CHAPTER 1

1.1 INTRODUCTION
All organizations need to identify external factors within their environment that could have an
impact on their operations. Many of these will be things that the organization has no control
over, but the implications of which need to be understood.
A popular tool for identifying these external factors is the PESTLE Analysis, which can be
used to help you consider Political, Economic, Social, Technological, Legal, and
Environmental issues. This process of identification should involve a variety of different
disciplines across your organization so that a full picture of these external factors can be built
up. These factors can then be fully researched and analysed.
As organizations become more globalized, expanding their existing borders, the PESTLE
technique ensures that they thoroughly question each of these factors and consider their
impact.
The PESTLE Analysis provides you with a framework that enables you to investigate your
external environment by asking questions for each factor and discussing the likely
implications
The PESTLE tool is a powerful technique for analysing your environment but it should
represent just one component of a comprehensive strategic analysis process.
It is also a useful technique to know if you are part of a strategic project team. In all of these
instances, there is a need to assess the potential impact of external factors on your
organization, from both an operational and a market perspective. The ranking of each of these
factors within the six categories may vary because different organizations have different
priorities. For example, organizations that sell to consumers tend to be more affected by
1

social factors, whereas a global defence contractor would tend to be more affected by
political factors.

1.2 OBJECTIVE OF STUDY

1. To undertake the pestle analysis of UAE.
2. To understand the demographic profile of people in UAE.

1.3 SCOPE OF STUDY

The scope of this study is to make PESTLE analysis of UAE. And also to study the
demographic environment of UAE. This study will help the investors interested to invest in
the country.

1.4 RESEARCH METHODOLOGY

No primary data is collected. Secondary data was collected from readily available sources
such as from internet and newspaper. It is not an authentic data.

1.5 LIMITATION
The study is comprehensive and vast and was to be completed within a specific time. Only
limited part of it is covered in this study and detailed briefly.

CHAPTER 2
HISTORY
2.1 Early Years:
The United Arab Emirates (UAE) was
formed from the group of tribally
organized

Arabian

Peninsula

sheikhdoms along the southern coast

of

the

Persian

Gulf

and

the

northwestern coast of the Gulf of

Oman. This area was converted to
Islam in the seventh century and
forcenturies afterward was embroiled
in dynastic disputes. Most UAE
nationals are descended from two tribal groupings, the Qawasim and the Bani Yas, which
emerged as leading powers in the eighteenth century. The Qawasim, mainly land and sea
traders, dominated what are today the emirates of Ras al Khaymah and Sharjah. The Bani
Yas, who were agricultural and pastoral, lived in what are today the emirates of Abu Dhabi
and Dubai. From the seventeenth to the nineteenth century, the area became known as the
Pirate Coast, as both European and Arab pirates attacked foreign ships. The British mounted
expeditions against the pirates during this period, culminating in an 1818 campaign against
the pirate headquarters of Ras al Khaymah and other harbors along the coast. This action
ostensibly was taken to safeguard British maritime routes, particularly those of the British

East India Company, but some historians have noted that the war was in fact motivated by the
British desire to establish supremacy in the region against the claims of other European
powers.
2.2 British Rule:
In 1820 Britain concluded a general treaty of peace with the principal sheikhs of the Pirate
Coast and Bahrain. Its purpose was to end plundering and piracy and to establish a
commitment to desist from the slave trade. The 1820 treaty includes the first denunciation of
the slave trade ever written into a formal treaty. However, this treaty did not in practice
prevent regular warfare at sea among the tribes of the coast, and in 1835 the sheikhs agreed to
a new truce, pursuant to which they agreed to report aggression to British political or naval
authorities rather than to retaliate themselves. This truce was renewed several times until May
1853, with the signing of a treaty to bring a complete halt to all hostilities at sea, establishing
a perpetual maritime truce. The truce was supervised by Britain, to whom the signatories
referred all violations. The coastal sheikhdoms now became known as the Trucial Coast,
stemming from the treaties signed with the British that resulted in the maritime truce, or as
Trucial Oman, because the treaties separated the sheikhdoms from Oman. These terms
remained in use until 1971, upon independence from Britain. In 1892, as France, Germany,
and Russia were developing an interest in the Gulf Region, Britain and the sheikhs of the
Trucial Coast signed a new treaty, known as the Exclusive Agreement. Under this treaty,
the sheikhs agreed not to enter into any agreement or correspondence with any power other
than Britain and not to cede, sell, or mortgage any part of their territory to anyone other than
Britain without British consent. From this period until independence in 1971, the individual
coastal sheikhdoms were under British protection, which meant that Britain assumed
responsibility for their defense and external relations, while the sheikhdoms followed the

traditional form of Arab monarchy, i.e., each ruler had virtually absolute power over his
subjects.

