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UAE Foreign Investment Law by 2008

The law will seek to regulate incoming foreign investment into the UAE, introduce best practice, and provide investors with a "one stop" legal reference point for foreign investors.

Speaking to Khaleej Times, Aref Al Farra said: "We hope to have a draft to share with stakeholders in the next few months. By the end of the year we hope to have a draft investment law in place."

Although the new law will not standardise all laws and regulations throughout the country "it will, at least, provide foreign investors with certainties about the main issues they would be looking at," he said. "What we are trying to do is to provide, at least, a common denominator — a standard law governing foreign investment," he explained.

Drafting the law is proving complicated because each emirate has different standards when it comes to foreign investment, whether it concerns incentives or land ownership, for example.

As it stands "some northern emirates might give you land for free," Al Farra explained. These differences mean that it is not, as yet, possible to provide more details about the contents of the law.

"The law is not only about procedures but also about providing transparency," added Al Farra. "When he/she comes to invest in the UAE they need one law instead of the myriad of laws and regulations, which might be confusing."

A foreign investment law is important, not merely to facilitate a greater inflow of foreign capital, but also to encourage foreign investors to invest in new and innovative ideas, including start-up companies.

In this respect the pending UAE Competition Law will also help. The law, modelled on the anti-trust laws in the US and other developed countries, will legislate against companies engaging in monopolistic and anti-competitive practices thereby affording greater business opportunities to small and medium sized enterprises (SMEs). As is the norm in other parts of the world, SMEs will be excluded from the pending law, as their size means they would be unlikely to be able to carry out monopolistic practices.

According to Al Farra, the Competition Law, which in its final draft stages, is likely to be issued this year, "either before or after the summer."