16 May UAE is coming up with an all-new investment law in Q4
This new law will increase foreign investments by almost 10 to 15 percent. This good news is awaited since long and UAE plans to issue this investment law by end of 2019. Most expected investments could come from either Asia or Europe, as per the Economy Minister, Sultan Al Mansoori.
This law would also liberalise many sectors like the pharmaceuticals and others in the manufacturing industry, to the services industry. So, business setup in Dubai free zone will be welcomed.
The final version of the new law has been submitted for review and approval to the Cabinet. Then it would be sent to the legal committee of the Ministry of Justice. The UAE has got a projected $10.3 billion in overseas investments in 2017, said Mr. Al Mansoori.
“My expectation is we should probably hit $10.6bn to $10.8bn [in 2018],” he said. “It’s a marginal increase, but we have to take into consideration the current situation and atmosphere in the world right now. The environment is sometimes challenging.”
This new law also makes 100 percent foreign ownership possible in many sectors, which has been approved by the government; currently, it was only possible up to 49 percent. This is because of so many reforms that help to lower the reliance of the economy on its oil revenue. This also means that company registration in Dubai will be beneficial and easier than before.
The Ministry of Economy is also planning to come up with some laws that could enhance the efficiency of the economy and improve the contribution that the non-oil sector gives to up to 80 percent by the year 2021 from the current 70 percent.
The GDP is expected to grow to 3.9 percent this year; however, this number will be impacted by various factors such as oil price fluctuations, the political scenario and what is the status of the global economy, said the minister. Going by the past data, the UAE’s economy has grown 3 percent in the year 2016, and the 2017’s figures haven’t been published yet. The International Monetary Fund has projected a growth of about 3.4 percent this year.
Things are looking up and the economy has been recovering since the oil slump in 2014; and this is because of the government’s efforts to diversify the income away from the revenue from crude.
The GDP growth from the oil sector is also cut down because the country is following the guidelines of the global oil pact and that could limit the output till Q4 of this year. There is an agreement between Opec and some countries, which is led by Russia; it is expected to be extended till after 2018. Oxford Economics projects bullish numbers showing forecasted growth of about 2.6 percent, said the senior Middle East economist, Mohamed Bardastani.
According to him, the factors influencing the economic recovery are the better oil price situation, fiscal policy with an expansionary view, higher investments before the Expo 2020, and overall regional financial recovery.
“Oil sector growth will be constrained by the extension of the Opec agreement [to the end of 2018]. As such, we see the bulk of economic growth in the UAE this year coming from the non-oil sector, underpinned by expansionary fiscal policy at the federal and emirate levels and recovery in regional economic activity.”
The growth in the Middle East and North Africa is expected to go up to 2.9 percent from its 7-year slump of 1.1 percent in 2017. He said that this will hugely promote and help the UAE’s open economy.
The minister also said that UAE is watching the possible effect of the trade wars over protectionist tariffs between the US and China.