2018: The Year That Was

The year that was: Business as usual, in the midst of challenges in 2018

Filed on December 26, 2018 | Last updated on December 26, 2018 at 08.31 pm
The year that was: Business as usual, in the midst of challenges in 2018


Advancements in technology, most notably artificial intelligence, has also gained traction.

Trade wars and data breaches, wild market swings and jolted investors, pretty much sum up the global business world in 2018 - a year that has tested the patience of even the most seasoned businessmen - and which has probably not been seen since the 2008 global financial crisis. The UAE, meanwhile, continued to flourish: the arrival of value-added tax was accepted positively, thanks to measures put in place to ensure maximising its benefits for everyone. Advancements in technology, most notably artificial intelligence, has also gained traction, with local firms leveraging the technology to prop up their business models and satisfy customers.

VAT: A smooth transition

The UAE is completing its first-year of smooth implementation of the value-added tax (VAT). The UAE expects to generate Dh12 billion in revenues through VAT in 2018 and Dh20 billion in 2019. On January 1, 2018, the UAE levied VAT at 5 per cent at each step of the supply chain of goods and services to broaden the government's revenues sources.

Consequently, the UAE launched Phase I of the tourist VAT refund scheme from November 18, allowing visitors to claim the VAT refund on purchases made in the UAE from the country's 3 busiest airports - Dubai, Abu Dhabi and Sharjah - while flying out of the country within 90 days. From December 16, Phase II of the tourist VAT refund scheme was rolled out from 6 other locations, as well as 2 sea ports and 4 land ports.

Like a 'breached' whale

Facebook wasn't the only major company that was hit by a data breach - and at least it wasn't done by some external attackers.

The most recent company on the list of 2018's victims hit the news only at the end of November: Marriott Starwood hotels. The breach was routine, with the attackers being able to access its guests' information that was potentially stolen and shared. But the bigger news was the number of affected accounts - a whopping 500 million.

Marriott tried to contain the damage by informing its guests on what to do in case they were one of the victims.

That number, though, pales in comparison to the biggest loser this year: Aadhar, the ID database of the Indian government. The breach started when a leak was experienced on a system run by state-owned utility Indane. It was unclear when the intrusion started, but this we know: hackers had access to one billion users' names, 12-digit ID numbers and certain information that included - gasp! - bank accounts.

In the airline industry, Cathay Pacific was not spared. The breach, involving about 9.4 million users, came to light in March, prompting the carrier to put out safety measures to its customers while they were investigating. British Airways' user accounts were also attacked, albeit at a 'paltry' 380,000, and the hack was a 'criminal' act involving bookings made to the airline.

Marketing firm Exactis, meanwhile, suffered a breach as well, involving more than 340 million accounts. Detailed information - including names, phone numbers addresses, personal interests and more - were compromised.

And being a tech giant doesn't really make you immune from attacks: Google+ was also breached this year, affecting 52.5 million users.

A year of scandals

2018 was a big year for technology. Not much, though, for certain companies on the corporate level.

The biggest bombshell that exploded this year was Facebook's involvement in a politcally-inspired data breach with Cambridge Analytica, compromising the accounts of a whopping 87 million users. That forced CEO Mark Zuckerberg to face the wrath of angry lawmakers - personally in the United States - across the globe. The episode - among several other headaches Facebook went through in 2018 - brought the biggest social media network under the microscope, with authorities scrambling to try and curb the power Facebook has over all of us.

Arguably, the next biggest corporate scandal involved everyone's favourite maverick executive, Elon Musk. The Tesla CEO in August tweeted that there was "funding secured" for a move to take the electric carmaker private. After some ruckus, it caught the attention of the US Securities and Exchange Commission, which eventually found out that Musk was somewhat just trolling everyone and that his words (on Twitter) had the potential to make markets crash and bludgeon short-sellers. In the end, Musk - who also caught more fire when he smoked cannabis during a podcast - was forced to quit his chairmanship, Tesla's brand suffered a beating and it cost both of them $20 million each to settle things.

Meanwhile, Uber couldn't catch a break as well. The company, no stranger to controversies, hit a huge roadblock in the race to put self-driving cars on the road when it hit and killed a pedestrian in Arizona in March. Very recently, though, they've received a green light to continue its testing. It doesn't end for Facebook there. Its messaging unit, WhatsApp, got involved in a false propaganda mess, particularly in India.

Eye on AI at Gitex Technology Week

Artificial intelligence, the hottest trend in technology these days, was also the hottest topic at this year's edition of the biggest IT showpiece in the region - Gitex Technology Week.

From government entities to businesses across the spectrum, everyone has been scrambling to incorporate AI into their fold, whether it be through chatbots, smart channels and, of course, robots roaming around the shop floor. AI is widely believed to be the next best thing tech has to offer and is an anchor of the Fourth Industrial Revolution. Companies see the potential in it - increased customer engagement, lower costs, among several others - and Dubai is leveraging it as it marches towards its goal to be the smartest city in the world.

