UAE Vision To Attract Foreign Direct Investment
6th September 2018
(This article will be featured in the Autumn 2018 issue of the British Business Group Abu Dhabi's quarterly magazine, Capital Letter).
In the early summer, the Crown Prince of Abu Dhabi, Sheikh Mohamed bin Zayed, announced an AED50 billion economic stimulus to attract Foreign Direct Investment (FDI) into Abu Dhabi and boost the economy. This followed an announcement by Sheikh Mohammed bin Rashid, Vice President and Prime Minister and Ruler of Dubai, two weeks prior of significant changes to the visa system.
The key aims of the two announcements are:
Increasing the UAE’s rankings in the ease of doing business (currently 21st out of 190, as per The World Bank)
Removing barriers for FDI
Supporting Entrepreneurs and SMEs
Liberalizing the rights of business ownership
Reducing the cost of business ownership
Attracting and retaining highly skilled talent
At the time of the AED50 billion economic stimulus announcement, officials were given 90 days to create execution plans for the initiatives. At time of going to print, the specifics are yet to be formally announced and are eagerly awaited by both existing business owners and those looking to enter the market. However, 10 key initiatives were announced which provide an insight into the type of changes we might expect to see:
Entrepreneurs being allowed to work from home without the need for leasing office space for up to two years
New quick payments for private sector contractors
A cost-cutting review of building regulations
Establishment of Abu Dhabi Accelerators and Advanced Industries Council to identify new technologies and investments
Developing eco-tourism, camping villages and areas for recreational sports
Promoting public private partnerships (PPP)
Creating 10,000 jobs for Emiratis over the next five years
Encouraging local production and supporting SMEs to boost their competitiveness
Dual licences for companies in Abu Dhabi free zones enabling them to work onshore and bid for government tenders.
Also, Sheikh Mohammed bin Rashid, Vice President and Prime Minister and Ruler of Dubai announced the decision to allow 100% foreign ownership of busineses. Currently foreign companies and individual expats setting up businesses in the UAE are required to engage with a local sponsor. For a Limited Liability Company (LLC) the foreign party can only hold a maximum of 49% of the shares and are required to partner with either an Emirati individual or 100%-owned Emirati business to hold the majority 51% share. Enabling 100% foreign would significantly increase the attractiveness of doing business in Abu Dhabi and increase investor confidence, whilst reducing risk. At the moment, it is yet to be announced whether this will be for all new companies setting up here, sector specific or based upon the size of the entity.
The local media has announced that some activities which are currently restricted to 100% Emirati ownership will be opened up to foreign ownership, but with an Emirati local partner.
Currently, it is possible to own a company 100% in the UAE. 100% foreign ownership is possible onshore for Foreign Branch structures or in the free zones.
Since the announcement was made, some changes have already been seen to be implemented. In July, Administration Decree No. 219 of 2018 was passed relating to dual licensing for free zone entities. This means, licensed entities in Abu Dhabi free zones can apply to the Department of Economic Development (DED) to request a license to carry out their activities onshore.
Some Dubai free zone authorities have slashed their prices to become more competitive.
The DED has announced an expansion of its Tajer package which currently enables Emiratis to setup a business and work from home. The new Golden Tajer is opening up to all GCC nationals and UAE residents and is increasing the number of eligible activities to 1,057, all exempt from requiring a commercial premise. At the time of going to print, this was yet to be implemented for expat residents, but if/when implemented will be a significant boost and huge cost saving for entrepreneurs not needing an office space.
The DED has launched a centralised platform for the private sector, Sharakah, which will enable those companies which have provided services to the government and not yet been compensated, to claim.
How Gateway can help your business expand into the UAE
Gateway Group will assess your current position and future plans to guide you to the most appropriate location and legal structure for your new business. We provide a selection of local sponsor and service agent packages designed to protect your business and your profits. We also manage the whole commercial registration from start to finish so you don't have to worry about navigating government departments and processes or sourcing local service providers and instead you can focus on developing your business. Our on the ground experience and expertise means we can get your business registered quickly and smoothly so that you can mobilize your team to meet your contractual obligations. To get started with your Abu Dhabi or Dubai company set up email us Info@GatewayToUAE.com
Written by Jenny Hunt, Founding Partner & CEO
Gateway Group of Companies, Abu Dhabi & Dubai UAE
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