On the 27th of April, 2020, the Moscow Chamber of Commerce and Industry held an online conference "Specifics of doing business with partners from the United Arab Emirates during the quarantine period" to inform Russian companies about the current situation in that country's market and opportunities to establish contacts and conduct business with partners in the UAE during the period of restrictions, associated with the proliferation of coronavirus COVID-19.
The conference was moderated by Mr. Suren Vardanyan, the Vice President of the Moscow Chamber of Commerce and Industry. He described the measures of support for entrepreneurs during the period of force majeure. The Vice President started the meeting with the life-affirming message: “We are in conditions, which nobody expected, they do bring mitigations and changes to our lives. Still, I am absolutely certain that we will come out of this crisis, although having been somewhat changed. The system of mutual relations between the companies, both inside the country, and abroad, will be guided by a new framework.
The first speech was delivered by Mr. Alexei Busev, the Chairman of the MCCI’s Commission on Foreign Economic Cooperation with Partners in the UAE. Before making a brief digression into the history, economy and peculiarities of the region, the speaker said: "Our work does not take a break - its volume has increased, because companies are actively trying to find new ways, contacts and markets". He urged all interested entrepreneurs to use the Emirates as an entry point to the markets of neighbouring countries.
The UAE has a great economic potential, which is due to several factors. One of them is its advantageous location: it is a global trade and economic centre, connecting East and West. The UAE's transport and logistics infrastructure is recognized by international experts as one of the best in the world.
The second factor is its preferential taxation. The United Arab Emirates has no corporate income tax (except for the banking sector and oil industry) and no personal income tax.
The third factor is that the UAE is a regional centre, "an entry point for foreign companies that are planning to operate in the Gulf, Middle East and North Africa.
Stability is also important. The rate of the dirham against the US dollar has remained unchanged since the 80s - 3.67.
Moreover, the UAE has the highest standard of living in the region and one of the highest per capita incomes in the world. Mr. Busev spoke about practical aspects of doing business in this country during the quarantine period. The companies are ready to negotiate via videoconference.
The country's business life is not defunct - about 60% of companies and up to 30% of employees work in offices. If certain rules are observed, wholesale is allowed. There are ports, banks, state administrations and free economic zones. The movement of cars and pedestrians is restricted. According to Mr. Busev, at the moment, in the region the particularly active companies deal with food, IT in its aspects, medical equipment and sanitation facilities and packaging businesses.
"We are now perusing those companies that have stayed afloat and are keeping their trading activities, but have changed, for example, the nomenclature of their products. We are conducting a kind of audit," Busev said.
The Russia's trade representative in the UAE, Mr Ara Melikyan, spoke about the current situation in the market of the Arab Emirates, about the restrictions and privileges that have been introduced in the country in connection with the spread of coronavirus. "Our task is to identify the barriers that exist on the way to our exports and overcome them with the help of the UAE’s government agencies. For example, our oil, gas and oil drilling equipment is unique and quite competitive, but special certification is required. We have started to work on overcoming these barriers," said the trade representative, who described the tasks facing the Representative Office.
From the point of view of the "state man" Ara Melikyan expressed skepticism about the possibility of Russian small and medium business penetration into UAE markets. The fact is that the Emirati legislation presupposes a commercial presence in the country, which is difficult for SMEs to practically implement. Therefore, it will be difficult for small and medium businesses to sell anything to the Emirates. Russian entrepreneurs are simply unable to participate in tenders.
The Arab side representative, Mr. Faisal Jassem, the Development Director at DP World, JAFZA Free Economic Zone Administration, presented Jebel Ali JAFZA Free Economic Zone. He told about perspective directions of work in the UAE market in the period of coronavirus-related restrictions. "Our main task is to help our partners enter the global markets. We have an enormous number of seaports that we own or manage. And we provide all this infrastructure to our partners," said Mr. Jassem.
The acting General Director of ANO "Moscow Export Center" (MEC), Ms. Olga Zhilina, conveyed in detail the measures, taken by her organization to support Moscow exporters. "We have a wide package of support measures. Country blocks are of particular interest.
This includes the UAE market. We are implementing a large project "Moscow School of Export", where one can get knowledge on various topics - customs, logistics, economic activities," - said Ms. Zhilina. She added that under current conditions, the Moscow Export Centre is thinking over online options for cooperation, presentations and exhibitions. As for the already traditional support measures, they include preparation of free analytical research, selection of potential buyers, provision of accounts at e-commerce sites, as well as subsidiary support. It is a financial measure of SMEs support from the Moscow Government.
Mr. Vasily Melnik, the General Director of A+ Law Firm, spoke about legal aspects of conducting international business during the quarantine period. The speaker gave a detailed description of benefits for SMEs in Dubai and Abu Dhabi. They relate to customs, real estate, logistics, tourism and business. He also focused on private initiatives by major Dubai companies. Mr. Melnik focused on what needs to be taken into account when organizing deliveries and gave his concrete recommendations. The main ones include the need to thoroughly study the terms and conditions of contracts, to assess risks soberly, to expand the section of force majeure in contracts and to know the regulations of government agencies.
Mr. Melnik also outlined what should not be done. First of all, during the crisis, one should not rely on the help of government agencies and goodwill of the parties. One should not leave a contract or project without daily attention.
Regarding the banking instruments of import and export insurance and letters of credit forms of settlements, the narration was presented by the Head of the Foreign Economic Activity Development of the "Bank St. Petersburg" in Moscow, Ms. Alexandra Verbitskaya. She talked about the risks that arise, when concluding contracts with foreign partners. First of all, it is the risk of solvency. In the current situation, many companies no longer feel as confident in the market as before.
"There is also such a thing as the delivery of exclusive equipment or equipment to order, and if the buyer refuses this delivery, the seller will not know what to do with it. It will be extremely difficult for him to sell it somehow. Therefore, we need a tool that is in demand in times of crisis", - said Ms. Verbitskaya.
She spoke in detail about the letter of credit as the most popular banking instrument during the crisis. Letter of credit is an obligation of the bank to pay a third party at the request of the client when the recipient of payment to the bank executing the letter of credit, documents provided by the terms of the letter of credit. According to the bank representative, it not only reduces the risks, but also brings some additional benefits.
"We are witnessing a fundamental review of market players and market demands and believe me, you and I will come out of this position in a completely different world! This is a reality. Please take it seriously, especially when working on foreign markets," summed up Mr. Vardanyan.
This includes the UAE market. We are implementing a large project "Moscow School of Export", where you can get knowledge on various topics - customs, logistics, economic activities," - said Olga Zhilina. She added that under current conditions the IEC is thinking over online options for cooperation, presentations and exhibitions. As for the already traditional support measures, they include preparation of free analytical research, selection of potential buyers, provision of accounts at e-commerce sites, as well as subsidiary support. It is a financial measure of SME support from the Moscow Government.
We are witnessing a fundamental rethinking of market players and market demands and believe me, you and I will get out of this position in a completely different world! This is a reality. Please take it seriously, especially when working on foreign markets," Mr. Vardanyan summed up.