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.
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.
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.
