 2012–2017

760.1
741.0
800.0
708.9
704.4
699.6
652.6
700.0
600.0
500.0
400.5
399.4
383.1
360.3
364.3
$ Billion
357.9
359.6
359.7
349.2
344.1
400.0
300.2
288.3
300.0
200.0
100.0
0.0
2012 2013 2014 2015 2016 2017
Year
Exports Imports Total
International investment position

Foreign investments
According to the ‘UNCTAD World Investment Report 2018’, FDI increased to $10.35 billion in 2017, compared to $9.6
Economic Landscape
billion in 2016. The country’s FDI stock increased from $119.58 billion in 2016 to $129.93 billion in 2017.
Monetary situation
Overview
The Central Bank of the UAE is the regulatory body for the country’s monetary and financial system. The currency is
pegged against the US dollar. The peg has provided stability. Consequently, the government intends to maintain the
current system.
Inflation
The UAE's monetary policy is geared towards maintaining a low level of inflation. Inflation remained low until 2004, but
due to increasing demand for oil and a corresponding increase in commodity prices, the country’s inflation levels
started to increase from 2006, with the inflation rate reaching 9.29%. In 2008, inflation rose to 12.25%. However, it has
slowed down in recent years, with a rate of 1.56% recorded in 2009 due to a drop in oil prices, commodities and
imports. An average of 0.88% was recorded during 2010–2011 as the cost of housing remained unchanged and food
prices rose at a slower pace. In 2012, inflation declined further to 0.66% due to declining rent expenses and
international food prices. In 2013, inflation increased to 1.1% due to an increase in rent and food prices. The inflation
rate was to 2.34% in 2014 due to the soaring property prices, while the rate registered around 4.0% in 2015. According
to MarketLine, the inflation rate eased to 1.62% in 2016 owing to low oil prices and lower rent. In 2017, slowly picking
up fuel and utilities prices pushed inflation up to 2% and is expected to push it to 4.24% in 2018.

Economic Landscape
Figure 26: Consumer Price Index and Consumer Price Inflation in the UAE, 2012–2022f
140.0 4.5
4.0
120.0
3.5
100.0
3.0
Percentage (%)
Consumer Price Index
80.0 2.5
60.0 2.0
1.5
40.0
1.0
20.0
0.5
0.0 0.0
2012 2013 2014 2015 2016 2017 2018f 2019f 2020f 2021f 2022f
Year
Consumer Price Index Inflation (%)
Banking sector
The UAE has a strong banking sector, with a total of 49 commercial banks of domestic and foreign origin active within
the country. 22 national banks are spread across the UAE with 771 branches, while 26 foreign banks have 82
branches, as of the end of 2017. Islamic banking has assumed a more prominent role in the UAE in recent years, and
most conventional banks are opening or expanding Islamic banking departments, while Sharia-compliant consumer
and investment products are being introduced. In 2017, Islamic banking accounted for 23.6% of total bank deposits.
Government agencies and the majority of state-owned companies are using Islamic bonds to finance development and
acquisitions. According to the Central Bank of the UAE, the total assets of UAE banks have grown by almost eight
times since 2000. The total assets of conventional banks stood at AED2.14 trillion ($0.58 trillion) by the end of 2017
with an increase of 2.8% from the previous year. Islamic banking witnessed an 8.8% increase in its total assets by the
end of 2017, from AED506 billion ($137.78 billion) in 2016 to AED550 billion ($149.76 billion) in 2017. The repo-rate
was increased by 25 points by the Central Bank to reach 2.25% in June 2018. The Emirates Interbank Offered Rate
(EIBOR) is a reference rate published by the UAE Central Bank on a daily basis based on the average interest rates at
which UAE banks lend unsecured funds to other banks in the UAE interbank market. Since April 15, 2018, Thomson
Reuters Ltd has been appointed as the EIBOR calculating agent in the UAE. The one year EIBOR as of September 25,
2018 stood at 3.32%.

Economic Landscape
Employment
The unemployment rate stayed below 4.0% during 1991–2007, before rising to 4% in 2008 and to 4.2% in 2009. Since
2010, the unemployment rate has exhibited a downwards trend in the UAE. The unemployment rate was 3.81% in
2010, then it declined to 3.54% in 2011 and to 3.17% in 2012. In 2013, the unemployment rate was 2.81%, then 2.43%
in 2014. The decline continued into 2015 and 2016, with the rate registering 2.09% and 1.64%, respectively, for those
years. An approach towards the nationalization of jobs also the paved way for the reduction in the unemployment rate.
In 2017, the unemployment rate stood at 1.71%. MarketLine forecasts that the unemployment rate will average an
annual rate of 1.68% over 2018–2022.
Figure 27: Unemployment in the UAE (Thousands/%), 2012–2022f
200.0 3.5
180.0
3.0
160.0
140.0 2.5
Unemployment (Thousands)
Unemployment Rate (%)

