Foreign companies will for the first time be allowed to own 100 per cent of a business outside of a free zone in the UAE, the Minister of Economy said.
At a the Annual Investment Meeting in Dubai on Monday, Sultan Al Mansouri promised a new “law of Foreign Direct Investment that allows 100 per cent ownership in some sectors outside free zones”.
The law is intended to encourage innovation and technology transfer. It will likely require foreign companies that are granted 100 per cent ownership rights to provide support or expertise to sectors identified by the government as strategically important. It would only apply to some industry sectors.
The Ministry of Economy declined to state which sectors would see a relaxation of foreign ownership restrictions, and did not say when the law would be introduced.
A first draft of the law has been approved by a Ministry of Justice committee, and the Cabinet. It will now be redrafted by the Ministry of Justice, before it is sent to the Federal National Council and the Cabinet for approval.
Mr Al Mansouri said that the forthcoming Companies Law and Commercial Arbitration Law should also make the regulatory environment more friendly for foreign investors.
Foreign direct investment inflows to the UAE increased by 25 per cent to $13 billion in 2014, up from $10.4bn the previous year, Mr Al Mansouri said. The country was ranked 11th in last year’s AT Kearney Foreign Direct Investment Confidence Index.
The UAE has traditionally been a net investor in foreign countries, due to the sizeable holdings of its sovereign wealth fund, and considerable financial reserves. Total outflows were equal to around $100bn last year, Mr Al Mansouri said.
But the new FDI law is aimed at making the country more attractive to inward investment, which the Ministry of Economy regards as important “to build an economy that is based on knowledge, innovation and creativity”, Mr Al Mansouri said.
Mr Al Mansouri also announced that the UAE had set itself two new economic policy targets.
The country aims to reduce its dependence on oil revenues to below 10 per cent of Gross National Product “in the upcoming years”, he said.
He also expressed a desire that the UAE should be among the top 10 countries in the World Bank’s Ease of Doing Business Index. The country was ranked 22nd globally in the 2015 index.
“UAE government is strongly committed to removing bureaucratic hurdles that face foreign investors,” Mr Al Mansouri said.
Originally appeared on: The National