ECONOMISTS are expecting a surge of 15-20% in foreign direct investment (FDI) flow in the United Arab Emirates (UAE) once the eagerly-awaited proposed measure allowing 100% ownership to foreign investors becomes a law.
The proposed law, believed to be a game-changing investment law which will be introduced in the last quarter of 2018, will apply in some specific onshore business sectors.
The law is expected to change not only the investment landscape of the UAE, but also create significant growth opportunities by attracting more foreign direct investments, especially in the non-oil sectors.
Sultan bin Saeed Al Mansouri, UAE Minister of Economy, said the final draft of the landmark law is awaiting the UAE Federal National Council’s approval before it becomes a law by the last quarter of 2018.
FocusEconomics’ panel of economists said while a new investment law set to be unveiled by the end of year should further boost FDI inflows, looser fiscal policy and notably large investments in infrastructure should prop up growth in the non-oil economy by supporting private investment momentum.
“This, along with higher oil prices and tourism, is poised to help private consumption bounce back from VAT implementation. On the other hand, the Opec agreement should keep oil output largely stable in the year. The main risks are a flare-up of regional tensions, which could harm investment, and a downturn in oil prices,” the panelists said, while forecasting the GDP to expand 2.7% in 2018. They see it at 3.2% in 2019.
Economists expect an annual surge of up to 15-20% 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% of total foreign direct investment to the Middle East and North Africa region, according to Garbis Iradian, chief economist at the Washington-based the Institute of International Finance.
Iradian cited the UAE’s friendlier business environment, excellent infrastructure, relatively diversified economy, and political stability continue to position the oil-rich country as one the most preferred investment destinations in the world.
Economists said the UAE has been working on several other bold reform initiatives, including the bankruptcy law, to boost investor confidence over the past several years.
The UAE bankruptcy law, which allows companies in financial distress to restructure, has already come into effect.