SLG Newsletter Nov 2018
Dear Friends and Clients,
The UAE government has decided to go into the bond market for the first time and to launch public bonds. This may seem surprising at first, because the main source of oil and gas remains in their control. On the other hand, cheap money is also stimulating the economy, and that is probably the primary reason. Also, Cambodia plans to issue government bonds in 2022. Due to the excellent performance of the local economy, buying a call option on these bonds should be considered.
As already reported in the previous months, there are now relief visas again and the new regulations on the transport of drugs have been changed several times within the shortest possible time. This is a clear example of flexible administration. A lot has happened in the criminal justice system this month when the UK student was initially sentenced to life imprisonment and then, after 4 months in prison, was quickly pardoned.
Additionally, the securities law has now been decriminalized in the UAE. In the past, any bounced cheque led to imprisonment of the person signing. Now, for smaller amounts, only fines are imposed.
If you should take a swim at Dubai marina, make sure you don’t look like waste. As always, be appropriately dressed in this country, and that includes the water. Otherwise you are taking the risk of being eaten by the “trash eating shark”.
In Cambodia, a significant change in the tax legislation is expected soon. The 14% withholding tax on interest is to be dropped if the interest is paid to the parent company for the provision of the shareholders’ loans. This should result in significant relief for the capitalization of subsidiaries or branches in Cambodia.
Yet another reason to take a look at Cambodia, where for investors the red carpet is rolled out and the banks are liberal and customer-friendly. Bank accounts can be opened within 24 hours after establishing your company.
Myanmar is also showing a new face, opening up the Yangon real estate market for reasonable prices. But be aware there is no free hold for foreigners, only lease hold properties which can be leased up to 50 years with a two times 10 years extension.
The hectic pre – Christmas season has begun – at least in the west. Enjoy the great weather and more relaxed atmosphere in the Middle and Far East. Reconsider properly your corporate structure and the consequences in taxation. We still have time to make the necessary changes before the end of the year.
Update on VAT – refund for tourists in the UAE
In November 2018, VAT refund for tourists will be implemented at the airports of Abu Dhabi, Dubai and Sharjah and will soon be available on other land, sea and air ports by mid-December all over the Emirates. Several of the conditions that are eligible for VAT refund are: items must be bought by a tourist in the UAE, bought goods must be subject to the Tax Refund for Tourists Scheme, the tourist must intend to leave the UAE within 90 days from date of purchase, and tourists should take the purchases with them within three months of purchase. Once proper documents have been submitted, tourists may claim the refund in cash or have it transferred back to their credit cards.
UAE issues Public Debt Law: federal bond issuance allowed
The UAE President has issued The Federal Decree Law No. (9) Of 2018 on Public Debt on 13th October. It will allow the federal government to issue sovereign bonds and assist the banks to comply immediately with international liquidity rules. Local banks can now acquire government bonds in dirhams or foreign currencies which will enable compliance with the Basel III requirements. The Governor of the UAE Central bank has stated that the new law will permit the federal government to issue sovereign bonds that would create a more resilient financial market.
The new law identifies the general rules for issuing and managing public debt. The Public Debt Management Office will be established and will report directly to the Minister of Finance. The office will also work closely with the UAE Central Bank on the issuance and sale of government bonds, treasury bills as well as other public debt instruments.
Tourists and residents need approval to carry medication
The Ministry of Health and Prevention now insists that all tourists and residents entering the UAE are required to fill in an electronic form to get approval to carry any kind of medication for personal use. Supervised medicines with a prescription are permitted for 1 month entry. Other medicines with a prescription are permissible for 3 months. Medicines that do not meet the requirements will be confiscated at the airport. The Undersecretary for Licensing and Public Health Policy advised tourists get prescriptions attested by authorities for any medicines that may have narcotic or psychotropic substances to avoid sanctions. Embassies have been notified regarding the new policy. The form can be downloaded from the ministry’s website.
Visa Update – changes for tourists, students, widows and divorced
The Visa reforms took effect from 21 October 2018. Visitors and tourists can now apply for a one-month extension of their visa which costs AED 600. Visit visa holders can apply for a 30-day extension twice without having to leave the country. However, the reform regarding the visit and tourist visa will not be applicable for the citizens of the GCC countries and its expatriates. Visa over stayers will have to pay a fine of AED 100 each day which will be imposed ten days after their visa expiration. Divorcees or widows (including their children) may apply for a 1-year extension of their residency visa from the date of the divorce or husband’s death without the need of a sponsor. It costs AED 100 for a one-year residency visa and also AED 100 for the cancellation of the previous visa plus various documents are needed. Students can now be given a residency visa for a period of 1 year upon reaching the age of 18 or after the date of their graduation. The fees are as well AED 100 for the visa and AED 100 for the renewal for another year. Attested educational certificates and supporting documents are necessary for the application.
