< Previous20 Vol. 25/10, September 2024 Property For property owners in Dubai keen on tapping into the lucrative short-term rental market via platfor ms like Airbnb, navigating the regulator y framework is key. The Dubai Depart- ment of Economy and Tourism (DET) enforces rules ensuring hosts comply with specific requirements before list- ing their properties. Airbnb, a global leader in short-term rentals, allows homeowners to rent out their properties for short stays, often generating higher income than tradi- tional long-term leases. However, with its rise in Dubai, the DET stepped in to regulate the industry. Property owners must now obtain a short-term rental permit from the DET, adhering to a comprehensive licensing process. Anna Skigin, CEO of property management company Frank Porter, explains that the process, while neces- sary, involves several detailed steps. The application process involves paying fees, which vary depending on the type and size of the property Dubai’s short-term rental license, explained A guide for property owners looking to navigate the city’s regulations and maximise their property returns WORDS BY SHARON BENJAMIN & KATE-LYNNE WOLMARANS ABE_2510_20-21_Property - Short term_13373735.indd 2028/08/2024 17:40arabianbusiness.com 21 Property Setting the right occupancy limits is also crucial. Airbnb allows hosts to define the maximum number of guests based on the property’s size, amenities, and available services. This information is set out in the listing, and guests are expected to follow the guidelines. Skigin also reminds hosts of the impor tance of renewal deadlines. Permits typically expire after a year, and failing to renew on time could lead to fines or even a ban on further rentals. Authorities have become more vigilant, monitoring for non-compliance, and imposing penalties on those who fall short of the new standards. While the process may seem complex, Skigin encourages property owners to seek professional help. “By staying informed, leveraging profes- sional expertise, and maintaining good practices, you can navigate Dubai’s short-term rental licensing system effec- tively and ensure a smooth operation for your rental property,” she says. In Dubai, the short-term rental market may offer lucrative opportuni- ties, but it’s important to approach it with caution, ensuring that all DET requirements are met, and the right insurance coverage is in place. With the proper steps, hosts can secure their rental income while maintaining peace of mind. Applying for a Department of Economy and Tourism license in Dubai involves several steps and can vary in duration based on factors like the type of license “Applying for a Department of Economy and Tourism (DET) license in Dubai involves several steps and can vary in duration based on factors like the type of license, the completeness of your application, and the current work- load of the department,” says Skigin. So, how do you navigate the process? Here’s a quick guide: First, it’s essential to gather the required documentation. This includes proof of property ownership or lease, identification, and compliance certifi- cates. Once prepared, the next step is to submit your application either online through the DET’s portal or in person. After that, there are fees to be paid – ranging from $100 for a studio apart- ment to $330 for larger properties – and a health and safety inspection to pass. Once the DET approves your appli- cation, you’ll receive your short-term rental permit, but that’s not the end of the process. Hosts must also ensure they have adequate insurance coverage. Skigin highlights two key types: Short- term rental insurance, which covers property damage, theft, and liability; and liability insurance, which protects against claims for injuries or damages occurring during a guest’s stay. “Your property must meet local health and safety standards,” Skigin notes. This could include having a fire safety certificate and ensuring that your property complies with local building codes and safety regulations. Hosts should also be aware that Airbnb’s Host Protection Insurance may not cover all possible claims, so securing additional insurance is vital. But it’s not just about ticking boxes. The regulatory environment in Dubai has evolved dramatically since Airbnb’s arrival. Previously, short-term rentals were loosely governed, but as their popularity soared, the DET introduced stricter controls. Along with obtaining a permit, hosts must register to collect and remit the Tourism Dirham fee – a tax imposed on short-term rentals to fund tourism infrastructure. Understanding the DET’s ongoing requirements is key. Permits must be renewed annually, and if you’re using a third-par ty proper ty management company, you’ll need a management agreement. Additionally, some home- owners’ associations (HOAs) impose their own rules, and certain communities restrict short-term rentals altogether, so be sure to check your area’s regulations. Skigin advises: “Make sure to check the zoning laws in your specific area of Dubai. Some districts may have restric- tions or specific rules for short-term rentals, which can impact where you can operate.” Properties in commercial or mixed-use zones are usually more accommodating to short-term guests, while some residential neighbourhoods impose stricter regulations to preserve the local character. After receiving the permit, hosts must register to collect and remit the Tourism Dirham fee, a charge imposed on short-term rental bookings ABE_2510_20-21_Property - Short term_13373735.indd 2128/08/2024 17:4022 Vol. 25/10, September 2024 Partner Content J.K Khalil, Mastercard’s Division President for East Arabia, on how the lines between physical and digital economies are blurring, potentially transforming the way we think about money and value in our daily lives Exploring the future of the digital payments landscape Khalil explained the importance of connecting AI systems to global data pools to improve fraud detection and adapt to new threats The future of digital payments and financial ecosystems is evolving on a daily basis. As the use of cash declines and smartphones transform into digital wallets, the very notion of currency is being redefined. In a recent podcast episode of AB Majlis, J.K. Khalil, Division President for East Arabia at Mastercard, painted a vivid picture of a future where loyalty points might buy your morning coffee, AI safeguards transactions across global networks, and a digital identity could carry more weight than a passport. “My children are now asking me to open a bank account for them and how to store the card on their phones. They don’t want a plastic card. In our generation we were asking for allowances and legal tender and traditional fiat currency, I wanted to know exactly how many papers and coins I had. They don’t want to play Monopoly, they want a card on a phone,” he said. Khalil addressed the common fear of credit cards in some markets, arguing for a more nuanced understanding of credit. “Credit is actually good because it allows us to enhance our quality of life,” he stated. “Credit is bad if you don’t know how to manage it.” He used examples from the US market to illustrate how credit cards can provide benefits beyond just delayed payment, such as discounts, points, and the ability to make larger purchases that improve quality of life. “The US is a place where people are very comfortable with the concept of credit, you learn that it does not make sense to use cash to do everything. And they show you the importance of credit and how you accelerate and multiply your efforts and your funds,” he said. “For instance, can you buy a house without credit? It’s impossible. We buy a house and we pay it from the earnings of our future work and income. Can you buy a car without credit? It’s impossi- ble,” he added. A ‘simple’ principle in a ‘complex’ market Khalil, who recently took on his new role as part of Mastercard’s refreshed organ- ABE_2510_22-23_Mastercard_13369585.indd 2228/08/2024 17:49arabianbusiness.com 23 Partner Content Imagine also being able to buy coffee with them. I think that interchangeability of digital assets and currencies is some- thing that is very powerful.” This vision extends beyond just loyalty points to encompass a broader reimagining of currency and value exchange. Khalil suggested that as corporations take on greater roles in shaping societal values, customers start identifying with them. “The rise of digital identity is also shap- ing a new concept of identity,” he explained. Khalil envisions a future where individ- uals might choose to use certain digital currencies based on their affinity for particular brands or agreement with corpo- rate values. This could lead to a more fluid and personalised economic ecosystem. “I think the biggest innovation is that our phygital lives – digital physical lives – are enabling us to do things and stand for new values above nations and maybe above corporations and create an economy of one,” he said. As traditional financial boundaries blur and new forms of value exchange emerge, Khalil’s vision suggests we may be on the cusp of the most significant transformation in the history of money and commerce. isational design, emphasised the compa- ny’s focus on being “closer to market and closer to customers” in an increasingly complex business landscape. “It was led by a very simple princi- ple, closer to market and closer to customers,” Khalil explained. “As the nature of the business becomes more complex, we noticed that there is a greater need for our delivery capabilities from a product innovation, product delivery, and even co-creation