Dubai: Industry experts say the initiative will encourage companies to look at long-term investment opportunities and attract foreign direct investment (FDI) to build the talent pool and infrastructure in the UAE.
“One important aspect of this law is that it will attract the right level of skills and especially in areas like scientific research and start-up communities, and drive a lot of foreign investment into those areas,” said Jyoti Lalchandani, vice-president and regional managing director for the Middle East, Africa and Turkey at International Data Corporation (IDC).
In terms of attracting FDI, he said that companies will come and set up operations, start-ups and also in terms of attracting technical skills. It is a definitely a step in the “right direction”.
As technology transforms the way we live and work, F5 believes it is important to nurture skilled individuals and lay the foundations for future prosperity.
Tabrez Surve, regional director for Gulf and Turkey at F5 Networks, said that the UAE has always been the trendsetter for the rest of the Middle East and once again this move will ensure that professionals will start to view the UAE as a semi-permanent destination of residency.
Ali Hyder, Group CEO of Focus Softnet, said that while the new initiative isn’t yet clear on what level of qualifications and experience will be qualified for getting this visa — he said this will surely help in getting good resources and help in the recruitment process.
Business executives during a meeting.
“We are yet to get clarity on what sort of resources will be allowed to get the 10-year visa. Depending on that it will surely help retain good qualified resources and professionals,” he said.
Mechelle Buys Du Plessis, managing director of Dimension Data UAE, said the 10-year visa extension eases the process for top professionals to take up employment in the UAE. It removes the requirement to renew visas every two or three years and provides a longer-term view for professionals with families in the UAE.
number of Fortune 500 companies with regional headquarters in the region
He said the longer-term visa opportunity for top professionals will create an “attractive space” for foreign direct investment.
The ability for investors to plan for the required workforce and talent pool over a longer period is set to attract investment opportunities.
As technology rapidly transforms the way we live and work, F5 believes it is important to nurture skilled individuals and lay the foundations for future prosperity.
“The skills deficit is especially pronounced when cloud technology is involved, because speed to market, agility, and innovation are increasingly becoming business prerequisites. The need to manage and migrate apps more efficiently, whether public or private, has gained unstoppable momentum,” Surve said.
Traders at the Dubai Financial Market (DFM).
Mohammad Meraj Hoda, vice-president for business development at Ring, a home security company owned by Amazon, said that retaining good talent is always an issue but when a company and the laws of a country provide better stability in terms of work environment it always helps to retain and attract better talent pool.
“It helps a company when they see long-term prospects where they can retain good talent. We also expect innovative companies from all segments to open investment in the region,” he said.
Jyoti does see the country becoming more of an innovation hub rather than software development hub as there are countries like Jordan, India or Egypt that are much cheaper.
“I don’t think UAE wants to position itself as a software development hub and rather wants to position itself as an innovation hub in a bid to create an ecosystem for entrepreneurs to come and invest in new companies. It wants to create an environment for retaining technical skills. With a 10-year visa, companies can retain talent in the country and they can plan ahead,” he said.
Hoda is quite positive about UAE becoming a leading country in terms of R&D, medical, manufacturing as well as a technology hub.
A 10-year residency for the skilled can revive UAE property
That and allowing specifc businesses full ownership deemed as potential gamechangers
By Manoj Nair, Associate Editor
Dubai: Opening up 10-year residency contracts for certain professions and full ownership of businesses for investors could just be the tonic the UAE’s property market needs. In one go, it creates opportunities for the highly skilled to commit to asset purchases and without having to bother about a renewal every two years.
A two-year residency is what the current “investor visa” offers to property buyers in the UAE, provided the asset they own is worth Dh1 million and over. Industry sources say that guaranteeing longer duration residency permits always works out to the longer term benefit of a country’s property market. Malaysia has been a beneficiary of such schemes as has Turkey in the recent past.
Doctors and engineers will benefit from the new visa regime, as would other “specialists”, though that is yet to be defined.
Top developers were quick to spot opportunities — the proposed changes to visa regulations “will undoubtedly have a positive effect on the economy and, in particular, the real estate sector,” said Ali Rashid Lootah, Chairman of Nakheel.
The local office property market could also certainly do with a boost. And some of the provisions in the latest Cabinet decision has the potential to provide that, at some point in the near future.