Visa amnesty scheme extended
The visa amnesty scheme has been extended up to December 1, 2018 as announced by the Federal Authority for Identity and Citizenship. The scheme began last August and was supposed to end on October 31, 2018. Acting Director-General of Foreigners and Ports Affairs said the decision to extend the deadline came so as to offer greater assistance to all those living in the UAE who have yet to fully legalize their status. No leniency will be given to residency violators after the given extension. Investigations and arrests will be made to violators and they will be prosecuted as per the UAE laws, followed by imprisonment and deportation. Consulates and embassies have been asked to fully cooperate and push for greater efficiency in processing the documents for their citizens in time. The authority also clarified that there will be no ban for those who will be leaving the country on exit-passes and can enter UAE legally, including absconders.
Abu Dhabi – new rental regulations for fair justice
In October, the Abu Dhabi Judicial Department (ADJD) implemented Article 11, Clause 4 of Decisions No. 25 of 2018 on rental disputes committees and procedures. It states that rental contracts registered with the Abu Dhabi Municipality shall have the status of “executory instruments” through which the Rental Dispute Committees will allow landlords to directly involve enforcement agents and take action against tenants that have failed to pay rent.
Tenants shall be requested to pay the unpaid rent amount within a period not exceeding 21 days from the date of notification for residential rents, and 30 days for commercial and industrial rents. The decision from the rental dispute committees will be issued within a minimum of two days and a maximum of three weeks. An eviction notice will be issued after the rental dispute committees have heard from all parties. The new decision applies only to properties with lease contracts registered with the Department of Municipalities in Abu Dhabi.
Dubai – home of a trash-eating “Shark drone”
In November a “shark drone” developed by the Dutch company RanMarine will begin operations in the Dubai Marina. The “WasteShark” takes nature as its inspiration with its whale shark-like mouth. But instead of vacuuming up krill, this device collects waste.
According to RanMarine, the drone is available in both autonomous and remote-controlled models and measures just over 1.5 meters by 1.1 meter. The WasteShark can carry up to 160 kg of trash and has an operational battery life of 16 hours. “They also have the capabilities to gather air and water quality data, filter chemicals out of the water such as oil, arsenic, and heavy metals through filtering pads, and scan the seabed to read its depth and contours”, said Oliver Cunningham, one of the co-founders of RanMarine. “Furthermore, fitted with a collision-avoidance system, the drone uses laser imaging detection and ranging technology to detect an object in its path and stop or back up if the object approaches”, he added. Beside Dubai, WasteSharks are operating in South Africa and the Netherlands. The Dubai-based operator Ecocoast has two WasteShark drones in the emirate. According to Ecocoast, these drones will clean waterfronts for clients including hotels and municipalities and environmental authorities.
John Burt, associate professor of biology at NYU Abu Dhabi, said “attaching devices to measure water quality, temperature, and air pressure could be useful in collecting data in real time and allowing a more dynamic understanding of water quality”, but added that “the drones could be vulnerable to boat traffic”. At the moment the UAE “does have a significant problem with large-scale microplastic pollution,” he added. “There is a need for some sort of remedial action to limit the waste that we have on our shoreline.” According to Cunningham, RanMarine is also working on a larger ocean-going model.
But the WasteShark isn’t the only “fish” in sea. Sharjah-based company Fenbits has developed a waste-collecting aquadrone called BluePhin. BluePhin utilizes AI technology and can collect 770 pounds (350 kg) of trash in two hours.
Fly without passport at Dubai Airport Terminal 3
The world’s first “biometric path’’ or smart tunnel equipped with the latest biometric technology has been installed at the Emirates Terminal 3, Dubai International Airport. This development was done in cooperation between the General Directorate of Residence and Foreigners Affairs in Dubai (GDRFA) and Emirates Airlines and was launched last October. Emirates passengers can soon check-in, clear immigration procedures, and proceed to the Emirates Lounge and onto the boarding gates without the need of human intervention. The smart tunnel that combines facial and iris recognition will improve customer flow at the airport and with fewer queues and document checks. Also, its ‘’live’’ passenger tracking can help track passengers, improve security and develop a more personalized airline service. This service will initially be available to business and first class passengers and will soon extend to economy class passengers and to other Emirates flights, potentially.