120.0
2.0
100.0
1.5
80.0
60.0 1.0
40.0
0.5
20.0
0.0 0.0
2012 2013 2014 2015 2016 2017 2018f 2019f 2020f 2021f 2022f
Year
Total Unemployment Rate of Unemployment (%)
Outlook
The UAE’s economy recovered well following a contraction in 2009. According to MarketLine, the economy is expected
to grow by 1.96% in 2018 and is expected to exhibit an average growth of 3.09% over 2019–2023. The economy is still
heavily dependent on its oil revenues, but efforts are being made to diversify the economy. The banking sector is
sound, but nonperforming loans and the sluggish performance of private sector remain areas of concern.

Social Landscape
SOCIAL LANDSCAPE
Summary
Social development in the UAE began with the establishment of the Ministry of Labor and Social Affairs. The
government has ensured that healthcare and education are provided free of cost to its citizens. Healthcare facilities are
accessible to the population through a widespread public hospital network. Private investment in healthcare networks is
also welcomed, with tax-free zones spread across the country.
Evolution
The government instituted a comprehensive social welfare system operated by the Ministry of Labor and Social Affairs
during the 1970s, soon after the formation of the UAE. Social welfare assistance is extended in accordance with the
Social Security Law, which came into effect in 1977. According to official statistics, the Ministry of Labor and Social
Affairs spent $1.5 billion on social welfare from 1986 to 1997. Of the families receiving social assistance during this
period, 25% were in Abu Dhabi, 23% in Dubai, 21% in Sharjah, 7% in Fujairah, 5% in Ajman, and 3% in Umm al-
Quwain. In July 1999, the Federal National Council approved new legislation regulating social security benefits, under
which many groups that were more underprivileged were entitled to social security benefits. In the same year, the
General Authority for Pensions and Social Security, an independent entity that invests employer and employee
contributions to fund the Social Security Program, was set up to operate social welfare schemes. In the recent UAE
budgets, programs under social development and benefits receive the highest allocations. Of the AED51.4 billion
($14.0 billion) 2018 budget, education programs were allocated AED10.4 billion ($2.83 billion; 20.2% of total 2018
budget) while health care and pension programs were allocated 8.8% and 8.6%, respectively, of the total 2018 budget.
Demographic composition
Composition by age and gender
The population of the UAE was 9.4 million in 2017, according to MarketLine. According to CIA - The World Factbook,
the life expectancy of the total population as of 2017 is 77.7 years; it is 75 years for males and 80.4 years for females.
In 2017, the infant mortality rate was 10.00 per 1,000 live births. The birth rate was 15.1 per 1,000 people in 2017.

Social Landscape
Table 9: Mid-year Population by Age (As a Percentage of Population, by

Gender), 2017
Mid-year Population by Age Female Male

0-4 13.14 5.90
5-9 12.13 5.43
10-14 9.61 4.37
15-19 7.93 4.11
20-24 10.24 7.62
25-29 12.13 15.38
30-34 11.11 16.56
35-39 8.27 13.82
40-44 5.62 10.73
45-49 3.64 7.26
50-54 2.29 4.30
55-59 1.54 2.36
60-64 1.00 1.19
65-69 0.59 0.50
70-74 0.35 0.24
75-79 0.20 0.13
80+ 0.21 0.10

Social Landscape
Religious composition
According to CIA - The World Factbook, 76% of the population follow Islam, 9% are Christian, with the remaining 15%
following other religions. Others mainly include Hindus and Buddhists, along with Ahmadi, Baha'i, Dawoodi Bohra
Muslim, Druze, Ismaili, Jewish, Parsi and Sikh.
Figure 28: Major Religions in the UAE
Others, 15.0%
Christian, 9.0%
Muslim, 76.0%
Education
Overview
The formal education system in the UAE has been in place since 1971. Before that, Kuwait financed and administered
education in the country. The UAE’s Ministry of Education has managed the education system since 1972.
System of education
Education is obligatory for six years at the elementary level, and from age six onwards, free education is provided to all
UAE citizens. The government pays expenses related to school uniforms, books, equipment and transportation. Arabic
is a compulsory subject, and segregation of classes by sex is mandatory. At the secondary level, children go through
six years of education in two stages. In terms of higher education, there are a number of quality institutions available to
students. The UAE University was established in 1976 in Abu Dhabi.

