Overview

With an economy of $509 billion, a population of 11 million, and a government that is investing heavily in digital transformation across all economic sectors, the UAE is a leading market for Information Communication Technology.  The UAE aims to digitize in order to solve infrastructure and manpower challenges with cutting edge 5G Wireless, Smart City and IoT technology based on the knowledge economy.  

The UAE’s Digital Economy Strategy includes measures to support the growth of the Digital Economy  from the current 12% of non-oil GDP to 20% by 2030.  One of the key measures is to use A.I. to match skilled talent more effectively with available job opportunities.  The UAE leads the Middle East region in the deployment of digital solutions to enhance public infrastructure as it aims to become the leading regional smart city and technology innovator.  The UAE supports public-private partnerships to develop digital infrastructure and cloud computing ecosystems to support its strategies and initiatives and its leadership position in the region.

UAE government leaders see data as a key source of future value creation that will supplant the heretofore reliance on oil revenues and trade in goods.   Some of the long-term trends driving the growth of the digital economy in the UAE include: 1) women gaining financial independence drive eCommerce; 2) local telecommunications operators E& and Du were early adopters of fifth generation (5G) mobile telecommunications technology, and 3) large investments are being made in data center infrastructure and cloud computing applications.  

Artificial Intelligence

A PWC study estimates that A.I. will contribute $96 billion to the U.A.E. economy by 2030 and account for 13.6 percent of the gross domestic product.  The physical infrastructure is continuously being developed and cybersecurity solutions and digital regulations are all advancing to a digital business environment and ecosystem.  

The UAE government’s A.I. Strategy 2031 includes eight strategic objectives: 1) build a reputation as an A.I. destination; 2) increase the UAE competitive assets in priority sectors through deployment of A.I.; 3) develop a fertile ecosystem for A.I.; 4) adopt A.I. across customer services to improve lives and government; 5) attract and train talent for future jobs enabled by A.I.; 6) bring world-leading research capability to work with target industries; 7) provide the data and supporting infrastructure essential to become a test bed for A.I.; and 8) ensure strong governance and effective regulation.

In June 2024, the government of Dubai appointed 22 chief A.I. officers to key government departments with the task of driving a high-tech vision for the future.  The A.I. officers will help government bodies such as Dubai Police, Dubai Roads and Transport Authority, Dubai Electricity and Water Authority and the Department of Economy and Tourism to harness artificial intelligence across all government services.

Cybersecurity

The UAE’s National Cybersecurity strategy aims to create a safe and strong cyber infrastructure in the UAE that enables citizens to fulfill their aspirations and empowers businesses to thrive. The updated version of the strategy was launched in 2019 by Telecommunications and Digital Government Regulatory Authority (TDRA), the entity which is responsible for the ICT sector and digital transformation in the country. The strategy is based on 5 pillars and 60 initiatives aiming to mobilize the whole cybersecurity ecosystem in the UAE.

According to an IBM study, the average cost of #cybersecurity incidents in the Middle East region reached a new high of $6.93 million per data breach. This is significantly higher than the global average of $4.24 million per incident.  As a result, senior managers are paying more attention to cybersecurity resilience and the government is increasingly requiring compliance with cybersecurity standards.  However, the cybersecurity talent gap is a growing issue and the cost of cybersecurity prevention is a widespread concern.

In November 2020, the UAE Cabinet agreed to establish the UAE Cybersecurity Council with the aim of developing a comprehensive cybersecurity strategy and creating a safe and strong cyber infrastructure in the UAE. The council contributes to creating a legal and regulatory framework that covers all types of cybercrimes, securing existing and emerging technologies and establishing a robust ‘National Cyber Incident Response Plan’ to enable swift and coordinated response to cyber incidents in the country.  

In July 2024, the UAE Cybersecurity Council announced that it is developing three new policies to be issued by the end of 2024 to enhance the UAE’s position as a global hub for advanced technology and artificial intelligence.  The three new policies being developed cover the areas of “cloud computing and data security,” “Internet of Things security,” and “cybersecurity operations centers.”  The July 2024 announcement also stated that a new encryption law and executive regulations to set the standards for secure data transmissions in line with quantum systems are expected to be issued before the end of 2024.

