Dubai – India’s 2020-21 budget was quite balanced and simplification of tax regime announced in the latest budget will help the economy on a long-term basis, say analysts.

While addressing the Indian Union Budget 2020 conference held in Dubai on Monday, they said markets and investors should look at the Indian economy over the long-term basis – five to 10 years or beyond.

Tushar Pradhan, chief investment officer at HSBC Global Asset Management in India, said the budget set direction towards simplified tax regime which is in line with the country’s bid to be a $5 trillion economy.

“Every individual or corporate should be part of the tax net and that is going to propel economy. Simplification is a big step. Some have argued that alternative tax regime is more confusing then before but we have to take it with a pinch of salt,” he said while addressing the forum, which was organized by The Indian Institute of Chartered Accountants (ICAI) – Dubai chapter.

He noted that divestment target of Rs2,100 billion is too ambitious and the next year will be really tough one to meet fiscal deficit to match.

Paras Shahdadpuri, chairman of Nikai Group, said the market was expecting some sops for the industries but it was missing in the budget.

“There was a lot of expectations built around the budget, expecting some big bang and fireworks. But it didn’t happen. Therefore, industry was disappointed. But, overall, budget is good as it did provide some stimulus,” he added.

Anish Mehta, chairman of ICAI’s Dubai chapter, said the government aimed to give more disposable income in the hands of individuals by introducing new tax slab under simplified regime in the budget.

“People, now, can choose between old and new tax slab depending on their savings appetite or not claiming various exemptions. However, this will discourage forced savings by individuals which is essential for sound financial position in times of crisis. Another measure which will impact the tax is taxing dividend distribution in the hands of the recipient rather than corporate. This may be beneficial to some but disadvantageous to tax payers who are in higher income group,” he added.

He said people were expecting some relaxation on exemption of tax on long-term capital gains which could not find place in the budget 2020. “This could have boosted investments in capital market.”

Anurag Chaturvedi, secretary of ICAI’s Dubai chapter, sees it as a balanced budget with respect to an individual increased slab-based rates and options to opt new scheme of tax.

“Abolition of dividend distribution tax is bigger reform by the government. However, capitalists will have to bear burden of increased tax slab rates, additionally bringing stateless persons in to tax net and introduction of deemed residency provisions will impact NRI in general. It will force them to choose a tax domicile (Tax Resident of any country) outside India to avoid taxing global income in India,” Chaturvedi said.

Source:https://www.khaleejtimes.com/simplification-of-tax-system-will-help-india-economy-on-long-term-basis-analysts

UAE, Egypt and Saudi Arabia emerge in top three for Mena startups

The UAE is known to encourage entrepreneurs to unlock the potential that the nation has to offer them in fulfilling their business aspirations.

The recent reforms introduced by the wise leadership of the country to boost confidence among startups also proves that the ecosystem has matured, and is now expanding its reach in the region, with Egypt and Saudi Arabia complementing the growth.

The latest report from Magnitt indicates that the number of investments in Mena-based startups was up 31 per cent in 2019, with 564 investments and $704 million in total funding, up 13 per cent compared to 2018, excluding previous mega-deals in Souq and Careem.

“With exits at an all-time-high, including the Mena region’s first unicorn exit, the region’s founders, investors, and governments are seeing the returns on their efforts in the tech venture space,” said Philip Bahoshy, founder and chief executive, Magnitt.

In 2019, Egypt, for the first time ever, accounted for the largest number of deals in Mena with a jump of 25 per cent, while the UAE accounted for the lion’s share of total funding and a surge of 60 per cent.

Egypt is the largest and most promising startup hub of the Mena region. The government has been working very hard to open up opportunities for foreign investments. Rainmaking is working with Egyptian entrepreneurs and local ecosystem players since 2014 and has engaged more than 150 startups, provided support to almost 900 founders, and worked with nearly 70 local partners so far.

So how do Egypt and the UAE complement each other in the startup space? “Egypt provides an extensive pipeline of startups, entrepreneurs and talents, while the UAE offers significant availability of infrastructures and funding. Together, Egypt and the UAE could build an active alliance to drive innovation in the region and export innovation globally from the UAE,” said Ahmed El Sherif, managing director at Rainmaking Innovation Egypt.

“We expect a big spurt of funds to support startups over the next three to four years. In terms of industries, we are recording the greatest interest from local corporations into innovation investments in the fintech, insurtech, tourism, healthcare, industrial sectors, and impact industries.”

Similarly, Saudi and the UAE complement each other a lot in the startup space. “The UAE has leapfrogged in innovations, bringing in international investors, and taking away the lead, but Saudi is already catching up,” says Taha Sajid, chief technical consultant, Limar Global Tech.

“I have not come across any one business startup, who have started in either of these countries but not have their eyes on the other; Saudi for the investment perspective and the UAE for getting market exposure. It is due to the fact that in order for startups to grow, they need to have a proper ecosystem, have market adoption, get the investment for liquidity, loyal customers, all of these things are possible if you are not only restricted to one jurisdiction. Apart from less travelling distance, they share the same cultural/religious/traditional aspect and even the resources ethnicity, like most people belong to Mena, India, and Pakistan, they understand each other well, which makes them complement each other,” added Sajid.

