• Five percent growth projected for 2014 on the back of successful diversification policy
• Business climate favorable with the new companies’ law improving transparency
• Debt profile improves, financing needs of the government related entities (GRE) continue
The United Arab Emirates (UAE) country assessment has been ranked at A3, according to Coface, a worldwide leader in credit insurance. With economic growth expected to stand at around 5 percent in 2014. Coface uses a seven-level ranking; in ascending order of risk, these are: A1, A2, A3, A4, B, C and D. The country assessment provides an insight into the average payment incident level presented by companies in a country in connection with their short term trading transactions.
The UAE business climate which measures corporate risk, considers a number of factors such as the availability of company reports, reliability and the effectiveness of legal system has also been assessed at A3. After contracting around 5 percent in 2009, the UAE’s economy gradually recovered, recording solid growth rates with 5.2 percent witnessed in 2013.
“The UAE economy remains solid on the back of both the hydrocarbon sector and the non-hydrocarbon sector. The diversification policy constitutes an important pillar of the economic performance as it reduces the dependence on oil and supports the real sector. The business environment is improving and the actions taken to increase the transparency within the economy are crucial to reduce the risks in the corporate sector,” said Seltem IYIGUN, Economist for the MENA at Coface.
Economic growth performance
Earlier this year, Dubai managed to refinance favorably its debt maturing (around 20 billion USD) with Abu Dhabi and the UAE central bank. However the debt burden of the entire public sector in Dubai is still heavy with significant amounts coming due in the next few years, around 40 billion USD between 2015 and 2017.
The introduction of regulatory measures by the authorities aiming at avoiding another property bubble is also promising for the country’s economy. The introduction of the new Companies Law which brings gradual reforms to the corporate governance is also seen as a major progress. However there is still room to go as the financial accounts are rarely available with the exception of international large groups.
In Coface’s latest Panorama report, the focus is on the hydrocarbon, agro food and retail sectors as these are the key elements of the economy.
Hydrocarbon sector: Key contributor to the growth
The UAE produces 3.5 percent of the global crude oil, representing 7 percent of the proven reserves, ranked 7th in the world and 4th within the OPEC countries. In 2013, the hydrocarbon sector accounted for one third of GDP and hydrocarbon exports were about one third of total exports. Public finances of the UAE remain highly dependent on hydrocarbon revenues, despite ongoing diversification in the economy. The oil accounted for almost 80 percent of the budget revenues in 2013. The main risks in this sector would be the corporate profitability depending on the government supports and the balancing of the hydrocarbon supply and demand in the country. The regional conflicts can also represent a source of risk.
Agro food sector: Heavy dependence on imports
The agro food sector is becoming increasingly important in the UAE in line with the growing population and per capita income. The country accounts for 20 percent of the total food consumption of the Gulf Cooperation Council (GCC) countries, second largest consumer after the Saudi Arabia. The country is also the second largest food producer in GCC. However the arable lands are very limited and the climate is not very favorable for the agricultural activities. The government supports the agriculture sector and food processing industry. Heavy dependence on food imports creates a risk for the country in case of a shortage in food supply. The government’s control over the food prices may also weigh negatively on the corporate profit margins.
Retail sector: Favorable environment for expansion, risks mitigated
The retail sector is one of the fastest growing industries in the UAE on the back of increasing wealth, economic sustainability and strong domestic consumption. The fact that the UAE was not affected by the political turmoil in the Arab World made the country a more popular tourism destination which also contributed to the expansion of the retail sector. The intense competition, the increase in accommodation, food, transports and education prices and rents can be considered as major risks weighing on the retail activity but these risks remain mitigated.
“Panorama report confirms significant development achieved by the region’s economy in the past three years, establishing it as leading global trading economy. Non oil trade hit AED 256bn in the 1st quarter of 2014 showing continued momentum driven by country’s non oil foreign trade in all economic sectors as reported by UAE Federal Customs Authority. The UAE represents an ideal business location and a safe haven in the Middle East Region” said Massimo Falcioni, Head of Middle East countries Coface.
