05 Jul The UAE outlines industry sectors entitled for up to 100 percent foreign ownershipEmail This Post
The recent announcement by the UAE Cabinet on Tuesday was welcomed by both firms and residents, when they listed the business activities which will be eligible for up to 100 percent foreign ownership as per a law approved last November, as the nation seeks to bring in more investment from overseas and thus create jobs for its people.
The listing of 122 economic activities in 13 sectors ranges in renewable energy, agriculture, space, manufacturing, information and communications, logistics, transport, hospitality, food services, and many others.
“Our goal is to open and expand economic sectors, attract new investors and cement the global competitiveness of our national economy,” said Sheikh Mohammed bin Rashid, the Prime Minister of the UAE and Ruler of Dubai, on Twitter on Tuesday.
“Local governments [across the seven emirates of the UAE] will determine the percentage of ownership in each activity according to their circumstances,” he tweeted. In some emirates, some of these activities could also require to have an Emirati shareholder, even though the foreign ownership limit increases.
Earlier, foreign investors were permitted to hold up to 49 percent of a business or firm that is registered in the UAE, except if it was situated in a designated free trade zone, and they had to have a partner or an Emirati investor who usually held the remaining 51 percent.
Similar to other GCC nations, which conventionally depended upon hydrocarbons to empower their economies, the UAE has executed reforms to fortify and diversify during a phase of lower oil prices. Various reforms such as reducing business registration fees to augment the non-oil private sector and announcing a 5 percent VAT in the month of January last year, as per a GCC-wide agreement.
The Emirates has recently also begun issuing long-term residency visas to some expats to persuade them to reside longer and also invest in the country. Special permanent visas known as “gold card” were granted to expats who contributed significantly in to the UAE economy.
The IMF or the International Monetary Fund forecasted in April that the state’s gross domestic product growth to increase to 2.8 percent in 2019, which is up from 1.7 percent in the year 2018. The amplified construction activity due to Expo 2020 in Dubai is expected to spike up growth.
Relaxing these foreign ownership rules “is a further measure to liberalise and strengthen the investment environment and will be a critical step in the development of new sectors and industries”, said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “A key objective will likely be areas linked to technologies and ones that will support job creation.”
Including logistics and storage activities in the listing would “allow investors to own projects in e-commerce transport, supply chain, logistics and cold storage for pharmaceutical products”.
Professional, technical and scientific activities also get the eligibility – “which enables ownership of laboratories for research and development in biotechnology”.
The listing also has administrative services, educational activities, support services, healthcare, construction, and arts and entertainment.
When the law was issued in November in the UAE’s Official Gazette, the UAE government published a list of a dozen sectors which were still not eligible to qualify for 100 percent foreign ownership. Some examples for these are banking, oil and gas, utilities, telecoms, road and air transport, and medical retail (including pharmacies).
The UAE still keeps going up in the World Bank’s ‘Ease of Doing Business’ ranking and figures at number 11 position among a total of 190 economies. Now, this decision will reinforce the UAE’s position as a hub for company formation in Dubai and in the investment community.
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