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.