Dubai is the second largest out of the 7 United Arab Emirates (commonly known the UAE). Known for its luxurious lifestyles, modern architecture and bustling nightlife, Dubai is becoming home for the vast number of expats migrating there everyday.
Over the past three decades, Dubai has come a long way in terms of improvement of its trade and daily life and has earned the status of the world’s trade hub. Due to its strategic location, low logistical and operational costs, excellent infrastructure, international outlook and liberal government policies, Dubai is attracting investors in a big way. Activities such as trade, transport, tourism industry and finance have shown steady growth and helped the economy to achieve a high degree of expansion and diversification.
Dubai has been open to investors since the 1960’s and year on year, it has been relaxing it’s policies in order to attract entrepreneurs from all over the world.
In the year 2021, the UAE government announced a major plan to liberalize the economy and the stringent residency rules for foreigners, as the country sought to overhaul its finances and attract visitors and investment. Recently, especially post-Covid, the UAE government has rolled out various policies designed to counter the recent deterioration in the UAE’s growth prospects, the decline in its expatriate labour force, and to enable it to remain competitive as its Gulf neighbours pursue their own economic liberalisation programmes.
On June 1st, 2021, the UAE government passed a new law allowing foreign investors to hold a 100 percent stake in companies throughout the UAE (except for strategic sectors such as oil, gas, and defence). Previously, full foreign ownership was only permitted within the UAE’s designated Free Zones and selected economic sectors. Foreign investors could previously only own a maximum 49 percent stake in a business, with the majority stake being held by a local Emirati partner. This change in the legal and economic system have proven to be attractive to foreign investors who were subject to the decisions of the local Emirati partners and had to undergo a tedious legal process to set up their business. The new law no longer requires an Emirati chairman or half of the board comprising of Emiratis for joint stock companies throughout the UAE.
As per statistics, within the first 2 days of the introduction of law, 59 foreign investors reportedly took up 100 percent stakes in companies. It is believed that since the Free Zones are concentrated in Abu Dhabi and Dubai, liberalizing economic regulations outside of Free Zones can help attract economic growth especially in the UAE’s other five emirates – Ajman, Sharjah, Ras Al Khaimah, Fujairah, and Umm Al Quwain. With the advantage of custom duties and other taxes available in the Free Trade Zones, that shall assist them in leveraging the branding and influence with the UAE government. Full foreign ownership outside the Free Trade Zones could also start a trend as the UAE strives to make its entire business environment more competitive.
In November 2020, the UAE introduced new reforms to liberalise its social environment and place the UAE on a more secular footing, thereby making it a more attractive destination for expatriates to live and work.
New policies were introduced to tackle harassment against women, making the law more strict in this area. Reforms were made allowing expatriates to apply the laws of their country regarding divorce and inheritance; scrapping reduced sentences for “honour” killings; the decriminalisation of alcohol consumption and suicide; and the decriminalisation of couples co-habiting without being married.
The UAE has also been promoting female economic empowerment, a recent example arose by recently ordering all firms listed on its stock exchanges to have at least one woman member on their board of directors.
As per the old laws, expatriate’s enjoyed fewer rights and privileges than Emiratis, with the residency rights often being conditional on employment. This has meant that expatriates often had to leave the UAE after employment, taking their money with them and divesting any property or investments held there.
However, since January 2021, the UAE government has opened up a pathway to citizenship announcing that skilled professionals, including senior business executives, investors, scientists, doctors, and engineers, will be able to obtain UAE citizenship. With greater access to UAE passports, expatriates enjoy visa-free travel throughout the GCC, and can open bank accounts more easily and establish businesses. The UAE also introduced a retirement visa in 2020, to allow expatriates aged 55 and over to obtain a renewable five-year visa provided they meet certain financial criteria, such as having one million dirhams ($US 272,000) in a UAE bank account for foreign nationals.
The UAE has been credited as being more liberal with relaxed policies, building better infrastructure and amenities for their foreign workforces and establishing better connectivity to the world compared to other gulf countries. With the UAE continuing to innovate and reform in order to liberalise its economy in the interests of attracting foreign investment and talent, foreign firms are considering the UAE as their most favored hub for trade and investments.
With a few risk that undermines the delicate social contract between Emiratis and their government, UAE remains the most politically-stable investment destination in the Gulf with the UAE’s leadership actively working to convince its citizens that welcoming foreign investment and labour benefits the UAE and Emiratis.