UAE announces ownership, visa reforms to lure foreign investors

File photo showing Sheikh Mohammed bin Rashed Al-Maktoum, Vice President and Prime Minister of the UAE (Reuters)
Updated 21 May 2018
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UAE announces ownership, visa reforms to lure foreign investors

  • The UAE has announced plans to permit full ownership and visa incentives to foreigners, hoping to attract investors and innovators.
  • The decision will allow foreign investors 100 percent ownership of companies, coupled with 10-year residence permits for them and their families.

DUBAI/ABU DHABI: The UAE’s decision to relax foreign ownership restrictions on local companies and grant longer visas will benefit the country’s economy and attract higher foreign direct investment, according to analysts, especially in the local real estate sector. 
The landmark policy change may prompt other Gulf countries to follow suit as the region drives non-oil growth. 
“Approval for 100 percent business ownership outside of free zones is a welcome development, which enhances the FDI potential of the UAE,” said Ayub Ansari, senior analyst at SICO Bank in Bahrain.
“This, in addition to longer term visas should incentivize expats to invest more within the UAE, making expat deposits more sticky.”
The state-run news agency WAM announced on May 20 that overseas investors would be allowed to own up to 100 percent of UAE-based companies by the end of the year. 
Currently foreigners can only own up to 49 percent unless a company, is based in one of the UAE’s free zones. 
The government also said it would allow long-term visas for up to 10 years for investors and specialists working in medical, scientific, research and technical sectors, as well as their dependents, according to WAM. 
“(We) await the fine print on the decision for a more meaningful assessment of the impact on the economy,” said Ansari. 
Foreign investment in the UAE represents a relatively low proportion of GDP, said Zahabia Gupta, associate, sovereign and international public finance ratings at S&P Global.
“For the UAE as a whole, foreign direct investment inflows currently comprise less than 3 percent of GDP. 
“Allowing foreign investors to own 100 percent of companies should help attract higher investment into the UAE and could facilitate the transfer of technologies and skills to UAE companies from their foreign owners,” she said. 
She added that the policy could drive growth in non-oil sectors such as retail, trade, and manufacturing. 
The decision to grant longer-term visas is forecast to impact the local real estate sector in particular. It has languished in recent years thanks to increasing supply and sluggish economic conditions. 
The visa move “will surely boost the performance of the real estate sector and give comfort to the investors there and especially property owners,” Marie Salem, director of capital markets at FFA Dubai, told Reuters. 
Shares in Emaar Properties, the UAE’s largest listed real estate devloper, rose 2.9 percent yesterday to their highest level in nearly two weeks. 
The rest of the Gulf region is likely to follow the UAE’s lead in relaxing rules around foreign ownership in an effort to encourage greater foreign investment, said Gupta. 
“Other GCC countries, including Saudi Arabia and Qatar, are also implementing or planning to implement similar measures,” she said. 
“We believe that this will, over the medium term and in conjunction with other business-friendly regulations, support the governments’ efforts to gradually diversify Gulf economies away from their dependence on hydrocarbons.”
The UAE and Saudi Arabia both introduced value-added tax at the start of this year with the aim of creating a new source of non-oil government revenue. 
A report by rating agency Moody’s Investors Service, published yesterday, warned that the UAE’s main credit challenge remains its “fiscal reliance on hydrocarbons.”
Oil revenue represented 42 percent of total government revenue in 2017, compared to 70 percent in 2014, according to the report. 
The price of oil — which fell below $30 per barrel in early 2016 — has recovered to around $80 per barrel, thanks to an agreement led by Saudi Arabia and Russia to curb production, which has coincided with an increase in global demand. 


