UAE reforms intensify Gulf rivalry, herald ‘new dawn’ for economy
The United Arab Emirates’ decision this week to allow foreigners to fully own their businesses in Dubai or Abu Dhabi, and no longer require local partners, has greatly intensified rivalry with Qatar and Saudi Arabia.
The UAE further raised the stakes with its fellow GCC member states by signalling on Sunday that some expat professionals, including investors, will qualify for new 10-year residency visas.
The measures, which are expected to come into effect by the end of the year, have been greeted with unanimous enthusiasm from across the economy. Speaking to Abu Dhabi’s The National newspaper, legal firm Clyde & Co described the new foreign ownership laws as a “game changer” for thousands of foreign businesses operating across the seven Emirates that together make up the UAE.
The unprecedented announcement this week by Sheikh Mohammed bin Rashid al-Maktoum, prime minister of the UAE and ruler of Dubai, is widely seen as a strategic move if the UAE is to successfully diversify its economy from a traditional reliance on oil and gas revenues. Securing a deep pool of talent as part of a large and skilled workforce will be central to achieving this goal.
Khatija Haque, the head of Middle East and North Africa research at Emirates NBD, told Bloomberg “The UAE needs to keep pace or stay ahead if it doesn’t want to lose its competitive advantage. When oil was at $100 a barrel for several years there wasn’t that much need to attract foreign investment. Clearly that has changed.”
With cost of living rising steeply for expats and Emiratis alike, the new laws will allow for much greater inflows of FDI, with foreign-owned companies no longer restricted to the specialised free trade zones. Dubai and Abu Dhabi are seen as having the edge over rivals in the region for their infrastructure and attractive, foreigner-friendly, setting. The government is hoping the new laws will encourage many more professionals to remain in, or relocate to, the UAE, a country where Emirati nationals make up around 15% of the total population.
Yet in other respects the country has a long way to go. In Turkey, 64% of shares listed on the Borsa Istanbul are foreign-owned, compared with 12.9% in Dubai, 6.5% in Doha and just 5% in Riyadh.