2.3 Road to Independence:

In 1952 Britain recommended that the rulers of the seven sheihkdoms establish the Trucial
Council to encourage the adoption of common policies in administrative matters, possibly
leading to a federation of states. The rulers met at least twice a year under the chairmanship
of the political agent in Dubai. Since 1958, when petroleum was first discovered beneath the
coastal waters of Abu Dhabi, petroleum assets have largely determined the power structure
and relative prestige of the emirates. Onshore petroleum was found in Abu Dhabi in 1960,
and commercial production followed in 1962, providing significant wealth to the sheikhdom,
which remains the largest and most affluent emirate. In 1966 petroleum was discovered in
Dubai, which prospered greatly from this new wealth.

2.4 Independence:
In 1968 the United Kingdom announced its decision, reaffirmed in March 1971, to end the
treaty relationships with the seven Trucial Coast states and to withdraw British military forces
from the area. In March 1968, the Trucial Coast states joined Bahrain and Qatar (which had
also been under British protection) to form the Federation of Arab Emirates, but Bahrain and
Qatar seceded from the federation in 1971, opting for separate independence. In July 1971,
six of the Trucial States (Abu Dhabi, Ajman, Al Fujayrah, Dubai, Sharjah, and Umm al
Qaywayn) agreed on a federal constitution for achieving independence as the United Arab
Emirates (UAE). On December 1, 1971, the United Kingdom terminated all existing treaties
with the Trucial Coast states, and independence was declared the following day. The seventh
Sheikhdom, Ras al Khaymah, joined the UAE in February 1972. At the time of independence,
Sheikh Zayid ibn Sultan Al Nuhayyan of Abu Dhabi was named the first president of the
UAE, a role he fulfilled until his death in 2004. The ruler of Dubai, Sheikh Rashid ibn Said
Al Maktum, became vice president, and his eldest son, Sheikh Maktum ibn Rashid Al
Maktum, the crown prince of Dubai, was named prime minister. In 1986 Sheikh Rashid
assumed the posts of both vice president and prime minister, but on his death in 1990 Sheikh
Maktum succeeded his father as ruler of Dubai and as vice president and prime minister of
the UAE.
In 1971 the UAE adopted a provisional constitution that was intended to expire after five
years but it was in fact renewed until the adoption of a permanent constitution in 1996. The
government was centralized further in 1976, when the federal government attained control
over defense, intelligence services, immigration, public security, and border control.

CHAPTER 3
PESTLE ANALYSIS
SUMMARY

The UAE has achieved steady progress over the past three decades to emerge as a significant
global player in both the political and the economic arena. The extremely rapid pace of
7

economic growth until 2008 was due to the steady demand for oil, supplemented by a shift in
focus to a number of non-oil sectors. The UAE maintains active diplomatic ties with over 60
countries, primarily in Europe and Asia. The UAE is considered to be 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. Although
the UAE has received international recognition as an economic force, its decision to ally with
the US-led coalitions during the Persian Gulf War and the Iraq war also boosted its political
weight.
Under the leadership of former President Sheikh Zayed, the UAE transformed from a nation
affected by large-scale poverty to a highly developed and prosperous country. With the death
of Zayed in 2004, his son, Sheikh Khalifa, immediately took over as president. Although the
government structure in the UAE is not democratic, both Zayed and Khalifa have shouldered
the responsibility of maintaining the country's progress. The government has consistently
received recognition for its efforts at creating business opportunities over the past decade.
The country's tax regime is also considered among the best in the world for businesses. The
UAE market is equipped with a strong telecommunication network and, as a result, the
country's IT market is gradually becoming competitive. However, the level of science
education remains low. The country has a strong integrated environmental development
program. Its ecological procedures are integrated with the Environmental Impact Assessment
(EIA) program, which is part of business practice in the UAE.

3. 1. Political analysis
Overview

The UAE government is considered

to have a consistent policy-making
agenda. The country is also one of
the first Gulf countries to have
conducted partial elections in the
region. However, the absence of
democratic institutions and fragile relations with Iran now pose problems for the government.