The Dubai Electronic Security Center launched a new cybersecurity strategy in 2023 and has published a number of cybersecurity standards and guidelines to help government entities and private organizations operating in Dubai to improve their cyber security and/or cyber resilience.

Market Challenges

Regulatory Environment

Personal Data Protection and Cross Border Data Flows

In January 2022, the Federal Decree-Law No. 45 of 2021 regarding personal data protection (the Data Protection Law) came into effect.  The Data Protection Law restricts the cross-border movement of data unless a) the Emirates Data Office determines that certain countries or territories provide adequate data protection, b) the UAE accedes to bilateral or multilateral agreements related to personal data protection with the countries to which the personal data is to be transferred, c) personal data is transferred under a transferred under a contract, d) personal data is transferred based on consent, or e) other specific circumstances exist.  This law applies to any data subject who resides in or has a business in the UAE but excludes health data, which is covered under a separate law and related regulations.   It is an integrated framework to ensure the confidentiality of information and protect the privacy of individuals in the UAE.  However, as of September 2024 the UAE had not yet published the implementing regulations that would be necessary for Federal Decree-Law No. 45 of 2021 to come into force.

The UAE has announced plans to implement new legislation to classify and protect government data but no drafts have been announced.

The Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) free zones have their own data protection authorities and legislation that allow for cross border data flows based on international best practices.  In July 2024 the DIFC became an Associate Member of the Global Cross Border Privacy Flows Forum, a group of roughly one dozen countries that facilitate cross border data flows by mutually recognizing the privacy certifications done in each jurisdiction.

Cross Border Health Data Flows

Several UAE laws and regulations restrict the cross border flow of healthcare data.  Understanding how to navigate and comply with health data regulations is an important factor in successfully doing business in the UAE, particularly in the healthcare services, health insurance, medical device and diagnostics sectors.  

UAE Federal Law Number 2 of 2019, known as the Health Data Law covers the collection, processing and circulation of health data and sets out processing, security, and retention requirements.  The Health Data Law places a general restriction on the transfer of patient health data outside the UAE but allows for exemptions that are specified in the UAE Health Ministerial Resolution 51 of 2021 and can be granted by the health authorities in each Emirate on a case-by-case basis.  The ten types of exemptions that can be granted for cross border data flows are: pharmacovigilance reporting, patient treatment overseas, the administration of insurance claims, scientific research and clinical trials, wearable healthcare monitoring devices, medical diagnostic testing, cooperation with UAE governmental institutions, telemedicine, for personal use, and other purposes as approved based on coordination with the federal Ministry of Health and Prevention.  The process for obtaining permission to use these ten exemptions is not clear and the 2019 Health Data Law often acts as a barrier for U.S. companies that wish to leverage global cloud services for things like expat health insurance claims management or for A.I.-enabled robotic surgery that depend on large global data sets.

In May 2024, the Department of Health Abu Dhabi published an update of its Abu Dhabi - Healthcare Information and Cyber Security Standard (ADHICS).   Thee new 2024 ADHICS version 2.0 allows the use of the cloud and even specifically list Amazon Web Services, Microsoft Azure, and Software as a Service vendors/providers for the storage and processing of health data inside of the UAE.  This will allow many companies to expand their customer base to companies in the regulated healthcare sector.   However, ADHICS version 2.0 blocks all cross-border flows of health data, including for data resiliency and backup purposes, except when exemptions have been specifically granted by the health regulatory authority in each Emirate.   Because of the difficulty in obtaining permission from the respective health regulatory authorities in each Emirate to utilize the ten exceptions listed in the UAE federal 2021 Health Data Ministerial Decree, the flow of health data across borders and the use of global cloud services will continue to be severely limited under ADHICS version 2.0.

Digital Trade Opportunities

Cross-Sector Enabling Technologies, i.e., digital technologies that enhance productivity, efficiency, and functionality across different industries. Examples (including alignment with CETs):

The UAE, a leading hub for international trade and business in the Middle East and North Africa (MENA) region, is a competitive market for the Information Communication Technology (ICT) industry. In a bid to reduce dependence on oil revenue and grow the private sector, UAE government initiatives set out to build a competitive knowledge economy and establish an open, efficient, effective, and globally integrated business environment. The UAE government is taking several steps to prompt the development of a knowledge-based economy.  

