Fertile grounds for accelerated growth: How the UAE inspires Saudi expansion

Fertile grounds for accelerated growth: How the UAE inspires Saudi expansion

For the UAE, future projections are leaning toward a healthy global business sector after a year of steady sector growth, with local and global players doubling down on the market. Today, the UAE Ministry of Economy officially announced its next stage of SME empowerment and business globalization at #gitexglobal2022. The UAE has introduced its vision to open the business sector to emerging and leading markets in partnership with local & global players in the ecosystem; a deep dive into the Entrepreneurial Nation Program launched by the Ministry of Economy sheds light on an incredible turning point for the region’s next global maneuver, with sights on expanding UAE-based companies to Saudi Arabia with the help of AstroLabs as one of many critical initiatives.

Earlier this year, Dubai announced it had ranked 1st globally in greenfield FDI (Foreign Direct Investment) projects with more than 600 FDI projects taking shape in the Emirate. This comes shortly after the UAE joins the world’s top 20 most trustworthy investment environments as ranked in Kearny‘s 2021 Global FDI Index.  

While these milestones were heavily driven by recent enhancements and introductions to commercial frameworks, as well as an exemplary pandemic recovery plan initiated by growth-driven governance, the UAE has structured a long and visionary path to ground itself as the world’s global hub for innovation- we take an overview of some of the critical junctures in this journey.

The boosted success of business in the UAE in attracting global players to the local ecosystem puts the MENA region on the map in a natural ripple effect. For one, the progressive strides set the blueprint for future-forward growth in peer emerging markets- and we see Saudi Arabia already taken off in that direction. The Kingdom has set a pioneering digital transformation track as part of its 2030 vision with expansive investment allocations including $20Bn for AI development and $6.4Bn in future technologies by 2030. For another, global and regional players landing in the UAE are naturally gravitating towards a MENA expansion, and there is nothing more attractive than futuristic economies currently in the making. 

The Pathway to Digital Innovation

The road to global attractivity for the UAE has been paved through strategic and holistic initiatives over the past 5 decades. While the UAE boasts a fully-integrated multi-platform digital governance today, early signs of digital transformation date back to 2011 with the rollout of the first eDirham; this was in congruence with the launch of the eGovernment in 2011 which evolved into the smart government in 2013. At the time, the global e-commerce market was worth a whopping $1.2 Tr, yet the market has grown by almost 5x times since then. 

The UAE government introduced an ingenuine mix of infrastructure readiness, business & investment facilitation, and a multicultural open society incentive in the backend. With 10 major airports, 12 seaports, an intricate network of roads and bridges, and 6 national carriers connecting over 200 cities worldwide. This allows more than 30% of the world’s population to access the UAE within 4 hours, and almost 70% to enter the country within 8 hours.

The no-income/corporate tax environment and Visa facilitation have attracted top global players to set up in the UAE over the years; this was facilitated by the highest number of specialized economic and free trade zones in MENA. At the DMCC, for example, AstroLabs has enabled the expansion and setup of 500+ technology-driven businesses which now form the tenants and greater coworking community at our spaces in Jumeirah Lake Towers. Global government actors are also honing in on the opportunity, running market entry programs to accelerate the expansion of their top-tier emerging businesses into the region.

Fertile grounds for accelerated growth

Today, we see an unprecedented boost for the digital economy in the UAE: a quick overview of the landscape emerges with figures such as $4.8Bn in e-commerce market value, prospected to cross $9Bn by 2026, $1.5Bn in VC investment in UAE-based startups over 2021, with more than half of investors based outside of MENA, and finally a remarkable YoY GDP growth of 3.8% in 2021 which is forecasted to near 6% by the end of this year. 

What’s next for scalable UAE-based businesses?

So what’s next for next-generation businesses that were successful in building and scaling their operations in the UAE?

Well, as of most recently, the global trajectory has seen a honed focus on emerging markets. The UAE-based global VC Global Ventures Capital, for example, has set investment targets in Pakistan, Egypt, and Nigeria after successfully boosting regional businesses in the region. On the other hand, a historical top contender in MENA has been in overdrive for the past years – Saudi Arabia has truly set the map for the future of doing business. 

How the UAE inspires Saudi expansion

Aside from observing exceptional economic growth, the Saudi entrepreneurial ecosystem is being heavily backed by private/public initiatives with a current focus on digitization, diversification, and privatization- surely, the roll-out of Saudi Mega-projects has been reflective of this national trajectory. On one end, Mega-projects such as AlUla have been boosting local players to capitalize on immense heritage to build a flourishing tourism and entertainment sector in Saudi Arabia. On another, as part of the Saudi Vision 2030 privatization program, Saudi Arabia has announced $160 Bn of investment in projects, including the building of the Oxagon, the world’s largest floating industrial city in Neom.

Today, global & regional businesses are presented with a golden opportunity for accelerated growth in Saudi. Emerging end-of-year reports settle Saudi Arabia at the top of the G20 charts for the highest real-GDP growth over this year. With a population of more than 34 million, the rapid digital transformation efforts have increased internet penetration up to 95.7% by end of 2021 which makes the Kingdom one of the most conducive environments for scalable digital offerings. 

While oil revenues boost the Kingdom’s economy and investment in Saudi 2030 vision, economic diversification efforts are also bearing fruit. For instance, Saudi Arabia plans to exempt registered small and medium enterprises (SMEs) from commerce fees for three years as the Kingdom plans to boost SME contribution by up to 35% of GDP by 2025. Additionally, Saudi Arabia’s Social Development Bank allocated SAR 9 billion (USD 2.4 billion) as an aid to SMEs. This is aside from the constant push for private/public investments by Saudi Aramco and its Saudi Aramco Entrepreneurship Center (Wa’ed)

This being said, and with the unrivaled pace of growth and private/public support, successful businesses in the region and across the globe have set Saudi Arabia as the next expansion destination. On the other hand, Saudi Arabia has also made setting up within the Kingdom an easy and highly accessible process on the road to becoming another global champion in an ever-growing MENA region.