The UAE is giving huge impetus to Small and Medium Enterprises (SMEs) as the vital sector drives the economic engine of the country, said a UAE paper.

At the recent 13th session of SME World Summit in New Delhi, the UAE representatives underlined that SMEs were the backbone of UAE’s economy. During the conference, the UAE stressed the need to promote partnerships that support the segment so it can penetrate into new markets.

"As we boost sustainable economic diversification, new areas of trade ought to be explored and tapped. Innovative start-ups can play a big role in shaping the economic ecosystem of the UAE," said the daily Gulf Time in a commentary today.

The paper noted that last year, more than 22,000 SMEs were established in Dubai alone.

"There are more than 350,000 SMEs across the entire UAE which provide jobs for 86% of the private sector workforce. The share of this sector in non-oil GDP is 60%. In the next 5 years, this is expected to grow to 70%."

The SMEs hold massive potential to expand. Earlier, there were many bottlenecks that hampered its operation. However, the UAE’s new bankruptcy law would go a long way in easing the functioning of the sector and bolster it to shore up investments. The new law seeks to encourage lenders to facilitate SMEs to restructure their bad loans," it added.

As SMEs work in a secure business environment, they will try experimenting with new ventures. The innovative trading will help diversify the economy. Spurring innovation through SMEs will yield long-term benefits for the UAE.

While focusing on innovation, it is imperative that more free zones are established to enhance the strength of SMEs. With flexible rules that make business easy and where innovation takes roots, these zones could be the ideal hubs for the SMEs to thrive. The free zones can provide the right direction to the entrepreneurs regarding the specific economic activity that they wish to undertake, help them with the logistics and assist them to build up the infrastructure. These zones can be an effective platform for the SMEs to learn, collaborate and network among themselves. The SME World 2016 summit discussed ways to exchange the experiences of various entrepreneurs which is crucial for the business to break the barriers.

Recently, an allocation of AED 5 billion in contracts to SMEs was announced by the Dubai Expo 2020. This will be instrumental in adding more vigour and significance to the world’s fastest emerging sector. The next decade will be the decade of SMEs and therefore, more steps must be taken to ensure that the players in this sector move away from the trading-dominated model and invest on innovation and sustainability. With the right nurturing and guidance, the SMEs will make the UAE’s economy more robust and resilient. The UAE must enter into pacts that empower SMEs to increase their footprints in hitherto uncharted domains. Business alliances will open up new avenues and also enhance competitiveness of the segment.

The paper concluded by saying the future trade of nations and their GDP growth would hugely depend on the value they put on their SMEs.

"It is just the first lap in the marathon run for the SME sector. There is a long way to go. And the UAE is right in clearing the track for the long race."