New UAE investment law: 100% foreign ownershipRoemarie Ann Periabras
New UAE investment law: 100% foreign ownership
UAE’s game-changing investment law, which will allow up to 100% ownership to foreign investors in some specific onshore business sectors, is expected to prop up private and foreign direct investments when it will be finally introduced in the last quarter of this year, economists and analysts said.
Experts said, the law, eagerly awaited by the business community, was widely expected to be introduced in the first quarter of 2018 and is expected to change not only the investment landscape of the UAE, but also create significant growth opportunities by attracting more foreign direct investments.
Focus Economics’ panel of economists said while a new investment law set to be unveiled by the end of year should further boost FDI inflows, looser fiscal policy, and notably large investments in infrastructure, should prop up growth in the non-oil economy by supporting private investment momentum.
Sultan bin Saeed Al Mansouri, Minister of Economy, has said the final draft of the landmark law is awaiting the UAE Federal National Council approval before it becomes a law by the last quarter of 2018.
Forecasting the GDP to expand 2.7% in 2018. For 2019, the panel sees the economy growing 3.2%. According to the panelist, “This, along with higher oil prices and tourism, is poised to help private consumption bounce back from the VAT implementation. On the other hand, the Opec agreement should keep oil output largely stable in the year. The main risks are a flare up of regional tensions, which could harm investment, and a downturn in oil prices”.
Economists said the UAE has been working on several other bold reform initiatives, including the bankruptcy law, to boost investor confidence over the past several years. The UAE bankruptcy law, which allows companies in financial distress to restructure, has already come into effect.
The new UAE Commercial Companies Law, which was introduced last year, contrary to the expectations of the global investor community, did not amend the 49% limit on foreign ownership. Under the new CCL, a foreign investor can only own a maximum of 49% of a locally incorporated company, apart from companies incorporated in a free zone in which they can own 100%. In a public joint stock company, while there is no 51% UAE ownership needed, but there is a 51% GCC stake-holding requirement.
Source: Khaleej Times