Social Landscape
Healthcare
Healthcare services
The UAE has one of the best healthcare systems in the entire Gulf region. This is mainly due to an increase in
government spending and strong public investments during the 1980s. Since January 2006, a comprehensive health
insurance program – the costs of which are shared between employers and employees – has covered all residents in
Abu Dhabi. The number of doctors per 100,000 people was 181 during 1990–1999. There were 38 public hospitals in
2015, compared with only seven in 1970. The number of physicians working for the government health services is also
consistently increasing, from 4,702 in 2010 to 6,952 in 2015, according to the Ministry of Health and Prevention. There
were 88 private hospitals in the UAE as of 2015, with 13,529 physicians serving in these hospitals.
The UAE’s Ministry of Health formulated a policy in October 2008 to automate healthcare processes through the
implementation of IT systems. The ministry has implemented healthcare information technology (HIT) systems from
private sector pharmaceutical company Cerner, which was designed to improve patient care and the work practices of
doctors and nurses. The Cerner Millennium solutions installed throughout the ministry's healthcare delivery facilities
have automated processes related to the scheduling, admissions, emergency, laboratory, pharmacy, radiology,
surgery, medical records, and clinical supplies departments. Nurses and physicians use these programs to manage
and document patient care through online order entry and results notification and viewing. The HIT-enabled systems
are expected to streamline the medical system and document healthcare activity across the country, increasing
accountability.
The UAE is also aiming to become an advanced hub for medical tourism, especially for those from the Arabian, African
and Asian regions. According to the Dubai Health Authority (DHA), the emirate itself attracted 326,649 medical tourists
in 2016, with a growth rate of 9.5% from 2015. Among them, Asian medical tourists accounted for 37%, while Arab and
Europe medical tourists accounted for 30% and 15%, respectively. The Dubai Medical Tourism Project is the
specialized hand of DHA which looks into the promotion of medical tourism activities in the emirate.
Social welfare
Social welfare policies
The Ministry of Labor and Social Affairs formulates the country’s social welfare policies. Social welfare assistance is
extended in accordance with the Social Security Law, which came into effect in 1977. More than 40,000 citizens benefit
from social security and around 9,000 individuals receive pensions. Furthermore, under the national pension and social
security scheme that was started in 1999, citizens who have contributed are eligible for retirement benefits, disability
benefits, and compensation for their dependents upon their death.
Performance
Healthcare
Healthcare facilities are provided free of cost to the citizens of the UAE. The Ministry of Health initiated a multimillion-
dollar program in 2007 in order to expand health facilities, hospitals, and medical centers, and to provide trauma
centers across the seven emirates. The government has established a highly advanced general hospital in Abu Dhabi
with a bed capacity of 143, along with a trauma unit and the first home healthcare program. Diseases related to
cardiovascular problems have been one of the main causes of death in the UAE. In 2015, cardiovascular problems
accounted for 28% of the total deaths in Dubai, according to the Dubai Health Authority (DHA). Other major causes of
death include accidents and injuries, malignancies, respiratory system related diseases, and complications during the
Social Landscape
perinatal period. According to MarketLine, the UAE’s total healthcare expenditure was $12.6 billion or 3.4% of GDP in
2017.
Figure 29: Total Healthcare Expenditure in the UAE ($ Billion/%), 2008–2017
16.0 4.5
14.0 4.0
3.5
12.0
3.0
10.0
Percentage (%)
2.5
8.0
$ Billion
2.0
6.0
1.5
4.0
1.0
2.0 0.5
0.0 0.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
Total Healthcare Expenditure Total Healthcare Expenditure as (%) of GDP
Income distribution
Standard of living
In the ‘2018 Human Development Index’ (HDI) report, the UAE was ranked 34th out of 189 countries in 2017. With a
value of 0.863, the country is in the very high human development category. The UAE has a healthy economy, with
strong Islamic traditions in terms of equitable income distribution and generous welfare spending. The country also has
high living standards and a high cost of living.
Outlook
The UAE has increased its spending on the social sector over the years. More than 50% of the 2018 budget has been
allocated towards social development, education, public services and health. The country falls in the high development
category on the 2018 HDI rankings. The country is taking steps to promote health tourism. However, the stringent
human rights scenario is a major concern. Every year, many activist organizations such as Human Rights Watch and
Amnesty International point out the country’s deteriorating human rights conditions. The UN has also voiced its

Social Landscape
concerns regarding the human rights scenario in the country over the past few years. The governments needs to take
steps to improve the situation, and its membership of the UN Human Rights Council makes it more important for the
country to address these issues.