perspec- tive to be closer to our customers.” This restructuring reflects Master- card’s recognition that payment solu- tions need to be tailored to specific markets. Khalil highlighted the diverse challenges and opportunities across the region, from high-GDP markets such as the UAE to large-scale markets like Pakistan, where financial inclusion remains a key priority. On the topic of emerging technolo- gies, he discussed how Mastercard is leveraging AI to enhance payment expe- riences and security. While noting that Mastercard has been using AI “for more than 15 years”, he emphasised that recent advancements and cost reductions have made AI more accessible and powerful. “What we are trying to do now is to productise and expose some of it to our customer s through our ser vices, through our data platform, but also through AI companies that we have outright bought out,” Khalil explained. He highlighted Mastercard’s acquisi- tion of Brighterion, an AI company that can create machine learning algorithms to solve various business problems, particularly in fraud detection. Khalil stressed the importance of connecting AI systems to global data pools to improve fraud detection and adapt to new threats. “When a creative guy comes along and does something new that looks like some bad actor whom we caught in another market, we catch them not because of your data, but because of somebody else’s data,” he said. The future: Interchangeable digital assets and new form of currency Looking ahead, Khalil painted a picture of a world where physical and digital As the use of cash declines and smartphones transform into digital wallets, the very notion of currency is being redefined lives are increasingly blended, enabling new for ms of value creation and exchange. His most intriguing predic- tion was about the future interchangea- bility of digital assets and currencies. “I think for me, the biggest thing would be the interchangeability of digital assets,” Khalil said. “Imagine being able to pay, let’s say, with your Bonvoy points from Marriott for your next ticket… I think the biggest innovation is that our phygital lives – digital physical lives – are enabling us to do things and stand for new values above nations and maybe above corporations and create an economy of one ABE_2510_22-23_Mastercard_13369585.indd 2328/08/2024 17:4924 Vol. 25/10, September 2024 Economics WORDS BY TALA MICHEL ISSA How Somali pirates showcase market dynamics and risk management in a high-stakes shadow economy Europe and Asia began illegally fishing off Soma- lia’s coast, deplet- ing fish stocks and pushing local fishermen into despera- tion. Compounding the issue, reports surfaced of toxic waste dumping in Somali waters by international compa- nies, further devastating the livelihoods of coastal communities. In response to these external threats, some Somali fishermen began arming themselves to protect their waters, To fully understand the rise of Somali piracy, one must look back to the collapse of Somalia’s central govern- ment in 1991. The fall of the regime led to a power vacuum, plunging the coun- try into chaos and creating a breeding ground for lawlessness. Without a func- tioning state to regulate territorial waters, foreign fishing vessels from The Horn of Africa hosts an unlikely mix – pirates threaten shipping lanes, foreign militaries jockey for influence, and international relations are tested. Its waters may seem an improbable place to gain insight into economics, but Somali pirates, long viewed solely through the lens of crimi- nality, offer a compelling – if controver- sial – case study in free market principles and entrepreneurial spirit. ABE_2510_24-26_Somali Pirates_13372476.indd 2428/08/2024 17:51arabianbusiness.com25 Economics initially acting as informal coastguards. However, with the absence of any formal governance, what started as a means of defending local interests soon escalated into something far more organised and lucrative. These fishermen, realising the financial rewards of hijacking ships and demanding ransoms, transitioned from protectors to predators, giving rise to the modern Somali pirate. By the mid-2000s, Somali piracy had evolved into a sophisticated and highly organised criminal enterprise, with pirates operating from coastal strongholds such as Harardheere and Eyl. These groups were driven not only by desperation but by the promise of wealth in an environment where legiti- mate economic opportunities were virtually non-existent. What began as a response to the exploitation of Somali waters had morphed into a profitable shadow economy built on extortion, ransom demands, and the hijacking of commercial vessels. Dean Mikkelsen, a defence and secu- rity expert, argues that these maritime marauders demonstrate key economic concepts in action. “Somali pirates offer a