The UAE continues to grow in the technology space. Private and public sector players are seeking to modernize by adopting state-of-the-art solutions and catch the broader global wave of innovation, data utilization, digital transformation, and technological advancement.  The UAE’s desire to diversify and build a knowledge economy is creating new opportunities, and the government has set aside large parts of the budget to achieve its ambitious visions and plans.  Technology players continue to see the potential to grow their business in the UAE.    

According to Business Monitor International, the software and services segments have seen significant investment in areas such as cloud computing, smart services, and cybersecurity. Software and services demand will drive IT spending growth over the medium term, especially demand from large industries for solutions around cloud computing, data analytics, cybersecurity, and IoT.  The hardware segment will also see healthy growth as the market tilts towards high-end power users and workstation purchases from the enterprise and commercial sectors.  

There is also growth expected in the demand for business management software. Key verticals include process manufacturing, followed by the finance sector, where regulatory compliance and new services, including Islamic banking, will help to create opportunities. The increasing regional and global orientation of the UAE economy is a major driver for locally based small and medium-sized enterprises to enhance the efficiency of their operations.

These government projects will require the expertise and services of foreign firms – offering opportunities for American companies that have a comparative advantage with advanced technologies and innovations.

Cloud Computing  

The UAE is one of the largest data center hubs in the Middle East and more are planned. Up to $1 billion in additional investments are projected by 2026.  The UAE data center market is expected to grow at an average rate of 3.43% between 2022 and 2027. In 2019, Microsoft chose the UAE as its first destination to create hyper scale datacenters in the region and Microsoft Azure launched two cloud regions in Dubai and Abu Dhabi. In November 2021, Oracle announced the opening of its second cloud region in Abu Dhabi, in addition to Oracle Cloud Dubai Region.  In 2022, Amazon Web Services launched and opened the new AWS Middle East (UAE) Region that consists of three availability zones.  e& (formerly known as Etisalat Group), Equinix, Gulf Data Hub and Core42 also have major data centers.

With aggressive investments by the UAE government in cloud computing, and the UAE’s competitive business laws and strong technological infrastructure, the sector is forecasted to continue expanding in the years ahead. The deployment of 5G services and development of smart cities will increase data traffic and further grow the demand for more data centers in the country. Public cloud hosting in the UAE has addressed variations in resources and expertise efficiently through highly specialized solutions. Despite these significant expansions, there is still sizeable room for development that will require the expertise and know-how of American firms. UAE data localization requirements for health and government data, however, require American companies to increasingly seek local solutions to navigate the market.

Cybersecurity

The UAE’s geopolitical position, importance to the world economy, and critical infrastructure in the energy (oil & gas and nuclear power), transportation, and aviation sectors make the UAE vulnerable as a target of cyber-attacks, driving rapid growth in the cybersecurity market.  The cybersecurity market in the UAE is expected to grow to a value of $4.51 billion by 2025. The growth can be attributed to the global cyber threats, increased exposure to cyber-attacks, corporate policies, and increased regulation of cyber risk and data management.  Substantial growth is expected from the digitization of various sectors including financial services and utilities, as well as the need to secure the country’s critical infrastructure.

The UAE reports the highest number of malware incidents among consumers in the GCC. To protect the UAE’s critical data information infrastructure and improve national cybersecurity, the government introduced the UAE Information Assurance Standards, which are a set of guidelines for government entities in critical sectors.  Compliance with these standards is mandatory for all government organizations and businesses that are identified as critical infrastructure in the UAE.  Several local players have been developing cybersecurity capabilities to capitalize on rising demand, while international IT security firms are expanding their presence in the country. With leading technology experts stating that the number one priority for UAE firms remains cybersecurity, the market is expected to continue expanding.  All of the UAE development initiatives also drive the demand for cybersecurity, which will provide many opportunities for American companies.

