Executive Summary

The United Arab Emirates sometimes simply called the Emirates is a country

in Western Asia at the southeast end of the Arabian Peninsula on the Persian
Gulf, bordering Oman to the east and Saudi Arabia to the south, as well as
sharing maritime borders with Qatar to the west and Iran to the north. UAE has
the second largest economy in the Gulf Cooperation Council [GCC] Since
independence in 1971, UAE's economy has grown by nearly 231 times to 1.45
trillion UAE is ranked as the 26th best nation in the world for doing business
based on its economy and regulatory environment The country's industrial base
remains very positive. The service sector has developed rapidly during last
twenty years. As UAE followed a socialist economy this report provides an
overview of political, economic, social, technological, legal, and environmental
factors that impact companies and country’s success The PESTLE Analysis
supports companies’ strategic planning by providing insight about external
environment in which the companies operate. By analysing political, economic,
social, technological, legal, and environmental aspects of the environment,
companies get a comprehensive picture of the status and trends of important
factors that are beyond their control but have an impact on their businesses As
organizations become more globalized, expanding their existing borders, the
PESTLE technique ensures that they thoroughly question each of these factors
and consider their impact. The PESTLE Analysis provides you with a
framework that enables you to investigate your external environment by asking
questions for each factor and discussing the likely implications The PESTLE
tool is a powerful technique for analysing your environment but it should
represent just one component of a comprehensive strategic analysis process.

OBJECTIVE OF STUDY
1. To undertake the pestle analysis of UAE.

2. To understand the demographic profile of people in UAE

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 HISTORY
Early Years:
The United Arab Emirates (UAE) was formed from the group of tribally
organized Arabian Peninsula sheikhdoms along the southern coast of the
Persian Gulf and the north-western coast of the Gulf of Oman. This area was
converted to Islam in the seventh century and for centuries afterward was
embroiled in dynastic disputes. Most UAE nationals are descended from two
tribal groupings, the Qawasim and the Bane Yes, which emerged as leading
powers in the eighteenth century. The Qawasim, mainly land and sea traders,
dominated what are today the emirates of Raps al Khaymah and Sharjah. The
Bane Yes, who was agricultural and pastoral, lived in what are today the
emirates of Abu Dhabi and Dubai. From the seventeenth to the nineteenth
century, the area became known as the Pirate Coast, as both European and Arab
pirates attacked foreign ships. The British mounted expeditions against the
pirates during this period, culminating in an 1818 campaign against the pirate
headquarters of Raps al Khaymah and other harbours along the coast. This
action ostensibly was taken to safeguard British maritime routes, particularly
those of the British East India Company, but some historians have noted that the
war was in fact motivated by the British desire to establish supremacy in the
region against the claims of other European powers.
British Rule:
In 1820 Britain concluded a general treaty of peace with the principal sheikhs of
the Pirate Coast and Bahrain. Its purpose was to end plundering and piracy and
to establish a commitment to desist from the slave trade. The 1820 treaty
includes the first denunciation of the slave trade ever written into a formal
treaty. However, this treaty did not in practice prevent regular warfare at sea
among the tribes of the coast, and in 1835 the sheikhs agreed to a new truce,
pursuant to which they agreed to report aggression to British political or naval
authorities rather than to retaliate themselves. This truce was renewed several
times until May 1853, with the signing of a treaty to bring a complete halt to all
hostilities at sea, establishing a “perpetual maritime truce.” The truce was
supervised by Britain, to whom the signatories referred all violations. The
coastal sheikhdoms now became known as the Trucial Coast, stemming from
the treaties signed with the British that resulted in the maritime truce, or as
Trucial Oman, because the treaties separated the sheikhdoms from Oman. These
terms remained in use until 1971, upon independence from Britain. In 1892, as
France, Germany, and Russia were developing an interest in the Gulf Region,
Britain and the sheikhs of the Trucial Coast signed a new treaty, known as the
“Exclusive Agreement.” Under this treaty, the sheikhs agreed not to enter into
any agreement or correspondence with any power other than Britain and not to

