More new companies come to capital

Latest figures show Abu Dhabi is showing its resilience and proving increasingly attractive

The number of new businesses being registered in Abu Dhabi is on the rise, as is the number of staff being hired, official figures show. A total of 3,253 business licences were approved in the first quarter of the year, a rise of 8 per cent from the same period last year, according to data from the capital's Department of Economic Development (DED).

Most of the new licences were issued to companies in the construction, retail and trade sectors. Demand for labour also increased in the first three months of the year, a DED survey of 1,200 companies in public and private sectors found. The survey asked businesses whether they had recruited staff in the period or were considering hiring in the next six months. It ranked demand for labour, out of a total score of 100, at 63.7 points in the three months, compared with 54.1 in the same period last year.

Economists say the figures provide further evidence of the resilience of Abu Dhabi's economy in the global financial downturn. "We expect to see a pickup in indicators in 2010 with the strengthening in economic activity, including non-hydrocarbon, as the government forges ahead with its investment programme and government spending growth accelerated," said Monica Malik, the chief economist at EFG-Hermes in Dubai.

The number of licences issued increased by 6.8 per cent to 11,870 in the period from May 2008 to April last year. Improvements in the business licensing process also accounted for the rise, officials say. About 95 per cent of the process to obtain a new licence can be completed within five working days after the establishment of a dedicated licensing centre in the capital. "This data reveals the continued positive outlook of investors and businessmen towards current and future conditions," said Shiref Shabana, the senior economic researcher at the DED.

Difficulty in accessing credit, a shortage of business land, illegal competition and lack of skills in the labour market were among the concerns flagged by the business community in the DED's research, Mr Shabana said. Abu Dhabi hopes to partly overcome a shortage of credit for private-sector businesses through the establishment this year of an export development agency to spur trade lending. The agency will be a big step towards the setting up of an export-import bank, which would be the first in the Gulf region. The DED has held talks with Islamic Development Bank (IDB) in Saudi Arabia about the proposals for the facility, said Adeeb Alafifi, the director of foreign trade and export support at the DED.

"We are hoping to sign an agreement with[the IDB] and they will give us a proposal for launching the [export-import]bank," Mr Alafifi said. Initially relying on funding support from government, export-import banks become self-financing based on the proceeds generated by loaning funds for exports. The plans could go some way to filling a void in trade funding in Abu Dhabi that has opened since banks tightened credit lines. Export-import banks are government-owned entities that finance and insure trade deals. Abu Dhabi wants to raise the contribution of non-oil exports to the emirate's GDP to 11 per cent by 2030 from 1.5 per cent now.

That plan involves boosting the value of exports each year by 7 per cent. [e-mail]