Dubai:A new law allowing 100 per cent foreign ownership of companies in the United Arab Emirates will only apply to some sectors of the economy, limiting the risk that it could disrupt existing business, Dubai investment officials told Reuters.
The UAE cabinet, chaired by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum, said in May that it would permit 100 per cent foreign ownership of some UAE-based businesses, up from the current 49 per cent limit, by the end of 2018.
Few details of the law have been revealed so far. But Raed Safadi, chief economic advisor at Dubai’s Department of Economic Development, said on Monday that it would only apply to “strategic sectors” of the economy.
This means it will not damage the interests of UAE citizens who currently benefit from acting as silent partners in foreign-invested businesses, Safadi said.
In fact, the new law will create opportunities for UAE citizens because “they have a lot to offer in terms of knowledge of local markets, the networks and the connectivity,” he added.
Fahad Al Gergawi, chief executive of the Dubai Investment Development Agency, said: “We are not targeting the sleeping partners’ businesses, because these are small businesses. We are targeting strategic, impactful businesses which will leave their fingerprints on the economy and create a meaningful impact on jobs, technology, and boost imports and exports.”
Special business areas in Dubai known as “free zones”, which already permit 100 per cent foreign ownership, could also be affected by the new law, because they will lose one of their unique advantages.
Safadi said, however, that Dubai’s free zones had unique business models which made them individually attractive, and that they were adjusting to “structural pressures” presented by the new law.
Ahmed Bin Sulayem, executive chairman of the Dubai Multi Commodities Centre, a free zone focused on commodities trade, said free zones were diverse enough to cope with the law.
“You are looking at a big market, representing over 15,000 businesses, and almost 100,000 people live and work there…People go there not just for the 100 per cent ownership and the tax-free facilities that we provide; they go there to be connected to the market, to not miss out,” he said.
Foreign direct investment commitments to Dubai rose 26 per cent from a year earlier to $4.84bn in the first half of 2018, according to official data.