PESTEL ANALYSIS OF UNITED ARAB EMIRATES

15th of October 2014

Chetan Somashekar
Rushikesh Guruji
Sudharshan Sekhar

About UAE

UAE is a federation of 7 emirates Abu Dhabi, Dubai, Sharjah, Ajman,

Umm Al Quwain, Ras Al Khaimah and Al Fujairah.

The capital being Abu Dhabi.

The gulf countries gained its independence from the British in 1966 and the
countries united in the year 1971.
The first president being the king Zayed bin Sultan Al Nahyan.
From 1744 1891 the gulf region was under the Saudi rule.

Video on UAE

Outlook of PESTEL

Political

Law

Economic

PESTEL

Envirnom
ent

Social

Technical
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Political Analysis - UAE

UAE is a non-democratic
country
and
absolute
hereditary monarchies.
Borders shared with Oman to
the east and Saudi Arabia to
the south.
Sea borders are shared with
Qatar and Iran.
Total Population 9,205,651
(Rank : 93) with 84.8% of
population living in Abu Dhabi,
Dubai and Sharjah.
With Immigrants comprising of
86% of population.

15%

14%

9%

Emiratis
South Asians

64%

Westerners

Other

Political Analysis - UAE

The 7 Emirs (King) of each Emirate form the pillars Federal Supreme Council(FSC).
The FSC meet 4 times a year & decide the general policy, agenda of the country.

The FSC includes the President, Cabinet, Judiciary and Federal bodies.

Responsibilities are granted to the national govt. but can be over-ruled by the FSC.

With the consent of Islamic law all proposal, recommendations and approvals are
processed.

Political Analysis with respect to Automotive Plant :

Every venture in UAE requires to be joint collaboration with the UAE national as a

partner.
Conservative and tedious political structure make it stringent for business operations.

Economic Analysis - UAE

Labour Distribution

Facts
GDP

:$377 Billion

Export

:$360 Billion

Labour Force :3.705 million

Agriculture

Industry

Services

Positive Aspects
The country has Free Trade Zones and Industrial Areas where they attract

investment with schemes like zero percent taxes and co-operation from govt.
UAE is a member of the Gulf Co-operation Council (GCC), where in all the Gulf
countries participate in Technological, Finance and Investment strategies. Focus
being reducing the Imports and increasing the Exports.
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Economic Analysis UAE

Imports
29

Metals & Pearls

Machinary

26

Automobiles

Chemicals

15

Base Metals & Articles

16

Textiles

Others

Negative Aspects
The global financial crisis, increasing international credit and deflated asset
prices in 2009 showed that the economy was not stable in testing times.
Due to this crisis Dubai prompted a global concern about its solvency.
Hence, to overcome this crisis it received a $10 billion loan from the Emirate of
Abu Dhabi. The entire debt of UAE at present is $109 billion.
The main challenges for UAE - Dependency on oil
- Vulnerable Real Estate prices.
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 UAE strategic plan for the coming years focuses on diversification of economy

such that a major part of their income comes from non-oil sectors.
UAE s collaboration with developed countries like France, UK and USA has
boosted its economy esp. with China with a strong potential of $100 billion.

Social Analysis UAE

UAE has a long History of Islam into its

society.
Islam plays a large role not only in religion
but also in govt. And business activities.
Its strict and stringent laws make it difficult
for
people
from
different
ethnic
backgrounds (Non-Muslims).
UAE has a low literacy rate with women
being least educated.

Religion
9%
15%

76%

Islam

Christianity

Other Religions

Blue Collar Labour Abuse

A very common practice for managers and employers in UAE is to hold the
employees passport during the tenure of the employment contract.
Human Rights Commission has criticised this practice on UAE. But, the
government has given no heed to it.

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Technological Analysis UAE

UAE society is symbolic driven and status oriented.
The youth of Dubai has embraced consumer technology and always try to
innovate more in this sector
Though UAE does not have any home grown technological advancement but still
they import the latest technology keeping itself in pace with the world.
Ex: RFID, Driverless metros
A gradual trend has revealed that there is a shift with the increase in investors for
IT Companies and Technologies against the traditional Real Estate.
The concept of R&D is some thing out in the middle east is just simply not
understood. Their thinking is why not just buy it from US/China.

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 International brands have adopted the city as a place to experiment new

ideas and designs aimed exclusively at Arab market.

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Environmental Analysis UAE

UAE has strong environmental policies in sync

with its economy.
Federal Environment Agency (FEA) is a direct
governmental body enforcing environmental
standards and pollution control in UAE.
The Environmental Impact Assessment (EIA)
program is part of all business practices in UAE.
Current Strengths
Strong integrated environmental development.
Current Challenges
Increasing emission levels, with the country being one of the largest producers of oil
in the world. Climatic condition affect tourism also.

Future Prospects
Waste water recycling the Oasis project and Solar clean energy.
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 Major oil companies like ADNOC, SHELL are bound by rigid safety and
environment standards and are working towards reducing emission and zero
operation flaring.

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Legal Analysis UAE

The UAE is one of the few tax-free zones, with virtually no taxes in the
country.
However, the countrys company ownership laws still act as a hurdle to
foreign direct investment flows and continuous government interference in
business affairs can stifle the performance of business in the country.
Current Strengths

Current Challenges

Low tax legislation

Favourable judicial laws

Compliance to local ownership

laws

Future Prospects

Future Risks

Improved policy towards

manufacturing sector

Government interference in
business

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OUR Conclusion

UNSTABLE ; Reason- absence of democracy and need for the

people to be democratic can emerge at any point.

RISK; Reason- Currently stable but due to dependency on oil and

span of 20-25 years things go vary.

Large % of Immigrant work force and with no residence permit and

unequal laws for citizens and expatriates esp. Labour Laws

T
E

Hi-tech technology easily present but exported and nothing in-built

and hence being dependent.

Living conditions are harsh and strict environmental laws make it

difficult to open an manufacturing unit.

Very adamant Islamic laws make it difficult immigrants to work

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Shukran

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