It seems hard to believe that around 30 years ago the world had hardly heard of places like the UAE and Dubai. Since then through the help of expats and the vision of some of the leaders in these countries they have blossomed and thrive.
I can recall the excitement and almost disbelief in the Mid 80’s when Emirates launched its first flight. The incredible achievements of Emirates since then are mirrored by the outstanding success of the UAE and in particular Dubai and the vision of its rulers.
The success of Dubai and other gulf countries has been built on the back of expat labour and it is likely that almost every nationality in the world has worked in the UAE during this growth boom. The opportunities that have arisen for expats working in the Gulf have been immense and for those who took the risks the reward for many has been worth it as Dubai and the region has mostly flourished.
In the early days most expats worked in construction, oil and gas, power and other basic industries. Generally expat contracts were shorter and the rewards and benefits were high reflecting the fact that in the late 70’s and early 80’s these places were seen as a ‘hard ship posting’.
The cost of living in the early days was also very cheap and the life was much more basic but at the same time perhaps more fun and adventurous. Early expats to the Gulf and especially places like the UAE would spend their weekends exploring the desert in their 4 Wheel Drives perhaps ending the day with a BBQ under the stars.
In the early days beaches were open and you could also drive on to the beach and roll out your BBQ and even catch fish of the beach and cook them up. In terms of finance things were also very different then as most expat were provided everything by their company.
A typical expat posting included housing, schooling, insurance, car allowance and flights home for the whole family as well as often a continuation of your pension in the home country. Yes for those who were fortunate enough to get one of these early packages life was very good indeed.
Since these early days the Gulf countries have been transformed and this transformation has been occasionally interrupted by various wars and crisis’s in the region. Despite these events places like the UAE and Dubai have thrived as many in the region have viewed places like Dubai as a safe haven.
As a result the wars and issues in places like Iraq, Iran, Palestine, Lebanon, Jordan & Syria have forced many of these people to call the UAE their home and as a result they have invested heavily in the region. The extremely close links and strong ties with India and Pakistan have also benefitted the UAE and Dubai in particular as many of these nationals have invested in the UAE both into business and property.
These changes have driven the UAE in particular, and Dubai to have undergone rapid transformation, leading to what we see today. Emirates is now a global leader in the aviation industry and Dubai has become a world class city. Instances of other world class business’s which have come out of the region are common and the standard and quality of business is now very high.
Expats have changed since the ‘pioneer days’ and places like Dubai are no longer considered a ‘hard ship posting’ and the reality is that often the quality of life in places like Dubai is higher than in most places in the world. Although the cost of living in Dubai is now very expensive this is offset by the world class facilities expats can enjoy while living there.
The days of being able to ‘rock up’ and drive onto the beach with your 4 Wheel Drive are pretty much over. Instead beaches have been turned into fantastic recreation areas with facilities for everyone. These facilities are available to all and include swimming with the supervision of a lifeguard, running tracks and the use of rest rooms, showers and restaurants.
The facilities on these beaches are world class and cater to every nationality and age group and can be shared by locals, expats and tourists. As the quality of life in the UAE improves the demographics for expats has also changed.
No longer the usual expat contracts with all the perks and benefits of before as people from all over the world flock to places like Dubai to work and enhance their business skills. Not only has Dubai built the tallest building in the world but for engineers and architects the attraction to be involved in projects in the region looks great on the CV.
Places like Dubai have also pioneered the use of free zone’s in the region to encourage ‘new business’s’ which has encouraged both local and international talent. With Dubai becoming so well known the city has blossomed in terms of entertainment and now caters to almost all nationalities, religions and ages. As a result many expats now come to Dubai much younger than the ‘pioneers’ who originally came out.
With Dubai and the Gulf becoming popular places to work and live understandably expat contracts have changed as has the business environment. The expat contracts of old have long gone and expats are now faced with having to look after themselves and create their own benefits packages.
Business’s in the Gulf are now run far more commercially and as a result ‘bloated’ HR departments which once pandered to making sure expats were pampered and looked after have now disappeared. For those looking to save money working in the Gulf is now considered more of a long term posting. This is due to the initial costs which are now generally borne by the expat and the companies need to hire more for the longer term.
