The UAE government’s decision to allow 100 per cent foreign ownership of onshore businesses has come as a major boost to the country’s economy that has been actively pursuing foreign direct investment (FDI).
The UAE, the most diversified and open economy in the GCC, has been on a path of liberalising investment policies to attract foreign capital into the country.
While several free zones within the country had already been allowing full business ownership to foreigners, onshore, it has been restricted to certain categories of businesses with a gradual easing happening during the last two years.
The latest legislative reform to give full foreign ownership of companies along with host of reforms aimed at relaxation in visa rules, rationalisation of government fees and incentives to small and medium enterprises are sure to attract more foreign investors
In April this year the government released a list of 122 categories for 100 per cent foreign ownership on the mainland under the Foreign Direct Investment (FDI) Law, which followed the latest legislative change this week.
Historically, manufacturing, the backbone of world’s major economies has not taken off so much here due to the nature of capital-intensive projects and legal ownership restrictions. Keeping foreign investor as a minority shareholder legally has been a major impediment in attracting investors onshore in new generation businesses such as software development, financial technologies, and artificial intelligence.
Investment opportunities in the UAE
By scrapping the system of having UAE national partner as mandatory across the board for most sectors, the government has opened the floodgates of investment opportunities in the UAE.
The UAE has been on a steady rise in the Global Competitiveness Index of the World Economic Forum. In the latest Index, the country is ranked 25th globally, improving by 2 positions from last year’s report and is leading the Arab region. This is complemented by UAE’s high performance in the key pillars of ranking such as stable macroeconomic environment and top-class infrastructure.
The country has been pursuing a strategy to improve and develop performance in all competitiveness indicators. Clearly the approach is rooted in open economic policies, modernisation and updating of legislations and streamlining of procedures as well as the adoption of innovation to move up on the scale of global competitiveness.
The latest legislative reform to give full foreign ownership of companies along with host of reforms aimed at relaxation in visa rules, rationalisation of government fees and incentives to small and medium enterprises are sure to attract more foreign investors.
The reforms aimed at improving the ease of doing business in the country, attracting foreign investors, creating jobs and diversifying its economy away from oil are certain to help UAE make a quantum leap in socio economic progress in the years ahead.