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cede, sell, or mortgage any part of their territory to anyone other than Britain
without British consent. From this period until independence in 1971, the
individual coastal sheikhdoms were under British protection, which meant that
Britain assumed responsibility for their defines and external relations, while the
sheikhdoms followed the traditional form of Arab monarchy, i.e., each ruler had
virtually absolute power over his subjects
Road to Independence:
In 1952 Britain recommended that the rulers of the seven sheikhdoms establish
the Trucial Council to encourage the adoption of common policies in
administrative matters, possibly leading to a federation of states. The rulers met
at least twice a year under the chairmanship of the political agent in Dubai.
Since 1958, when petroleum was first discovered beneath the coastal waters of
Abu Dhabi, petroleum assets have largely determined the power structure and
relative prestige of the emirates. Onshore petroleum was found in Abu Dhabi in
1960, and commercial production followed in 1962, providing significant
wealth to the sheikhdom, which remains the largest and most affluent emirate.
In 1966 petroleum was discovered in Dubai, which prospered greatly from this
new wealth.
Independence:
In 1968 the United Kingdom announced its decision, reaffirmed in March 1971,
to end the treaty relationships with the seven Trucial Coast states and to
withdraw British military forces from the area. In March 1968, the Trucial
Coast states joined Bahrain and Qatar (which had also been under British
protection) to form the Federation of Arab Emirates, but Bahrain and Qatar
seceded from the federation in 1971, opting for separate independence. In July
1971, six of the Trucial States (Abu Dhabi, Ajman, Al Fujairah, Dubai, Sharjah,
and Umm al Quwain) agreed on a federal constitution for achieving
independence as the United Arab Emirates (UAE). On December 1, 1971, the
United Kingdom terminated all existing treaties with the Trucial Coast states,
and independence was declared the following day. The seventh
Sheikhdom, Raps al Khaymah, joined the UAE in February 1972. At the time of
independence,
Sheikh Zaydi ibn Sultan Al Narayan of Abu Dhabi was named the first
president of the UAE, a role he fulfilled until his death in 2004. The ruler of
Dubai, Sheikh Rashid ibn Said Al Maksim, became vice president, and his
eldest son, Sheikh Maksim ibn Rashid Al Maksim, the crown prince of Dubai,
was named prime minister. In 1986 Sheikh Rashid assumed the posts of both
vice president and prime minister, but on his death in 1990 Sheikh Maksim
succeeded his father as ruler of Dubai and as vice president and prime minister
of the UAE.
In 1971 the UAE adopted a provisional constitution that was intended to expire
after five years but it was in fact renewed until the adoption of a permanent
constitution in 1996.
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 POLITICAL
These determine the extent to which government and government policy may
impact on an organisation or a specific industry. This would include political
policy and stability as well as trade, fiscal and taxation policies too.

Political identity

The UAE has its own flag, coat of arms and national anthem. All citizens of the
UAE carry the unified nationality of the United Arab Emirates, which is
recognised internationally. The UAE consists of seven emirates:

 Abu Dhabi
 Dubai
 Sharjah
 Raps Al Kamiah (it acceded to the new federation in February 1972)
 Ajman
 Umm Al Quwain
 Fujairah

How does the political system work?

The political system is based on the Constitution which explains the main rules
of the political and constitutional organisation of the country. The Constitution
demonstrates the main purpose of the establishment of the federation and its
objectives at the local and regional levels. It guarantees all UAE citizens equal
rights and opportunities, safety and security, and social justice.
The Constitution has 152 articles establishing the basis of the UAE and the
rights of citizens in ten areas that are:

1. The federation, its constituencies and principal aims

2. The fundamental social and economic basis of the federation
3. Public freedom, rights and duties
4. The federal authorities
5. Federal legislations, decrees and authorities in charge
6. The emirates
7. Allocation of legislative, executive and international jurisdiction between
the federation and the emirates
8. Financial affairs of the federation
9. Armed forces and security forces
10.Final and transitional provisions

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Key developments in the political system

