Dubai at start of new boom

Dubai is at the start of a new cycle of boom, powered largely by a dynamic private sector, according to Farid Karmostaji, director of Entrepreneur Development Division of Sheikh Mohammed Bin Rashid Establishment for SME Development (Dubai SME). Speaking at the inauguration of Franchise UAE 2012, Karmostaji said that an increasing number of companies were looking at Dubai as a base, and a good number of franchisors were keen to set up outlets in the emirate. "We can feel the new frenzy in the number of new shops opening and malls expanding," said Karmostaji in comments published by state news agency WAM. "There is certainly room for more franchisees. Earlier, the concept of franchising was not very clear to some entrepreneurs, but today many local companies are keen to take the franchising route." He also said that the Sheikh Mohammed Bin Rashid Establishment for SME Development was ready to play a larger role in the development of small businesses by opening the doors to non-Emiratis. He told WAM that budding entrepreneurs would be able to take advantage of Dubai SME's entrepreneurship and business startup courses. Gaurav Marya, managing director of Franchise Middle East, said the participation of 75 exhibitors from all over the world was a proof that Dubai "serves as a gateway and a business destination of choice". The earlier era of a handful of mega companies monopolising the franchise industry is being replaced by small and medium players launching franchisees, he added. The Middle East is estimated to have over 400,000 high net worth individuals, each with liquid assets of more than $5m, making it an ideal region for growth of franchising and SMEs, he said. In February, the director-general of Dubai’s Chamber of Commerce said banks should dedicate five times more funding to SMEs. Lenders should reserve around 20 percent of their funds for small companies, if the SME market is to receive the boost that it needs, Hamad Buamim said. “At the moment around four percent of banks’ total funding goes to SMEs. We want that to be 15 to 20 percent ideally. This is normally the case in other economies. We believe this is better for the banks as it will reduce their exposure to the big players.” He added that there was often a misperception about the risks of lending to small businesses, which was having a negative impact on bankers’ policies.