UAE looks to allow 100 percent foreign ownership

Alex Noble
For Al-Shorfa.com
2008-06-24

The United Arab Emirates

The United Arab Emirates may relax foreign investment laws to allow 100 percent international ownership of projects, particularly in the industrial sector, a government minister said this week. The Minister of Economy Sultan bin Saeed Al Mansouri said there was nothing to be feared from foreign investment, and added that successful international investment would work to protect nationals.

“As long as this investment [by foreign investors] is useful for the country, why should foreigners not own these projects, especially if these business projects involve huge amounts of capital, and big companies and countries compete for them?” Al Mansouri said, speaking at a meeting at the Abu Dhabi Higher Corporation for Specialised Economic Zones (ZonesCorp).

Al Mansouri acknowledged the issue was “sensitive”, but the protection of nationals would be guaranteed.

Meanwhile, Hussein Jassim Al Nuwais, chairman of the Zonescorp executive committee, said the ownership law was significant for the attraction of foreign investors to Abu Dhabi, the capital of the U.A.E.

“We have a lot of raw materials, especially in the petrochemical sector, which we export to China and Japan. Then we buy them back after manufacturing at a huge cost. If we set up industries for these materials in Abu Dhabi, we would make huge profits,” Al Nuwais said.

“We offered big international firms huge industrial projects and they liked them. We discussed the required procedures, then the investors asked for full ownership, and the projects stopped, despite being highly important.”

Al Nuwais identified three areas that require huge investment and would potentially benefit from foreign ownership - petrochemicals, aluminium and iron. All three industries, he said, require a large amount of capital and expertise to run effectively. Foreign investment in the emirate is already a major force driving economic growth. In February, ZonesCorp said the current allowance of 49 percent foreign ownership will be considerably increased in sectors that are most in need of foreign investments.

The legislation would be part of the government's efforts to encourage investment in the emirate as it looks to spend $200 billion transforming the capital into an ultra-modern city over the next 12 years, under its ‘Abu Dhabi Plan 2030’ development strategy. Hussain Al Nowais, Abu Dhabi Council for Economic Development board member, said current U.A.E. laws needed to be changed to meet the increasing numbers foreigners intending to invest here.

“Many foreign companies and investors would like to invest in the U.A.E., and Abu Dhabi in particular. We do not mind as long as they offer added value to our economy. As for small companies or trading shops, their return to the national economy is small and their ownership rate should not be raised,” he said.

This move would allow the government to specify the rate of foreign ownership in line with the added value offered to the economy by overseas investment in specific industries, said Al Nowais, who is also chairman of Al Waha Capital.

“There were proposals to push the rate of foreign ownership up from the current 49 percent to 51 percent, 60 percent and 70 percent, but some sectors might need a higher rate,” he continued. The Ministry of Economy has put the company law forward for amendment, with a committee studying the proposals, he said.

“We have to develop our economic laws to attract private investment fund capital and benefit from the privatisation of government companies,” Al Nowais added.

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