Sudan protests rumble on as Bashir remains defiant

Updated 32 min 17 sec ago
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Sudan protests rumble on as Bashir remains defiant

  • Rights group Human Rights Watch has put the death toll at 40, including children and medical staff
  • Bashir has remained steadfast in rejecting calls for him to resign

KHARTOUM: One month after protests erupted across Sudan against rising bread prices, anti-government demonstrations have turned into daily rallies against a defiant President Omar al-Bashir who has rejected calls to resign.
Protest organisers have called for a march on the presidential palace in the capital Khartoum on Thursday, along with simultaneous demonstrations in several other cities.
Authorities say at least 24 people have died since the protests first broke out on December 19 after a government decision to triple the price of bread.
Rights group Human Rights Watch has put the death toll at 40, including children and medical staff.
The protests have escalated into nationwide anti-government demonstrations that experts say pose the biggest challenge to Bashir since he took power in an Islamist-backed coup in 1989.
"I have been demonstrating and will continue to demonstrate until this regime is overthrown," vowed Adel Ibrahim, 28, who has participated in demonstrations in Khartoum.
"We are protesting to save our future and the future of our homeland."
Protests initially broke out in the eastern town of Atbara, which has a history of anti-government sentiment, and within days spread to other provinces and then to Khartoum.
Cities like Port Sudan, Gadaref, Kassala and agricultural regions that previously backed Bashir saw protests calling for him to step down, while the western region of Darfur too witnessed rallies against the 75-year-old veteran leader.
Using social media networks to mobilise crowds, most protesters have marched chanting "Peace, freedom, justice", while some have even adopted the 2011 Arab Spring slogan -- "the people want the fall of the regime".
Crowds of demonstrators, whistling and clapping, have braved volleys of tear gas whenever they have taken to the streets, witnesses said.
"There's a momentum now and people are coming out daily," said prominent Sudanese columnist Faisal Mohamed Salih.
"Even the authorities are astonished."
Although the unrest was triggered by the cut in a vital bread subsidy, Sudan has faced a mounting economic crisis in the past year, including an acute shortage of foreign currency.
Repeated shortages of food and fuel have been reported across cities, including in Khartoum, while the cost of food and medicine has more than doubled.
Officials have blamed Washington for Sudan's economic woes.
The US imposed a trade embargo on Khartoum in 1997 that was lifted only in October 2017. It restricted Sudan from conducting international business and financial transactions.
But critics of Bashir say his government's mismanagement of key sectors and its huge spending on fighting ethnic minority rebellions in Darfur and in areas near the South Sudan border has been stoking economic trouble for years.
"If this regime continues like this, we will soon lose our country, which is why we have to fight," said Ibrahim, who has been looking for a job for years.
An umbrella group of unions of doctors, teachers and engineers calling itself the Sudanese Professionals' Association has spearheaded the campaign, calling this week the "Week of Uprising".
"Protesters don't even know the organisers by names, but they still trust them," said Salih.
Sudanese authorities led by the feared National Intelligence and Security Service (NISS) have cracked down on protesters, drawing international criticism.
More than 1,000 people, including protesters, activists, opposition leaders and journalists have been arrested so far, rights groups say.
Bashir has remained steadfast in rejecting calls for him to resign.
"Demonstrations will not change the government," he told a rally in Darfur on Monday as supporters chanted "Stay, stay".
"There's only one road to power and that is through the ballot box. The Sudanese people will decide in 2020 who will govern them," said Bashir, who is planning to run for the presidency for the third time in elections to be held next year.
Two uprisings in Sudan in 1964 and 1985 saw regimes change within days, but experts say this time protesters have a long road ahead.
"At the moment, Bashir appears to have the majority of the security services on his side," said Willow Berridge, a lecturer at Britain's Newcastle University.
Bashir's ruling National Congress Party has dismissed the demonstrations.
"There are some gatherings, but they are isolated and not big," party spokesman Ibrahim al-Siddiq told AFP.
The International Crisis Group think-tank said Bashir might well weather the unrest.
"But if he does, it will almost certainly be at the cost of further economic decline, greater popular anger, more protests and even tougher crackdowns," it said in a report.
Salih said protesters appeared to be determined.
"But the one who tires first will lose," he said.