DUBAI IS RENEWING its bid to be the commercial and financial hub of the Gulf. It is doing so by focussing on the legal statutes affecting two key areas of development -- high technology and capital markets. It is in the process of adopting new legislation, expected to be in force by the end of the year, which will give companies based in Dubai the best legal protection in the Gulf. Shortly after, it will turn its attention to the financial sector.
These new laws, to ensure copyright protection and to create standard articles of incorporation for limited liability companies, are largely the result of work being done in the emirate's newly created Economic Department. They are part of a long-term plan to focus non-oil development on key sectors.
Although the country is currently reaping the benefits of its central location, government planners are determined to build up the finance sector and high technology manufacturing to complement the already well-developed transport sector. To do so, the government has moved to address certain shortcomings. In the high-tech sector, foreign companies have long been wary of selling or manufacturing certain products in Dubai, as in many other Gulf countries, because of weak copyright protection and company laws. The US government has long been pressing for such protection. In finance, the country has suffered from lack of proper regulation, and the absence of structured trading facilities needed for a healthy capital market. In short, it lacked the proper laws.
Dubai has traditionally been regarded as the most sophisticated of the Gulf trading entrepots. Its ruler, Sheikh Maktoum bin Rashid al Maktoum, created the Economic Department in March 1992, to "improve the environment" for doing business in Dubai. Specifically, it was created to carry out long-range planning as well as help frame badly needed commercial legislation.
Unlike the Saudis, who spread economic planning among several agencies (chiefly the Saudi Arabia Basic Industries, and the Saudi Arabian Monetary Agency), Dubai has opted for a more centralised think-tank approach. Under its director general, Mohamed Ali al Abbar, the Economic Department has already developed a companies law (whose enactment is expected in the first quarter of 1993) and a commercial law (to be in force by the middle of the year).
The first governs articles of incorporation allowing for the creation of limited liability companies (Dubai previously had no such law). The...