Pakistani startups exploring Dubai to set up new ventures

KARACHI: With a friendly environment for businesses, easy tax laws, promotion and assistance, the Pakistani startups are exploring Dubai to set up their ventures.

Waleed Amjad Islam, the co-founder and chief operating officer of KalPay, said that most of the founders have set up their businesses abroad, especially, in the UAE and Singapore, as the investors are more comfortable in investing capital there.

“The tax laws in these countries are well-established, as the rules and regulations facilitate the new ventures. Most of the startups work with the companies who are based outside Pakistan and under the prevailing conditions, these ventures face immense challenges in making international payments,” he added.

“The political uncertainty, unstable macroeconomics of Pakistan along with the overall business conditions in the country also play a significant role, as the youth find it easy to float their novel ideas in other countries,” Islam remarked.

It is easy to start a new venture in destinations such as Dubai due to smooth operations of the basic structure, simple tax laws and promotional environment for the businesses and startups, compared with Pakistan, he added.

For Islam, the attraction for the Pakistani founders to make Dubai their base, is that it also works as a gateway to expand business operations in the Gulf Cooperation Council (GCC) countries and the international market.

Before 2015, the Middle East and North Africa (MENA) Region tech scale-up scene was virtually non-existent. Between 2015 and 2017, the tech ecosystems of the region collectively generated an average of 49 new scale-ups/annum, moving from 37 in 2015 to a total of 64 in 2017.

According to a Dubai Chamber report, the leading role of the UAE in the MENA Region remains undisputed as of 2022, substantially driven by a vibrant local investment ecosystem.

Some of the most active UAE private venture capitalists include Wamda Capital and Middle East Venture Partners (MEVP). Each of these have led 31 funding rounds of MENA tech scale-ups.

BECO Capital, Global Ventures and Shorooq Partners also play a significant role, each led more than 10 rounds. The role of the corporate and institutional players is also noteworthy.

The scale-up investments increased by around seven times in Dubai to $2.1 billion in 2017 from $0.3 billion in 2015.

“In the 2018/21 period, the region’s growth path has been even more evident. With an average of 98 new scale-ups/annum, the MENA Region practically doubled the previous period’s figures,” the report showed.

With respect to capital raised, the average yearly amount reached $1 billion, except for 2021, which proved outstanding for the tech scene of the MENA Region, as it raised $2.9 billion in 141 new scale-ups, the majority of which were in the UAE.

These figures were impacted by several large funding events, including the initial public offerings (IPOs) of Swvl Technologies at $405 million and Anghami raising $142 million, besides, the investment rounds of Kitopi, $415 million; Unifonic, $125 million; Halan, $120 million; and Tamara, $110 million.”

Syed Azfar Hussain, project director of the National Incubation Centre (NIC), Hyderabad, said that the founders are choosing foreign destinations for their new ventures, especially Dubai, owing to easy access and non-cumbersome visa procedure.

“The state of Delaware of the US and Singapore are also a huge attraction for the startup founders. However, Pakistani startup founders opt Dubai due to the presence of a huge Pakistani population in the MENA Region,” he added.

The startup ecosystem in Delaware is known for its high level of innovation and creative spaces, which is supported by a diverse workforce, a pro-business legal and regulatory environment, top universities and a strong line of support programmes to start a business.

The state supports innovative startups and enterprises with a host of incentive programmes right from financing to business development and research and development.