Update: More details released for long-awaited UAE Foreign Direct Investment Law08 Nov 2018
Following a concerted effort from the UAE to attract more foreign investment, a new Decree was issued on 30th October 2018; relaxing existing domestic ownership restrictions and representing the next step towards permitting 100% foreign ownership outside of free zones.
The Decree Law no.19 of 2018 (or FDI Law) will change the business landscape within the UAE, catalysing Foreign Direct Ownership (FDI) within the country. It builds upon the Federal Decree Law No. (18) of 2017 which amended the UAE Commercial Companies Law (restricted foreign ownership to 49% of the shareholding), and gave the UAE Cabinet power to permit a rise in foreign ownership in specific sectors of the economy.
The FDI Law builds upon this progress and further details have now been released regarding what the Law decrees. The details reveal that an FDI Committee will be formed to refer sectors and particular activities to the UAE Cabinet. The Cabinet will then determine which sectors and activities are to benefit from increased foreign ownership.
The Cabinet will then issue a 'Positive List' to accompany the existing 'Negative List' (sectors not affected by the FDI Law) to represent the sectors and activities permitted levels of foreign ownership exceeding 49%. The 'Negative List' covers 14 economy sectors:
- Oil exploration and production
- Investigation, security, military
- Banking and financing activities
- Pilgrimage and umrah services
- Certain recruitment activities
- Water and electricity provision
- Fishing and related services
- Post, telecommunication and other audio visual services
- Road and air transport
- Printing and publishing
- Commercial agency
- Medical retail (including pharmacies)
- Blood banks, quarantines and venom/poison banks
The Cabinet can add and remove sectors from each respective list, determining which sectors benefit from the FDI Law by taking into account the impact on the national economy, environment, job opportunities created for UAE nationals and the profile of the foreign investor themselves.
Further clarification is still needed in relation to the FDI Law and updates are expected in the coming months.
The FDI Law will increase the stream of FDI into priority sectors which are all listed on the 'Positive List'; helping the UAE to achieve sustainable and even development throughout the emirates.
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