Current strengths

Strong policy implementation

The UAE government is known for its consistent policy implementations. Under the
leadership of the former President Sheikh Zayed, the UAE transformed from a nation affected
by large-scale poverty to a highly developed and prosperous country. With the death of Zayed
in 2004, his son, Sheikh Khalifa, immediately took over as president. While the government
structure in the UAE is not democratic, both Zayed and Khalifa are believed to be directly
responsible for the country's progress. In general, Khalifa is viewed as a modern ruler, with a
pro-Western attitude similar to his father's.
Current challenges

Absence of democracy

Despite several changes in the international sphere, the regime in the UAE has done little
towards implementing democracy in the country. It had one of the lowest percentile ranks
20.7on the voice and accountability indicator in 2008 (World Bank's Governance Matters
2009). This parameter measures the extent to which a country's citizens are able to participate
9

in selecting their government, along with freedom of expression, freedom of association and
the availability of free media. The present regime does not tolerate an interventionist media
and tightly controls the functioning of news outlets, while private media operators are not
allowed to operate from the UAE. There are no political parties and no official opposition
exists in the country. The delay in implementation of democratic laws is leading to increasing
unrest among the public and the media. Furthermore, the country has been historically
dominated by family rulers. Although such a systemanalysis ensures that power is mostly
concentrated within the large ruling families, inter-family relations are sometimes fractious.
Furthermore, there is no formal or recognized legal structure for determining family seniority
or claims on power.
Future prospects

Improving foreign relations

The UAE will continue to base its foreign policy on maintaining close strategic relations with
the West, particularly the US. These relationships have been buttressed by a series of
agreements with France, the US and the UK on the development of nuclear power and on the
establishment of a French military base. The UAE has also signed a major arms deal with the
US. Furthermore, the UAE reopened its embassy in Iraqmaking it the first Arab country to
do so since a general exodus between 2003 and 2005. In 2008, the UAE also waived all of
nearly $7 billion debt dating from the Saddam Hussein era indicating that it is ready to take
significant initiatives in certain areas.

Future risks

Fragile relations with Iran

10

If the relations between the US and Iran take a turn for the worse, which may lead to a war
between the two countries, then the UAE's commercial interests are likely to suffer. The risk
of a US military conflict with Iran has been of particular concern.
The UAE's geographical proximity to Iran, where it also has extensive commercial interests,
makes it more likely that it would experience negative repercussions from any conflict there.
The country has traditionally taken a low-key approach to wider Arab affairs, raising the risk
levels on its relations with Iran.

3. 2. Economic analysis

O
verview
The state budget surpluses that the UAE enjoys have been driven by high oil prices; twothirds of the UAE's fiscal revenues are accrued from oil and gas sales. The government's high
degree of dependence on exports of these resources for its revenues makes it vulnerable to oil

11

price movements, and it has realized that in the long term more dependable sources of tax
revenues will be required.

Current strengths

High per capita income

The UAE's per capita income of $38,900 (as of 2009), calculated on a purchasing power
parity basis, and is the 23rd highest in the world. Per capita income is also expected to see a
rising trend in the coming years. High per capita income shows a strong market for goods and
services across all sectors; it also gives a boost to internal production and reflects the strength
of the domestic market.

High-quality infrastructure

The UAE has been ranked sixth in the world for the quality of its infrastructure according to
the World Economic Forum (WEF). The country has advanced infrastructure in public
premises, roads, ports, aviation and electricity. Moreover, Burj Khalifa, a skyscraper in
Dubai, was opened in January 2010. It is considered to be one of the tallest man-made
structuresat 828 meters. The building is part of the flagship development called Downtown
Dubai. This development is expected to attract investment and generate employment
opportunities in the near term.
Current challenges

Debt issues in Dubai

The Dubai government is facing major debt issues. "Dubai Inc" (which is formed by Dubai
World, Dubai Holding and the Investment Corporation of Dubai) has around $109 billion in
debt. Though Dubai World reached agreement with the majority of its creditors regarding its
$23.5 billion debt restructuring in May 2010, Dubai International Capital (DIC), one of two
finance arms of Dubai Holding has requested for an extension on some of its $2.6 billion
12

debt. The repayment extensions clearly indicate that the debt problems in Dubai are not
sorted out yet.

Dependence on oil revenues

The state budget surpluses that the UAE enjoys have been driven by high oil price levels, and
two thirds of the UAE's fiscal revenues come from oil and gas sales. The government's high
degree of dependence on exports of these resources for its revenues makes it vulnerable to oil
price fluctuations. The authorities have realized that, in the long term, more dependable
sources of tax revenues will be required. The economy's overdependence on oil revenues is
now causing the government to worry about future sustainability.
Future prospects

Improving economic ties

The UAE government is making consistent efforts to improve its economic ties
internationally. As part of this, the country has participated in many successful negotiations
with China, Italy, Ireland, Kazakhstan and other Gulf countries. The UAE attaches 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 finance sector and invest in China's petrochemical
industry. China and the UAE have seen comprehensive and fruitful co-operation in economy
and trade since 2002, and the UAE has become one of China's most important trade partners
in the Middle East. Bilateral ties between the UAE and China have huge potential for growth,
with predications made at the Abu Dhabi and China Economic Forum suggesting that
bilateral trade between the two countries could exceed $100 billion by 2015. Improving
international ties are gradually integrating the UAE economy with other parts of the globe
and are expected to have a positive impact on the UAE's economic performance.