Technological Landscape
TECHNOLOGICAL LANDSCAPE
Summary
The UAE is technologically well equipped with the latest telecommunications networks and broadband facilities, with
Dubai and Abu Dhabi being two of the world's leading free trade zones. The country does not have a history of
research and development (R&D), with its major scientific institutions being established as late as the 1990s. The
country is making gradual progress in the fields of biological research and space technology.
Evolution
Historically, the UAE has been dependent on advanced technology imports, mostly from foreign oil-producing
companies, and in the past was limited largely to heavy industry. Until recently, nearly all of its technological specialists
were foreigners. During the 1980s, the UAE took major steps to decrease its reliance on foreign scientists and
technicians. The Ajman University College of Science and Technology was founded in 1988, followed by the Higher
Colleges of Technology at Abu Dhabi in 1988, while the Etisalat College of Engineering at Sharjah was established in
1989 to conduct indigenous R&D activities. In March 2008, the National Authority for Scientific Research was
established to co-ordinate and fund scientific research.
Intellectual property
The federal laws pertaining to intellectual property were enacted in 1992, granting protection for patents, trademarks,
and copyrights. However, since the UAE became a member of the General Agreement on Tariffs and Trade, the
established rules were revised to comply with the World Trade Organization's Agreement on Trade-Related Aspects of
Intellectual Property Rights. The revised laws were implemented in 2000. Under the Patent Law, patent applications
are examined for patentability, novelty, inventiveness and industrial applicability. Accepted applications are published in
the Official Gazette, and any interested party has the right to appeal to the committee within 60 days of the date of
publication. A patent is valid for 15 years and renewable for a period of no more than five years. Patents granted for
process inventions relating to drugs and pharmaceuticals are granted for a non-renewable period of 10 years.
In terms of patents registered, the UAE is ahead of Qatar and Oman, but behind Saudi Arabia and Kuwait in the Middle
Eastern region, according to the US Patent and Trademark Office (USPTO). The UAE was granted 45 patents by the
USPTO in 2015, compared to the 360 patents granted to Saudi Arabia and 64 patents granted to Kuwait.

Table 10: Patents Granted by the USPTO, 2010–2015
Year 2010 2011 2012 2013 2014 2015
Saudi Arabia 58 61 170 237 294 360

UAE 7 10 20 18 54 45
Kuwait 14 24 32 84 98 64
Qatar 0 1 4 7 5 6
Oman 1 3 3 3 2 4
Source: USPTO MARKETLINE
Research and development

Although historically the country has dependent on foreign technologies, it has achieved remarkable progress in the
following areas, primarily through foreign collaborations:
 Satellite technology to detect groundwater.
 Developing affordable medicine for malaria. This particular initiative is jointly funded by the US-based Bill and
Melinda Gates Foundation and the UAE Health Ministry.
 In 2007, the Abu Dhabi Future Energy Co., a technologically developed energy research company, signed a
co-operative agreement with the Massachusetts Institute of Technology to establish the Masdar Institute of
Science and Technology, in order to develop sustainable methods of utilizing energy sources.
According to UAE government sources, the country has invested more than AER20 billion in developing space
technologies and related satellite and telecommunication companies such as Al Yah Satellite Communication, Thuraya
Satellite Telecommunications and Dubai Sat. The UAE has launched four satellites, of which two were launched from
the Mohammed bin Rashid Space Centre (MBRSC). The UAE also has launched a 100 year plan for a Mars mission
under the title “Mars 2117 Strategy”. Dubai Science Park was established in 2015 by merging Dubai Biotechnology and
Research Park (DuBiotech) and Energy and Environment Park (EnPark) to promote research and advancements in the
field of life science and related technologies.

Performance
Opportunity sectors
Telecommunications, broadband, and the internet
The UAE has one of the best telecommunications networks in the Gulf region. In 2004, the government established the
Telecommunications Regulatory Authority (TRA) to oversee the general process of telecommunications deregulation.
In 2017, the UAE had 19.82 million cellular telephone subscribers. The country has one of the highest penetration
ratios for mobiles in the world, with 210.91 mobiles per 100 people. The internet market continues to grow, with the
number of users standing at 8.57 million in 2017, compared to 6.81 million in 2011.
Figure 30: Internet Users in the UAE (Millions/%), 2012–2017
8.8 92.0
91.0
8.6
90.0
8.4
89.0
Internet Users (Millions)
8.2
Percentage (%)
88.0
8.0 87.0
7.8 86.0
85.0
7.6
84.0
7.4
83.0
7.2
82.0
7.0 81.0
2012 2013 2014 2015 2016 2017
Year
Number of Users Percentage of Population
The World Economic Forum publishes the ‘Networked Readiness Index’ (NRI), which measures the extent to which an
economy is prepared to use ICT to accelerate competitiveness and well-being. The UAE was ranked 26th among 139
nations in 2016 in terms of the NRI. In terms of parameters such as mobile network coverage, the importance of ICT to
the government’s vision of the future, government success in ICT promotion and ICT use and government efficiency,
the country ranked first in the NRI 2016. In terms of laws relating to ICT, the country ranked fourth, while for
parameters relating to the government procurement of advanced technology products and venture capital availability,

