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The new UAE investment, residency and company reforms announced on Sunday signify a tectonic shift for the business and social ecosystems as the nation seeks to enhance its appeal as a prime hub for world class talents and big-ticket investors
The long-term residency reform aimed at attracting international investors, young talents and top-skilled professionals along with the landmark legislation allowing 100 per cent foreign ownership of companies will have infinite positive ramifications on the fortune of the second largest Arab economy, ensuring it a more sustainable and progressive transformation, analysts and economists believe.
The new changes, which are part of a string of reforms and pro-business initiatives being undertaken by the visionary government, are poised to open up the floodgates of talents and capital to the Emirates, which has already made a mark as one among the world’s top sought-after investment destinations, they said.
As His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, and Ruler of Dubai, has asserted through these game-changing reforms, the nation would remain a global incubator for exceptional talents and a permanent destination for international investors.
“Our open environment, tolerant values, infrastructure and flexible legislation are the best plan to attract global investment and exceptional talents to the UAE.”
The positive impact of the new changes will soon be felt across all sectors. The long-awaited decision to allow 100 per cent foreign ownership to onshore companies – thereby eliminating the need for an Emirati partner with 51 per cent stake – in some specific sectors will significantly boost investor confidence, while the 10-year residence rules for top-notch professionals and big-time investors will not only help retain their talents and capital but also trigger a huge inflow of such category of people from other global investment haven such as Singapore and Hong Kong.
Sultan bin Saeed Al Mansouri, UAE Minister of Economy, said the new reforms provide a distinct advantage to UAE’s competitiveness in attracting global investments and consolidating its position as a preferred destination for exceptional talents and competencies across different priority sectors and disciplines.
Al Mansouri said the new 100 per cent ownership system for global investors would bolster the UAE’s image on the global investment map while major global firms would be encouraged to set up branches in the country.
“Over the past years, several factors have succeeded in establishing UAE’s position as the first Arab country for attracting foreign investment. However, the new directives allowing 100 per cent ownership to foreign investors, the provision of 10-year visas for investors and their families and for those with advanced skills and expertise, represent a significant first step in developing a system of investment and development legislation in the country. It sends out a clear message that the UAE is one of the best destinations in the world for high-profile investors and investments, and also for innovators in various disciplines, all of which are pillars for building the economy of the future,” said the minister.
The current round of reforms, close on the heels of a new arbitration rule unveiled last week, is expected to prop up private and foreign direct investments when it will come into effect by the final quarter of this year.
“These transformational steps will not only change the investment landscape of the UAE, but also create significant growth opportunities by attracting more foreign direct investments (FDI), especially into the non-oil sectors, most notably in the real estate, healthcare, tourism and educational sectors,” analysts said.
Most economists expect an annual surge of up to 15-20 per cent in FDI flow once the investor-friendly reforms come into effect. In 2017, the UAE remained the main destination of FDI inflows at about $11 billion.
“By allowing 10-year residency, the UAE is offering a more secure and stable environment for professionals and investors and thereby prompting them to look at long term investment opportunity here instead of transferring their money to home countries. In fact, in 2017 alone, expatriates in the UAE sent home Dh164.3 billion. “If assured of a secure and permanent residency, they would not be inclined to do so in future. On the contrary, most of their funds will be used to buy property here,” said an investment adviser.
“We welcome the changes to residency visa regulations, which will undoubtedly have a positive effect on the UAE economy – and in particular the real estate sector,” said Nakheel Chairman, Ali Rashid Lootah.
However, most analysts are waiting for further clarity on 10-year residency visa for professionals – whether it is independent of local employers as in the case of “Permanent Residency” status in Australia or “Green Card” in the US. They also expect further clarity on the size of investments required to qualify for the long-term visa.
Under this regime, visas of up to 10-years will be granted for specialists working in medicine, science, research and technical fields – plus their families.
In the academic sector, the new visa rules will have a profound impact by allowing students to secure five-year visas while enabling “exceptional” graduates to remain in the country for 10 years. At present, all students have to renew their visa every two years.
Rules similar to the new 100 per cent foreign ownership of companies have existed in other GCC countries. Saudi Arabia announced a plan for a green card-like program in 2016 to be implemented over five years and to help reduce the kingdom’s reliance on oil. That program will allow employers to pay to hire foreign workers beyond the official quota.
Qatar said in 2017 it plans to introduce permanent residency to attract investors and some skilled workers.
Over the past several years, the UAE has been working on several bold reform initiatives, including the bankruptcy law, to boost investor confidence as it continues to position itself as one the most preferred investment destinations in the world with friendlier business environment, excellent infrastructure, relatively diversified economy, and political stability.
Source : Khaleej Times