2020: the year mortgages went digital
By Francesca Carlesi, co-founder and CEO, Molo – Feb, 2021
It’s safe to say that the past year has changed everything. With restrictions in place that limited almost every aspect of our lives, from work to socialising, it’s no surprise that some industries were decimated and others were left severely shaken. The mortgage sector was no exception, as it also underwent a vast transformation which may have changed the course of mortgages forever.
The industry saw a paradigm shift, which was driven by consumers being forced online. This was the case for everything from mortgage applications to online house viewings and property valuations. As expected, this resulted in an increased demand for digital mortgage solutions with more flexibility.
While the industry was already slowly shifting, the pandemic has accelerated this and now the traditional process of getting a mortgage is increasingly coming under threat. We’ve seen a number of somewhat surprising trends over the last year that support this argument and suggest that consumers are embracing the change. For example, compared to March last year, we’ve seen the number of people aged over 45 applying for a mortgage loan increase by 70%. This indicates that consumers who may have previously resisted applying for a digital mortgage saw no alternative option in lockdown.
It seems that this paid off, as our data suggests that overall consumers were more satisfied with the simpler and quicker process.
A shift in behaviour
It’s clear that the pandemic did nothing to discourage those seeking a mortgage from doing so and the industry continued to grow. For example, in October last year, the UK mortgage industry saw a 13-year high, where over 97,500 loans were approved – the highest figure since September 2007, the month at the start of the financial crisis. But what led to this and why?
In a post-pandemic world of financial uncertainty and instability, the idea of purchasing property is now being perceived by many as a safer bet than investing in the stock market or other investment options.
As a result, buy-to-let properties are becoming an increasingly appealing option and Google has now coined it as ‘breaking out’. Not only did Google trends observe a 5000% increase in the search term ‘how to get a buy-to-let mortgage’ last year, but at Molo, our own data also supported this and found a significant rise in the number of first-time buyers who were mortgage hunting.
Despite being introduced twenty years prior to buy-to-let mortgages, let-to-buy mortgages also saw huge growth in 2020. The pandemic has led to increased numbers of remote workers and commuting has become a thing of the past. UK cities are seeing somewhat of a mass exodus as the priorities of city dwellers are changing and many are going in search of more space. Let-to-buy mortgages offer the flexibility to facilitate this. Investing in this kind of mortgage means that families, for example, can afford to rent out their property in the city and move to locations that are more rural.
We’ve also seen the industry pivot slightly in terms of regional demands. While there is continued demand from London and the South East, for example, we’ve also seen growth in areas such as the North West and we predict this won’t slow any time soon. One of the cities with especially high demand was Blackpool, where growth in demand was twice the national average.
Future gazing: 2021 and beyond
We’re expecting that the changes seen across the industry over the past will stick. After all, if even the sceptical customers were happy with the ease and simplicity of the online mortgage application and approval process, why on earth would they go back?
It’s important that we learn from these observations and use them to draw insight into the future of the mortgage sector. For instance, while Coronavirus has certainly caused disruption for lenders and consumers alike, it’s also highlighted the need for a more advanced, digital offering. It’s shown that digital mortgages really have become the best option for customers. The pandemic has been a test run for businesses and has proved that, even after restrictions are lifted, there is no good reason for mortgage providers to return to the traditional but slower business-as-usual.
At least in the property world, 2020 could well be remembered as the year that mortgages went digital. While it’s true that the pandemic was the catalyst for this shift, it’s now gone beyond the virus. The changes we’ve seen over the past year are likely to shape the mortgage industry for years to come.
EU finance chief says UK’s Northern Ireland move a breach of trust
DUBLIN (Reuters) – The European Union’s finance chief said Britain’s decision to make unilateral changes to Northern Irish Brexit arrangements raised questions over whether it can be trusted in future trade negotiations with any partner.
“It does open a question mark about global Britain, if this is how global Britain will negotiate with other partners. Our experience has been not an easy one to put it mildly,” Mairead McGuinness, who is negotiating post-Brexit financial services terms with Britain, told Irish broadcaster RTE on Thursday.
