Inflow of start-ups will gain steam with 100% foreign ownership
Inflow of start-ups seen spiking with 100% business ownership and 10-year residency rules; liberalisation seen to boost tech innovation in onshore sectors
Dubai: The inflow of high-tech start-ups into the UAE will gain traction due to the new initiative that allows 100 per cent ownership of enterprises for foreign investors, industry experts said.
- Sam Blatteis | Co-founder and CEO, The Mena Catalysts
Sam Blatteis, co-founder and CEO of The Mena Catalysts Inc, a Gulf-based government affairs consulting company, said that the upcoming rule change sends a “solid signal” to high-tech investors that anyone is allowed to compete.
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“A number of offline industries have required a 51 per cent local ownership. But as “offline” and online industries blur, opening up markets may provide more assurances to high-tech companies that the leadership has stated it wants to attract.
“The emerging rule allowing further foreign ownership may make it easier for 'online' start-ups to participate in 'offline' industries,” he said.
However, he said that large swathes of the technology sector already can have up to 100 per cent foreign-ownership in the UAE, which helped usher in a dizzying line-up of internet companies to Dubai.
Clearing barriers
But this upcoming rule change, he said, clears the path as barriers to investment seem to be falling in the UAE.
“We still want to see the full details of the new policy before making a final assessment but this is the science of small wins. Because liberalising foreign ownership might encourage tech innovation in long-previously overlooked onshore sectors,” he said.
Jyoti Lalchandani, vice-president and regional managing director for the Middle East, Africa and Turkey at International Data Corporation, said that the 100 per cent ownership is really a trigger to drive more foreign investment, especially in sectors such as science and technology — as well as venture capital.
“The UAE has realised that it now provides a compelling value proposition to attract foreign investors looking for new growth opportunities."
"Ultimately, the UAE (and Dubai in particular) benefits from its strategic location, political security and stability, social and cultural openness, and world-class infrastructure,” he said.
Ideal choice
Ammar Al Malik, executive director of Dubai Internet City, said the prospect of 100 per cent ownership is certainly an “interesting proposition” for companies of all sizes and will further cement the position of the UAE as the leading business hub in the region, attracting even more businesses, entrepreneurs and the best and brightest talent.
“From our perspective at Dubai Internet City and with the values of our community, I am confident we will continue to be the ideal choice for global companies and tech start-ups in the region," said Al Malik.
"Our unique ecosystem and tailored set up allow technology companies and talent to connect and innovate, contributing to the success of Dubai,” Al Malik added.
Sukhdev Singh, executive director at market research and analysis services provider Kantar AMRB, said the new initiative will just fuel the growth of start-ups the UAE is witnessing.
He said that UAE offers a great local market as well as proximity to major developing markets, and with the possibility to have 100 per cent ownership, once expects significant improvement UAE ’s attractiveness as a business hub. This should also help in ‘ease of doing business’ index improvement for the UAE.