Samsung 'flexes' muscle

Samsung held its usual Galaxy S launch event in August. But that wasn't the highlight from the South Korean tech giant this year. In November, the company unveiled a foldable smartphone cum tablet. And while long-rumoured, it still upended the competition. Samsung gave little detail about the device, except for what it looked like during a very cryptic launch of the prototype device. Being dubbed as the 'Galaxy F' - others believe it to be the 'Galaxy F' - it is expected to be officially launched in early 2019.

5G is seriously upon us

The UAE's telecom operators, etisalat and du, say that they are very much ready for the deployment of 5G.

And what does this mean for us? Faster downloads, seamless connectivity and everything else in between that you can imagine for a city thriving on innovation. It's been a long time coming, yet both companies have geared up for the next-generation mobile standard, ramping up their infrastructure in order to provide one of the best mobile services you'll see anywhere across the globe.

The question, however, is the availability of 5G devices that will harness its power; expect these coming out in 2018.

Apple goes big (and pricey)

At Apple's traditional September launch, it went with not one, not two, but three new iPhones - two of which became its biggest flagships to date.

The 5.8-inch iPhone XS led things off. But arguably the real stars of the show were the entry-level, 6.1-inch iPhone XR and 6.5-inch iPhone XS Max, both of which offer big screens unprecedented in Apple's history. Some buyers, though, balked of the price: in the UAE, the highest-specced of the lot surpassed the Dh6,000 mark.

iPads, meanwhile, received a major makeover in October, with several features from the iPhone X line crossing over to it.

190 nations confirm Expo participation

Expo 2020 Dubai surpassed its participation target of 180 countries, as the number reached 190, substantially strengthening Dubai's case to successfully host mega events that generate business activity on a large scale for the host and for the participating countries. Countries such as the United States, Japan, the Netherlands, Finland, and Pakistan have already made investment commitments and unveiled the designs of their pavilions.

Record Dh180b budget okayed by UAE Cabinet

The UAE Cabinet approved a higher budget for 2019, allowing the government to increase spending on the well-being of its citizens. The Cabinet approved a zero-deficit budget of Dh180 billion for the next three years and Dh60.3 billion for 2019 compared to Dh51.4 billion in the previous year, an increase of 17.3 per cent. "Citizens are top priority, and we have allocated the largest part of the budget to ensure their prosperity, health, education and security," said His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai. About 59 per cent of the budget will go to education and social development.

Abu Dhabi unveils Dh50b stimulus

Abu Dhabi's government announced a massive stimulus package worth Dh50 billion to propel the emirate's economy into the future. The reform drive - under the banner Tomorrow 2021 - will transform Abu Dhabi, create jobs, bringing lasting benefits to all who live and work there and attract investment from abroad. It would also develop the UAE community by launching housing projects, offer quality education at reasonable costs and establish social welfare and other development initiatives that ensure that UAE citizens are well provided for. It would also encourage emerging companies in the field of technology, attract talent to Abu Dhabi, support research and development centres, and training and developing talent and expertise.

Ease of doing business improves

The Abu Dhabi Executive Council approved a resolution to exempt all new economic licences issued in the emirate from all local fees for two years. The Dubai Municipality announced the reduction of municipal fee from 10 per cent to seven per cent to enhance competitiveness in the hotel and tourism sector. Dubai's Department of Economic Development also exempted companies from all the fines imposed on them, and facilitate the procedures for renewing licences by the end of 2018. The business community lauded these moves, which highlights the continuing efforts that the UAE puts in making the nation among the best places for setting up shop.

Ready property the real winner

Ready space was the clear winner in the Dubai property market in 2018, with developers focusing more on clearing their existing inventories rather than launching more grandiose off-plan schemes. Buyers were offered generous incentives on ready-to-move-in and close-to-completion properties such as a waiver of service charges, price discounts and waiver of the 4 per cent Dubai Land Department registration fees.

Branson left Virgin Hyperloop One

Richard Branson quit as chairman of Virgin Hyperloop One, saying the company, which plans to build a supersonic transport system in the UAE and other countries, needs a more actively involved leader. "At this stage in the company's evolution, I feel it needs a more hands-on chair, who can focus on the business and these opportunities," a statement quoted Branson as saying.

100% foreign ownership law finally announced

The UAE's game-changing investment law, which will allow up to 100 per cent ownership to foreign investors in some specific onshore business sectors, is expected to prop up private and foreign direct investments when it was finally introduced in the last quarter of this year, economists and analysts said.

