U.A.E. Raises Stakes to Stop Expats Leaving Dubai

News UAE

U.A.E. Raises Stakes to Stop Expats Leaving Dubai

The United Arab Emirates is taking its most drastic steps yet to stop Saudi Arabia or Qatar from encroaching on its lead in attracting foreign investors.

In an unprecedented departure in policy, the U.A.E. will soon allow foreigners to fully own their businesses in Dubai or Abu Dhabi without a local partner. In some cases, professionals will even be entitled to 10-year residency permits.

More than anything, the country’s decision shows how the economic interests of the six oil-producing Gulf Cooperation Council are diverging as crude’s dominance wanes. To survive a global shift away from fossil fuels, they’ll not only need money and talent, but they’ll also have to compete with each other to get it.

“The U.A.E. needs to keep pace or stay ahead if it doesn’t want to lose its competitive advantage,” said Khatija Haque, the head of Middle East and North Africa research at Emirates NBD PJSC, Dubai’s biggest bank. “When oil was at $100 a barrel for several years there wasn’t that much need to attract foreign investment. Clearly that has changed.”

For a long time the U.A.E. resisted giving the foreigners who dominate the workforce too much clout. Restrictive visa rules meant skilled workers could only stay in the country if they were employed. Unless their businesses were in free zones like the Dubai International Financial Centre, they’d need a local partner to hold 51 percent.

Under the new U.A.E. rules, which take effect by year-end, non-Emiratis can control 100 percent of a company anywhere in the country, forgoing the requirement to have a local partner outside of free zones. Professionals working in medical, scientific, research and technical fields and top students could be eligible for residency permits of up to 10 years.

“Explaining the local ownership structure has also always been a nuisance when raising money from international or even regional investors into businesses that had mainland operations in the U.A.E.,” said Khaldoon Tabaza, the founder of investment company iMENA, which invests in several U.A.E. and regional tech startups. The new framework “reduces the cost of doing business in and out of the U.A.E.”