“We have to be very clear that when something happens that is not appropriate and indeed in our view breaches both trust and an international agreement, then we have to call it out. It wasn’t a good day yesterday but this morning we have to work for practical solutions, with the UK, not separately.”
(Reporting by Padraic Halpin; editing by John Stonestreet)
The Benefits of Starting A US Non-Profit: The Latest Tax Regulations
Starting a nonprofit organisation can be a very effective way of significantly improving your society’s welfare, and truly assisting those in need. Ultimately, however, understanding all the prerequisite steps mandated to start a nonprofit– as well as the legal obligations and privileges that can be associated with such a process, is crucial before fully committing to and moving forward with your business plan.
Growing a prolific, successful, and impactful non-profit can be a very tedious process and can commonly involve years of consistent effort, diligence, and determination. Consequently, this article will take a deep dive into the relative statutory and federal legislation and critically analyse the plethora of economic, monetary, and social benefits that starting a nonprofit can bring in for you.
Non-profit Organisations: A Quick Overview
Regardless of whether your goal is to address a particular societal issue, form a trade organisation or perhaps create a social club, if you are looking for the opportunity to earn a profit on top of accomplishing your stipulated goals, forming and operating a nonprofit organisation may be the way to go.
Contrary to most social clubs- which are formed to solely provide benefits for their specific members, nonprofits are generally created to provide benefits to the general public. These can include corporations created for educational, scientific and charitable purposes and- as we will further analyse below, are commonly exempt from paying corporate income taxation in accordance with Section 501(c)(3) of the Internal Revenue Code.
The Financial and Structural Benefits of Starting a Non-profit
As briefly touched on above, forming a nonprofit organisation can provide a plethora of benefits for you, these include:
- Tax Exemptions- companies that are categorized as ‘public charities’ in accordance with section 501(c) of the Internal Revenue Code are generally exempt from paying corporate income tax on a state and on a federal level. Additionally, after a company has obtained their aforementioned ‘tax exempt’ legal status, a person’s or company’s monetary donations to them is tax-deductible.
- Grant Opportunities- There’s a prolific amount of both public and private bodies that unilaterally limit their charitable donations and grants to public charities only. This is because nonprofits can- and commonly do, offer tax deductions to such individuals or corporate entities on an exclusive basis.
- Unique Corporate Structure- A nonprofit organisation operates as its own unique legal entity- completely separate from its owners and founders, and consequently is in a position to place its own interests and corporate ethos above the interests of the persons that may be associated with it.
- Limited Liability & Perpetual Existence- On top of having a statutory right to exist in perpetuity, nonprofits also have limited liability under the law. Therefore, any damages that may arise from potential legal disputes are limited to the real assets of the actual nonprofit, and not the assets of its founders and/or owners (subject to specific legal exemptions).
Final Overview: The Potential Disadvantages of Forming a Nonprofit
Despite all the advantages laid out above, it should be duly noted that there are a couple of potential disadvantages to forming a nonprofit that you may want to consider before moving forward with your plan.
Firstly, the process of forming a nonprofit can take a significantly long period of time and this is commonly associated with a great deal of both effort and capital. Moreover, in order to apply for some of the benefits listed above- including federal tax exemption, a monetary fee is required and the process also often needs a present attorney or corporate accountant to serve as a corporate consultant.
Furthermore, there are a couple of practical disadvantages to starting a non-profit organisation. These include: a) excessive paperwork- as all nonprofits are legally required to keep detailed analytical records of their practices and submit them to their relevant state de[artment and to the IRS, and b) limited personal control over the organisation- this is particularly the case in states that require nonprofit organisations to have more than one director.
Finally, nonprofits are commonly subject to prolific levels of public scrutiny- especially in relation to their finances, which may act as a disincentive for some private individuals.
Overall, starting a nonprofit can bring in a plethora of economic, monetary, and social privileges for the individuals involved, and- although the process can come with a few potential inconveniences, they are arguably a small price to pay. Companies like TRUiC advise on the varying benefits of different states when it comes to US formations. It is worth conducting thorough research before making your next move.
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