Artificial Intelligence  

Artificial Intelligence (A.I.) is a priority in the UAE.  A.I. is forecast  to contribute almost 14% of the national GDP by 2030 ($96 billion), according to IBM. As part of the government’s UAE Centennial 2071 plans, the UAE A.I. Strategy 2031 was launched to improve efficiency in the transport, health, space, renewable energy, water, technology, education, environment, and traffic sectors. The UAE has already begun integrating A.I. with industries such as education, healthcare, space, transportation, and aviation. A.I. is a key part of the ambitious plans of the UAE government to diversify their economy and become a knowledge economy.  This includes the establishment of the Mohamed bin Zayed University of Artificial Intelligence in Abu Dhabi, part of an effort to develop more talent that can support the growth of the digital economy.  The race between Gulf states to have the newest and most sophisticated technology, particularly in the field of A.I., provides a large market in which U.S. firms have comparative advantages.  

Smart Cities  

The UAE has made significant investments into projects for smart cities, with goals to build smart cities from scratch and improve the infrastructure in existing cities. The Digital Dubai Authority was established to support the city-wide initiative to transform Dubai into the world’s smartest and happiest city.  In December 2021, the Dubai Paperless Strategy was fully implemented across all 45 government entities in the emirate, after being launched in 2018.  These entities provide more than 1,800 digital services and over 10,500 key transactions.

Examples of initiatives include the provision of public Wi-Fi, electric car charging stations, and live traffic monitoring for the Roads and Transport Authority, highlighting how there are tech-related opportunities for American companies in all sectors of the Emirati economy. UAE authorities will want to maintain the reputation of the UAE as a leading smart country, and continuous public sector investments in large-scale infrastructure projects revolving around smart building will continue growing, providing opportunities for American companies.

Internet of Things (IoT) opportunities include smart services, private industrial 5G internet systems, and machine-to-machine communications.  There are applications in the public sector for smart cities and telehealth, and enterprise applications include smart metering, asset tracking, and production optimization. The UAE has emerged as a leading global location for the deployment of IoT solutions to enhance public infrastructure, especially Dubai as it aims to become a leading smart city. There is a foundation of cooperation across multiple sectors including ICT, power, transportation, infrastructure, healthcare, and government.  

5G Mobile Telecommunications

There are two telecommunication providers in the UAE:  

• e& (formerly Etisalat) (Emirates Telecommunications Corporation).  
• Du (Emirates Integrated Telecommunications Company).  

The UAE was the first country in the Arab region and fourth globally to launch its 5G network. Both du and e&, the nation’s leading telecom companies, launched limited 5G networks in 2019, along with the 5G-enabled ZTE Axon 10 Pro smartphone to both post-paid and pre-paid customers. By the end of 2023, it is estimated that 16 million 5G smartphones will be operational in the region. With the UAE being at the forefront of technological advances and given the strong GDP per capita, demand for 5G services is predicted to be strong over the coming years.  

In June 2021, e& revealed a 6G project that is estimated to be around 100 times faster than 5G. They have invested in 6G realization by conducting research and developing international standards that are the main building blocks for the 6G ecosystem. The rollout and expansion of the telecom network and infrastructure in the UAE will offer many business opportunities for American companies.  As 5G network adoption continues, the UAE is considering Open Radio Access Network (Open RAN) technologies to provide network flexibility, encourage supplier diversity, and drive higher efficiency.  

Mobile telecommunications operators E& and Du are exploring the possible use of Open Radio Access Network technology based on open standards, rather than proprietary standards.   The potential adoption of Open Radio Access Network technology could spark a new wave of innovation by a variety of vendors.  This would require testing labs and systems integrators that can bridge legacy systems with new systems based on open standards.

Wi Fi 6E

The UAE has committed to allocate 500 MHz of the of the 6 GHz radio frequency band for unlicensed use for Wi-Fi 6E and 7E users, including for industrial internet of things.  This opens up potential for faster public and private internet data transmission rates than ever before.    

Digital Economy-Related Trade Events

GITEX GLOBAL
Date: October 14-18, 2024
Venue: Dubai World Trade Center, Dubai, UAE

GISEC GLOBAL
Date: May 6-8, 2025
Venue: Dubai World Trade Center, Dubai, UAE

Helpful Resources

• I&A’s Office of Digital Services Industries (ODSI)
• National Trade Estimates Report – Digital Trade Barriers
• White House CET List, e.g., Artificial Intelligence -> Machine Learning