100% foreign ownership investment law in the UAE to catapult FDI, GDP growth

The UAE has recently announced a game-changing investment law which allows 100% ownership to foreign investment and valid for a particular business sectors. The new law is expected to bolster both private and Foreign Direct Investment (FDI) after its implementation in fourth-quarter of 2018. The business community eagerly anticipated the law to be introduced in the first quarter of 2018 but has now moved to the Q4.

Once introduced and properly implemented, it’s likely to overturn the entire investment landscape of the UAE inflicting significant impact on real estate companies in Sharjah following latest development and construction projects. It’s also directed to create amazing jobs and growth opportunities following increased Foreign Direct Investments (FDI) with non-oil sectors being more appealing.

The Minister of Economy, Sultan Bin Saeed Al Mansouri says that final draft of the decree has been submitted to the UAE Federal National Council and awaiting approval before taking effect in Q4 of 2018. A panel of economists revealed their thoughts that although the law is set to be enforced by end of the year, some visible results are already emerging in terms of boosted FDI inflows, large infrastructure investments and freer fiscal policy; all aimed towards expansion of non-oil economy.

Higher oil prices, increase in tourism and now this law is sure to help the private sector recover from the implementation of VAT. On the contrary, oil output is to remain stable all year long following the OPEC agreement. The panel of economists forecasted that GDP would expand to approximately 2.7% by end of 2018 and nearly 3.2% in 2019.

The group also expects annual rise in FDI low to more or less 20% once the law is implemented. Looking back in 2017, FDI inflows at almost $11 billion marked the UAE as primary destination which accounted for approximately 22% of the total Foreign Direct Investment (FDI) in the MENA region. It’s the open and diverse business environment, amazing infrastructure, economic and political stability makes the UAE most preferred investment destinations.

Economists also claimed that the UAE has several other initiatives in the books whereas previously introduced bankruptcy law boosted confidence of the investors over the last several years. The law also allowed restructuring of the corporations facing monetary distress. Real estate companies in Sharjah, as a result, came forth with amazing development projects that transformed the city’s infrastructure, making it one of the most precious and prestigious destinations in the UAE.

Along with the Commercial Companies Law of 2015 and the 2016’s Bankruptcy Law, this is again a considerable judicial step supporting continued betterment and acknowledgement of the UAE being a global investment centre and worthy of foreign/international investment. One outcome of the law however could be a stop to general standards by which national shareholders of the UAE enter into commercial schemes of negotiations as nominee shareholders.

Still, things are likely to turn in favour of the industry sector following implementation of the Investment Law. Everyone’s waiting for the results that’ll eventually come forth in due course.