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

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. 

Iran must stop supporting militias for peace offer to be taken seriously: Expert 

Updated 26 May 2019

Iran must stop supporting militias for peace offer to be taken seriously: Expert 

  • Iran has for long pursued a policy of outsourcing its meddling to external militias
  • Among these are the Hezbollah in Lebanon and the Houthis in Yemen

JEDDAH: Iran needs to dismantle its proxies and end its interventions in Arab affairs before seeking to normalize relations with its Gulf neighbors, a political expert told Arab News on Sunday.

“The Gulf countries have been calling for normal relations with their neighbors for years, but their calls have fallen on deaf ears on the Iranian side,” Hamdan Al-Shehri, a political analyst and international relations scholar, said.

Accusing Tehran of “playing games,” Al-Shehri described Iranian Foreign Minister Mohammad Javad Zarif’s suggestion that Iran wanted to improve relations with its Gulf neighbors as worthless “as long as it continues meddling in the affairs of other countries, and fails to halt its evil militias from sabotaging and destabilizing regional security.”

Iran has for long pursued a policy of outsourcing its meddling to external militias, which indirectly supports, such as Hezbollah in Lebanon and the Houthis in Yemen. 

Zarif, who is on a two-day visit to Iraq, told a joint news conference in Baghdad with his Iraqi counterpart Mohammed Al-Hakim that Iran wants to build balanced relations with its Gulf Arab neighbors and had proposed signing a non-aggression pact with them.

However, Al-Shehri said that Tehran needs to address three key issues — its nuclear program; its terrorist militias, which have been spreading chaos in the Gulf region and beyond; and its ballistic missile program — before making any such proposals.

“The question is, would Iran be ready to give up all three files? If they want their neighbors to accept them and normalize relations with them, they have to be honest and stop playing games,” he said.

Al-Shehri described Zarif’s regional tour as an attempt to rally support and send a false message that Iran has friends and allies who would stand by them in their crisis with the US.

“Where were these countries when Iran’s terrorist proxies in Yemen, the Houthi militias, launched missiles and drones attacking the holiest Islamic site in Makkah and other Saudi facilities?” Al-Shehri asked.

Zarif said Iran will defend itself against any military or economic aggression, calling on European states to do more to preserve a nuclear agreement his country signed.

“We will defend (ourselves) against any war efforts, whether it be an economic war or a military one, and we will face these efforts with strength,” he said.

Strains have increased between Iran and the US following this month’s sabotage attack on oil tankers in the Gulf. Washington and other regional allies have concluded that Iran is most likely behind the attacks. 

Tehran has distanced itself from the bombings, but the US has sent an aircraft carrier and extra 1,500 troops to the Gulf, sparking concerns over the risk of conflict in the volatile region.