Future risks
13

Hurdles to foreign investment

Foreign investors do not receive the same treatment as national companies. Complete foreign
ownership is restricted under the country's laws. At least 51% of a business must be owned by
a UAE national, and projects must be managed by a UAE national or have a board of
directors with a majority of UAE nationals. Distribution of goods must also be conducted
through a UAE national. These restrictions affect the FDI in the country.

3. 3. Socio-cultural analysis
Overview
The country has a low level of unemployment and an abundance of semi-skilled youth
workers for its labor markets. However, low literacy and a lack of proper facilities for
education are dogging the social system. Furthermore, the government's expenditure on
schooling is low.

Current strengths

Liberalized labour immigration

Labor immigration has been liberalized to allow foreign workers to come and work in the
UAE. The Ministry of Labor passed new legislation on immigration rules in 2007, making
the policies and procedures easier for foreigners. The new law relaxed the rules regarding
residence permits for foreign workers from the EU and other Western countries, and now a
mere registration will suffice to work in the UAE. This has created a good environment for
many highly skilled foreign workers coming to the UAE. Foreign labor participation in the
labor force is 75% of the total workforce in the Gulf countries. The private sector remains the
major employer of foreign labor, constituting over 95% of the total in nations such as the
14

UAE and Qatar. In recent times, Dubai has seen a major rise in the influx of foreign labor due
to the growth in the construction sector. Due to liberalized labor policies, the country has a
skilled workforce from all parts of the globe.
Current challenges

Low literacy rate

The UAE's 77.9% literacy rate is low compared to other countries in the region. A low
literacy rate acts as an obstacle to the availability of highly educated native workers suited for
different sectors of the economy. This is another reason why the dependence on foreign
workers has been increasing over the years, as employers find it easier to find the right kind
of resources to match their requirements among the foreign population. Government
expenditure on education has been historically low in the country. The government
expenditure on education was as low as $1.5 billion in 2002, which increased to around $2.8
billion by 2009. Education expenditure as a share of GDP was a mere 1.2% in 2009.
Furthermore, the spending on higher education is 38% less than spending in other GCC
countries, according to a study conducted by the National Human Resources Development
and Employment Authority (Tanmia). The low level of education spending might decrease
the availability of skilled domestic labor in the country.
Future prospects

Usage of IT systems in healthcare

The UAE MoH formulated a policy in October 2008 to automate healthcare processes
through the implementation of IT systems in the country. The MoH will be implementing
healthcare information technology (HIT) systems from Cernera private sector
pharmaceutical companythat are designed to improve patient care and the way that doctors
and nurses do their jobs. 12 hospitals and 60 clinics will employ a suite of Cerner Millennium
solutions to optimize and automate paper-based processes. iCapital, a UAE-based company
15

and consortium lead, will serve as the prime contractor for these implementations. The Cerner
Millennium solutions installed throughout the MoH healthcare delivery facilities will
automate processes in the scheduling, admissions, emergency, laboratory, pharmacy,
radiology, surgery, medical records andclinical supplies departments. Nurses and physicians
will also 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.
Future risks

Unemployment levels set to rise

Though unemployment levels in the UAE remained low until the onset of the global
economic crisis, it is expected to rise sharply in the coming years. The rate of unemployment
which remained below 2.75% during 2002-08, jumped to a high of 4% in 2008 and to 4.2%
in 2009. According to the UAE Economic Report for 2009, around 47% of the country's
population is unemployed. As per Datamonitor estimates, the unemployment rate is expected
to increase to 5.8% by 2013.

3. 4. Technological analysis

16

Overvi
ew
The country has a strong telecommunication network with state-of-the-art technologies. As a
result, it is attracting entrants to its IT market at a rapidly increasing pace. However, poor
science education and a lack of R&D facilities are a hindrance to technological development.
Current strengths

Rapid growth in telecom segment

The country has made rapid progress in its telecom segment since privatization began in
2000. The telecom segment generated more than $6 billion in revenues in 2009. The fixed
telephone line segment grew at 6.6% in 2009 while the mobile phone market grew at 4.2% in
the same year. According to Datamonitor estimates, the UAE has a high mobile penetration
rate of more than 212 mobiles for 100 people.
Until 2006, the UAE's telecom market was still a monopoly, with the government-owned
operator Etisalat being the lone player. But the entry of telecom operator Du in 2008 marked
a vital shift. In less than a year, Du has a share of nearly 30% in the mobile telecom market as
of 2009, and analysts predict that it will continue to grow in the years to come. According to
the government, the telecom industry will be more open to private players going forward.

