Dubai: Ministry of Finance on Wednesday unveiled the details of Federal Law no. (4) of 2020 on Securing Interest with Movable Property.
The new Federal law enables companies operating in various business sectors, especially SMEs, to benefit from their movable properties to secure their bank and commercial loans. This strengthens both the UAE’s leading position in global competitiveness and ease of doing business indices, as well as its foreign direct investment (FDI) attractiveness, said Younis Haji Al Khoori, Undersecretary of the Ministry of Finance (MoF), during a virtual press conference.
The Federal Law on Securing Interest with Movable Property addresses challenges related to obtaining credit from banks in the country. For example, the inability of some projects to access financing options, together with other challenges resulting from the inability of some projects to use their movable properties as collateral with banks.
Al Khoori pointed out that the idea of the project focused on creating an electronic registry in the country to record assets to ensure project financing. This register would allow the use of “tangible and intangible” movable properties such as equipment and tools, receivables, cash flows, crops and others as collateral against obtaining loans.
He said that the UAE enjoys an outstanding global reputation in numerous fields, thanks to the forward-looking directives of our wise leadership who have launched national strategies and programmes that compete with the best, most developed and stable countries in the world. Today, our nation possesses competitive capabilities that qualify it to compete with the most advanced global economies.
“The law will have a significant positive impact on the nation’s economy, as it caters to recent developments in the scope of movable properties. It will also support SMEs to easily obtain the necessary financing, by diversifying the financial assets that can be used, while ensuring the rights of creditors from banks and financing institutions,” said Al Khoori.
The provisions listed in this law cover most of the World Bank’s indices included in the Doing Business Report, which is one of the most important global competitiveness reports. Therefore, complying with international standard requirements in securing interest with movable property helps improve the nation’s competitiveness, and integration into the global economy - allowing us to further adopt internationally recognised standards and best global practices. This will lead to strengthening the legal framework for doing business, increasing the investment attractiveness of the nation and achieving significant macroeconomic gains.
“The Ministry of Finance continues coordinated efforts with its partners and all relevant parties to develop fiscal and monetary policies in the country, maintain financial stability, advance sustainable economic growth and strengthen the country’s financial competitiveness,” said Al Khoori.