Over the years, the UAE has taken many steps to develop its political system,
make it more receptive to the needs of the socio-economic progress of the
country and to ensure that that UAE's population is equipped to cope with the
challenges of global development.
The UAE's elections of the Federal National Council in 2006 and the creation of
the Electoral College were landmark steps designed to enhance public
participation in the UAE political system.
Having followed the practice of nominating all its 40 members between 1972
and 2006, since 2006, 20 members of the FNC were elected by an electoral
college and 20 were nominated by the rulers of the respective emirates.
In 2008, the Supreme Council also approved constitutional amendments to
further empower the FNC and increase its scope of influence and coordination
with the Cabinet.
In 2010, Vision 2021 was launched as a national charter aimed to transform the
UAE into 'one of the best countries in the world' by 2021, by integrating the
efforts at the federal and the local levels.
Vision 2021 focuses specifically on four objectives:

1. Ensure that UAE nationals have ambition and sense of responsibility, are
capable of drawing the future with confidence and participate effectively
in a sustainable socio-economic environment based on stability,
solidarity, moderate Islamic values and national heritage.
2. Ensure a strong union with a common destiny that protects Emiratis and
advocates balanced development.
3. Develop a knowledge-based economy that will be diverse and flexible,
and led by skilled Emiratis.
4. Ensure prosperity for UAE nationals

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UAE TAXITION POLICY
Corporate Taxes
Tax Base for Resident and Foreign Companies

The corporate income tax (applied at the local level not federal) is only levied
on income generated by gas and oil companies with no regard for the residency
status.

Corporate tax (except for oil and gas 0%. There are no taxes levied by the
companies and subsidiaries of foreign Federal Government on income or
banks) wealth of companies and individuals
Tax applicable for all companies: the 10% of the annual amount of the rent
duty deducted by the municipality in of offices and warehouses and 5% of
each Emirate at the time of issuance or the annual amount paid by a company
renewal of a trade licence. to accommodate its employees.
The Abu Dhabi Income Tax Decree of 0%
1965, the Dubai Income Ordinance of
1969 and the Dubai Income Tax
Decree, as well as the Sharjah Income
Tax Decree 1968 dictate that:
Every corporate body that conducts
trade or business through a permanent
establishment situated in the Emirate is
subject to tax at a sliding scale (in
general this only applies to oil, gas and
petrochemical companies and branch
offices of foreign banks) -
Income less than AED1,000,000
AED 1,000,000 <= Income <= AED 10%
2,000,000
AED 2,000,000 <= Income <= AED 20%
3,000,000
AED 3,000,000 <= Income <= AED 30%
4,000,000
AED 4,000,000 <= Income <= AED 40 %
5,000,000
Income >= AED 5,000,000 55%

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Custom duties on CIF (cost, insurance, 5%
freight) value of goods imported
(Sharjah)
Tax on profits made by branches of 20%
foreign banks

Consumption Taxes
Nature of the Tax; VAT

Standard Rate; In January 2018, a VAT started to be implemented in the UAE

at a rate of 5%.
Reduced Tax Rate; Food items, health, education, petroleum products, social
services and bicycles are VAT exempt. The financial services and (residential)
real estate sectors are also exempt from VAT (with certain exceptions).
Other Consumption Taxes Excise duties were introduced in 2017 for three types
of products: carbonated beverages (50%), tobacco (100%), and energy drinks
(100%)

Individual Taxes
Tax Base for Residents and Non-Residents No personal tax is levied.

Tax Rate

0%
No personal tax is levied.
Most Emirates impose a rental tax. Residential tenants pay 5% of annual
rent and commercial tenants pay 10%
of annual rent in Dubai. Expat tenants
pay 3% of annual rent whereas UAE
citizens do not pay any rental tax in
Abu Dhabi. All tenants pay 2% of
annual rent as rental tax in Sharjah.
Municipalities also impose tax on Varies from Emirate to Emirate:
services. It is deducted on the services Tourist facilities may charge 10% tax
of restaurants and hotels. on the room rate, 10% on service
charge and 10% on municipality fees.

