Dubai: The World Trade Organisation (WTO) yesterday urged the UAE to liberalise its foreign investment regime and scrap laws that give local companies a monopoly in the sale and distribution of foreign branded goods.
In a statement following the conclusion of the UAE's second Trade Policy Review (TPR) with the WTO — six years after the first review in 2006 — WTO officials stressed that changes to the Commercial Companies and Commercial Agencies Law were still needed.
"They [WTO members] encouraged the UAE to speed up the promulgation of its new law on the liberalisation of foreign investment and modernise the business environment," said Eduardo Munoz, the chairman of the WTO's Trade Policy Review Body.
"Members also encouraged the UAE to eliminate local services/agent requirements, and to increase the transparency, accountability, and effectiveness of government administration."
At the meeting, the UAE government submitted its TPR document in which it admitted that its investment regime — relating to companies — remains "more restrictive than the trade regime".
Review pledge
"The investment regime remains considerably more restrictive than the trade regime, as foreign participation in any domestic company or activity is limited to 49 per cent of the capital. However, 100 per cent foreign ownership is allowed in any of the UAE's free zones," said the document submitted by the Ministry of Foreign Trade.
Speaking after the meeting, Shaikha Lubna Al Qasimi, minister of foreign trade, said "The UAE will continue to uphold its free-market strategy and will proceed with reviewing all existing policies in order to make them as resilient, adaptable, and responsive to future challenges."
"Local companies have nothing to fear. Competition and openness can only strengthen them," said Khalid Maniar, founder and managing partner of Crowe Horwath.
But he added that the UAE should not be alone in opening its markets. "Whatever the UAE decides, that has to be in line with the GCC countries as the region is currently in the process of economic integration."
WTO members have asked the UAE to consider amending its government procurement regime by removing the requirement to employ a UAE national in order to submit tenders and to review its transparency procedures for all bidders as well as its offset programme.
Competition legislation
"Acknowledging the current absence of full-fledged competition legislation, members commended the UAE for preparing a draft competition policy law and urged to bring it into effect as soon as possible. Questions were raised about the procedures and criteria for fixing prices and the exemptions of state-owned enterprises and small and medium-sized enterprises from competition regulations," Munoz said.
"A major development in the telecommunications sector during the review period was the termination of the monopoly in telephony services. However, competition in the sector remains low; there is a duopoly in mobile telephony, which result in relatively high prices. The market could benefit from increased competition in the sector."
