Dubai, Nov 2 (Emirates 24 x 7): Dubai is considering creating a pension fund for its large expatriate community to become the first city in the Middle East to enforce this landmark system for foreigners, officials were reported on Tuesday as saying.
The emirate, which does not impose income tax on individuals, said the project could cover both the public and private sector and analysts believe it will largely succeed if it is made compulsory to all expatriate workers.
The project is part of several ideas being considered by the Dubai Economic Department (DED) to spur investment and make Dubai a more attractive place to do business and live, DED said in a statement.
“The study about the pension system for the expatriates is among these ideas…it will cover the public and private sector but it is still in its preliminary stages,” said Ali Ibrahim, deputy director of planning and development at DED.
“We have set up a team to study this vital project and will present a report on the outcome of this study to the competent authorities to take the right decision.”
The Dubai-based Emirat Alyoum Arabic language daily quoted officials and experts as saying the pension idea would give a strong push to the local market as it will expand liquidity, boost investor confidence and improve living standards.
“There is no doubt the proposed pension system will ensure financial and social stability and create sufficient guarantees for expatriate workers in the emirate…this will in turn increase confidence in the domestic economy,” said Aref Al Muhairi, executive director of the Dubai Statistics Centre.
“I believe it will also boost domestic liquidity and this will give a push to business in the emirate…as for the sum that will be taken off the salary for the pension fund, I think it will be in line with international levels.”
Muhairi said he did not know whether the fund would be compulsory but added there would be several options for the Dubai government. “However, I believe that making the fund mandatory will bring many benefits to expatriate workers, reduce their financial disputes and tackle end of service problems…this will contribute to easing pressure on courts….I am confident that this project will be highly successful as is the case in pension funds in many European states.”
The paper quoted a Dubai-based economist as saying the proposed fund would play a major role in the economy of Dubai, the region’s commercial hub.
“Pension funds around the world play a key role in attracting large investments that greatly support the economy…I think this fund will be in the interest of Dubai as many countries already have such funds for non-citizens,” Mohammed Al Asumi said. “I am sure it will give stronger confidence to expatriates in the emirate and at the same time improve their living standards.”