The Far East:
Properties in Myanmar, Yangon
According to property market analysts, now is the best time to consider acquiring properties in Yangon as a result of the increasing availability of home loans, the introduction of the Condominium Law 2016, and a stable market. Management groups can apply condominium rules and regulations and upon its formalization, and housing projects can be officially registered. Real estate developers are working together with banks to make home ownership a possibility by imposing housing loans that can be repayable monthly. Having more shopping centers, office towers, serviced apartments and good hotels can increase Yangon’s charm as a city to live in. Land costs in Myanmar fell at 25% this year from its peak in 2013.
Myanmar startups draw international investor interest
Interest in Myanmar’s startups has been on the rise as investors scour the market for potential returns. Germany’s development finance institution DEG and agRIF, an impact focused fund which provides funding to financial intermediaries targeting smallholder farmers and the rural population, announced a joint investment of US 6 million in Rent 2 Own (Myanmar) Ltd (R2O). Daiwa PI Partners, an investment arm of a major Japanese securities firm group, is also taking a stake in the venture by fully purchasing shares from one existing shareholder.
R2O, which first launched in January 2016, has served 70,000 clients through its network of 34 branches covering an area of Central Myanmar that ranges from the Ayerwaddy Delta to the mountains of Shan State. The startup now supports one third of all motorcycle sales taking place in the shops they cover. R2O CEO Philippe Lenain said in a statement, “We’ve partnered with over 400 motorcycle dealers in the country to offer their clients a fully insured bike, as well as maintenance, for a monthly fee and he added, “so far, the only limitation to R2O’s growth has been our limited capacity to access funding”.
Singapore – fast track option for Civil Intellectual Property disputes
Civil Intellectual Property (IP) disputes, currently heard in the High Court, State Courts and the Intellectual Property office, can now be consolidated in the High Court under the proposal of the Law Ministry to accelerate the process for IP litigation. The Ministry of Law said, “The fast-track option is meant for disputes which involve a lower value or where parties prefer to further speed up the conduct of their cases. It may be suitable for less well-resourced parties, such as individuals and small and medium-sized enterprises (SMEs) who may otherwise be unable to enforce their IP rights or defend themselves in litigation.” Furthermore, from the Ministry of Law, a time and cost-effective system of IP dispute resolution is important for rights holders to effectively safeguard their intellectual creations, ensuring that incentives to innovate and create new works for the benefit of society remain. It also assures potential defendants that they can effectively and efficiently resolve disputes. Parties can decide to have their cases handled in the same manner or choose the fast-track option.
Cambodia – Government Bonds to enter market by 2022
In October, the government reiterated its intention to issue sovereign bonds, and said they will become available to investors in the next four to five years.
According to Chou Vannak, deputy director general of the General Department of Financial Industry, “Government securities will serve to support economic growth, reduce reliance on foreign currencies and risks associated with currency exchange rates, and will allow the Central Bank to take control of the country’s monetary policy. The bonds will play a crucial role when development funding dries out as Cambodia becomes a wealthier and more self-reliant nation.” He further said they will protect the country against external shocks affecting the government’s debt portfolio.
Additionally, these financial tools will mobilize domestic savings for investments, provide diversified investment products to investors, and support the interbank market and the development of the financial system. Sim Dara, director and head of research of Yuanta Securities (Cambodia) further states that, “Government bonds are safer than corporate bonds and are a very interesting investment for companies like insurance firms, who are looking for long-term investments”. “With sovereign bonds, the government will reduce exchange rate risks. It will give the Central Bank a benchmark for the implementation of the local
monetary policy, support the financial sector and increase stability,” Mr Seilava said, and it will allow the government to raise capital in the local currency, and create a low-risk investment for institutional investors like commercial banks, insurance firms and pension funds. The regulations to create and implement the government’s bond strategy have been in place since 2000, Mr Seilava said, adding that it has not been implemented yet because the government still enjoys concessional loans from development partners at very low interest rates.
The national budget for 2019 is around $6.7 billion, which is 11.4 percent bigger than last year’s. Cambodia’s outstanding public debt stands at $6.8 billion.
Cambodia joins global real estate map
After having joined the United States-based organization, the National Association of Realtors (NAR) last year, Cambodia is now officially featured in the NAR map. Headquartered in Chicago and boasting over 1.1 million members, NAR is a North American trade association for those who work in the real estate industry. The chairman of the Cambodian Valuers and Estate Agents Association (CVEA) Cheng Kheng, said that having the Kingdom featured in NAR’s map was good news for the entire local property sector as it will increase the exposure of the local property market and help it continue to grow.
During the first nine months of the year, the Ministry of Land Management, Urban Planning and Construction approved construction permits for 2,541 projects in Cambodia, which are worth a combined $4.82 billion.