its ranks were second and seventh, respectively.
Outlook
Technological knowledge is crucial for an economy as technological innovation in different fields can help the country
progress. Technology can play a vital role in improving various sectors, including education, infrastructure and
healthcare. The UAE’s comparatively high rank in the ‘Networked Readiness Index 2016’ was the outcome of the
government’s effort to diversify the economy and expand the use of ICT in all segments of society. The country
unveiled a National Strategy for Advanced Innovation in February 2018, which aims to establish a national platform for
innovation, communication and learning. The country is also actively promoting its free zones and business hubs, such
as such as Dubai Internet City, to attract innovation and technology related FDI. With these initiatives and pro-
investment policy adoptions, the country is expected to witness robust growth and become a regional innovation and
technology hub in the coming years.

Legal Landscape
LEGAL LANDSCAPE
Summary
The individual emirates have a constitutional right to choose between joining the federal judicial system and
maintaining their own independent system. On the matters which are strictly not under the federal system jurisdiction,
Abu Dhabi (under the Judicial Department), Dubai (Dubai Court system) and Ras Al Khaimah (RAK Courts system)
maintain courts and legal systems at a local level. Like other countries in the Gulf, the UAE has adopted a free market
economy and has a thriving private sector. The country has a competitive tax structure and several free trade zones to
attract investment; there is also zero taxation on personal income and VAT was only introduced in January 2018. The
state owns a major share of public utilities and all the important sectors.
Evolution
The UAE has adopted a blended combination of Sharia and modern legal regulations to create a unique legal system.
The country’s legal system is modeled from Egyptian and French civil laws, as well as Islamic laws based on Sharia
law. The 1971 constitution was the precursor to the country’s judicial and legal system. In 1971, the Federal Supreme
Court was established; and in 1978, all of the lower courts were incorporated into a unified federal judiciary consisting
of four tribunals. The Commercial Companies Law of 1984 guides business regulations. The Commercial Transaction
Law of 1993 and the Labor Law of 1980 are also important laws guiding businesses in the UAE.
Judicial system
With the goal of maintaining harmony and uniformity between the seven emirates, a constitutional right for each
emirate to either join the federal judicial system or maintain its own independent system was granted. The UAE federal
judiciary primarily consists of the federal Supreme Court, federal courts and public prosecution.
Structure of the system

The federal judicial system in the UAE comprises federal courts of first instance, two federal courts of appeal in Sharjah
and Abu Dhabi, and a federal Supreme Court in Abu Dhabi. The Supreme Court consists of five judges, including a
President of the Court. The Supreme Court has powers over appellate and original jurisdiction. The emirates also have
Islamic Sharia courts parallel to the Federal Courts. There are two common court laws as well; Dubai International
Financial Center Courts (DIFC) and Abu Dhabi Global Market Courts (ADGM). These court systems are modeled on
common civil systems and are primarily based on English and Australian laws but have no jurisdiction over criminal
cases.
Legislation affecting business

Industrial acts, legislations, and regulations
UAE Company Law, which draws many of its regulatory guidelines from Sharia, forms the basis of the legislative and
regulatory body for conducting business in the UAE. The law defines a company as "a contract in accordance with
which two or more persons participate in an economic project by providing a share of the funds or effort required and to
share the profits or losses resulting from such projects”. Conducting business through individual establishments owned
either by a UAE national or by an expatriate is very common. Foreign individuals establishing a business presence are

Legal Landscape
required to have a national sponsor. Some business forms and structures are unavailable to foreign investors. Each
entity must be registered and licensed with the UAE Federal Ministry of Economy and Commerce, and with the
appropriate authority in the emirate in which its office is located.
Tax regulations
There is no federal tax legislation on the taxation of corporations in the UAE; instead, each emirate has its own tax
policies. An income tax decree has been enacted by each emirate, but in practice, the enforcement of these decrees is
restricted to foreign banks and oil companies.
Tax rates
There is no corporate tax rate at the federal level in the UAE. However, each of the seven emirates in the UAE has
issued their own income tax decrees. As of 2018, the corporate tax rate in general ranges from 0%-55%. Foreign
banks are taxed at 20% of their taxable income. Tax is restricted to the taxable income that is earned or deemed to be
earned in that particular emirate. Oil companies (which include any chargeable person that deals in oil or the right to oil
both offshore and onshore) usually pay a flat rate of 50% to 55% in the UAE.
Other local taxes

