Strategy to support SMEs needed

The UAE needs a clear strategy to support small and medium enterprises (SMEs) as part of an ongoing programme to diversify its economy and ease reliance on unpredictable oil sales, an official said on Monday.

The strategy should also tackle challenges besetting this vital sector, including lack of funding, low competitiveness and the poor link between these projects and major industries, said Mohammed Omar Abdullah, undersecretary of the Abu Dhabi Department of Economic Development (DED).

Addressing a seminar on SMEs, Abdullah said the support and development of this sector is one of the priorities of the policy agenda of the UAE government, adding that this stands as a critical issue, in achieving targeted economic diversification, and realizing sustainable economic development.

“For a long time we have been debating, discussing and reviewing SMEs related issues, definition and pivotal role in advancing development.  Today let's move beyond this stage… let's look into the future of SMEs, because what concerns us today, is the need to adopt a clear policy and an integrated strategy in order to maximize SMEs benefits and advantage, activate their leading role in the development process,  and provide greater opportunities for the participation of UAE national cadres  and utilization of their capabilities,” he said.

“I am fully convinced that these goals will be achieved only by working together… government and business community, to mobilize and unify efforts to support the competitiveness of SMEs in the country, and provide the most favorable environment for fostering their growth.”

Abdullah said SMEs in the UAE, the largest Arab economy after Saudi Arabia, face “major challenges and problems” which limit their contribution to development and economic diversification plans.

“Some of the most pressing challenges embody the need to provide required financing, the weak linkages between SMEs and large industries, low competitiveness, and the inadequate rehabilitation and training programmes….

extrapolating successful international experiences, reveals that means to support and develop SMEs have recently seen extensive changes,” he said.

“Financing and protectionist policies alone are no longer the dominant pattern of supporting strategies. Support mechanisms and techniques have widened to include a range of tools which are more in line with contemporary economic and social realities. Such innovative tools have become more oriented towards providing substantive and technical support along with necessary financing.”
Abdullah said DED had been working to strengthen and reinforce the role of SMEs in the process of overall economic development.

He said DED had developed an integrated action plan, based on providing the best facilities and services to boost SMEs and assist local and international investors intending to invest in the emirate.

DED has also developed its supportive policies and economic laws and regulations, to facilitate business needs, speed up business setting procedures and render aiding services to develop SMEs, he added.

“Innovative systems were also adopted to enhance transfer of technology, strengthen SMEs productive linkage, and enable business to grow and prosper, through a package of other supporting services,” he noted.

“Moreover, DED’s role to support and  develop Abu Dhabi’s exports, is  furthered by the establishment of the Export Development Centre,  which is entrusted primarily with supporting non-oil exports, enhancing business environment, assisting local and international investors. Investment flows will be more enhanced especially after the establishment of that Centre.”

Turning to Abu Dhabi economy, he said its GDP swelled by nearly 16 per cent, with the rate of growth in the non-oil GDP reaching about 5.5 per cent, which “demonstrates the substantial improvement” in the performance of non-oil economic activities in the emirate’s economy.

“This confirms that our economy is on the right track of economic recovery. The growth of manufacturing industries activity, which reached 10.8 per cent in 2010, is another important indicator that underscores the government efforts to develop and advance this sector, as one of the pillars of sustainable development.”

Abdullah said that although the contribution of oil in GDP increased from 44.6 per cent in 2009 to 49.7 per cent in 2010, it was still below 50 per cent, for the second successive year. “This confirms that the emirate has made great strides in diversifying the economic base, consistent with the goals of the "2030 Vision."

“Actually we are moving forward towards introducing more economic reforms, enhancing business environment, eliminating restrictions and constraints, in accordance with our ambitious 2030 vision and its clear strategy; and in partnership with all entities and stakeholders,” he said.