Small businesses play valuable role in Dubai economy

02 November 2010

The proposed second-tier market is proof that Dubai recognises the economic importance of small firms

Plans to launch a second-tier market for small business listings by late 2011 could be a significant boost to Dubai’s economy. It will provide a welcome solution to two key weak spots in the region – the struggle small businesses face in raising growth capital and their ability to launch initial public offerings (IPOs) on local markets.

The move is aimed at establishing an exchange similar to London’s Alternative Investment Market (AIM), which offers greater flexibility through less regulation and no requirements for capitalisation or the number of shares issued. It would lower the bar of entry for small and medium-sized enterprises (SMEs) and, in doing so, help stimulate the growth of Dubai’s beleaguered capital markets. 

The plan is proof the region is waking up to the role SMEs can play in the economy. Accounting for 90 per cent of all businesses in the Middle East and 70 per cent of the region’s employment, they currently generate less than 30 per cent of its gross domestic product.

The government wants this to change. It is mulling the introduction of special visas for entrepreneurs and new regulations to make it easier for small businesses to set up. It is also working on insolvency laws to allow more orderly winding up of companies.           

The events of the past two years have sharpened Dubai’s appreciation for the need to delivering long-term, sustainable growth. As the lifeblood of the region, SMEs are crucial to this.  

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