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flag United Arab Emirates United Arab Emirates: Investing

In this page: FDI in Figures | Why You Should Choose to Invest in the United Arab Emirates | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

According to the 2013 Global Investment Report published by the UNCTAD, the United Arab Emirates is the third largest FDI recipient in the West Asia region, behind Turkey and Saudi Arabia. The main investors are Britain, Japan and Hong Kong. In 2013, the UAE attracted $12b, the political and economic stability of the country attracting investors fleeing the revolutions of the "Arab Spring." The bulk of FDI is concentrated in the sectors of oil production, water and electricity production. The strengths of UAE is its easy access to oil resources, low energy costs, a willingness to diversify the economy and high purchasing power.

The absence of direct business taxation (excluding banks, oil companies and telecommunications operators) and direct income taxation, of exchange controls and of any limitations on the repatriation of capital, as well as the existence of a strong and profitable banking sector, plus a large pool of expatriate labor are the country's undeniable assets. Its main weakness is the small size of its domestic market.

 

Country Comparison For the Protection of Investors

  United Arab Emirates Middle East & North Africa United States Germany
Index of Transaction Transparency* 4.0 6.0 7.0 5.0
Index of Manager’s Responsibility** 7.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 4.0 9.0 5.0
Index of Investor Protection**** 4.3 5.0 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 7,6799,60210,488
FDI Stock (million USD) 85,40695,008105,496
Performance Index*, Ranking on 181 Economies 87--
Potential Index**, Ranking on 177 Economies 19--
Number of Greenfield Investments*** 373328316
FDI Inwards (in % of GFCF****) 10.011.412.1
FDI Stock (in % of GDP) 24.524.826.6

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in the United Arab Emirates

Strong Points
The strengths of the country are:
- Not directly taxing corporations (apart from oil, banking and insurance sectors) and individuals;
- absence of exchange control or of any constraint relating to repatriation of funds;
- a solid and profitable banking sector and favorable regulations for foreign investments;
- The geographical situation of the country makes it a potential platform to influence the whole of the Gulf, Iran, Asia and Middle-East;
- Lastly, the country has a cheap foreign labor force, very good transport and production infrastructures (financed by hydrocarbon income) and an access to low cost energy.
Weak Points
There are legal obstacles for foreign investments. Effectively, the interdiction (except for free zone) of more than 49% of shareholding of a local company for a foreign investor constitutes a significant hindrance. Moreover, the obligation for recourse to a local service agent for the branches and representative offices of foreign companies represents a limit.
Government Measures to Motivate or Restrict FDI
The government announced a certain number of measures, for example removal of the obligation of the capital holding of 51% by a national or even the opening of banking and insurance sectors for foreign investors. Till now not much progress has been made. However you can notice the flexibility of rules of access to real estate property for foreigners in Emirates of Dubai, Sharjah and Abu Dhabi.
Bilateral Investment Conventions Signed By the United Arab Emirates
UAE has signed 32 bilateral agreements on investment. See the list of countries provided by the UNCTAD.

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Procedures Relative to Foreign Investment

Freedom of Establishment
It is limited since it is mandatory to have a local agent for creating an establishment in the UAE and that the foreign shareholding in this company cannot exceed 49%.
Acquisition of Holdings
The majority capital acquisition of a local company is limited to 49%.
Obligation to Declare
There is no special obligation for declaration. Foreign capital in a company can anyway be more than 49% except for free zone.
Competent Organization For the Declaration
World Association of Investment Promotion Agencies
Requests For Specific Authorizations
In the sector of banking, insurance, health, maritime transport, education, media, and telecommunications, specific authorizations are required by the concerned Ministries.

Learn more about Foreign Investment in the United Arab Emirates on Globaltrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
Abu Dhabi Investment Authority
Tenders, Projects and Public Procurement
Tenders Info, Tenders in United Arab Emirates
DgMarket, Tenders Worldwide
Other Useful Resources
Emirates Free Zone, directory of the free zones with a presentation of UAE.
 
 

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Learn more about Investing in the United Arab Emirates on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: October 2014