compelling, albeit controver sial, example of free-market economics in action,” he tellsArabian Business. “Operating in the absence of a formal state, they have created a sophisticated shadow econ- omy, complete with its own ‘stock exchange’ in the town of Harardheere.” Somali pirates’ self-organised governance This pirate stock exchange, while its exact nature is debated, represents a crude form of venture capitalism. Local investors can fund piracy operations by contributing cash, weapons, or other resources, with the promise of a share in ransom profits. It’s a high-risk, high-re- ward proposition that mirrors tradi- tional stock markets, where investors buy shares in ventures expecting returns on their investments. The pirates’ approach to setting ransom demands showcases a nuanced understanding of market forces. “Pirates demonstrate a high degree of economic rationality in setting ransom amounts. They carefully consider the value of the captured ship and cargo, the nationali- ties of the hostages – which can influ- ence the likelihood of payment – and the operational costs associated with the hijacking,” Mikkelsen explains. This rational actor model extends to risk assessment. Pirates factor in external threats such as naval patrols and potential military interventions, adjusting their ransom demands to reflect increased danger or potential losses. It’s a stark reminder that even in illicit markets, participants respond to incentives and disincentives in predictable ways. The emergence of this shadow economy also offers insights into how markets can self-organise in the absence of formal governance struc- tures. “The establishment of the Pirate Stock Exchange shows how, in the absence of a functional state, Somali pirates have built an organised econ- omy that supports their activities,” Mikkelsen says. This for m of self-gover nance extends to community involvement, with piracy often viewed as a collective enterprise benefiting the local popula- tion through reinvestments in public infrastructure. Piracy as a rational choice Anja Shortland, Professor of Political Economy at King’s College London and author of books on ransom negotiation, tellsArabian Business that piracy has emerged as a “rational economic choice” for many in Somalia. “We’re dealing in Somalia with an environment where lots of people are unemployed, underemployed, where life isn’t particularly precious.” Shortland highlights the importance of understanding the pirates’ perspec- tive. “I teach the economics of crime, and what I’m always doing is inviting my students to put themselves into other people’s shoes, and look at the world from their point of view.” From this vantage point, piracy offers financial oppor tunities and status in an environment where legiti- mate alter natives are scarce. The r isk-rew ard calculation, when compared to other dangerous occupa- tions available in the region, can make piracy an attractive option. The pirates’ operational methods also reflect a sophisticated understand- ing of risk management. “The way that the attacks were conducted was also pretty non-violent. You show some force, and then if you get feedback, you with- draw. You only go in if you realise that the target is pretty much undefended,” says Shortland. ABE_2510_24-26_Somali Pirates_13372476.indd 2528/08/2024 17:5126 Vol. 25/10, September 2024 Economics This cautious approach minimises risks to the pirates themselves, creating a business model that, while illegal, is designed for sustainability. The use of hostages as human shields further reduces the likelihood of violent confrontations with law enforcement. This has effectively created a deterrent against rescue attempts. Ransom negotiations The ransom negotiation process itself offers lessons in game theory and behav- ioural economics. Shortland explains that both sides understand it as a purely business transaction, with the pirates’ future success dependent on maintain- ing a reputation for releasing hostages once payments are made. This creates a strange form of trust in an otherwise lawless environment. These economic principles are vividly illustrated by several high-profile piracy incidents off the Somali coast. In 2008, the Ukrainian cargo ship MV Faina was hijacked, with pirates initially demanding a staggering $20m ransom. This ambitious opening bid kickstarted months of intense negotiations, demon- strating the complex bargaining processes typical in these illicit transactions. An even more extreme case unfolded with the hijacking of the Sirius Star in November 2008. This Saudi-owned supertanker was carrying 2 million barrels of crude oil valued at over $100m at the time. The pirates initially demanded $25n for the release of the ship and its 25-member crew. After two months of negotiations, the ship and crew were released for a repor