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 Facilities may also charge a city tax
(ranging from 6 to 10%) and 6%
tourism fee.
Real property tax A transfer charge is levied on the
transfer of real estate in the UAE (4%
in the Emirate of Dubai and 2% in the
Emirate of Abu Dhabi)
No personal tax is levied. 0%
Most Emirates impose a rental tax. Residential tenants pay 5% of annual
rent and commercial tenants pay 10%
of annual rent in Dubai. Expat tenants
pay 3% of annual rent whereas UAE
citizens do not pay any rental tax in
Abu Dhabi. All tenants pay 2% of
annual rent as rental tax in Sharjah.
Municipalities also impose tax on Varies from Emirate to Emirate:
services. It is deducted on the services Tourist facilities may charge 10% tax
of restaurants and hotels. on the room rate, 10% on service
charge and 10% on municipality fees.
Facilities may also charge a city tax
(ranging from 6 to 10%) and 6%
tourism fee.
Real property tax A transfer charge is levied on the
transfer of real estate in the UAE (4%
in the Emirate of Dubai and 2% in the
Emirate of Abu Dhabi)

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 ECONOMICAL
These factors are determinants of an economy’s performance that directly
impacts a company and have resonating long term effects. For example, a rise in
the inflation rate of any economy would affect the way companies’ price their
products and services. Adding to that, it would affect the purchasing power of a
consumer and change demand/supply models for that economy. Economic
factors include inflation rate, interest rates, foreign exchange rates, economic
growth patterns etc. It also accounts for the FDI (foreign direct investment)
depending on certain specific industries who’re undergoing this analysis.

UAE ECONOMY
Major Indicator of Economic Development An economic indicator is a statistic
of the economy. Economic indicators show the analysis of economic
performance and predictions of future performance. One application of
economic indicators is also the study of business cycles.
Economic indicators are the composition of various indices, earnings reports,
and economic summaries. Here are some of the economic variables affecting
the UAE’s circumstances:

INDICATOR LAST PREVIOUS UNIT

USD
GDP 382.58 357.05 BILLION
GDP GROWH
RATE 0.8 3 PERCENT
INFLATION
RATE 1.97 1.67 PERCENT

AED
IMPORT 854400 832100 MILLION

AED
EXPORT 1169500 1083500 MILLION
GOLD TONNES
RESERVES 7.5 7.5

CRUDE OIL BARRELS

PRODUCTION 3250 3336 PER DAY

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 SOCIAL

Also known as socio-cultural factors are the areas that involve the shared belief
and attitudes of the population. These factors include – population growth, age
distribution, health consciousness, and career attitudes and so on. These factors
are of particular interest as they have a direct effect on how marketers
understand customers and what drives them.
Following are the a list of social factors 

Population

According to an estimate by the World Bank, the UAE’s population in 2018

stands at 9.543 million.

UAE Population Statistics by Year (Historical population)

Population
10

9.5

9 Population

8.5

7.5
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Male vs Female Population of the UAE in 2018

According to our research, in 2018, males make up 72% of the UAE
population at 6.89 million while the number of females account for only
28% of the total UAE population at 2.65 million. That makes the gender split
at 72% male – 28% female. Men outnumber women in all age groups as
mentioned in the above infographic. However, the number of males and
females in age group 0 to 14 are almost equal.
The number of men under the age group 15 to 24 is double that of women in

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the same age group. The most significant difference, gender-wise, is seen in
age group 25 to 54. There are 4.83 million men within this age group in the
UAE whereas the number of women within this age group is just 1.46
million.

Age-wise population of the UAE

Majority of the UAE population falls in the age group of 25 to 54 years. A
large part of this can be attributed to the expatriate population of working
men and women who fall in this age category. The median age for Dubai is
33.5 years.

0-14
4
15-24
25-54
3
55-64
65 - 100
2

0
Women Men Total

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Religion

Islam is the largest and the official state religion of the UAE. The government
follows a policy of tolerance toward other religions and rarely interferes in the
activities of non-Muslims.[378] By the same token, non-Muslims are expected to
avoid interfering in Islamic religious matters or the Islamic upbringing of
Muslims

Religion
80%

70%

60%

50%

40% Religion

30%

20%

10%

0%
Muslim Christianity Hindu Buddhist Other None

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 Distribution of expenses using our statistical model
8%
12% 3%

8%
Transportation
Clothing And Shoes
Sports And Leisure
Markets
Utilities (Monthly)
Rent Per Month
22% Restaur
41%

7%

STANDARD OF LIVING

Purchasing Power Index 111.6   Very

High

Safety Index 84.04   Very

High
Health Care Index 67.52   High
Climate Index 45.23   Moderate
Cost of Living Index 57.14   Low
Property Price to
4.39   Very
Income Ratio Low
Traffic Commute Time
Index 37.9   Moderate

Pollution Index 53.16   Moderate

 

ƒ Quality of Life Index: 164.3   Very

High

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 TECHNOLOGICAL
 Factors include technological aspects like R&D activity, automation,
technology incentives and the rate of technological change. These can
determine barriers to entry, minimum efficient production level and influence
the outsourcing decisions. Furthermore, technological shifts would affect costs,
quality, and lead to innovation.

