The UAE’s move to allow foreigners to fully own businesses in the country is set to be a boon for British firms and investors, according to experts.
The new law, which allows nationals from any country to own 100 percent of businesses, is the latest move to boost the economy’s competitive edge and make the country more expat-friendly.
The landmark business reforms will prompt an “unprecedented explosion” of foreign direct investment in Dubai and Abu Dhabi and will cement their growing status as major international financial centres, said Nigel Green, CEO of UK-headquartered financial advisors, deVere Group.
“This is especially the case after the UAE government in September changed legislation so that expatriates are now legally able to remain in the country long after they retire,” said Green.
The new commercial ownership law, coming close on the heels of the decisions on long-term stay visas and remote working for professionals, is expected to lead to an influx of new UK businesses setting up shop as they seek new growth markets in a post-Brexit era.
The UAE-UK trade relationship spans over decades, with the UK being the fourth largest export market outside the EU and home to over 120,000 UK nationals. Separately, 1.5 million Britons visit the country from the UK every year, according to the British Business Group.
“As the UK’s largest trading partner in the region, we welcome the UAE’s company ownership law, which will benefit UK investors into the UAE,” a spokesperson at the UK Department of International Trade (DIT) spokesperson told Arabian Business.
“Expo 2020 Dubai next year presents an exciting opportunity for the UK to showcase innovation and creativity on a world stage, strengthening trade and investment ties between the UK and the UAE,” the DIT added.
Transformative approach
According to David Holloway, senior lecturer in Law at the University of Birmingham Dubai, the new decree confirms a “transformative approach” to foreign investment in the UAE.
“While certain strategic sectors, such as oil and gas, appear to be exempt from liberalisation, the new law will certainly incentivise inward investment into the UAE in the lead up to Expo 2021.
“There is an immediate appeal to UK-based investors seeking post-Brexit markets, particularly those operating in the construction industry, as well as financial and commercial services sectors,” Holloway told Arabian Business.
Scott Livermore, chief economist at research group Oxford Economics Middle East
Strong links
Scott Livermore, chief economist at research group Oxford Economics Middle East, said the new rules for company ownership, combined with changes to visa regulations and local laws, makes the UAE even more attractive as a base for UK companies wanting a foothold in the GCC and even to serve parts of Asia.
Given the already-strong links between the UK and the UAE, the changes encourage businesses and individuals to “invest in the UAE and build longer-term relationships,” he said.
Joe Hepworth, CEO at company set-up firm British Centres for Business, explained that the removal of the need for local Emirati investor to hold 51 percent of UAE foreign companies has “cleared up a long-time concern.”
Joe Hepworth, CEO at company set-up firm British Centres for Business
“UK companies naturally gravitate to the UAE, and that pull just became even stronger,” he said. “Coming at this time with Brexit looming, we know that UK companies are looking for alternative markets and ease of doing business – non-tariff barriers are key factors for any such consideration.
“This is very good timing from a UK perspective and further establishes the UAE’s credentials as the pre-eminent business hub for the MENASA region.”
Freezone limits
Mandip Kaur Dulay, founder and chief strategy officer of Dubai-based strategy firm Impact Group hailed the new commercial law as a game-changer for UK-UAE relations.
“Free zones have previously been the default position for foreign companies who wish to trade in the country, however they have limits and can prevent bidding for public sector opportunities and often present challenges when setting up bank accounts with high-street banks,” she said.
“This new law will attract new businesses to the shores of the UAE and provide a compelling market for British companies to trade from, without the bureaucracy of a local service agent, which may have deterred businesses entering new territories. That said, the challenges around cost, time and taxation will need to be explored and considered further.”
Dulay said the new law would encourage more British companies to consider the UAE as their new home – bringing new solutions, talent, and competition.
“The UK offers some of the world’s most creative minds and talented professionals, which have fuelled the creative industry, launch of innovative technology and enhanced infrastructure,” said Dulay.
“This new law will enable British businesses to share their experiences and talent with the UAE, which look to become one of the world’s most innovative and future-ready countries,” she added.
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