UAE eyes law allowing full foreign ownership of firms by year-end

Zawya Dow Jones/Dubai

 The UAE, which is enjoying an economic revival on the back of stronger trade and tourism, expects to have a new investment law passed before the year-end that will allow foreigners full ownership of companies in industries that could potentially benefit the country’s economy.

Economy Minister Sultan bin Saeed al-Mansouri told Dow Jones on Tuesday that “the economy ministry has set up a draft of a new investment law that would entitle foreigners to 100% ownership of companies.”

He said he was working on having the new investment law passed before the year-end.

Under current regulations, foreigners are entitled to only 49% ownership in companies that are registered outside the free zones. The law currently requires foreign businesses to have a UAE national as partner or sponsor. This has held back potential foreign entrepreneurs who are wary of investing millions of dollars without having clear exit strategies.

Previous attempts to revise the companies’ law have failed despite years of deliberation, as economic committees from various emirates saw no benefit from such a law. Therefore, the new investment draft-law will include “some conditions that serve the economy of UAE and introduce job opportunities and serve certain industries-such as the aluminium sector,” al-Mansouri said.

The minister said he expects foreign direct investment in UAE to grow by 15% in 2013 from $7.6bn last year.

Most investment has poured into the hospitality and tourism sectors, according to the minister. Saudi Arabia was the top Arab investor in the UAE last year, he added, but didn’t give further details. The travel and hotel sectors in the country are set to boom, according to industry sources. The UAE National Council for Tourism and Antiquities expects a 10% on-year growth in hotel clients to 15.4mn in 2013.