The largest and the wealthiest emirate in the UAE with 95 percent of the total oil production coming from it, Abu Dhabi has been attracting foreign investments for a long time now. The Emirate has state-of-the-art infrastructure and proximity to Africa, Asia, Southern and Eastern Europe and of course the Middle East markets.
Abu Dhabi has always been a haven for the working professionals with permissible tax-free incomes and high employment standards. The Free zones are proving to be the perfect incubation points for the startups. Amidst all this comes the announcement of the new 100% Foreign Ownership Law that permits the establishment of 100-percent foreign-owned companies in Abu Dhabi. It is in line with the Federal Decree-Law No. (26) of 2020 amending the provisions of Federal Law No. (2) of 2015 on the Commercial Companies Law and its amendments by adding articles that permit the establishment of 100% foreign-owned companies in Abu Dhabi.
The Abu Dhabi Department of Economic Development had also unveiled a list of registered commercial and industrial activities that were open for ownership by natural and legal non-citizens.This basically permits the operations for 100-percent foreign-owned companies in all economic activities, except 85, of Abu Dhabi. The amended Commercial Companies Law came into effect on 1 June 2021.
International Business Magazine had approached Abu Dhabi Department of Economic Development (ADDED) to further understand the purpose of this decision and how organizations across the globe were acknowledging this new move from the Emirate.
Sharing his insights with us, His Excellency (HE) Mohammed Ali Al Shorafa Al Hammadi, Chairman of ADDED, established at the first instance itself that this move is aimed to contribute to the flow of foreign investments in Abu Dhabi.
The making of a foreign investment hub
The Emirate of Abu Dhabi has been established based upon the standards and practices of openness, which in turn led to promoting the leading and significant role of the private sector. This is linked to boosting the private sector’s contribution to the GDP, and in line with the economic diversification policies that helped increase the non-oil sectors’ contribution to the Emirate’s GDP. This was cited as one of the reasons for the rollout of the Foreign Direct Investment Law that introduces 100 percent foreign ownership. HE Mohammed Ali Al Shorafa explains that the 100 percent foreign ownership law has not only attracted foreign investments but has also supported the Emirate’s capability to hire competencies, motivate economic growth and boost the investor’s confidence.
The revised laws are expected to especially benefit businesses in next-generation, innovation-focused sectors that need to move quickly and decisively. Streamlining the setup process and shareholder requirement helps companies be more competitive, thereby strengthening Abu Dhabi’s value proposition for investors. Abu Dhabi has also launched the “Thrive in Abu Dhabi” Programme, which helps investors obtain the Golden Visa, and contribute to promoting and boosting the private sector’s contribution to the development process.
Diversified investment opportunities
ADDED has revealed that a series of incentives and programs in support of vital industries, official statistics show that FDI stock in manufacturing recorded 16.7 percent in 2020 from overall FDI Stock in Abu Dhabi, compared with 7.7 percent in 2007. Abu Dhabi has established partnerships and garnered investments from oil, gas and the hydrocarbons sector. It has also revealed that the mining and quarrying captured almost 19 percent of Abu Dhabi’s overall FDI stock in 2020 compared with 6 percent in 2007.
HE Mohammed Ali Al Shorafa Al Hammadi clarified that the proposed list of business activities was confined to a limited number of sectors and activities so that it could adhere with the national security and national interests of the state. The Abu Dhabi Investment Office (ADIO), the central government hub, was established to support global investors looking to grow in the Emirate. Any foreign expat can reach out via ADIO’s webpage.
With the entrepreneurs, for the entrepreneurs
Along with large corporate houses, Abu Dhabi is also promoting small and medium enterprises by launching programmes, initiatives and incentivizing packages such as Ghadan21 and Abu Dhabi Accelerator Programme. HE Shorafa revealed to INTLBM that these initiatives and stimulus packages helped the entrepreneurs to overcome the aftermath of the COVID-19 crisis.
In order to alleviate the stress of the pandemic, the Abu Dhabi government took several initiatives including allocation of AED 5 billion to support water and electricity for citizens, commercial and industrial sectors, AED 3 billion for credit guarantee programme to stimulate the financing of SMEs, AED 1 billion for financial markets and enacting resilient investment laws.
In May 2021, the Abu Dhabi Judicial Department extended the scope of use of interactive bilingual claim forms to cases before the Courts of Appeal, allowing foreign litigants to easily familiarise themselves with court procedures. This builds on other business-friendly reforms to meet the needs of Abu Dhabi’s large multinational community, including the digitalization of almost all procedures and the appointment of foreign judges.
ADDED reports that the pandemic has brought the limelight over the ICT (Information and Communications Technology) sector and therefore, the cumulative FDI in the sector has increased considerably in Q1 of 2021. It further claims that with the new law, enterprises and entrepreneurs are able to procure their commercial licenses within a few minutes.
HE Mohammed Ali Al Shorafa Al Hammadi concludes, “It is considered a significant step towards the realization of the wise leadership’s vision that aims to promote the Emirate’s competitiveness globally. The new 100% Foreign Investment Law enhances the openness and resilience of the economic climate by adopting the best modern practices in the investment areas, and aligned with Abu Dhabi’s economic strategy for the next fifty years.”
Abu Dhabi is continuously working to ease and simplify doing business in the emirate, with an objective to strengthen the private sector, increase collaboration among the stakeholders and provide world-class services.
The decision to offer a 100% Foreign Ownership scheme in Abu Dhabi comes to encourage foreign and global companies to open their businesses and shift their headquarters to the UAE. Such a move will boost the overall Abu Dhabi economy and guarantee business sustainability in the Emirate. The move promotes an open, flexible and business-friendly environment across sectors, demonstrating the government’s commitment to providing companies with the optimum conditions they need to operate. Investors from all over the world can establish, own and operate in one of the region’s most competitive markets with greater clarity and certainty.
Article by Ujal Nair