Information and communication technology

The UAE is very keen on developing her capabilities in the field of information
and communication technology and is continuously undertaking measures to
achieve that.
Free zones
One of the first steps was setting up free zones such as Dubai Internet City (in
1999) and Dubai Media City (in 2000) to support technology companies in the
UAE and boost technological advancements and economic growth in the UAE
and the Middle East. Later, in 2005, Dubai Silicon Oasis was established.
Today, there are several free zones in the UAE that make publishing through
modern information and communication technology possible. Some of the free
zones are:

 TwoFour54 (in Abu Dhabi)

 Dubai Studio City (in Dubai)
 Dubai Production City (in Dubai)
 International Media Production Zone (in Dubai)
 Dubai Outsource City (in Dubai)
 Sharjah Media City Free Zone (in Sharjah; announced)
 Ajman Media Free Zone (in Ajman; announced)
 Creative City (in Fujairah)

Most popular Social Media Platforms in the UAE

 Facebook is the most popular social media in the UAE with 97.48% of
population using the social media platform.
 WhatsApp is the most popular messenger app in the UAE with 97% of
people in UAE using WhatsApp.
 YouTube users in the UAE have also increased compared to previous
year. According to AdWords insights, 80.92% of the UAE population
(7.72 million) uses YouTube

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Space science and technology
As per data of April 2015, THE UAE's investments in space technologies have
already exceeded AED20 billion, including investments made in the satellite
data and TV broadcast company - Al Yah Satellite Communication, the mobile
satellite communication company - Thruway Satellite Telecommunications and
the Earth mapping and observation system - Dubai Sat.
The UAE has launched four satellites which are currently orbiting around the
world. The satellites are:

 Dubai Sat 1 (launched in 2009)

 Dubai Sat 2 (launched in 2013)
 Ahsan 1 (launched in 2011)
 Ahsan 2 (launched in 2012)

ENVIRONMENTAL

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 These factors include all those that influence or are determined by the
surrounding environment. This aspect of the PESTLE is crucial for certain
industries particularly for example tourism, farming, agriculture etc. Factors of
a business environmental analysis include but are not limited to climate,
weather, geographical location, global changes in climate, environmental offsets

According to the CIA’s World Fact book, the UAE has a total surface area of
83,600 square kilometres, comparable to that of Austria or Azerbaijan. The
UAE can be divided into three geographical zones: a flat, low-lying, barren
coastal plain; rolling sand dunes that stretch from the coast into the expanse of a
vast desert wasteland that blends into the Empty Quarter (al-Rub al-Khali), the
world’s largest sand desert; and a rugged mountain range, shared with Oman, in
the north and east. While parts of these mountains are bare, other parts, such as
the Jabaal al-Akhtar, have vegetation. The UAE’s highest point is the top of
Jabaal Yahir, at 1,527 metres.
The UAE lies within the northern desert belt of the Arabian Peninsula
known for its scare and unpredictable rainfall, high temperatures and
humidifies, and prolonged periods of sunshine (about eight hours per day in
winter and 11 hours in summer). The UAE has a harsh desert climate,
generally hot and humid in the summer but cooler in the mountainous
regions, such as the Hagar al-Garbo Mountains. July and August are the
hottest months, when average maximum temperatures can exceed 48 °C on
the coastal plain. During the late summer months, a humid south-east wind
called Shari (‘easterly’) makes the summers too humid for comfort, but
there is usually a slight drop in temperature in the evening.

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 LEGAL
 factors include discrimination law, consumer law, antitrust law, employment
law, and health and safety law. These factors can affect how a company
operates, its costs, and the demand for its products

UAE Legal System

 No written law when the Gulf Emirates became protectorates of the
British Empire in the 19th century. Sheikhs ruled based on the Sharia
Law and tribal custom.

