A global economic crisis, rising regional political tensions, and a dismal outlook to the macro economic stance all make for an exceptionally tumultuous atmosphere to navigate through. Nevertheless, the United Arab Emirates led by its capital Abu Dhabi, has met these challenges head on while spear heading invigorating initiatives that would keep this nation ahead of the pack. The UAE just introduced a game-changing investment law, which allows for up to 100 per cent ownership to foreign investors in various sectors and is expected to further excite and attract private and foreign direct investments into the country. The laws will be finally introduced in the last quarter of this year making for an exceptionally exciting H2 2018.
This law, enthusiastically awaited by the commercial community, is expected to change not only the investment landscape of the UAE, but also create significant growth opportunities attracting more foreign direct investments (especially into the non-oil sectors) and enhance the SMEs contribution to GDP. It will make way for a more lenient fiscal policy, significant inflow of investment in infrastructure and increase private investment momentum for years to come.
“Economists expect an annual surge of up to 15-20 per cent in FDI flow once the law comes into effect. In 2017, the UAE remained the main destination of FDI inflows at about $11 billion, accounting for 22 per cent of total foreign direct investment to the Middle East and North Africa region”, according to Garbis Iradian, Chief Economist at the Washington-based Institute of International Finance.
Abu Dhabi has further added to these remarkable changes by introducing a very robust program of investing back into the local economy and to further enhance the capital’s micro economy. The billions of dirhams of potential support will be earmarked to building infrastructure, legislative projects, developing tourism, enhanced industrial and social projects, expanding leisure sectors and creating additional free zones to attract both foreign investors and entice local ones.
One of the key aspects of this investment program is the creation of more than ten thousand new jobs for the local Emiratis spanning both the private and public sectors to be achieved over the next five years. Additionally, the intention is to augment the small and medium size company’s ability to have a positive economic impact locally and help them expand operations regionally. These two core components will help solidify this particular business sector most geared to help add to the GDP of the UAE in the next coming years.
The Department of Economic Development (DED) expects “Abu Dhabi to achieve a three per cent average growth from 2018 to 2021 with 4.2 per cent growth in the non-oil sector and two per cent for the oil sector. Abu Dhabi has drawn circa Dh95 billion of FDI as of end of 2016 and the DED’s recent launch of an investment office will look to attract more interest into investments”.
Now if we take all these key and imperative initiatives and combine them with the UAE Vision 2021, add the Abu Dhabi Vision 2030 and the Dubai Industrial Strategy 2030, the UAE has formulated the perfect recipe for diversification of its GDP from oil and oil related industries, and building a sustainable economic stimulus and growth for the future.
It is apparent that the calls for the development of a spirited technologically advanced knowledge based economy, and the announcement of a 10 year residency visa for scientists, investors and professionals in the medical, scientific, research and technical fields is a critical step in attracting the most qualified human capital necessary to achieve this forward looking vision.
Despite the many challenges that the region in general faces, and albeit all the constraints of global financial markets, the UAE has maintained a steadfast pace of growth, diversification and technological advancement. What’s next for this great and ambitious nation? Will leading the area in introducing economic stimulus be enough? Is the drive for new and innovative methods of diversifying the economy the right path?
These concerns quickly became notional with the newly renewed continued collaboration between the UAE and China that was triggered lately. The recent visit of the Chinese President Xi follows an agreement reached between the two countries on various oil and gas related deals. The discussions during the visit focused on building and strengthening bilateral ties and addressed some of the lingering regional issues and their cause and effect. More recently the Crown Prince of Abu Dhabi hosted the countries of Eritrea and Ethiopia on reconciliation efforts all aimed at uniting the fronts and building long term bridges globally. The sound and astute strategy that the UAE leadership follows will ensure it maintains its immanent status as a country open to free trade, global partnerships and is a forward thinking progressive nation poised for prosperity.
