In less than a year, the Government of the UAE has announced yet another set of fundamental changes in foreign direct investment policies. The earlier announcement in 2018 was aimed at accelerating investment flows by up to 20 per cent, from the eight per cent average growth rate, as estimated by the Ministry of Economy.
The landmark announcement further aimed at strengthening the already business-friendly climate in the Emirate.
The UAE is the region’s largest destination for FDI, with annual inflows steady at around $9bn a year, much of this is directed into the federation’s many free zones, such as Jebel Ali. His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai recently announced vital changes to the country’s residency programme, including foreign investors in the country to be offered a 10-year residency visa, as well as up to 100 per cent business ownership. This move aims to boost FDI by up to 15%.
Historic news issued by the UAE cabinet last week will no doubt drive foreign direct investment and boost economic activity in the UAE. Over 120 economic activities across 13 sectors (including renewable energy, space, agriculture, logistics, hospitality, food services, information and communications, and manufacturing) were specified as being eligible for up to 100 per cent foreign ownership. The long-term goal of the UAE to stimulate, motivate and facilitate businesses and open and expand new economic sectors looks like coming to fruition. The new changes are expected to come into practice towards the end of the year.
100 per cent foreign ownership has been the preserve of the UAE’s free zones for many years though some may view this as compromising the attractiveness of free zones. However, each free zone offers much more than ownership benefits to attract investors. Benefits are tailored to a particular industry or business type, but generally include more efficient start-up processes and various tailored regulatory incentives.