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A new federal law on small and medium enterprises (SMEs) to be introduced by the end of June will outline the definition of SMEs, procedures of establishing SMEs and their capital requirements, a senior official of the Khalifa Fund said recently.
"It's going to have quite a significant impact on the SME industry and will establish a much better environment," Dr Ahmad Khalil Al Khalil Al Mutawa, CEO of the Khalifa Fund for Enterprise Development said on the sidelines of the inaugural Abu Dhabi Forum on Entrepreneurship.
In recent years, the UAE has witnessed rapid growth in the number of SMEs established in the country. According to a study by the 2009 Global Entrepreneurship Report, the UAE recorded the highest number of start-ups.
The country also has the highest increase in individuals starting up their own business, the majority of which are Emiratis demonstrating the increasing trend for UAE nationals who prefer to start their own businesses.
Continuing with this trend, the UAE is expecting the highest growth in the number of SMEs established at 81 per cent.
The burgeoning industry has been hampered by a productivity gap according to Sabiq Rashid, partner enterprise development Riyada Enterprise Development, Abraaj.
"In the UAE, SMEs only contribute 28 per cent of the GDP compared to the US which is close to 50 per cent. There's a big gap there and the question arises whether SMEs in this region can compete on a global scale," he said during the forum.
Meanwhile, the Khalifa Fund announced it would increase the ceiling for SME financing by 100 per cent – from the current Dh5mn (US$1.36mn) to Dh10mn (US$2.72mn) per project. The fund will finance 60 projects this year with more than Dh2mn (US$544,000).
Speaking as the guest of honour at the opening of The Abu Dhabi Forum on Entrepreneurship, which was presented by the Abu Dhabi University and the Khalifa Fund, Mohammed Omar Abdullah, Undersecretary, Abu Dhabi Department of Economic Development, said: "Entrepreneurship is a vital component of Abu Dhabi Vision 2030. With SMEs comprising 46 per cent of our economy, they all serve as essential contributors towards sustainable development and economic diversification of the emirate and of the country as a whole."