“Full ownership for investors outside of free zones can definitely be a value-add for the economy,” said Salem Ahmad Almoosa, Chairman of the business group that bears his name and developer of Falconcity of Wonders. “It will pump in investments and create more employment opportunities.
“The Company Law can stay as much, but existing international businesses can aim for mutually agreed changes in the way they operate with partners under the Agency Law. There can be compensations made and the partners can move on.
“Operating under the Agency Law can be reworked and in a way that will not be at odds with how international businesses work. This is a chance to remove the chinks in the system.”
Going forward, the market will be seeking clarity on what sort of businesses can claim 100 per cent ownership to operate in the market (and not just within the free zones). Would it apply to all businesses, large and small, or would it be decided on a case-by-case basis? With preference given to entrepreneur-led entities?
And which locations are likely to see the benefit? Dubai Healthcare City (DHCC) is an obvious one, more so as it is now building up its residential and hospitality interests. The MAG Group is a major investor in that cluster.
So could another Tecom enterprise, Dubai Science Park. “It was one cluster that was overlooked in the past, but I think with the recent moves, you could see a rush of activity from neighbouring countries as well as Malaysia, Singapore and even Ireland,” said Sameer Lakhani, Managing Director at Global Capital Partners. “While some of the details are yet to be released, which will then determine the specific impact on sectors, it’s apparent this is a gamechanger.”
Raising the bar to 10 years could be the clincher, which is far more “compared with any other leading city,” said Firas Al Msaddi, CEO at fam Properties. “What is far more important is the fact that the Government shows full awareness of the global and local market challenges and mindful of the need for timely action.”
UAE mortgage providers will definitely be showing a lot of interest in who will become eligible for the longer residency permits. As far as they are concerned, those eligible come with job security and the pay packages to make them ideal mortgage takers.
“While we wait for further details on the new visas, the chance for investors and households to move from transient residents to semi-permanent residents is certainly a landmark change,” said Faisal Durrani, Head of Research at Cluttons, in a statement. It “will undoubtedly drive greater domestic demand for residential and commercial property ownership, something that has been lacking from the country’s property market equation.
“The ability to feel more at “home” in what is essentially an adapted home for expats will also underpin loyalty among this privileged cohort, thereby fostering a greater sense of community and long-term well-being.”
Free zone authorities laud new Cabinet measures
Measures will increase competition, boost economy, they say
By Sarah Diaa, Staff Reporter
Dubai: Free zone authorities in the UAE on Monday said the latest economic measures announced by the country’s government will increase competition and attract more foreign direct investment (FDI).
The UAE Cabinet on Sunday evening said it will start allowing non-Emirati investors to own 100 per cent of UAE-based companies. The decision is a significant move from the current policies that limit foreign ownership of UAE-based businesses to 49 per cent outside free zones.
Currently, foreigners can have 100 per cent ownership of business in free zones, but must seek partnerships with UAE citizens for companies based outside the free zones.
foreign holding limit in UAE firms outside free zones
But free zone authorities on Monday did not express concerns about the new measures reducing their attractiveness, saying that the Cabinet decision will help strengthen the UAE’s economy.
“His Highness’ visionary new system will help increase competition, allow businesses to flourish domestically and regionally, and strengthen the national economy,” said Mohammad Al Zarooni, director-general of the Dubai Airport Freezone Authority (Dafza).
In a statement to Gulf News, Al Zarooni said the decision will “position the UAE at the forefront of the regional and global investment landscape, and is another compelling initiative resulting from the non-oil government diversification strategy.”
Similarly, the Jebel Ali Free Zone (Jafza) said that the measures will boost the UAE’s competitiveness, and help attract skills in the long term. A spokesperson from DP World, the port operator and parent company of Jafza, said that this will in turn help Jafza develop.
“The decisions focus on our nation’s role as a major destination for advanced projects in an environment that fosters new talent. Dubai has long been a magnet for commerce, with Jebel Ali Free Zone in particular helping to drive successful economic growth,” the spokesperson told Gulf News.
Economists also praised the move by the Cabinet.
holding foreigners can have in firms based in free zones
Monica Malik, chief economist at Abu Dhabi Commercial Bank, highlighted that, on a broader level, the measures mark a “clear shift in policy to supporting economic activity, boosting investment, and putting in place a framework for future development.”
Malik told Bloomberg News that the impact of the latest measures could reach multiple areas of support for the economy.
Speaking to Gulf News, she added that the removal of foreign ownership restrictions coupled with the low-tax environment already in the UAE could bring in a “substantial increase” in foreign investment, attracting foreign companies in all sectors.
