UAE economic freedom lags behind neighbours

The UAE, the Gulf’s commercial hub, has been ranked below neighbouring countries Bahrain, Oman, Jordan and Kuwait in the 2008 Index of Economic Freedom.

The report, published on Tuesday by the Heritage Foundation and Wall Street Journal, ranked the UAE 63rd out of 157 in a list of the world’s freest economies with an overall score of 62.8, equal with Saudi Arabia, Mongolia and Belize.

Kuwait was the next highest Middle Eastern country and ranked 39th on the index with an overall score of 68.3. Oman was positioned at 42 with a score of 67.4 and Jordan came in at 58 with a score of 63.

The scores are calculated on 10 freedom grades in a range of areas including business, trade, labour, property rights and investment.

Other Middle Eastern nations that ranked below the UAE were Qatar at 66, Lebanon at 73, Egypt at 85 and Yemen at 125. Syria was ranked 142st, while Iran was the lowest placed Middle East nation in 151st place.

Hong Kong topped the global index with a freedom score of 90.3%, with Singapore taking second place at 87.4%. North Korea was the lowest ranking country with an overall score of 3%.

The UAE was ranked 7th out of 17 countries in the Middle East/North Africa region, with its overall score higher than the regional average of 58.7.

The UAE’s overall score was 0.1 percentage point lower than 2007, reflecting worsened scores in the country’s business freedom, government size and monetary freedoms.

However, according to the index, the UAE scores above the world average in fiscal freedom, labour freedom, freedom from corruption, government size, and trade freedom.

“The UAE is weak in business freedom, investment freedom, financial freedom, and property rights. Foreign investment is restricted, and majority Emirati ownership is mandated even in the free zones," the report said.

"The UAE is a regional financial hub, but its financial sector is subject to considerable government interference. UAE nationals continue to rely heavily on a bloated public sector for employment, subsidised services, and government handouts."

The index notes that the overall freedom to start, operate, and close a business is limited by the UAE's regulatory environment.

“Starting a business takes an average of 62 days, compared to the world average of 43 days. The minimum capital requirement to launch a business is costly. Obtaining a business license takes less than the world average of 234 days.”

The report also noted that the level of corruption in the UAE is "admirably low for a developing nation". Source