Economic support to minimise the impact of COVID-19

Posted Date : 2020-05-19

Image Credit: WAM

Source: U.ae

CBUAE’s economic support scheme

Central Bank of the UAE (CBUAE) launched an AED 100 billion comprehensive Economic Support Scheme for retail and corporate customers affected by COVID-19. These measures will come into force with immediate effect since World Health Organisation declared Covid-19 as a global pandemic.

The Economic Support Scheme consists of AED 50 billion from the CBUAE funds through collateralized loans at zero cost to all banks operating in the UAE and of AED 50 billion funds freed up from banks’ capital buffers.

The purpose of the targeted scheme is to facilitate the provision of temporary relief from the payments of principal and interest on outstanding loans for all affected private sector companies and retail customers in the UAE. Participating banks should use the funding to grant temporary relief to private sector corporate customers and retail clients for a period of up to 6 months.

Dubai economic stimulus package

Dubai Government launched an AED 1.5 billion economic stimulus package for the next three months to support companies and the business sector in Dubai. The package seeks to enhance liquidity and reduce the impact of the current global economic situation.

The stimulus package developed by Dubai Government includes 15 initiatives focused on the commercial sector, retail, external trade, tourism and the energy sector. The package is expected to have a direct and indirect positive impact on all other sectors as well, over the next three months.

For the commercial and business sector, Dubai Government has introduced nine initiatives over the next three months including a freeze on the 2.5 per cent market fees levied on all facilities operating in Dubai. The fees were reduced from 5 per cent to 2.5 per cent in June 2018. The second initiative extends a refund of 20 per cent on the custom fees imposed on imported products sold locally in Dubai markets.

The package also includes the cancellation of the AED 50,000 bank guarantee or cash required to undertake customs clearance activity. Bank guarantee or cash paid by existing customs clearance companies will be refunded. Furthermore, fees imposed on submitting customs documents of companies will be reduced by 90 per cent.

Abu Dhabi economic stimulus package

Abu Dhabi Executive Council is providing a dynamic economic stimulus package to support economic activity, reduce the costs of living, facilitate business in the emirate and protect the UAE's economic stability.

The economic stimulus package includes the following initiatives:

continuing with all approved capital expenditure and development projects in the emirate, as well as with further measures to preserve Abu Dhabi’s economic gains, prioritising startups and SMEs
formulating plans to stimulate strategic investment sectors and to form a new committee headed by Department of Finance, with members from Department of Economic Development and local banks to review lending options to support local companies
developing investment laws and regulations and ensuring their flexibility to maintain Abu Dhabi’s progressive economic development
allocating AED 5 billion for water and electricity subsidies for citizens and the commercial and industrial sectors, with an intention to reduce the cost of living and support businesses, as well as subsidising electricity connection fees for startups until the end of the year 2020
allocating AED 3 billion to the SME Credit Guarantee Scheme managed by Abu Dhabi Investment Office (ADIO) to stimulate the ability of SMEs to navigate the current market environment
allocating AED 1 billion to financial markets to establish a market maker fund, to enhance liquidity and sustain balance between supply and demand for stock
exempting all commercial and industrial activities from property registration (Tawtheeq) fees levied by the municipality
exempting individual and commercial real estate registration fees for this year
suspending bid bonds and exempting startups from performance guarantees for projects up to AED 50 million
·not charging annual vehicle registration fees for commercial vehicles and not levying traffic toll for all vehicles
·offering up to 20 per cent rebate on the rental value of the restaurant, tourism and entertainment sectors
suspending tourism and municipality fees for the tourism and entertainment sectors for this year
settling all approved government payables and invoices within 15 working days
waiving all current commercial and industrial penalties
reducing industrial land leasing fees by 25 per cent for new contracts.

Additional AED16 billion stimulus package

The UAE Cabinet has approved an AED16 billion economic stimulus package as part of the Federal Government's additional measures to support the national economy, ensure businesses continuity, and mitigate the coronavirus impact.

The latest financial support complements those announced recently by the emirates of Abu Dhabi and Dubai, along with that of the Central Bank of the UAE, taking to AED126.5 billion the total value of stimulus packages introduced since the COVID-19 outbreak to survive the current challenging conditions.

The measures include a renewable six-month suspension of work permit fees and reduction of labour and other charges to cut the cost of doing business, support small businesses and accelerate major infrastructure projects.

Related links

UAE Cabinet approves additional AED16 billion stimulus package – WAM

Dubai Free Zones economic stimulus package

Dubai Free Zones Council announced an economic stimulus package to complement the Dubai Government’s efforts to overcome the COVID-19 situation. This initiative complements another package announced earlier to reduce business costs and enhance financial liquidity of companies operating in the free zones.

Dubai Free Zones Council’s package contributes to strengthening and supporting Dubai’s businesses by reducing the impact of the spread of COVID-19 on the economic situation. It includes five key elements. They are:

postponing rent payments by a period of 6 months
facilitating installments for payments
refunding security deposits and guarantees
cancelling fines for both companies and individuals
permitting temporary contracts that allow the free movement of labour between companies operating in the free zones to continue for the rest of the year.

Furthermore, companies will enjoy additional facilities, such as the postponing of payment plans for all commercial properties owned by DIFC Investments for a period of 6 months. DIFC will reduce its ownership transfer fees from 5 per cent to 4 per cent for any property sale that occurs within the period from April to June.

Related links

Dubai Free Zones Council launches economic stimulus package – WAM

DAFZA’s incentive packages

Dubai Airport Free Zone Authority (DAFZA) launched a set of economic incentive packages to support companies based in the free zone, in order to ensure business continuity across various sectors. The incentive packages aim to help the businesses mitigate the severity of the economic impact caused by COVID-19.

