Gulf govts should offset fund to reinvest in local tourism initiatives

UNITED ARAB EMIRATES, May 3 (AMEinfo.com): Regional governments in the Gulf should consider setting up an offset fund to reinvest in a variety of local tourism initiatives and projects to enhance opportunities for the national workforce, according to a leading hospitality expert. Michael Scully, MD Hospitality at Dubai-based hospitality and real estate investment company Seven Tides, was part of a panel discussion at the Arabian Hotel Investment Conference (AHIC) in Dubai Monday (2nd of May). The sums of money available could be considerable. Scully estimates that between them, the top 100 internationally branded hotels in Dubai alone could repatriate up to Dhs750m ($205m) per annum for little or no investment on their part. "This is basically a franchise service for a management fee which results in the Middle East being a cash cow, in some cases supporting corporate losses elsewhere." he said. It is important to note that the proposal for an offset fund is set against a tax-friendly environment - the UAEimposes no tax on hotel management profits. This compares favourably with corporate tax rates of 33 per cent in France and up to 28 per cent and 35 per cent in the UK and US respectively. The fund could operate by combining public funds with a proportion of repatriated profits, or as a private fund in parallel with existing government budgets. The key to the success of the public private partnership (PPP) initiative would be to present employment and business opportunities for the rapidly growing number of nationals, 65 per cent of which are under 25 years old. "Unfortunately, many graduates throughout the region are struggling to find decent jobs. The root cause of recent unrest in the region was as much about economic opportunities as it was about political opposition. "90 per cent of all working UAE nationals are in the public sector, compared with 20-25 per cent of working nationals in similarly sized economies elsewhere. The government simply cannot continue to employ more and more nationals.