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New SME law supports UAE nationals
‘SME sector can contribute positively to the country’s GDP,’ says Minister of Economy
April 13, 2014 5:43 by kippreport
The Ministry of Economy announced today the issuing of the 2014 Federal Law for SMEs. His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, issued Federal Law No. 2 of 2014 on Wednesday, April 9, for the SME sector, which will regulate the relationship between all government institutions and entrepreneurs of small and medium enterprises.
In his speech today, the UAE Minister of Economy, His Excellency Sultan Bin Saeed Al Mansouri, said the law would create a conducive business environment for UAE nationals, facilitating the establishment of their enterprises and contributing effectively towards promoting the sustainable development of the UAE.
“In line with the objectives of the UAE Vision 2021, this is a modern law that will advance economic development based on the conviction that successful enterprises will increase the ability of the economy to achieve optimal performance and, in turn, contribute to the social stability of the UAE’s nationals and residents,” he says.
According to Al Mansouri, the new law aims to support and promote the development of the SME sector, which can contribute positively to the country’s GDP. It will also instil a culture of research, innovation and entrepreneurship in line with the country’s economic ambitions. “This will help improve the competitiveness of the SMEs, create new job opportunities for UAE nationals and encourage them to work in this sector,” he says.
According to Article (2) of the law, its objectives include nurturing SMEs, dissemination of information about the law and encouragement of research, fostering a culture that stimulates entrepreneurship and creating programmes and initiatives aimed at the development of SMEs.
Article (6) stipulates the creation of policies based on developing rules and regulations to coordinate between the national programme for SMEs and other stakeholders, monitoring the performance indicators of the programme and periodic review of the effectiveness of the SMEs.
The initiative’s key responsibilities, will involve preparing a periodic evaluation report and submitting it to the Council, coordinating with the relevant regional and international organisations to support the development of SMEs, explaining the risks involved and supporting the participation of SMEs in local and international exhibitions, creating and categorising a database of registered SMEs and approving requests for funding.
The law also encourages transparency of SMEs, whom, according to the legislation, must be insured in order to receive facilities and incentives.
The Emirates Development Bank has an agreement with the Small and Medium Enterprises Council and will be obligated to contribute no less than ten per cent of its total annual financing facilities to SMEs that are part of the programme.
SME owners will have to pay a minimum of AED5,000 in penalties for breaches of the law.