ted ransom of $3m. This incident was particularly nota- ble due to the sheer size of the vessel – at 330 metres long, it was the largest ship ever hijacked by Somali pirates – and the value of its cargo. The case high- lighted the pirates’ ability to target high- value assets and their willingness to engage in protracted negotiations to maximise their returns. Another significant case was the hijacking of the Greek-owned oil tanker Maran Centaurus in November 2009. The vessel was carrying about 2 million Pirates demonstrate a high degree of economic rationality in setting ransom amounts This willingness to pay higher ransoms created market instability, driv- ing up prices and attracting more entrants to the piracy ‘industry’. It’s a vivid illustration of how external actors can disrupt even the most unconven- tional markets. “That just created a lot of confusion. A lot would say, ‘Well, if you’re happy to pay a million, are you happy to pay two? What about three, five, or eight million?’ So it became really unstable, and then the more people realised there’s so much money on the table, they thought, ‘Well, I’m going to try this,’” she adds. Piracy remains a serious crime The Somali piracy phenomenon also demonstrates the power of incentives in shaping behaviour. When private security companies began effectively defending ships, piracy incidents dropped dramatically. “Since the advent of private security companies, we’ve seen a few test balloons. Are they still there? Are they still being defended in the way they were? And if the answer is yes, they just back off,” she explains. This rapid response to changed market conditions mirrors how legiti- mate businesses adapt to new regula- tions or competitive threats. While it’s crucial to remember that piracy remains a serious crime with real victims, the economic patter ns it reveals are undeniably fascinating. The pirates’ ability to organise, self-govern, and even innovate within their shadow economy offers insights into both the potential and dangers of truly unregu- lated markets. “Overall, the operations of Somali pirates provide a dark but fascinating look into how economic principles like rational choice, risk management, and market dynamics play out in a lawless environment,” Mikkelsen says. The lesson from the Somali coast isn’t that piracy should be condoned, but rather that economic principles are universal – applying even in the most unexpected and challenging environments. barrels of crude oil worth approximately $150m at the time, making it one of the most valuable ships ever seized by pirates. The ship and its crew of 28 were held for nearly two months off the Somali coast. After intense negotiations, the ship and crew were released in Janu- ary 2010 for a reported ransom of between $5.5m and $7m, although the exact figure was not officially confirmed. However, the piracy market isn’t without its disruptions. Shortland high- lighted that non-professional negotia- tors entering the fray have destabilised previously established norms. “What was different in the Somali case was that this agreement, this idea that it was going to take three months and cost $200,000 was broken by non-professional associations coming in and saying, ‘We don’t want to wait for three months. How can I keep my crew in this horrible situa- tion? I’m happy to pay a million, but I want them back now.’” Somali pirates offer a compelling, albeit controversial, example of free- market economics in action ABE_2510_24-26_Somali Pirates_13372476.indd 2628/08/2024 17:51Discover Kayto, nestled in the heart of the contemporary Jumeirah Al Naseem, where you can indulge in an exotic blend of Nikkei cuisine with stunning views of the iconic Jumeirah Burj Al Arab. jumeirah.com/kayto28 Vol. 25/10, September 2024 LeadershipLeLeLLLLLeLeeeeLeLLeLeLeeLLeLLeeeeeadaaadadadadaddadaaa eeeeeeeerrrrerreeerershsshhhhhhshhshhiipipiipppppppppippiipipp Powering Ducab’s global expansion W hen Mohammad Almutawa stepped into the role of Group Chief Executive Officer of Ducab Group in 2021, he became the first Emirati to take the helm of the UAE’s powerhouse in energy solutions and manufacturing. The moment was historic, but for Almutawa, it was just the beginning of a journey that would redefine Ducab's future and cement its standing on the global stage. Since his appointment, the results speak for themselves – under his leadership, Ducab’s presence now stretches across 75 coun- tries, with financial growth and operational efficiencies soaring to new heights. Ducab Group, already a titan in the manufacture of cables, wires, and end-to-end power solutions, has long been synonymous with quality and innovation. Yet, with Almutawa in charge, the company’s ambitions have grown far beyond the borders of the UAE. Today, Ducab’s products power industries ranging from nuclear