“One of the key benefits of free zones was the 100 per cent ownership, but I think a lot of it also has to do with linkages and infrastructure that free zones have, but that is one key area one could see a potential impact on,” she said.
Malik said that any specific implication will depend on the legislation showing the types of companies granted 100 per cent foreign ownership and other details.
Will 10-year visa be linked to employer?
Current information doesn’t specify how new system will work, legal expert says
By Ed Clowes, Staff Reporter
Dubai: Plans to overhaul visa laws, allowing skilled workers to get 10-year residency permits, hinge on whether or not the visa will need to be sponsored by an employer, as is currently the case, or not, an employment expert has said.
On Sunday, the UAE cabinet announced that in the third quarter of 2018, it would launch a new system of entry visas for investors and skilled professionals, providing them with a long-term visa, lasting up to 10 years.
State-owned news agency WAM said the move was intended to lure top talent from around the world and boost foreign investment in the UAE.
Samir Kantaria, a partner and head of employment and incentives at law firm DLA Piper, told Gulf News on Monday that given the limited information provided by the initial announcement, it would appear that not all professionals will be eligible for the 10-year residency visa.
“From the information coming out it appears that the visa would be on offer to professional individuals working in medicine, science and engineering fields, so it remains to be seen if there is further scope…for other professional categories to be included,” Kantaria said.
However, a central issue remains unaddressed, according to the lawyer.
“The key question is whether the visa will need to be sponsored by an employer, as is current practice, or if the visa will operate independently from the employer, allowing the holder to move jobs freely without the need to cancel visas when changing jobs,” he said.
“If the latter is the adopted approach, this would be a major shift in the residency sponsorship policy of the UAE government which has to date, largely, linked residency with employment.”
By the end of the year, the government is expected to allow 100 per cent foreign ownership of local companies. Under current laws, companies outside of a freezone must have an Emirati partner who owns 51 per cent of the shares.
Experts praise positive moves
New ownership, visa rules to attract both investment and talent
By Andrew Staples, Chief Business Reporter
Dubai: Economists, advisers and business consultants say the move to allow 100 per cent foreign ownership and 10-year visa are positive.
While details are as yet too sparse for experts to predict their impact with any certainty, all agree that they will serve to increase the UAE’s attractiveness to the international business community.
Joe Hepworth, Director Middle East at foreign investment and trade development specialist OCO Global, pointed out that only 151 Fortune 500 companies had regional headquarters in the region — 148 of them in the UAE — while another 77 operated in the region without a regional corporate base. The rest had no regional presence at all.
“From this, you could obviously surmise that you’ve still got 300-odd F500 companies who could be attracted to set up here for whom the new rules would provide further incentive and reason.”
Investors often asked about ownership, he said. “I think in terms of investor confidence, investor perception, investor comfort, that it’s another reason for looking at an already attractive investment destination.”
Dr Steven Buigut, Professor of Economics at the American University in Dubai (AUD), said the 10-year visas would reduce the uncertainty of doing business in the UAE.
“This will boost the attractiveness of the UAE not only as a business centre but also long term promote build-up of a critical mass of experts that will promote home grown innovation,” he said, adding that longer-term visas would also boost demand in real estate.
Chris Seymour, Managing Director of consultancy Mott MacDonald Middle East, said the move would be welcomed across a number of sectors.
“While the construction and engineering sector is unlikely to feel the direct effect of these changes — at least initially — the likely increase in FDI will provide a stronger environment for investment which will slowly feed into the supply chain,” he said.
Professor Christopher Abraham, CEO and Head of SP Jain School of Global Management’s Dubai Campus, said the new ownership rules would certainly attract investment, and the new visas would attract some of “the world’s best”.
“In the years to come, we are likely to see a lot of innovations and disruptive ideas coming from this initiative which would put the UAE on the global map known for progressive reforms and positive developments,” he said.
At a glance: Business reaction
The UAE government’s announcement that it would issue longer visas for certain professionals has sparked debate around the country on how the new laws will affect the business community.
Property and technology will likely feel the biggest impact, but a significant boost to foreign investment is expected in most sectors.
Many in the UAE are also waiting for further details on the decision to allow 100 per cent foreign ownership of businesses, a decision that will be a major policy shift for the UAE, which has previously required foreigners to partner with a UAE National.
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