Current challenges
17

Poor science education

The educational system in the UAE has been inadequate for meeting its technological
development needs. Since the education laws are based on Islamic principles, schools have
traditionally not devoted enough attention to science and mathematics. With the focus instead
on traditional subjects, students are ill-prepared to meet the needs of a growing knowledge
economy. There were no centers for higher technical education until 1988, and a lack of
technical education hasrestricted the enrollment of UAE students into technologically
intensive industries. Moreover, the firms operating in the UAE have to rely on expatriates to
meet their need for technical staff, which proves to be more expensive.
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. With the size of the population and demography,
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 people. Furthermore, basic computer skills are
becoming part of the curriculum in lower education institutions, while major universities and
education facilities are now promoting and offering courses in the telecommunications and IT
fields. There is also formidable government support for the industry, which is trying to attract
foreign technology firms, particularly in the free trade zones. With 10 free trade zones, the IT
industry enjoys unique and huge advantages in the UAE, and the constant growth in the
demand for Arabic software packages in the UAE and neighboring Arabic-speaking countries
for business creates strong prospects for IT development. With huge revenues and profits
from oil, the standard of living in the country will grow and technology will become essential
in sustaining this standard.
18

Future risks

Low level of 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 2009, the UAE registered only nine patents
with the US Patent and Trademark Office (USPTO), compared to 95,037 in the US, 1,525 in
Israel. Although the country has been performing well in terms of economic growth, it lags
behind in terms of registering intellectual property rights. To make matters worse, the 2009
budget did not make any effort to strengthen the R&D activity in the country.

3. 5. Legal analysis
Overview
The UAE is one of the few tax-free zones in the
world, with virtually no tax laws in the country, and
the country has also improved its policy towards the
industrial sector. However, the federation's company
ownership laws still act as a hurdle to foreign direct investment (FDI) flows and continuous
government interference in business affairs can stifle the performance of businesses in the
country.
Current strengths

Low tax legislation

The UAE as a federation does not have any income tax legislation; each emirate has its own
income tax decree, which is enforced upon oil companies and foreign banks. Relying
primarily on immigrant employees, the UAE economy has projected itself as an employeefriendly nation. There is no tax levied on any personal income, including all types of salaries
and capital gains. Currently there is no national sales tax, although some emirates levy minor
19

sales taxes, such as Dubai's 10% tax on hotel bills. Along with the absence of income tax
laws there is also near-total (99.9%) fiscal freedom in the country. This has led to explosive
foreign interest, investments and corporate relocation into the UAE. Free trade zones have
also been legalized in multiple locations to reduce trade laws and allow new markets to take
hold.

Favourable judiciary

The court systems are highly organized and efficiently run in the country. The judicial
structure is being reformed to improve the level of services and facilitate transactions for
better efficiency. Each emirate has the option of participating in the federal legal system or
retaining its own. Five of the seven emirates have joined the central system under a unified
set of procedures and rules. The UAE's establishment of civil and criminal courts has resulted
in a diminished role of their Islamic equivalents. These new courts have been crucial in the
establishment of Western corporations and foreign investment.
Current challenges

Compliance to local ownership laws

The laws pertaining to the ownership of corporate holdings in the UAE are restricted, with a
mandatory majority to be held resident companies. Current policy dictates that all businesses
within the UAE are required to have at least 51% localownership, except for those within the
free trade zones. While the purpose of this legislation was to encourage entrepreneurship and
business innovation among the Emirati population, it is expected to be amended in the near
future to bring policy in line with WTO norms. However, there have been no changes yet in
the law, resulting in continued restrictions on foreign investment.
Future prospects

Improved policy towards infrastructure sector

20

The policy towards the industrial sector and the laws pertaining to tariffs are slowly being
modified. Due to climatic conditions, infrastructural development and manufacturing
facilities within the UAE are concentrated in pockets. For example, Dubai's Jebel Ali
complex has over 200 factories operating within it. Facilities available at the complex include
a power plant, a deep-water port, a steel fabrication unit and a free trade zone in which there
is a 100% duty exemption on goods meant for transshipment or re-export. The complex will
also host a new international airport called the Dubai World Central International Airport,
which will be completed in phases from 2013 to 2017. The airport is already under
construction and, upon completion, will have the highest cargo and passenger capacities of
any airport in the world.
Future risks

Government interference in business

Government interference has impeded business and domestic activities. There have been
several human rights violations in the labor sector. Furthermore, the Company Law regulates
the activities and the registration of foreign enterprises intending to establish a presence in the
UAE. This gives the government almost total control over which non-native companies may
enter or do business with the federation. Businesses operating in the UAE face strict financial
supervision and lack foreign investment freedoms