Saudi Arabia will emerge as a popular startup hub in the Mena region; the main reason is the cultural change through the national transformation drive of Vision 2030 and the ease of doing business with the direct involvement of the Saudi government through its proper structure.

“Any startups, whether local or international, if the idea is appealing and suits the local market, will get the proper guidance through different bodies. If there is a fintech startup, regulations have clarity in terms of business activities that need to be regulated or not and how SAMA and CMA are interrelated. Secondly, there is a separate framework for local and international entrepreneurs with the proper step and process flow. All this process is being driven by the Ministry of Commerce and Investment, supported by incubators like Badir and facilitators like Fintech Saudi. On the other hand, if you are an IT startup, there is digital transformation hub driven by the Ministry of communication and IT, so all the bases are covered when it comes to supporting startups,” said Sajid.

Innovation remains top of the agenda for many governments from across the region. According to Magnitt, Hub71 in Abu Dhabi was created to spur innovation in the capital with $250 million in funds to support regional and international startups scale in the region. Moreover, also Saudi Arabia has seen a shift in policy. Multiple initiatives have eased the ability of startups to enter the country, access education and scale within the Kingdom. Only recently, the Public Investment Fund (PIF) announced a $1billion Fund of Funds (FoF) to spur venture investments.

Egypt, given its scale and educational system, remains a key hotbed of innovation, with many early- stage companies and founders solving big market issues that are local to them. “Dubai, with a first-mover advantage, continues to assess how best to encourage and foster the startup ecosystem with new legislation and support, including golden visas for founders to help develop its ever-evolving ecosystem,” added Bahoshy.

Source:https://www.khaleejtimes.com/business/local/uae-startups-rising

Investors in the UAE and GCC are not rushing to sell their holdings due to coronavirus and rather those investors who missed last year’s rally are taking it as an opportunity to enter emerging markets, say analysts.

“So far, we have not seen any sellout requests from investors. The inquiries that we have seen is that when should we start adding to emerging market equities. And our answer is that if you have already invested, it is wait-and-see time. We’ll not add until coronavirus outbreak dies down. Let us wait and see when the factories reopen in February in China and supply chain returns to normalcy. We have not received a single call from any investor who wants to sell out as yet,” said Anita Gupta, head of equity strategy at Emirates NBD Group.

“In fact, on emerging markets, many people who missed out opportunity are asking when to enter. Investors are looking at it more as an opportunity than a scare,” Gupta said during the release of global investment outlook report for 2020 on Sunday.

After a spectacular 2019, propelled by monetary easing meeting excessive pessimism, Maurice Gravier, chief investment officer, Emirates NBD Group, expects markets to come back to the reality of fundamentals.

He said that the global economic backdrop is resilient, with growth expected to be close to that of last year, while inflation remains subdued. “The effects of last year’s rate cuts will be felt, supporting consumer spending, helping manage the enormous amounts of debt in the system, and providing oxygen to other central banks especially in emerging economies.”

UAE equities: Best bet in GCC

Emirates NBD’s Anita Gupta is the most bullish on the UAE equities among GCC markets.

“The UAE market is trading at lower valuations than the emerging and GCC markets both from price-to-book and price-to-earnings multiple. It also got very high dividend yield. In today’s world turning defensive, that makes the UAE market attractive for investors. However, the UAE market needs a catalyst because trading volumes are low and to take volumes up, what is going to work is the foreign ownership limit. Increased foreign ownership limit means emerging markets indices will add weight to the UAE equities which will results in more inflows both from passive and active investors. And that will increase trading volume as well,” she told Khaleej Times in an interview on Sunday.

“Also, with oil prices being where they are now, are pretty positive for government spend that flows through to private sector. So that should also be the catalyst for the UAE markets, going forward,” she added.

After the UAE, Gupta is quite bullish on the Saudi equities because of the stimulus measures Riyadh is taking.

“Saudi is increasing listings, starting with Saudi Aramco last year. Their corporate governance is also improving; plus, Saudi market is very well-diversified compared to other Gulf markets. They have companies listed from healthcare, insurance, retail, food companies, petrochemical and banking sectors. And the highest trading volume in the region with retail being a big part of their daily trading,” she added.

MR Raghu, managing director of Marmore Mena Intelligence, says GCC equity markets are expected to be neutral with the exception of Dubai, Oman and Bahrain.

“The neutral outlook is supported by moderate improvement in economic conditions and corporate earnings. Wherein oil price is widely expected to be at around current levels. The outlook for Dubai is positive on the back of expected improvement in the corporate earnings. While the outlook for Bahrain and Oman seems negative, given the strains in the economy,” Reghu added.

Source:https://www.khaleejtimes.com/business/markets/investors-see-coronavirus-as-an-opportunity-uae-equities-best-bet-in-gcc