 First written law when the British sent in magistrates from Sudan to
prescribe the oral decrees of the Sheikhs.

 Independent police force and courts established in the 1950s with British
influence (although court system adopted Egypt/Civil Law model).

 UAE Constitution established in 1971, uniting six (later seven) Emirates

into one federation. Abu Dhabi in 1960

 Egypt adopted a Sharia-influenced version of the French Civil Code in

1949. This law was adopted across the region as the basic civil and In the
UAE, modern federal legislation:

 In the UAE, modern federal legislation:

A. 1980: Labour Law, Central Bank Law

B. 1981: Commercial Agency Law
C. 1984: Commercial Companies Law
D. 1985: Civil Code, Islamic Banking Law
E. 1992: Civil Procedures Law
F. 1993: Commercial Code
G. 2002: Modern IP legislation

 No banking law, arbitration law, bankruptcy law, or comprehensive

administrative law. Abu Dhabi in 1980 

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What is Sharia (Islamic Law)?

 Sharia is the moral and religious law of Islam based on the Koran and
other religious texts, with core concepts that include:

A. prohibition on uncertainty (including prohibition on gambling)

B. equality of (economic) rights
C. prohibition on usury and interest

 Sharia forms “a principle source of legislation” (except in Saudi Arabia),

but direct applicability generally limited to family law and inheritance for
Muslims.

 “Islamic finance” is a way to structure Sharia-compliant financial

products, using different types of security and no payments of “interest.”
These structures are rarely based in legislation.

 Sharia can impact business in the following ways

:
A. enforceability of option contracts (prohibition on gambling/uncertainty)
B. insurance business structure (prohibition on gambling/uncertainty)
C. payment of default interest (prohibition on interest)
D. business succession (Sharia prohibits wills)
E. different classes of shares not permitted (principle of equality of rights)

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 MAJOR INDUSTRIES IN UAE
1. Oil & Natural Gas Industry
2. Gold Industry
3. Tourism Industry
4. Fishery & Agriculture Industry
5. Electronic Equipment’s Industry

GDP - composition by sector

INDUSTRY SERVICES AGRICULTURE
1%

49% 50%

 OIL& NATURAL GAS INDUSTRY

UAE is the major producer of Natural Gas & Oil. It is at the 7th position in the world. The
reserves of Oil & Natural Gas are majority found in Abu Dhabi. The 2nd place after Abu Dhabi is
Dubai where resources are found at Sharjah&Ras AI Khaimahare places where the reserves are
found in small amount.

 GOLD INDUSTRY
Dubai is known as city of Gold. 90% of market is pain Gold Jewellery& rest 10% is Gem set. It is
fastest growing Gold centre in the world
.
 CONSTRUCTION INDUSTRY
In the all over the world, the UAE presently has one of the most fastest and rapidly growing
economies and one of the largest GDPs. As to achieving the sustainable growth, the local
government had started the development of non oil sectors with encouragement for reducing the
dependence on oil and gas sector. The government invested 9 billion for the developing the
construction sector.

 ELECTRONICS EQUIPMENTS INDUSTRY

Most of companies in UAE includes to providing services under electronics equipment suppliers
and services have to focus on the business computing needs of manufacturing companies, retail
and distribution networks. the electronic equipments are highly used is Electronic commerce,
commonly known as e-commerce or e-comm. It is refers to the buying and selling of products or
services over electronic systems such as the Internet and other computer network

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 CONCLUSION
The UAE shall develop their national laws and convention in a number of very
vital areas such as intellectual property, trade in services, trade defense laws,
etc. The foreigners, other than the GCC nationals, are not being allowed to own
the agricultural land, but may own up to a 49% stake in the agri-business
companies.

UAE has made commitment under GATS, on all the banking and other financial
services but there is exception of settlement and clearing services for financial
assets. Doha round has the aim to achieve major reforms of international trading
system through the introduction of lower trade barriers and revised trade rules.

OAPEC co-ordinates energy policies between oil producing Arab nations whose
main purpose is development. UAE is one of the fastest developing countries in
the world and has shown considerable improvements in past 3 decade. UAE
economy is 3ed richest economy in the world and main contribution of UAE
economy is Oil and Gas sector, Gold sector, tourism sector, Perfume Industry,
Electronic industry, etc.

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