Emirats Àrabs Units flag Emirats Àrabs Units: Invertir als Emirats Àrabs Units

Inversió estrangera directa (IED) als Emirats Àrabs Units

FDI in Figures

According to the UNCTAD's World Investment Report 2021, the UAE saw its FDI inflows increase by 11% from USD 18 billion in 2019 to USD 20 billion in 2020, despite the outbreak of the Covid-19 pandemic. Over the same period, the stock of FDI reached USD 151 billion. Natural resource transactions drove investment in the country, primarily ADNOC's USD 10 billion sale of a 49% stake in its natural gas pipelines to a group of six investors including Global Infrastructure Partners (US), Brookfield Asset Management (Canada) and Singapore's sovereign wealth fund. In addition, around 53% of FDI in the Emirate of Dubai in the first half of 2020 was in medium and high-tech industries; and a key deal was in the pharmaceutical sector, with CCL Pharmaceuticals (Pakistan) acquiring a majority stake in StratHealth Pharma for an undisclosed sum. The bulk of FDI is concentrated in the sectors of trade, real estate, finance and insurance, manufacturing, mining and construction. The main investors are the United Kingdom, India, the United States, France and Saudi Arabia.

The strengths of the UAE include its political and economic stability, easy access to oil resources, low energy costs, a willingness to diversify the economy and a 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 labour are the country's undeniable assets.


In addition, the UAE further liberalised its FDI regime with the promulgation of the FDI Decree 2020, which further facilitated foreign investment by extending some of the free zone incentives to the wider economy. A decision of the Federal cabinet approved in 2020 allowed up to 100% foreign ownership for 122 economic activities across 13 industry sectors. The government also launched 50 economic initiatives aimed at making the country more competitive and attracting USD 150 billion into domestic projects by 2030. A slew of 40 laws covering trade, online security, copyright, residency, narcotics and other social issues was implemented, and government entities shifted to a four-and-a-half-day week (Oxford Business Group). From October 2021 to March 2022, Dubai hosts Dubai Expo 2020. On the other hand, the country’s main weaknesses are the small size of its domestic market, the dependence on imports and on the international financial situation, as well as on the hydrocarbon sector. The UAE ranked 16th out of 190 countries in the 2020 Doing Business report published by the World Bank, losing 5 positions in a year.

 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 17,87519,88420,667
FDI Stock (million USD) 131,012150,896171,563
Number of Greenfield Investments* 445384535
Value of Greenfield Investments (million USD) 13,5578,6987,066

Source: UNCTAD, Latest available data

Note: * Greenfield 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.

 
Country Comparison For the Protection of Investors United Arab Emirates Middle East & North Africa United States Germany
Index of Transaction Transparency* 10.0 6.4 7.0 5.0
Index of Manager’s Responsibility** 10.0 4.8 9.0 5.0
Index of Shareholders’ Power*** 4.0 4.7 9.0 5.0

Source: Doing Business, Latest 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.

Return to top

What to consider if you invest in the United Arab Emirates

Strong Points

The strengths of the country for FDI are:

  • No direct taxation of corporations (apart from oil, banking and insurance sectors) or of individuals
  • No foreign exchange control or constraints related to repatriation of funds
  • Good-quality business climate
  • Long-term political stability
  • Dynamic and diversified economy
  • Very rich hydrocarbons resources
  • Solid and profitable banking sector with a powerful sovereign fund and favourable regulations for foreign investments
  • Geographical location of the country, making it a potential platform of influence on the Gulf, Iran, Asia and the Middle-East
  • Low-cost foreign labour force
  • Good transport and production infrastructure (financed by hydrocarbon income)
  • Access to low-cost energy
Weak Points

Some of the disadvantages for FDI include :

  • Heavy dependence on hydrocarbons
  • Reliance on imports of lots of manufactured goods
  • A lack of flexibility in monetary policy
  • Inadequacy of the national statistical system
  • Degradation of the regional geopolitical environment
  • Legal obstacles to foreign investment.
Government Measures to Motivate or Restrict FDI

All seven Emirates have adopted measures to create a more favourable environment for foreign investors. Dubai, Sharjah and Abu Dhabi have very flexible rules concerning the acquisition of real estate property by foreigners. The Government of the UAE has also recently passed a new Companies Law. In free zones, foreign investors may hold 100% of a company's shares. The primary benefits of setting up a business in the free zone include exemptions from import and export tax, corporate tax and personal income tax.

Abu Dhabi and Dubai have also implemented a dual licensing regime: entities located in the free zones may be authorised to carry out commercial activities outside the free zone in selected sectors specifically authorised by the Department of Economic Development for that emirate.

The UAE issued Decree Law No. 19 on Foreign Direct Investment (FDI) in September 2018, which grants authorised foreign investment companies the same treatment as domestic companies, to the extent permitted by current legislation.  A negative list of economic sectors limited by 100 per cent foreign ownership includes 14 large industries.  The Council of Ministers approved on 3 March 2020 a positive list of economic sectors eligible for 100% foreign ownership.  This list includes activities in 13 sectors, including renewable energy, space, agriculture, manufacturing, transport and logistics, hospitality and food services, information and communication services, professional and scientific and technical activities, administrative and support services, education, health care, art and entertainment and construction.

Despite these projects, the regulatory and legal framework still favours national investors. There is no national treatment for investors in the United Arab Emirates and foreign ownership of land and shares remains limited. Foreign investors underline the weakness of the arbitration proceedings, the weakness of intellectual property rights and the lack of transparency. 

Finally, the regulatory framework for enterprises varies depending on the Emirate. The government of Abu Dhabi is particularly willing to improve the business climate in its emirate and is deploying Abu Dhabi Economic Vision 2030 to attract FDI in the non-oil sectors (industry, tourism, transport and logistics, financial services, real estate and telecommunications).


Abu Dhabi Investment Office (ADIO) is the government hub supporting investment in the emirate of Abu Dhabi. Dubai FDI offers essential information and invaluable support to foreign companies who intend to invest in Dubai.

Bilateral investment conventions signed by the United Arab Emirates
UAE has signed 50 bilateral agreements on investment, though not all of them have entered into force. See the list of countries provided by the UNCTAD.

Return to top

Vols fer algun comentari sobre aquest contingut? Escriu-nos.

 

© Export Entreprises SA, Tots els drets reservats.
Actualitzacions: September 2022

Return to top