Abu Dhabi Confidence in Business Climate Index 2012 manifests optimism pervading business sector

Abu Dhabi, March 26, 2013 (WAM) - The results of the confidence in business climate index 2012 in Abu Dhabi showed improvement in the business environment in the Emirate, as the general index scored 55 points, while the present situation index, , during the same year, registered about 52 points on average, higher (4) points compared to 2011, when it registered 48 points on average. The results of the index for the year 2012 announced by the Studies Directorate of Abu Dhabi Department of Economic Development, confirmed that economic establishments continued to feel the improved economic conditions in the Emirate, which would positively reflect on the development of their facilities in 2013. Owners of the enterprises felt the vigorous revival of internal demand in the Emirate in 2012 compared to 2011. The results revealed an improvement in levels of optimism of establishments operating in construction activity, regarding the volume of sales and investments over the next year. Despite some of the challenges which faced the industry, such as the financing problem, the results pointed out that the beginning of 2012 witnessed a marked recovery in the construction activity amid more optimism for the performance of the activity this year. The index results commended the decision of his Highness Sheikh Khalifa bin Zayed Al Nahyan, the President of UAE, to settle defaulting personal loans of citizens, which raised the level of optimism among enterprises working in the banking sector, in addition to the Government's implementation of various short and medium term infrastructure projects, including bridges, tunnels and electricity, which revived the construction activity and helped to fill part of the gap which resulted from the previous decline in construction activities. Abu Dhabi Government attaches great importance to the setting of a more favourable business and attractive. In this area the Department of Economic Development started e-linkages with a number of federal and local government agencies to further enhance the business environment in Abu Dhabi. The opening of Abu Dhabi Business Centre, of the Department of Economic Development in March 2013 as a one-stop-shop and a "single-window" to service businessmen and investors in all procedures relating to doing business and economic activities licensing, contributed enormously to improving the performance of economic activities in the Emirate of Abu Dhabi; and achieving a qualitative leap in upgrading the quality of services in general. The Executive Committee of the Executive Council of the Emirate of Abu Dhabi reviewed during its meeting in May 2012, the recommendations of the "Doing Business in UAE Report" in order to facilitate and simplify business procedures, enhance environment and reduce challenges facing investors and businessmen in the Emirate. The Committee decided in its meeting, to initially approve the proposed amendments required to enhance Abu Dhabi's business activities, indicated in the report, by three recommendations, concerning cancellation of a number of procedures, amendment of legislation and laws to stimulate business and reducing steps needed to complete transactions, by close coordination between the Abu Dhabi Council for Economic Development, the Competitiveness Office of Abu Dhabi Department of Economic Development, and to relevant authorities, within unified efforts to enhance the competitiveness of the Emirate. The index results pointed out that the establishment of a mechanism for the implementation of those recommendations would significantly limit the constraints and challenges facing investors and businessmen, as revealed by the quarterly opinion polls conducted by the Department of Economic Development. The results showed the suffering of owners of establishments over previous periods, from the length and number of licensing procedures. Eventually the decision would help in improving the business environment in the Emirate of Abu Dhabi, and raise optimism among investors and businessmen in the Emirate. Abu Dhabi has topped the list of best cities for business, according to "Global Traveller" Magazine questionnaire run over eight months in 2012 with the participation of around 25,000 respondents. Standard '&' Poor's Agency also cited the economy of Abu Dhabi among the richest economies in the world, and Affirmed Abu Dhabi Ratings at aa/a-1+ based on the strength and durability of the public budget and the balance of payments, and maintained its outlook as stable. According to Abu Dhabi Chamber, the private sector's contribution to the total output of the emirate in 2012 is expected to increase by more than 33 percent; the Chamber estimated the private sector's contribution to GDP to reach Dh 232 billion in 2012 compared to Dh 218 billion in 2011, at a growth rate of 6.4%. The confidence in business climate index indicated that economic enterprises were more optimistic about the performance of the economy of the Emirate of Abu Dhabi in 2012 compared to 2011, as the index registered (55) points on average for the year 2012, compared to lower levels of optimism in 2011 by two points at 53 points on the 100-points scale. Economic establishments revealed their optimism about economic conditions in the Emirate of Abu Dhabi during the first quarter of 2013, as the value of the future economic conditions index (in the last quarter of the current year poll) scored 58 points, the highest value index during the current year. This optimism came in line with all domestic and international expectations for Abu Dhabi to achieve high growth rates in 2013. The results of the General index and other sub- indicators ( the current situation index compared to the previous last three months, and the prediction indicators for the next three months) according to economic activity (industrial-commercial-services-construction), indicated high level of optimism among economic establishments (commercial and service) compared to (industry and construction) establishments; as the value of the index of confidence in the business climate for trading trade and service activities, registered (56) points each on average during the year 2012. Industry and construction activities scored (53) points for each on average during 2012. Results of construction activity showed an improvement in the value of the index in the second quarter of 2012, reflecting the beginning of the revival of the construction activity, since its setback during the global financial crisis, especially with the announced of the launching of infrastructure projects by the Government of the Emirate of Abu Dhabi at the beginning of the year. The future conditions index indicated that all economic establishments were optimistic about their future economic conditions, in view of the growth witnessed by the Emirate during 2012, and the inflow of investments in the industrial activity and the onset of the effects of the recovery of the real estate market in Dubai, which led to a positive outlook by establishments operating in the construction activity over the recovery of the real estate sector in the Emirate of Abu Dhabi, at the beginning of 2013, spurred by a number of laws which meant to regulate the functioning of the sector. The results of the last quarter of 2012 for all establishments engaged in different activities, with the exception of industrial activity, tended to express high levels of optimism in the future of the Emirate's economy, compared to same quarter of 2011; as the industrial sector was still facing some obstacles, particularly with regard to financing. The results also revealed high levels of optimism about the volume of sales in economic establishments in 2012 compared to 2011; as the index marked (59) and (49) points respectively. With regard to the industrial activity, the indicator hiked on average in 2012 to register 53 points compared to (46) point in 2011. Despite this improvement in the level of optimism, the poll results in the last quarter of 2012 came to express the feeling of (the sample examined) of the increase in prices of raw material, the drop in inventory below safe limits, the decrease in sales volumes and profits, as well as the reduced ability to export products outside the State during the period referred to. With respect to commercial activity, the index during the year 2012 recorded average of (56) points, in comparison with 54 points on average in 2011, indicating high optimism in 2012 due to the improvement of domestic demand. As for the service activity, during the year 2012 the index registered (56) points on average, compared to 52 points on average in 2011, reflecting rising optimism in 2012 as a result of the improved performance of the capital market activity in the first place, in addition to over Dh 1 billion of loans to citizens recovered by banks, which reflected positively on the bank's earnings. With regard to the construction activity, the index value on average during the year 2012 registered (53) points , in comparison with 52 points on average in 2011, indicating rising optimism as a result of the Government's implementation of a number of infrastructure projects in the Emirate, coupled with laws to stimulate demand for real estate. According to the general index relevant to the size of the facility, the results showed high levels of optimism in all enterprises (small, medium and large), However; small enterprises were less optimistic compared to medium and large sized enterprises, due to their reduced marketing and administrative capacities as well as their vulnerability to high fees, especially waste fees. The main obstacles facing enterprises according to polled owners , was the difficulty to access industrial land; the high cost of labour accommodation and immigration fees, as well as fees of trade licenses health insurance, waste collection among others. The delay in dispatching shipments at ports also resulted in increased costs. – Emirates News Agency, WAM