Expats who settle down and live in the Gulf are likely going to need to do all their financial planning themselves. This will include taking out things like Life Insurance, Critical Illness cover, Medical Insurance and also considering pension and investments. Unless you understand personal finance it can seem complicated and difficult to work out what is best for you and your family.
Expats who settle down and live in the Gulf are likely going to need to do all their financial planning themself. This will include taking out things like Life Insurance, Critical Illness cover, Medical Insurance and also considering pension and investments. Unless you understand personal finance it can seem complicated and difficult to work out what is best for you and your family.
Financial service companies and expat banks started arriving in the Gulf in the 70’s and have had mixed reviews in terms of offering value for money for the expat market. For those large life companies and banks which arrived in those days it was pretty much a license to print money for them as their was a total lack of any regulation or control.
The UAE and other Gulf countries have now moved to control these type of business’s so that they now need to be properly licensed and employees need to also be qualified. As a result many business’s have sprung up to provide for this growing and lucrative market. As with any regulation the countries who implement the legislation need to get a balance between protecting clients but not stifling future innovation.
Where markets have become over regulated when it comes to ‘financial services’ like the UK and Europe this has lead to a destruction of good jobs and the ordinary person not being able to get ‘quality advice’. The UAE needs to be careful it does not follow the same path by blocking innovation and new products by only allowing the strongest companies to survive to the detriment of clients in the region.
Excessive regulation in markets like the UK and Europe has lead to the ordinary person not making arrangements to protect their family and plan for the future which only leads to misery and unfulfilled dreams for family and children. Uncontrolled regulation that has happened in the UK and Europe leaves people with the only option of making their own arrangements through online insurance and investment sites.
The reality is that most people neither have the time or knowledge to do this creating future problems for these societies which governments will then have to fix. While expats are likely to have a greater financial knowledge the reality is that again the vast percentage will ignore these issues unless someone approaches them and takes time to understand their needs and goals.
Although expat packages in the Gulf have changed over the past few decades most of these countries still offer basic medical cover for expat workers and an ‘end of service benefit’. This ‘end of service benefit’ or gratuity as it is called in the UAE can be very helpful for many expats and is a forced saving.
The reality is that ‘gratuity’ does not really replace personal savings or pension planning for retirement. For short term expats the gratuity will also only be a small amount which can potentially help with relocation to your next job or back to your home country. For the longer term expat the gratuity can however be significant.
With expats in the Gulf now generally having to stay longer to make their time spent worthwhile from a financial perspective careful planning is important. It is also important to remember that when it comes to financial solutions ‘one size does not fit all’. This means that just because something is good for your friend it will not necessarily work for you.
Depending on the type of person you are there are probably two clear ways for you to get help with regard to sorting out your financial affairs. the first route is to use someone who is independent and can assess your needs both now and in the future when you leave or retire. If someone is referred to you by a friend who has used their services this can be a good starting point.
The second way to do this if your situation is relatively straight forward and you are clear what you want to achieve is ‘do it yourself’. Technology continues to change every aspect of the world and finance is no different. It is now possible to access products geared to the needs of expats online and cut out the middle man. The implications for those able to do this is huge in terms of savings in fees.
Many of these online sites also have ‘free chat boxes’ which can help you to make sure what you are doing is correct and matches your future needs. It is also possible to access advisors or financial coaches and pay a fee to get specific advice with regard to questions you have which will also save time and money.
It is clear that places like the Gulf and the UAE will continue to develop and change. The need to therefore have plans which are flexible and adaptable to your future needs is essential. The days of old style long term savings/insurance products pushed by tied sales people is coming to an end.
The UAE continues to become more attractive to people from all over the world as it opens its doors to people who want to retire there or set up business’s. The UAE leads the way in attracting high net worth individuals by introducing long term retirement visa’s and also significant business opportunities. For many nationalities places like Dubai become an attractive retirement destination as clients can retire there, own their own property and run a business.
Whether you decide to make places like Dubai your home or whether it is just a stepping stone in your working life careful planning is essential to making sure you make the most of your time.
The author lived in the UAE from 1983 to 1999 and continues to visit regularly.
He currently works as a ‘financial coach’ working with independent companies to help individual expats and companies help structure their financial and business affairs.
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