Experts told Zawya that the new provisions will create significant growth prospects and attract more FDI
The region’s investment community has welcomed the UAE’s new initiative that entitles expatriate investors to 100 percent ownership of companies licensed and registered in the Emirates, with effect from December 1, 2020. According to experts, the new law, which amends Law No. 2 of 2015 on companies and their shareholding, will create significant growth prospects and attract more foreign direct investment.
The changes have opened many sectors to foreign investment and onshore companies will not require an Emirati shareholder.
The policy reform had initially been announced over a year ago, but on Monday the changes to the relevant legislation have been approved by the UAE President Sheikh Khalifa Bin Zayed Al Nahyan.
“This initiative was already planned and its implementation is welcomed by the investment community in the region. It offers great flexibility for additional foreign direct investments in the UAE in many sectors. In addition to attracting new companies and new capital, it will also attract new talents from around the world," Christophe Lalandre, Lombard Odier’s Senior Executive Officer for Abu Dhabi told Zawya.
MUFG’s Ehsan Khoman, Head of MENA Research and Strategy, said: "These amendments to ownership laws will not only enhance the business landscape, but also create significant growth prospects by attracting more FDI flows."
UAE now belongs to the world's 20 top economies for FDI. In its bid to diversify away from the oil trade, the emirate has been focusing on targeted efforts to draw investments.
The 100 percent foreign ownership in more than 120 economic activities across 13 key sectors will help in increasing FDI.
The top 25 list of the 2020 Kearney FDI Confidence Index was dominated by developed markets this year, with the UAE being one of three developing economies to make the cut alongside China and Brazil.
"The new provisions will further add to the UAE’s robust business operating environment, first-rate infrastructure and well-diversified economy, which will continue to position the country as one of the most preferred business locations across emerging markets," he added.
"The move is expected to boost foreign investment, and many of the changes come into effect at the start of December. Individual emirates can mandate some level of UAE national ownership in some sectors, and strategic sectors such as oil & gas exploration, transport and utilities are exempt from the new rules," the research team of Emirates NBD, Dubai's biggest bank, said in a note.
The amended law allows natural and legal persons to establish companies without the need for a specific nationality.
It also allows non-joint stock companies to engage in investment activities on behalf of third-parties if laws governing these activities allow it. All of this is expected to enable companies to prefer the UAE as their destination for business in the Middle East and North Africa.
"More new entrepreneurs will expand their activities in Abu Dhabi, Dubai and other emirates. More established companies will consider the UAE as their base for the GCC region and beyond," Lalandre from Lombard Odier said.
"The impact should not only be visible on the investment side. More broadly, real estate should also benefit from new skilled workers in the country, the retail sector would see more visitors, the hospitality industry would organise more events and welcome more guests. In other words, the entire eco-system of the UAE is gaining importance," he added.
Aster DM Healthcare, a leading healthcare services provider in the UAE, also welcomed the new provisions, saying it would ultimately boost the country's competitive advantage in several sectors.
"The law has allowed us at Aster DM Healthcare to take over 100 percent legal ownership of our hospitals, clinics and consulting business in Dubai, [and] the process is ongoing for our business in other sectors," said Dr Azad Moopen, Founder Chairman and Managing Director, Aster DM Healthcare.
"The development provides significant impetus to long-term players like us to strengthen our commitment to the market and also attract foreign companies to think of long-term investments in UAE, turning the country into a strategic hub for development in the region,” he added.
0 comments