3. 6. Ecological and Ethical analysis

Overview

21

The country has a strong integrated

environmental development program,
with supporting economic policies.
Its

ecological

procedures

are

integrated with the Environmental

Impact Assessment (EIA) program,
which is part of business practice in
the UAE. However, the increasing level of emissions is still a concern, with the country being
one of the largest producers of oil in the world. Ethics is the heart of health care, and there is
an expectation that health care providers and all health professionals will adopt a degree of
ethics in their professional duties and practice. Throughout the UAE, stories of unethical
health care practices continue to be heard and read unabated. From Abu Dhabi to Ras Al
Khaimah, Dubai to Fujairah, stories of unethical health practices have been doing the
newspaper rounds regularly.
Current strengths

Integrated environmental development

The UAE government places a lot of importance on sustainable development and

environmental conservation in its economic development decisions. It is mandatory for all
businesses to assess the impact of their activities on the environment. The EIA policy is
monitored by the Ministry of Environment. According to the policy, business proposals must
pass through the EIA's verification process before approval. Furthermore, the Ministry of
Environment has initiated a project in which information about any successful
implementation of EIA principles is collected and analyzed for further strengthening and
development. The Ministry of Environment, in co-operation with other ministries, is also
encouraging the application of EIA principles to sector-specific programs, such as transport,
22

energy and oil production. The integration of environmental assessment into business
activities has brought in many changes, improving the environmental credentials of the UAE.
Current challenges

Increasing emission levels

Emissions of greenhouse gases in the UAE have been increasing over the years. CO2
emissions in the UAE increased by
3.9% to reach 169.4 million metric tons during 2009. The petroleum and manufacturing
industries, along with vehicular emissions, account for the majority of the UAE's overall
greenhouse gas emissions. Continued growth in road traffic and metals production also
contributed to the country's emission levels. Datamonitor forecasts suggest that CO2
emissions will increase to reach 187.1 million metric tons by 2013. The rising level of
emissions is a cause for concern, making the country vulnerable to adverse environmental
consequences. Future prospects

Wastewater recycling plant

An advanced wastewater treatment and recycling plant was launched at the Al Ghail
Industrial Park in April 2010. The water recycling plant incorporates environment friendly
recycling technology and has been funded by the Japanese government. An investment of
$4.5 million has been made for the construction of the plant and a funding of $1 million will
be made available annually during the three year period for plant operations. The project is
aimed to design, build, and operate for three years a 2000 cubic meter per day Membrane Bio
Reactor. The wastewater recycling and treatment plant is expected to recycle waste water for
industrial usage as an alternative to potable water in the Al Ghail Industrial Park.

Future risks

Increasing hazardous effects of desalination

23

The water resources per person in the UAE are already one of the lowest in the Middle East.
The water needs in the UAE are met through a desalination process, the effect of which is
slowly becoming hazardous. Most of the country's domestic water needs are met by this
process. The process removes salt from seawater. Other Gulfcountries have also invested in
Desalination facilities, and the United Nations (UN) estimates that almost half the world's
desalination capacity is in the Gulf. Abu Dhabi has five large desalination plants, which
release brine with a very high salt content of about 70,000 parts per million (ppm) back into
the sea. According to classifications from the US Geological Survey, fresh water has less than
1,000ppm and US oceans have 35,000ppm. The brine released into the Gulf waters, therefore,
has negative environmental implications. Furthermore, the cost of this process has been very
high. The increasing negative effects and the high cost of drinking water have now become a
problem for the country.

24

CHAPTER 4
DEMOGRAPHIC ENVIRONMENT
Demography is the study of human populations in terms of size, density, location, age,
gender, race, occupation, and other statistics. The demographics of the UAE are extremely
diverse. In 2010, the UAE's population was estimated to be 8,264,070, of whom only 13%
were UAE nationals or Emiratis, while the majority of the population were expatriates. The
country's net migration rate stands at 21.71, the worlds highest. Under Article 8 of UAE
Federal Law no. 17, an expatriate can apply for UAE citizenship after residing in the country
for 20 years, providing that person has never been convicted of a crime and can speak fluent
Arabic. There are 1.4 million Emirati citizens. The United Arab Emirates' population is
ethnically diverse. According to the CIA, 20% of residents were Emirati, 23% were other
Arab and Iranian, 50% were South Asian, and 7% were other expatriates, including
Westerners and East Asians (1982 est.). With a male/female sex ratio of 2.2 for the total
population and 2.75 for the 1565 age group, the UAE's gender imbalance is second highest
in the world after Qatar. In 2009, Emirati citizens accounted for 16.5% of the total
population; South Asian (Indian, Sri Lankan, Pakistani, Bangladeshi) constituted the largest
25

group, making up 58.4% of the total; other Asians made up 16.7% while Western expatriates
were 8.4% of the total population.
More than 100,000 British nationals live in the country. The rest of the population were from
other Arab states. The average life expectancy is 76.7 years (2012), higher than for any other
Arab country. About 88% of the population of the United Arab Emirates is urban.