Municipal taxes are levied in most emirates on annual rentals, paid at 5% for residential premises and 10% for
commercial premises. Other local taxes include a 5% tax on hotel and leisure services and property rentals. Value
added tax (VAT) on goods and services at the point of sale (POS) was introduced in the UAE from January 1, 2018 at
a flat 5%, as an additional source of income.
Performance
Effectiveness of the legal system

Legal indicators
The UAE was ranked the 10th freest economy among 180 nations in the ‘2018 Index of Economic Freedom’ published
by the Heritage Foundation and the Wall Street Journal. The UAE recorded an economic freedom score of 77.6, which
categorizes the country as “mostly free” and indicates a favorable environment for business. In the World Bank’s ‘2018
Doing Business’ report, the UAE ranked 21st out of 190 economies in terms of ease of doing business; the country was
ranked first in the world for the parameter ‘paying taxes’, 10th in terms of registering property, 10th with regards to
protecting minority investors, and second in terms of dealing with construction permits. For resolving insolvency, the
country ranked 69th.
Outlook
The legal landscape of a country is crucial to its overall development. There is a fair level of trust and robustness in the
UAE legal system. Crime rates are declining, and the execution of laws are fairly efficient. The lack of income and
corporate taxes, and the introduction of the unified VAT system, are expected to boost the business climate. Although
the UAE boasts one of the best tax regimes for businesses, the laws pertaining to the foreign ownership of corporate
holdings are restrictive at multiple levels. Similarly, the legal system has also been criticized for its extremely stringent
nature. The new amendment to the UAE Cybercrimes Law is perceived as a measure that restricts the last available
medium for citizens to express opinions.

