The United Arab Emirates government is reviewing a draft commercial law allowing full foreign ownership of some companies, according to an Abu Dhabi official.
“We recognize the importance of the foreign companies to have 100 percent ownership, but within specific rules and conditions,” Mohamed Omar Abdulla, undersecretary of the Abu Dhabi Department of Economic Development, said in an interview in Dubai today.
The measure applies to some industries outside of free zones, Abdulla said. The Abu Dhabi government and others within the U.A.E. are reviewing the draft, he said, without specifying when it will be passed. Foreigners make up about 90 percent of the nation’s 8.3 million population, according to 2010 government estimates.
The current commercial law allows foreigners to own a maximum of 49 percent of companies registered outside of free zones. Corporations that are eligible would “have to be within the industries that have certain priorities within the economy, like petrochemicals, communications, logistics, aerospace, financial, and others,” Abdulla said.
While the federal government has been negotiating the revised commercial law for years, the financial crisis in 2008 has helped push discussions forward, he said. The Arab world’s second-largest economy contracted 4.8 percent in 2009, according to the International Monetary Fund, as the credit crunch tightened lending, causing a slump in property prices.
The country’s stock markets have failed to recover from the crisis, with Dubai’s benchmark index trading at less than a third of where it was in June 2008, and Abu Dhabi’s benchmark index at about half.
Still, Dubai’s index rose 18 percent so far this year, and Abu Dhabi’s gained 10 percent. The U.A.E.’s gross domestic product may expand 4 percent this year and 2.6 percent in 2013, the IMF forecasts.
Abu Dhabi, the richest of the seven sheikhdoms that make up the U.A.E., is also working independently on a competitiveness index and plans to release it in February, Abdulla said. “That will provide us with a picture of where we stand, and help us in building a comprehensive plan to improve the business environment,” he said.