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Tue 9 Oct 2018 09:29 AM

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New UAE foreign ownership law won't harm Emirati partners, freezones, officials say

UAE officials believe that the diversity and business models of freezones mean they will adjust to the new regulations allowing 100 percent foreign ownership of certain businesses in the country

New UAE foreign ownership law won't harm Emirati partners, freezones, officials say
In May, the UAE Cabinet approved the 100 percent foreign ownership of companies in the country, which had previously been limited to those companies based in freezones.

The new UAE rules that will allow 100 percent foreign ownership of companies will only apply to some sectors of the economy, and the disruption it causes to existing businesses will be limited, according to local officials.

In May, the UAE Cabinet approved the 100 percent foreign ownership of companies in the country, which had previously been limited to those companies based in freezones.

Although few details of the regulations have been revealed by UAE authorities yet, Raed Safadi, the chief economic advisor of Dubai’s Department of Economic Development (DED), said in an interview with Reuters that the law will only apply to “strategic sectors” and will therefore not harm the interests of Emiratis who currently serve as silent partners in foreign-invested businesses outside the country’s freezones.

“They [Emiratis] have a lot to offer in terms of knowledge of local markets, the networks and the connectivity,” he said.

Safadi also downplayed concerns that the new ownership laws would damage the business of freezones, saying that they will continue to have attractive business models and would adjust to the “structural pressures” presented by the law.

Similarly, Fahad Al Gergawi, the CEO of the Dubai Investment Development Agency, is quoted as saying that the UAE is “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,” he said.

Additionally, Ahmed bin Sulayem, the executive chairman of the Dubai Multi Commodities Centre (DMCC) was quoted as saying that the diversity of freezones means that they will be able to adjust to the new regulations.

“You are looking at a big market, representing over 15,000 businesses,” he said. “People go there [freezones] not just for the 100 percent ownership and the tax-free facilities that we provide. They go there to be connected to the market, to not miss out.”

Foreign direct investment (FDI) into Dubai rose 26 percent - $4.84 billion - in H1 2018 compared to the same time period last year, according to new data from the Dubai Investment Development Agency (Dubai FDI), an agency of the Department of Economic Development (DED).