Environmental Landscape
ENVIRONMENTAL LANDSCAPE
Summary
Located in a desert region, the UAE faces frequent sandstorms, causing severe environmental damage. The country is
also affected by strong tides and occasional windstorms that complicate ship movements. Desalination plants, which
compensate for the lack of freshwater resources, have an adverse effect on the environment through its massive
energy demand. Issues attributed to climate changes, such as the rising sea level, are also concerning. In a prudent
step towards building a green economy, the UAE aims to focus on building its renewable sources in the near future.
Evolution
The UAE established the Supreme Committee for Environment in 1975, which transformed into Federal Environmental
Authority (FEA) in 1993, so it could work on implementing environmental protection legislation across the federation. It
brings cohesiveness to the fragmented environmental protection system. In addition to provisions regarding the general
protection of the environment, a proposed law contains specific chapters on water, soil, air, and noise pollution; the
protection and preservation of wildlife; protected areas; environmental disasters; and the handling of hazardous
materials and waste. Furthermore, the federal government formulated a Law on Control of the Use of Radiation
Sources and Protection Against their Hazards in 2002, in order to establish control over the hazardous byproducts of
nuclear activities and their effects on the environment. In 2004, the UAE Regulations for Radioactive Waste
Management were formulated and the UAE Regulations for Protection against ionization radiation were drawn up to
contain pollution from radioactive waste. The Ministry of Environment and Water (MOEW) was created in 2006,
replacing the FEA, and the Ministry of Climate Change and Environment (MOCCAE) replaced the MOEW in 2016, with
enhanced provisions to deal with climate change related aspects.
Environmental regulations
Overview
The Ministry of Climate Change and Environment is the regulatory authority that governs all activities concerning
environmental protection in the UAE. The government is currently focusing on reducing water wastage and is adopting
measures to manage waste efficiently.
Policy
The UAE government complies with the environmental laws which are mandatory for business organizations operating
within the country. Entities formed under the UAE’s corporate law must comply with environmental law provisions in
order to obtain a license and applicants must submit environmental impact studies.
Environmental protection is considered an important factor in most government decisions. General enforcement of the
law is undertaken by the Ministry of Justice, and under its authority, violators of the proposed provisions are made to
compensate to the individual victims of the environmental damage. During 2000–2006, many of the municipalities
within the UAE introduced a significant amount of environmental regulations, similar to those in other Gulf nations.
Many of these laws contain strong enforcement provisions. Within the UAE, Abu Dhabi and Dubai have the most
comprehensive systems of environmental regulations. Companies are required to obtain permits from the local
municipality for activities relating to water usage (sewage/drainage and liquid waste) and emissions. The governing
bodies have the power to cancel licenses at the polluter's expense, to enforce the discontinuance of drainage, and to
cancel existing permits. The operator of a facility is required to perform monthly tests and to send the results to the
municipality.
Environmental actions
Water conservation
The people of the UAE are the world’s largest water consumers, with average per capita consumption standing at 550
liters per day in 2018, according to the International Trade Administration (ITA), US Department of Commerce. In 2010,
demand for water totaled 4.5 billion cubic meters and is projected to nearly double by 2030. With the present rate of
extraction, the aquifers are expected to deplete in around 55 years. Most of the UAE’s domestic water needs are met
by thermal desalination based on fossil fuels, and 96.5% of the 2019 drinking water provision is expected to be met
through desalination, according to the ITA. The MOCCAE and the Environmental Agency of Abu Dhabi (EAD) have
used various conservation techniques to decrease and manage demand for water in the region. According to the EAD,
approximately 45% of the wastewater is re-used for non-potable purposes in the emirate. Abu Dhabi’s Sewerage and
Services Company (ADSSC), owned by the Abu Dhabi government, aims to meet all water needs for landscapes with
100% treated sewage effluent by the year 2030.
According to United Nations’ (UN) reports, around half of the world's desalination capacity is in the Gulf. Abu Dhabi has
desalination plants that release brine with a very high salt content, at about 70,000 parts per million, back into the sea.
In 2012, the energy company Masdar expressed the need to build solar-driven water production facilities in order to
meet water requirements in the city. In 2012, Coca-Cola initiated the ‘Every Drop Matters’ program across the UAE in
co-operation with the Emirates Environmental Group and the UN Development Programme (UNDP). The program,
supported by the UNDP Water Governance Program and the Eurasia and Africa Group of the Coca-Cola Company,
was helpful in understanding water conservation issues in the UAE. The UAE aims to replace all taps with water-saving
fixtures by 2030 in order to cut consumption by 52%.
Waste management
The UAE is one of the biggest producers of waste in the Gulf region. The country has come up with a federal plan to
set up recycling plants across different areas of the country. In 2009, the Centre of Waste Management launched an
innovative electro hydraulic underground waste system across Abu Dhabi. This technology was used for the first time
in order to regulate waste collection at the city’s central refuse points. The program, called Nadhafa (cleanliness), was
introduced in 2011, and was designed to reduce the quantity of waste produced, to ease the financial burden of waste
disposal, and to ensure the safe treatment and disposal of waste. In 2012, a waste separator was designed by a UAE-
based firm that will allow individuals to send recyclables to specific collection bins instead of discarding them in large
bags of mixed waste meant to reach landfills. Abu Dhabi aims to reduce the waste which is landfilled to 15% of total
waste generated by the end of 2018. The Dubai municipality launched its Dubai integrated waste management master
plan in 2012 and aims to implement a 75% reduction in landfills by 2021, then zero landfills by 2032. Dubai also aims to
generate 7% of its energy demand from clean energy sources by 2020.
Other regulations
Other regulations related to environmental protection include combating pollution in all forms and avoiding damage or
long-term impacts as a result of any economic, agricultural, or industrial urban development programs. The regulations
also require the MOCCAE and other governmental organizations to encourage environmental awareness and pollution-
combating principles among citizens.

Participation in global efforts, agreements, and pacts
Table 11: Major International Environmental Treaties Signed and Ratified by the UAE
International treaty Year of ratification

UN Law of the Sea 1982
Vienna Convention for the Protection of the Ozone Layer, 1988 1989
Montreal Protocol on Substances that Deplete the Ozone Layer 1989
Framework Convention on Climate Change 1995
UN Convention to Combat Desertification in those Countries Experiencing Serious Drought and/or Desertification 1998
and Particularly in Africa
Convention on Biological Diversity 2000
Kyoto Protocol to the UN Framework Convention on Climate Change 2005
Paris Agreement 2015
Performance
Environmental impact
Some of the main environmental issues in the UAE include declining natural vegetation, increasing overgrazing on
rangelands, and desertification. Moreover, extensive groundwater pumping has led to a rise in soil salinity levels, and
effluents from the oil industry have contributed to increased air pollution. According to MarketLine, CO2 emissions in
the UAE increased by 4.1% during 2015, reaching 238.9 million metric tons. In the UAE, the greatest sources of
pollution are the oil and gas industry, followed by the power and transportation sectors. With a score of 58.9 on the
‘Environmental Performance Index 2018’, the UAE was placed 77th out of 180 nations. The country’s air quality is
ranked 72nd, its ecosystem vitality is ranked 90th, its CO2 emission intensity is ranked 175th, its N2O emissions
intensity is ranked 154th, and its sustainable nitrogen management in agriculture is ranked 177th. In terms of heavy
metal exposure to the environment, the country ranked 159th out of 180 nations in the EPI 2018.

