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 collateralised 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.
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.
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
- 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
- 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
- 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
- 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.
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
Updated on 06 Apr 2020