Saturday, 30 August 2008 |
20:28 UAE time
Abu Dhabi’s private sector must be overhauled in order to boost its contribution to the emirate’s domestic economy, the Department of Planning and Economy (DPE) said on Saturday.
The private sector contributed 18.2% to Abu Dhabi’s gross domestic product (GDP) in 2007, up from 17% in 2006 and 15.5% in 2005, according to a DPE report carried on state news agency Wam.
However, the economic outlook report said the private sector needed to make better use of the available government incentives and “stimulating policies” to boost its capacity.
“The private sector needs to do more to increase its participation in the domestic economy… private companies will have to examine strategic and operational options in light of fluctuated conditions that could come along with fast-moving liberalisation of world economy,” the report said.
The contribution of the private sector to the economic development is not "meeting expectations", the report said.
”The sector suffers from structural defects that need comprehensive remedies. It also faces obstacles hindering it from integrating into global economy. This requires overall restructuring to enable it keep abreast with requirements and developments of the current stage,'' it said.
The DPE also said that the private sector would face unprecedented challenges.
''The emirate of Abu Dhabi is currently undertaking a massive government restructuring programme to come out with a formula of governance that could produce a sustainable constructive public-private partnership,” the report said.
Initiatives launched by the policy agenda of the government of Abu Dhabi for 2007-08 would open up “new, huge diverse opportunities” for the private sector to enter into a strategic partnership with the government.
A package of major economic policies would also be released to provide a stimulating business and investment environment under which a range of mega strategic development projects would be launched, the report said.
The UAE government has been promising changes to foreign investment laws for at least a year, as it looks to boost the private sector and diversify its economy away from oil-related revenues.
The contribution of the oil and gas sector to the emirate’s GDP also dropped to 65.7% in 2007 from 66.3% in 2006.
Full foreign ownership is allowed in the UAE, but it is restricted to free zones such as Dubai Media City (DMC), Dubai Internet City (DIC) and the Jebel Ali Free Zone.
Earlier this month the government said it may relax foreign investment laws to allow 100% international ownership of projects, particularly in the petrochemical, aluminium and iron sectors.
RELATED: UAE looks to allow 100% foreign ownership
The legislation would be part of the government's efforts to encourage investment in the emirate as it looks to spend $200 billion transforming the capital into an ultra-modern city over the next 12 years, under its Abu Dhabi Plan 2030 development strategy.
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