Figure 31: Carbon Dioxide Emissions in the UAE (Metric Tons/%), 2008–2015
300.0 15.0
250.0
10.0
200.0
Percentage (%)
Metric Tons (Millions)
5.0
150.0
0.0
100.0
-5.0
50.0
0.0 -10.0
2008 2009 2010 2011 2012 2013 2014 2015
Year
Volume Growth Rate
Outlook
Issues related to the environment have gained immense importance in recent years. The negative effects of climate
change are affecting the ecosystem and natural resources. The most important task for the UAE’s government is to
undertake measures to reduce CO2 emissions and its large dependence on fossil fuels for energy. The government is
also assessing the possibility of developing a peaceful nuclear energy program in consultation with the International
Atomic Energy Agency. The UAE has accepted a $20 billion bid from a South Korean consortium to build four
commercial nuclear power reactors – with a total output of 5.6 GW – by 2020. The Emirates Nuclear Energy
Corporation (ENEC) is projected to produce at least one quarter of its power from nuclear energy by 2020.

Appendix
APPENDIX
Ask the analyst
MarketLine’s Country Analysis Practice consists of a team of economists, analysts, and researchers, all with expertise
in their given fields. For any questions or comments about this report you can contact the author directly at
reachus@marketline.com
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Appendix

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Country Profile Series

United Arab Emirates

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

Despite ongoing economic diversification efforts, a comparatively high reliance on oil-

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

While the UAE’s biotechnology sector is improving, rising piracy is a challenge

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

Table 1: The UAE - Key Fundamentals, 2015–2022f

2015 2016 2017 2018f 2019f 2020f 2021f 2022f

Source: Country Statistics, MarketLine MARKETLINE

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

KEY FACTS AND GEOGRAPHIC LOCATION ..................................................................................................................15

KEY FACTS .................................................................................................................................................................15

PESTLE ANALYSIS .......................................................................................................................................................17

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

ECONOMIC LANDSCAPE .............................................................................................................................................55

SOCIAL LANDSCAPE ...................................................................................................................................................67

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

TECHNOLOGICAL LANDSCAPE ....................................................................................................................................73

LEGAL LANDSCAPE .....................................................................................................................................................77

ENVIRONMENTAL LANDSCAPE ..................................................................................................................................79

ASK THE ANALYST ........................................................................................................................................................83

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

Figure 2: Business Confidence Index, Q2 2011–Q1 2018 .........................................................................................................................20

Figure 3: Net Official Development Aid ($ Billion), 2011–2017 ................................................................................................................21

Figure 4: Non-Oil Foreign Trade (AED Billion), 1998–2017 ......................................................................................................................25

Figure 6: Foreign Investments in the UAE ($ Billion), 2008–2017 ...........................................................................................................27

Figure 8: Public Finance - Sources of Budget Expenditure (%), 2010–2017..........................................................................................29

Figure 11: Gender Ratio (% Of Population/Males per 100 Females), 2008–2017...................................................................................33

Figure 17: The UAE - Political Events Timeline .........................................................................................................................................50

Figure 18: The UAE - Key Political Figures ................................................................................................................................................51

Figure 21: GDP Composition By Sector in the UAE, 2017........................................................................................................................59

Figure 27: Unemployment in the UAE (Thousands/%), 2012–2022f ........................................................................................................66

Figure 28: Major Religions in the UAE ........................................................................................................................................................69

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

Table 2: The UAE - Key Facts, 2018 15

Table 3: Analysis of the UAE’s Political Landscape 18

Table 4: Analysis of the UAE’s Economic Landscape 23

Table 5: Analysis of the UAE’s Social Landscape 30

Table 6: Analysis of the UAE’s Technology Landscape 35

Table 7: Analysis of the UAE’s Legal Landscape 41

Table 8: Analysis of the UAE’s Environmental Landscape 46

Table 9: Mid-year Population by Age (As a Percentage of Population, by Gender), 2017 68

Table 10: Patents Granted by the USPTO, 2010–2015 74

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

KEY FACTS AND GEOGRAPHIC LOCATION

Table 2: The UAE - Key Facts, 2018

Country and capital

Population (2017) 9.40 million

Currency Emirati dirham (AED)

GDP per capita (PPP, 2017) $73071.7

Internet domain .ae

Major religions Muslims (76%), Christian (9%), others (15%)

Country area 83,600 sq. km

Language The official language is Arabic. Other commonly used languages

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018

Figure 1: Map of the UAE

Source: CIA - The World Factbook MARKETLINE

PESTLE Country Analysis Report: United Arab Emirates ML00002-030/Published 10/2018