The UAE will announce a list of sectors that will be open to up to 100 per cent foreign ownership under a new law in the first quarter of 2019. This is up from the 49 per cent limit permitted in businesses outside free zones. It has already been announced that around a dozen sectors including oil exploration are not being opened fully for foreign investors.

Long-term visas introduced

The UAE has offered visas of up to 10 years for investors, entrepreneurs and leading specialists and students focused on science, technology, medicine and culture. Foreign residents with wholly-owned property worth Dh5 million or more will qualify for a five-year visa, while those with a mix of property and business investments reaching Dh10 million or above can apply for a renewable 10-year visa.

Tourists loving the UAE's VAT refund scheme

Inspection tours conducted by the UAE's Federal Tax Authority revealed that customer satisfaction with the Tax Refunds for Tourists Scheme's electronic system is on the rise.

The authority had launched the scheme in two consecutive phases beginning November 18, so far covering 12 ports of entry to the UAE, comprising six airports, two sea ports and four land ports. GCC nationals, Asians and Europeans made up the bulk of beneficiaries from the scheme.

And the response was very encouraging: users of the programme praised the clarity, innovation, ease of use and speed of the regulations, with all concerned entities working hand-in-hand.

Yet more reasons to visit Dubai

The Dubai Frame in Zabeel Park opened to the public in January. The Dh260 million project tells the story of the past, present and future of Dubai. The Dh800 million lifestyle and entertainment destination, The Pointe, located at the tip of Nakheel's Palm Jumeirah also opened in December.

UAE and India sign landmark currency swap agreement

The UAE and India inked a landmark currency swap agreement, which means businesses can now can do trade using local currencies of rupee and dirham, instead of the dollar.

The agreement was signed during a visit by Indian External Affairs Minister Sushma Swaraj. With nearly $50 billion in bilateral trade, the two countries are one of the largest trade partners for each other and have made robust investments bilaterally. The latest development will be a big boost to import and export bilateral trade.

ATM's 25th show proves a success

Arabian Travel Market celebrated its 25thanniversary in April this year. The five-day event attracted a record 39,000 travel, hospitality and tourism professionals, registering an increase of 40 per cent more visitors since celebrating its 20thyear in 2013. The 2018 edition, on the theme of responsible tourism, boasted more than 400 main stand holders with over 100 new exhibitors making their debut. The number of countries represented at ATM 2018 totalled over 140.

Markets endure roller-coaster ride

Not even the usually-reliable 'Santa rally' could save global stock markets from ending the year on a dud. Political situations - headed mainly by US President Donald Trump's notorious impulsive decisions and the US-China trade war that has spread worldwide - jolted investors into selling off stocks and several others have all contributed to a wild year that culminated in Wall Street ending in its worst week since the 2008 global financial crisis last week - never mind that equities did hit new highs in 2018. Here's to hoping that Fearless Girl, which was recently installed across the New York Stock Exchange, can give some inspiration to investors to not back down from market turmoil.

Oil spouts, then slips and slides

Oil prices have endured another topsy-turvy year. Brent, the global benchmark, started the year near $60, hit a high of almost $87 in October and slid to the $50 level towards the end of the year. Factors such as inventories in the United States and other geopolitical events contributed to the wild ride.

Opec, meanwhile, agreed to more production cuts along with its allies in an attempt to balance the market. Should this not be enough, Suhail bin Mohammed Faraj Faris Al Mazrouei, UAE Minister of Energy and Industry and current chairman of the producer group, has said that Opec will hold an extraordinary meeting to address it.

Is gold no longer a safe haven?

Gold, seen as a safe investment during political and financial uncertainties, is no more a reliable investment as it fluctuated throughout the year. It started 2018 above $1,300 an ounce and hit a 19-month low of $1,159.96 in mid-August. Since then the yellow metal rose about 9 per cent at $1,267 and is expected to close the year in negative columns.

Opec and friends come to the rescue of oil markets

Opec and allied oil producers have played a key role in stabilising the market in 2018 as they have taken the right decision at the right time to increase or decrease production levels. In their latest meeting on December 6, they decided to cut the production by 1.2 million bpd from January to reduce the surplus and lift prices.

UAE Minister of Energy and Industry Suhail bin Mohammed Faraj Faris Al Mazrouei, who is also president of Opec, hinted in Kuwait this week that Opec+ will hold an extra meeting if output cuts are 'not enough'. He said a joint Opec and non-Opec monitoring committee would meet in Baku at the end of February or the beginning of March, as producers aim to return the oil market to the balance reached in the summer of 2018.

The oil market oversupply had fallen to 37 million barrels of crude in November from 340 million barrels in January 2017, when Opec and its allies began cutting production in an attempt to lift the price of crude.

