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KT edit: 100% ownership to bolster UAE’s position as a finance hub

Filed on May 19, 2021

The foreign direct investment in the UAE grew by 44.2 per cent in 2020 compared to the previous year and reached a record total of $19.88 billion.


The legislation allowing full ownership of businesses in the UAE by foreigners has been some time in the making. It is a significant step, a move away from the traditional approach of slightly restrictive participation which offered a choice between taking on a majority Emirati partner or choosing a free zone. Both approaches had perceived drawbacks but now the UAE is looking for deeper engagement with investors and allowing them more scope in running and managing their businesses here.

The new laws are coming into effect from June 1, ushering a seminal change that will lay the foundation of growth for the UAE in next 50 years. It is a coincidence that such reforms are now being coupled with the UAE’s post-pandemic strategy. The investor confidence in the UAE has risen manifold in the last few years. The deft handling of the pandemic, support extended to businesses and individuals, and the quick bounce back without jeopardising the health of the residents and citizens have not gone unnoticed.

The foreign direct investment in the UAE grew by 44.2 per cent in 2020 compared to the previous year and reached a record total of $19.88 billion. This is at a time when the UN estimates show that the global foreign direct investment flows decreased by 42 per cent in 2020. The rise in FDI is a nod to the rising confidence in the UAE and marks a clear shift in policy that is more supportive of economic activity, boosting investment and putting in place a framework to future development. The coming into effect of foreign ownership law will further solidify the UAE’s position as the leading finance hub in the region. This change along with a slew of reforms announced on the residency front is bound to increase investor interest and help the UAE counter some of the challenges posed by the transitory nature of population in the country.

And while the emirate is welcoming more people and investors, it is also doing so responsibly. Over the last few years, the UAE’s central bank and the government have put in place several checks and balances that vet the source of money coming in. Gone are the days when unaccounted money was easily brought in and deposited in bank accounts without any questions asked. The banks now follow strict ‘know your customer’ rules and the financial system on the whole has been keeping up with the international best practices. The changes made to rules on money laundering and terror financing speak for themselves. The UAE is opening up more to investors and doing so in a responsible manner.





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