Amending the laws will help start-ups grow

More businesses are forgoing traditional offices. Laws should help, not hinder, them

Rent rules are hurting startup companies. Lee Hoagland/ The National

Given the interconnectedness of the country, we are ripe to develop the knowledge economy. Not only do we attract the best and the brightest from across the region, but also our aviation sector connects Dubai and Abu Dhabi to nearly every major city on Earth and we have some of the best universities in the region. The natural result is that Dubai and Abu Dhabi are fast becoming magnets for start-up companies of all stripes and sizes.

The opportunities that the start-up ecosystem present for the economy are endless but their presence requires a reformulation of some traditional business laws. Free zones have been set up to facilitate better ease of business, but start-ups operate differently from traditional companies. As The National reported yesterday, many start-ups and small businesses are hobbled the notion of physical office space. The modern office is increasingly little more than a laptop and a smartphone that can be used anywhere from a coffee shop to a plane.

The challenge is that labour regulations require that a business maintain a physical office space. Regulations vary by emirate, but in Dubai, a hotspot of start-up activity, all businesses are required by law to have a physical office. For some companies, such as the Dubai technology company Inovio Labs, office space costs Dh45,000 a year and is used only to fulfil the legal requirement.

There are initiatives wrestling with this issue. In Abu Dhabi, TwoFour54 facilitates visas, licences and other assistance for start- up companies. Flat6 Labs, the start-up incubator at TwoFour54, gives new companies the office space required by law. While these incubators are helpful, business regulations will have to fall in line with how the knowledge economy works. When the current laws were written, businesses operated in a wholly different way. While authorities are right to maintain levels of oversight for start-ups, requiring a physical space is hurting some new enterprises.

The solution is a change in mentality about how business is done. Regulations are little more than intellectual constructs that apply to specific economic conditions. They can be amended as the climate changes. Start-ups provide great opportunities to diversify the economy and we have to amend our laws in a prudent manner to help ensure that they succeed.