By Lynne Roberts
The country is to allow 100% foreign ownership of some companies, minister says.
The UAE will begin allowing 100% foreign ownership of companies in certain areas of the services sector, the country’s minister of economy said on Monday.
Sheikha Lubna Al Qasimi said that the long-awaited revised Companies Law being drawn up would open up some areas to full foreign ownership, while permitting greater foreign participation in other areas, such as the financial services sector.
"Under the new Companies Law, the UAE may allow foreigners to own 100% of companies in the services industry," she said during a press conference in Abu Dhabi.
Currently foreign investors are only permitted to own a maximum of 49% of a UAE company. In certain areas of the financial sector, such as insurance, the limit on foreign ownership is as low as 25%.
Sheikha Lubna indicated the new law would allow majority foreign ownership in some areas of the financial services sector.
Full foreign ownership is allowed in the UAE, but it is restricted to ‘free zones’ like Dubai Media City (DMC) and Dubai Internet City (DIC), and the Jebel Ali Free Zone.
The announcement to allow greater foreign investment in UAE companies is in line with recommendations made by the World Trade Organisation (WTO) last year.
Sheikha Lubna said the revised Companies Law would be ready to go to the cabinet by the end of the summer, but could not say whether it would be passed into law before the end of the year.
The minister admitted the process has taken longer than expected, adding that the delay is not good for the UAE economy.
The country is looking to significantly increase the amount of foreign investment coming into the emirates as it continues to expand its economy and develop its infrastructure.
The UAE has experienced substantial growth in foreign investment over the last few years, but its restrictions on full foreign ownership have been sited as factors holding back greater investment.
Net foreign direct investment (FDI) into the UAE last year was $12.8 billion, compared to $11 billion in 2005, and $9.2 billion the year before, according to International Monetary Fund (IMF) figures quoted by the Central Bank of the UAE.