4.1 Religion
Islam is the largest and the official
state religion of the UAE. The
government follows a policy of
tolerance toward other religions
and

rarely

interferes

in

the

activities of non- Muslims. By the

same token, non-Muslims are
expected

to

avoid

interfering

in

Islamic religious matters or the Islamic upbringing of Muslims. The government imposes
restrictions on spreading other religions through any form of media as it is considered a form
of proselytizing. There are approximately 31 churches throughout the country, one Hindu
temple in the region of Bur Dubai, one Sikh Gurudwara in Jebel Ali and also a Buddhist
temple in Al Garhoud.
Based on the Ministry of Economy census in 2005, 76% of the total population was Muslim,
9% Christian, and 15% other (mainly Hindu). Census figures do not take into account the
many "temporary" visitors and workers while also counting Baha'is and Druze as Muslim.
Among Emirati citizens, 85% are Sunni Muslim, while Shi'a Muslims are 15%, mostly
concentrated in the emirates of Sharjah and Dubai. Omani immigrants are mostly Ibadi, while
Sufi influences exist too.
26

People of all faiths or no faith are given equal protection under the country's constitution and
laws. Languages Arabic is the national language of the United Arab Emirates. The Gulf
dialect of Arabic is spoken natively by the Emirati people. As a British colony until 1971 and
being a hub for commerce, English is the primary lingua franca in the UAE. As such, a
knowledge of the language is a requirement when applying for most of the jobs in the UAE.
Other widely used languages are Persian, spoken by the Iranian diaspora, as well as HindiUrdu, Balochi spoken by Baloch, Pashto and Tagalog, spoken by the large Southeast Asian,
Pashtun and Filipino diasporas, respectively. Malayalam, the official language of Kerala
(India) is spoken widely by the Malayali community that forms a huge majority of the Indian
diaspora in the UAE. Additionally, there are small Somali, Malay, Mandarin and Japanese
speaking communities.
Emirati architecture and folk arts. For example, the "barjeel" has become an identifying mark
of traditional Emirati architecture and is attributed to Persian influence. Certain folk dances,
such as "alhabban", are originally Persian. Local Emirati culture has also been influenced by
the cultures of East Africa and India. The United Arab Emirates has a diverse and
multicultural society. Major holidays in Dubai include Eid alFitr, which marks the end of
Ramadan, and National Day (2 December), which marks the formation of the United Arab
Emirates.
Emirati males prefer to wear a kanduraan ankle-length white tunic woven from wool or
cotton, and Emirati women wear an abaya, a black over-garment that covers most parts of the
body. The campaign UAE Dress Code aims to educate the expat population on modest
Islamic dressing and its sensitivity to Emirati population. Each of the seven semiautonomous
emirates has its own rules about attire.

4.2 Sports
27

Football is a popular sport in the UAE.

Emirati football clubs Al-Ain, Al-Wasl,
Al-Shabbab ACD, Al-Sharjah, Al-Wahda,
and Al-Ahli are the most popular teams
and enjoy the reputation of long-time
regional champions. The United Arab
Emirates Football Association was first
established in 1971 and since then has dedicated its time and effort to promoting the game,
organizing youth programs and improving the abilities of not only its players, but of the
officials and coaches involved with its regional teams. The UAE national football team
qualified for the FIFA World Cup in 1990 with Egypt. It was the third consecutive World Cup
with two Arab nations qualifying, after Kuwait and Algeria in 1982, and Iraq and Algeria
again in 1986. The UAE won the Gulf Cup Championship two times. They won the first cup
in January 2007 held in Abu Dhabi and has won the recent cup in January 2013 held in
Bahrain. Cricket is one of the most popular sports in the UAE, largely because of the
expatriate population from the Indian subcontinent, the United Kingdom, and Australia. The
Sharjah
Cricket

Association

Stadium

in

Sharjah has hosted 4 international

test cricket matches so far. Sheikh
Zayed Cricket Stadium in Abu Dhabi
also

hosted

international

cricket

matches. Dubai has two cricket stadiums (Dubai Cricket Ground No.1 and No.2) with a third,
the DSC Cricket Stadium as part of Dubai Sports City. Dubai is also home to the
International Cricket Council. The UAE national cricket team qualified for the 1996 Cricket
28

World Cup and narrowly missed out on qualification for the 2007 Cricket World Cup. The
country hosted the 2014 Under-17 Basketball World Championship. The senior national team
is a major contender on the Arabian Peninsula in terms of qualification to major international
basketball events such as the Asian Championship.
Formula One is particularly popular in the United Arab Emirates, and is annually held at the
picturesque Yas Marina Circuit. The race is held at evening time, and is the first ever Grand
Prix to start in daylight and finish at night. Other popular sports include camel racing,
falconry, endurance riding, and tennis. The emirate of Dubai is also home to two major golf
courses: The Dubai Golf Club and Emirates Golf Club.