The initiative includes postponing lease payments for up to three months and facilitating financial payments into easier monthly instalments. It supports retailers also who are operating from the free zone by exempting them from lease payments for a period of up to three months. The free zone would refund security deposits on leased spaces and labour guarantees to companies, as well as exempt new companies from registration and licensing fees. DAFZA would also cancel fines issued to companies.

Read related news coverage on WAM.

Relief package for bank customers

Banks in Dubai have come together to offer a comprehensive relief package to ease the financial pressure on their customers in the current economic environment caused by the coronavirus (COVID-19) outbreak. Banks that are providing relief to their customers include Emirates NBD, Dubai Islamic Bank, Emirates Islamic, Mashreq and Commercial Bank of Dubai.

The measures announced by the banks complement the UAE Government and the UAE Central Bank’s six-month economic stimulus package to support the business sector in the UAE and the Dubai Government’s three-month economic stimulus package to support the business sector in Dubai particularly.

The relief benefits include but are not limited to the following:

customers using credit cards for cash withdrawals will enjoy 50 per cent reduction in the cash advance charges
credit card holders can avail zero per cent easy payment plans on school fee transactions with zero processing fee
credit cardholders can benefit from special pricing on easy payment plans, cash on call and zero per cent on balance transfers
card holders can request refunds on foreign currency charges related to travel and hotel cancellations
customers who are financially-impacted (due to unpaid leave or any other valid reason) can request to defer up to 3 monthly installments without fees and profit charges on existing and new finance facilities
customers can request for debt consolidation solution
first-time home buyers can get 5 per cent more financing (up to 85 per cent for UAE Nationals and up to 80 per cent for expatriates)

Abu Dhabi banks’ initiatives for customers

Abu Dhabi banks including First Abu Dhabi Bank (FAB), Abu Dhabi Islamic Bank (ADIB) and Abu Dhabi Commercial Bank (ADCB), in coordination with Abu Dhabi’s Department of Finance and Department of Economic Development, launched 10 banking-related initiatives specifically for the benefit of individuals and 7 financial initiatives for SMEs to protect them from the economic impact of the spread of COVID-19 in the UAE.

Initiatives for individuals

Banks have a few initiatives for those individuals specifically affected by COVID-19 and some initiatives that are for all individuals.

Initiatives for individuals impacted by COVID-19

Banks can:

defer instalments (principal and interest) on existing loans (personal, auto, mortgages) and credit cards for up to 3 months for eligible customers until 30 Jun 2020 with no additional bank charges
halt foreclosures on mortgages for defaulted customers until 30 Jun 2020
halt suspension of bank accounts for retrenched customers until 30 Sep 2020
refund credit card processing fees in full for foreign currency transactions conducted after 1 January 2020, associated with cancellation of travel plans
make available installment programmes with no service fees for utility bill payments until 30 Jun 2020

Initiatives for all individuals

Banks can:

defer installments (principal and interest) on new loans (personal, auto, mortgages) and credit cards for up to 3 months for eligible customers until 30 Jun 2020 with 50 per cent reduction in associated bank charges
reduce interest charges on new loans (personal, auto, mortgages) and credit cards for eligible customers based on new prevailing rates for eligible customers
reduce bank charges by 50 per cent on early settlement of existing loans (personal, auto, mortgages) for eligible customers until 30 Jun 2020
reduce required down-payment by 5 per cent for first-time home buyers
provide interest-free installment plans for school tuition with waiver of service charges or zero per cent interest loan until 30 Jun 2020.

Initiatives for SMEs

Banks have a few initiatives for those SMEs specifically affected by COVID-19 and some initiatives that are for all SMEs.

Initiatives for SMEs impacted by COVID-19

Banks can:

defer installments (principal and interest) on existing borrowing for up to 3 months for eligible customers until 30 Jun 2020 with no additional bank charges

reduce bank's merchant service fees (credit card transactions) by 50 per cent for eligible SME customers with usage below AED 5 million per annum until 30 Jun 2020
reduce banking fees and charges on ‘zero balance’ accounts by up to 50 per cent for eligible customers
reduce the requirements for maintaining minimum average balance for all SME account categories to up to AED10,000 per month for eligible customers.

For all SMEs

Banks can:

defer installments (principal and interest) on new borrowings for up to 3 months for eligible customers until 30 Jun 2020 with 50 per cent reduction in associated bank charges
reduce interest charges on new borrowings based on new prevailing interest rates for eligible customers
reduce bank charges by 50 per cent on early settlement of existing borrowings for eligible customers until 30 Jun 2020.

All the initiatives stated may be revisited and updated subject to the latest market conditions.

Related links

Abu Dhabi banks announce 17 financial initiatives for the community and businesses – WAM

Business Continuity Readiness Guidelines

National Emergency Crisis and Disaster Management Authority (NCEMA) launched the Business Continuity Readiness Guidelines for UAE Organisations in the event of the novel coronavirus, COVID-19 outbreak, as part of efforts to boost the nation's readiness and response to emergencies and to transfer the best international practices.

The purpose of this guide is to demonstrate precautionary and preventive measures aiming to sustain business continuity for organisations by:

protecting and safeguarding individuals and society from the risk of epidemics in organizations
determining the critical functions for business continuity measures, taking into account the potential impact of the epidemic
knowing the necessary measures to be taken in the event of an epidemic outbreaks among employees
knowing how to activate business continuity plans in the event of losing individuals due to an outbreak in the workplace.
reducing and minimising the spread of the epidemic in the organization

Related links

Updated on 19 May 2020