Abu Dhabi to issue FDI licences allowing 100% foreign ownership

Abu Dhabi on Wednesday rolled out the ‘Foreign Direct Investment Law’, a game-changing initiative that allows foreign investors to hold 100 per cent ownership of their businesses within the emirate.

The Abu Dhabi Department of Economic Development (ADDED) said the FDI licence targets businesses with capital ranging from Dh2 million to Dh100 million or even higher.

The long-anticipated FDI licence, which is expected to have a far-reaching positive impact on Abu Dhabi’s business landscape, covers 122 different economic activities related to the agricultural, industrial and services sectors.

Mohammed Ali Al Shorafa, chairman of ADDED, said the chamber is committed to enhancing the local investment environment and strengthening the Abu Dhabi economy’s competitiveness through policies that provide more investment opportunities in various non-oil sectors.

The issuance of the FDI licence is in line with the provisions of Federal Law No (19) of 2018 regarding Foreign Direct Investment, and is part of the department’s efforts to further promote positive investment climate and thereby achieve sustainable economic development in Abu Dhabi, said Al Shorafa.

Although the landmark FDI law was passed in 2018, it was in April 2020 the law came into effect upon approval by the Federal Cabinet of the positive list of business activities allowed under the law.

Under the FDI Law, foreign investment above a 49 per cent will not be permitted in sectors which appear on a “negative list”. The UAE Cabinet has the discretion to amend the “negative list” by adding or removing sectors.

There are currently 13 sectors specified in the “negative list”, including banking, insurance, and commercial agencies.

Speaking to Khaleej Times, business analysts said this is a significant development for foreign investors that are interested in investing in, or already invested in, companies in the UAE. While Abu Dhabi has taken the first bold step, all other emirates are expected to implement the law.

Al Shorafa said the chamber also seeks to improve the emirate’s legislative environment, “ensuring the most ideal way to protect the rights of foreign investors, in accordance with the directives of the Abu Dhabi Government in attracting foreign direct investments to the emirate”.

The new licence further consolidates Abu Dhabi’s position as a global hub for investment and “ease of doing business”, said the chamber chief, adding that creating the list of investment opportunities within various economic sectors and activities applicable for foreign investments will deliver a strong positive impact to the emirate’s investment environment.

Al Shorafa said the FDI licence would “encourage investors, spur business development for foreign companies as well as attract businesses in technology and advanced industries” that contribute to the emirate’s economic diversification policy.

The implementation of the FDI law in Abu Dhabi “contributes to achieving various objectives such as expanding the base of foreign investments; increasing the size of capital flows; enhancing and diversifying local production; and increasing the emirate’s exports of goods and services,” he said.

Rashed Abdul Karim Al Balooshi, undersecretary of ADDED, said the beneficiaries of the FDI licence are foreign investors and residents in the UAE, including individuals, legal persons, and foreign companies that are engaged in FDI projects.

He pointed out that the current foreign investors in Abu Dhabi can benefit from this law by owning their projects by 100 per cent, with the aim of strengthening the efforts of the Abu Dhabi government in stimulating the private sector.

Al Balooshi emphasised that the procedures in securing the licence are fast and easy through ADDED’s Abu Dhabi Business Center (ADBC), which only require three key steps: submitting the licence application, obtaining the approval after fulfilling all conditions and completing all the required documents, and lastly, payment of fees followed by the issuance of the proposed licence under ‘Foreign Direct Investment’.

Al Balooshi said the FDI licence covers the practice of a wide array of business activities in the agricultural sector, including the cultivation of grains, leguminous crops, vegetables, fruits, citrus fruits, among others. In addition, activities that support crop and livestock production, seed processing for reproduction and many more activities within this vital sector are also covered by the licence.

Industrial activities permitted under the licence include manufacturing of food and beverages products, clothing and leather production, wood and cork products, as well as the production of plastics and synthetic rubber in its primary forms, fertilisers, pesticides, and other agricultural chemical products.

The list of service activities that can be practiced with the licence include legal consulting; accounting, auditing and tax advisory services; architectural and engineering activities; medical and dental clinics; veterinary activities; computer programming services; consultancy, research and development activities in science and technology, among other activities.

A total of 13 activities are currently not covered by the newly-issued licence, which include postal and telecommunications services; audio and video media related services; petroleum exploration and production; ground and air transportation services; activities related to investigations, security and military sectors; the manufacturing of weapons, explosives as well as military equipment, devices and clothing; printing and publishing services; banking and finance activities; payment and cash handling systems; commercial agents services; insurance activities, medical retailing such as private pharmacies; Haj and Umrah services; employment of labour, servants and recruitment of employees; activities related to poison control centres, blood banks and health quarantines; and finally, water, electricity and fisheries services.

issacjohn@khaleejtimes.com

• Abu Dhabi