UAE changing the rules on Foreign Direct Investment.
On Sunday the 20th of May, HH Sheikh Mohammed Bin Rashid Al Maktoum, announced plans to allow for 100% foreign ownership of businesses in the UAE. The announcement was widely welcomed across the UAE and indeed overseas, as the UAE looks to cement its position in the MENA region as a key investment location.
What will happen?
While the news has grabbed headlines across the world, the are yet to be any details released on the new law. With companies and investors waiting patiently to find out exactly how they can take advantage, many consultancies and agencies are speculating on the potential impacts. It is important to consider the possibilities, while also remaining focused on your current business strategy and plans.
One of the primary attractions of the many UAE Freezones is that companies can be 100% foreign owned. There is potential that some companies currently based inside the freezones will now look to come onshore and establish LLC companies with the relevant DED authorities.
However, there are certain license activities available within the freezones that are not available onshore, and vice versa, so unless there are amendments in these areas, companies may choose to remain in the freezones.
It is generally considered that activity type will play a large part in the eligibility of 100% foreign ownership, with areas such as retail, wholesale, and real estate obviously being high on investors agenda.
Throughout the UAE and the wider GCC, there are a number of high profile distributor agreements with international brands. The potential for these brands to establish themselves as foreign owned entities could lead to a big change in the retail landscape in the country.
When will we see the change?
The news announced last Sunday has been expected for sometime now, and did not come as a huge surprise to industry watchers in the region. It is generally considered that we will see the changes roll out before the end of 2018.
With development ramping up for Expo 2020, the news comes at a time, when the UAE is keen to attract increased foreign investment, and we will likely begin to see the impacts of these changes throughout 2019.