energy to marine and offshore, and oil and gas, in a diverse array of markets from Europe to A closer look at Mohammad Almutawa, the man behind the entity’s remarkable growth LEADERSHIP ABE_2510_28-29_Ducab_13352297.indd 2828/08/2024 17:58arabianbusiness.com29 Leadership the Americas. But this expansion wasn’t by chance. Almutawa has carefully orchestrated Ducab’s operations, always with an eye on stra- tegic growth, operational excellence, and, above all, customer satisfaction. At the heart of Almutawa’s leadership is a commitment to innovation – most notably seen in the implementation of smart manufacturing initiatives. His strategic decisions have helped transform Ducab into a company that not only meets the energy demands of today but antic- ipates the needs of tomorrow. By enhancing operational value, Ducab has gained a compet- itive edge in a rapidly evolving industry, ensur- ing that its products are synonymous with the kind of quality that sets global standards. “We’re not just expanding into new markets for the sake of growth,” Almutawa explains. “We’re expanding with a purpose – driven by innovation, quality, and sustainability. Ducab’s mission is to provide cutting- edge power solutions that the world can rely on.” It’s a sentiment echoed across the company’s sprawling portfo- lio, which includes over 85,000 cable variants designed to meet the diverse needs of industries across the globe. Under Almutawa’s leadership, Ducab’s EBITDA has doubled, an impressive feat in an increasingly competitive sector. But even more remarkable is the company’s ability to stay ahead of the curve in terms of operational efficiency, which has improved by a staggering 30 percent. It’s this sharp focus on process improvement that has made Ducab a leader in its field and solidified its reputation as a key player in the global energy sector. Almutawa’s leadership hasn’t just been about numbers and expansion. It’s also been about people. With a deep understanding of what it takes to foster sustainable growth, Almutawa has established strong internal frameworks that empower employees and cultivate an environment of continuous improvement. His holistic vision is one where employees at every level are encouraged to shape the company’s future, driving innovation from the ground up. Almutawa’s experience in business strategy, process enhancement, and market expansion is extensive. It’s a skill set that has been invaluable to Ducab, particularly as the company seeks to solidify its position as an industry pioneer in energy solutions. His background in industrial engineer- ing, with a degree from the University of New Haven in the USA, also plays a key role in his approach to modern- ising Ducab’s operations. The results of his leadership can be seen in Ducab’s expanding footprint. The company’s exports now account for 60 percent of production – a clear indicator of its grow- ing influence in international markets. Major projects across the globe, including the Public Utility Board in Singapore and the Delhi Metro in India, have been powered by Ducab’s solutions, further solidifying its global standing. But perhaps one of Almutawa’s most significant contri- butions is his focus on renewable energy. As the world pivots towards more sustainable power sources, Ducab has been at the forefront of research and development in this sector, exploring new avenues for its cable solutions to support the global shift towards green energy. It’s a vision that aligns with Almutawa’s broader goals of ensuring that Ducab remains a forward-thinking leader, not just in energy solutions but in sustainability. Ducab’s involvement in iconic projects within the UAE – such as the Burj Khalifa, Dubai Metro, and Expo 2020 Dubai – demonstrates the company’s continued commit- ment to shaping the future of the energy sector, both locally and internationally. For Almutawa, each of these milestones is a testament to Ducab’s ability to meet the complex demands of the modern world while maintaining the high- est standards of quality and innovation. As Mohammad Almutawa looks to the future, his focus remains clear: empowering Ducab to lead in global energy solutions while fostering innovation and sustainability. With a strong foundation already in place and a vision for contin- ued growth, Almutawa is well on his way to making Ducab a true global powerhouse. And in doing so, he is also shap- ing the future of energy solutions – not just for the UAE, but for the world. Ducab's exports now account for 60 percent of production, a clear indicator of its growing influence in international markets We’re expanding with a purpose – driven by innovation, quality, and sustainability. Ducab’s mission is to provide cutting-edge power solutions that the world can rely on ABE_2510_28-29_Ducab_13352297.indd 2928/08/2024 17:58Next >