Expo 2020 Dubai has announced that it will dedicate 20 percent of its total direct and indirect spend, to local and international SMEs.
Representing more than 5 billion Emirati dirhams (around US$1.36 billion) in contracts, this decision comes as a result of Expo 2020 Dubai’s belief in the role SMEs need to play in contributing to the UAE’s efforts in World Expo.
In 2014, the UAE approved a new SME law requiring all federal government bodies to dedicate at least 10 percent of their annual budget for procurement, services and consulting from UAE-based SMEs. This move, which came with additional SME-friendly regulations such as exemptions from bank guarantee requirements and specific custom taxes, builds on the new SME definition introduced in 2009.
The UAE, which leads the MENA region in a range of annual rankings on innovation and entrepreneurship, is keen to get themselves into the top 10 countries worldwide, when it will celebrate its 50th anniversary of independence in 2021. The ambitious UAE vision 2021 makes support for SMEs and startups a core priority. In the past Singapore, South Korea and Chile have stood as examples of how well-designed policies can transform economies and stipulate growth, innovation and diversification.
Currently, SMEs represent 95 percent of companies operating in the UAE, with 400,000 SMEs contributing 60 percent to the nation’s non-oil GDP, which is expected to increase to 70 percent, by 2021.
What is notable about UAE-based SMEs is their high international orientation. 51 percent of SMEs are exporting to other countries, compared to 44 percent in the EU and 18 percent in New Zealand. In a recent survey, 70 percent of SMEs were optimistic about their future growth based on demand for their products and services.
In order to support its decision, Expo 2020 Dubai is inviting interested vendors and suppliers to register on the Expo 2020 Dubai E-sourcing portal.
The portal serves as the primary gateway to the vast majority of Expo 2020 Dubai procurement operations. In addition to announcing upcoming tenders, the portal also details awarded packages relating to both goods and services, providing further possibilities for integration into the supply chain through indirect procurement and collaboration.
“This effort is also aligned with the UAE Vision 2021 to transition to a knowledge-based economy that fosters creativity and innovation,” said HE Sultan bin Saeed Al Mansoori, minister of economy and chairman of the UAE SME Council, in a statement.
HE Al Mansoori added that the UAE’s local and federal authorities are working closely together to further strengthen the local SME sector and provide entrepreneurs and SMEs with the support they need to fulfil their role in the economy.
The minister also affirmed that the government’s efforts are underpinned by Federal Law No 2 of 2014 on Small and Medium-Sized Enterprises and Projects, which allocates a minimum of 10 percent of all federal contracts to SMEs. The law also stipulates that companies in which the Federal Government owns a 25 percent stake must contract local SMEs for at least 5 percent of their total purchasing, servicing and consulting needs.
“Expo 2020 Dubai acts as an enabler for SMEs and is constantly looking for opportunities to maximise their integration into the wider UAE economy. This is evident in the strong activity on our E-sourcing Portal, where of the 6,196 suppliers registered, 2,418 are SMEs, and of the 787 contracts already awarded, 320 have been won by SMEs,” said HE Reem Al Hashimy, UAE minister of state for international cooperation and director general bureau Expo Dubai 2020, in the statement.