King Dollar still reigns

The US dollar has grown stronger against many international currencies in 2018. The greenback emerged strong against the euro and other international units, while emerging market currencies struggled for stability throughout the year. The Indian rupee, Pakistani rupee, Philippine peso and Sri Lankan rupee, among others, fluctuated and hit new lows this year. If the stronger dollar continues to play out, which it could, the currency risk may weigh on US investors investing abroad.

Cryptocurrencies get the creeps (again)

This year was supposed to be the year of cryptocurrencies, thanks to Bitcoin's epic surge to almost $20,000 last December; but that didn't exactly pan out and the market is enduring one of its worst bear markets, similar to those experienced in the past - most notably when Bitcoin's price dropped from $1,150 in December 2013 all the way to $300 over a year later, dragging the rest of the cryptocurrency market along with it. Bitcoin - the largest, most popular and measuring stick of the market - dove to the $3,100 level on December 15. Some analysts have warned that we haven't even seen the bottom of all this madness, running counter to crypto loyalists, who say that, relax, it'll bounce back and you'll get all your money back (maybe even more).

US, China wage wild trade war

US President Donald Trump believes the American economy wasn't being treated fairly, so he decided to impose stiff tariffs on goods coming into the United States - and China, being the world's second-largest economy and producer of just about anything, bore the brunt of those hundreds of billions worth of extra duties. But Beijing didn't hold any punches, countering with its own tariffs against Washington, leading to a full-blown trade war. A meeting between Trump and his counterpart, Xi Jinping, in Argentina appeared to have cooled off tensions as a detente was agreed upon, but it escalated very quickly again following the stunning arrest of a very senior official in one of China's biggest global corporations.

The dramatic fall of Ghosn

Carlos Ghosn, a revered figure in the auto industry who saved Nissan from collapse, was stunningly arrested in Japan on November 19. The reason? For allegedly conspiring to understate his compensation by about half of the actual 10 billion yen ($88 million) awarded over five years from 2010. The news sent shockwaves across the industry and put the Nissan-Renault-Mitsubishi alliance in a bit of a funk. It also prompted prosecutors to charge Nissan for its role in the financial misconduct scandal.

And to add insult to injury, Ghosn, while still in jail on December 21, was re-arrested on further allegations, all but denying him freedom for Christmas.

From ceasefire to reopen fire

Just when everybody thought things were going cool in the heated trade war between the US and China, a shocker happened: the arrest of Meng Wanzhou. Under normal circumstances, this was basically just Canada acting upon an extradition request from its neighbour. The only problem: Meng is the chief financial officer of tech giant Huawei, and is also the daughter of its founder, and she is alleged to have had a hand in fraud involving Iran. Making it more spectacular was that the shock arrest happened as Trump and Xi had agreed on a ceasefire.

Beijing once again didn't hold back, arresting two Canadian citizens in an apparent retaliation.

US Federal Reserve is all but done with hikes

The US Federal Reserve remained in the news in the wake of a record four interest rates hikes in a year. It raised rates from 1.25 per cent in 2017 to 2.50 per cent this year and is expected to go for two more hikes in 2019 to lift Fed Funds rates to a range of 2.75 per cent to three per cent. Experts see the possibility of the Fed reversing course on its rate hike regime starting in 2020.

The Central Bank of the UAE and other Arabian Gulf regulators raised their benchmark interest rates following the fourth rate increase this year by the US Federal Reserve. The UAE's banking regulator increased the interest rate by 25 basis points on its certificate of deposits, the monetary policy instrument through which changes in interest rates are transmitted to financial institutions.

Amazon finalises HQ2 plans

After conducting a yearlong search for a second home, Amazon has finally decided about its location. The US online retailer announced that HQ2 would be split into two locations - National Landing, a future neighbourhood including Crystal City in Arlington (Virginia); and Long Island City in Queens (New York). The Seattle-based company invited proposals for HQ2 in September 2017 and received interests from more than 200 cities in Canada, Mexico and US. The company has plans to have 50,000 employees at HQ2 to be built with an estimated $5 billion investment.

Change of guard at RBI

There is a surprise change of top official at the Indian central bank, as the former finance secretary Shaktikanta Das, assumed charge as the new governor of Reserve Bank of India in December for a three-year tenure. His predecessor, Urjit Patel, resigned from the post following a policy tussle with the government that had sent tremors through financial markets. Experts said Das may be more focussed on boosting growth and cutting rates after a recent sharp decline in inflation.

ERROR: Macro /ads/dfp-ad-article-new is missing!
MORE FROM Khaleej Times
CurrentRequestUnmodified: /2018-the-year-that-was/the-year-that-was-business-as-usual-in-the-midst-of-challenges-in-2018 macro_action: article, macro_profile: ,1882,1000 macro_adspot:
KT App Download
khaleejtimes app

All new KT app
is available
for download:

khaleejtimes - android khaleejtimes - ios khaleejtimes - HUAWEI AppGallery