4.3 Education

29

The education system through secondary level is monitored by the Ministry of Education in
all emirates except Abu Dhabi, where it falls under the authority of the Abu Dhabi Education
Council. It consists of primary schools, middle schools and high schools. The public schools
are government-funded and the curriculum is created to match the United Arab Emirates
development's goals and values. The medium of instruction in the public school is Arabic
with emphasis on English as a second language. There are also many private schools which
are internationally accredited. Public schools in the country are free for citizens of the UAE,
while the fees for private schools vary. The higher education system is monitored by the
Ministry of Higher Education. The ministry also is responsible for admitting students to its
undergraduate institutions. The literacy rate in 2007 was 91%. Thousands of nationals are
pursuing formal learning at 86 adult education centres spread across the country.
The UAE has shown a strong interest in improving education and research. Enterprises
include the establishment of the CERT Research Centers and the Masdar Institute of Science
and Technology and Institute for Enterprise Development.
According to the Rankings, the top-ranking universities in the country are the United Arab
Emirates
American

University,

the

University

of

Sharjah and University of

Sharjah.

4.4 Health
The life expectancy at birth in the UAE is at 78.5 years. Cardiovascular disease is the
principal cause of death in the UAE, constituting 28% of total deaths; other major causes are
accidents and injuries, malignancies, and congenital anomalies. In February 2008, the

30

Ministry of Health unveiled a five-year health

strategy for the public health sector in the
northern emirates, which fall under its purview
and which, unlike Abu Dhabi and Dubai, do not
have

separate

healthcare

authorities.

The

strategy focuses on unifying healthcare policy and improving access to healthcare services at
reasonable cost, at the same time reducing dependence on overseas treatment. The ministry
plans to add three hospitals to the current 14, and 29 primary healthcare centres to the current
86. Nine were scheduled to open in 2008.
The introduction of mandatory health insurance in Abu Dhabi for expatriates and their
dependants was a major driver in reform of healthcare policy. Abu Dhabi nationals were
brought under the scheme from 1 June 2008 and Dubai followed for its government
employees. Eventually, under federal law, every Emirati and expatriate in the country will be
covered by compulsory health insurance under a unified mandatory scheme. The country has
benefited from medical tourists from all over the Cooperation Council for the Arab States of
the Gulf. The UAE attracts medical tourists seeking plastic surgery and advanced procedures,
cardiac and spinal surgery, and dental treatment, as health services have higher standards than
other Arab countries in the Persian Gulf.

CHAPTER 5
CONCLUSION AND SUGGESTIONS

31

In summary the UAE provides a suitable investment climate for a Malaysian retailer seeking to
expand their business in the Middle East given the large potential retail market and the high GDP
per capita that is coupled with a growing metropolitan population. The general stability of the
political circumstances and pro-foreign investment government policies also serve to further
enhance the feasibility of the investment opportunity. It should also be noted that any company
that wishes to extend its network further into the Middle East markets will find the UAE to be a
suitable strategic spring-board to set up a regional base.
However there are specific pitfalls that a Malaysian retailer must be aware of in that despite of all
the positive points above have accompanying flip-sides. For example despite of the high market
growth potential, the UAE has a highly competitive retail environment and a high level of
demographic segmentation that would require a robust marketing strategy. The booming
economic growth also carries with it the risk of inflation costs impacting profits and high capital
requirements. Malaysian retailers may have a better business understanding of Gulf culture due
to the affinity they may share in operating within Muslim cultures.
It should be noted that the entry method may be limited due to exclusive general trade licenses
by UAE nationals that are required by law so entry methods and affiliate selection will be of the
utmost importance. However as with any international business venture, a successful or failed
entry into UAE market will depend very much on the level of risk mitigation based on sound
understanding of the local market conditions and the formation of a healthy relationship with the
local affiliates. In conclusion, the potential rewards offered by a successful business foray into the
UAE outweigh the risks.

BIBLIOGRAPHY
1. http://www.uae-embassy.org/uae
2. http://www.emirates.org/
32

3. http://www.uaeinteract.com/
4. http://www.free-management-ebooks.com/faqst/pestle-01.htm
5. http://www.gjournals.org/GJMS/GJMS%20pdf/2014/March/%20and%20Yeboah.pdf

33