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Reforms to help UAE treble number of firms to 1million

Dubai - The reforms will increase the confidence of foreign investors.

The recent landmark reform allowing full business ownership rights to foreign investors seeks to enhance the openness of the business climate, leading to more than a three-fold jump in the number of companies in the UAE to one million over the next 10 years, according to the Minister of Economy Abdulla bin Touq Al Marri.

The minister, addressing a virtual media briefing on Wednesday, said the amendments to the Commercial Companies Law would also increase UAE’s ability to attract foreign investments to new economic sectors, diversify the economic base and develop non-oil income.

Al Marri pointed out that the key amendments would enable the nation “to contribute to the creation of new job opportunities, development of market movement, localization of technology, development of skills and human capabilities.”

In addition, the reforms will increase the confidence of foreign investors and will provide a greater opportunity for establishing productive partnerships between citizen and foreign investors, the minster said at the briefing.

Others attending the briefing included Dr. Ahmad Belhoul Al Falasi, Minister of State for Entrepreneurship and SMEs; Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade; Abdullah bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy; Dr. Obaid Saif Hamad Al Zaabi, CEO of Securities and Commodities Authority.

Al Marri said the UAE currently has around 300,000 companies of various formats. “National companies represent 99.3 per cent of this figure, and the new amendments are designed to increase the number of companies operating in the country to one million within the next ten years.”

The amendments will have positive impact on the country’s business environment, most notably in increasing the productivity and competitiveness of national companies across the local and global markets and the preservation of opportunities and advantages for SMEs owned by citizens in the government procurement system. “In addition, accelerating the rate of transformation of SMEs in general into joint-stock companies listed in the financial markets to secure public financing, risk-based capital financing activities market development is also expected to be an outcome,” he said.

Al Falasi outlined efforts that are being undertaken in partnership with various concerned government entities to lay sound foundations for the transformation towards a more flexible economic model. These include updating the regulations and legislation governing economic, commercial and investment activities in the country, in addition to launching and implementing new initiatives and policies that would enhance the national economy’s ability to adapt to the changes in the current global economic landscape, develop future sectors and generate opportunities.

The minister for SMEs pointed out that the new reforms would safeguard the interests of both the UAE and the foreign investors by reviving the market movements, increasing the number and size of companies and projects in the country, and diversifying the foreign investment base. “These would positively reflect on the country's economic environment and enhance the business opportunities offered and the possibility of fruitful partnerships on a wider scale and openness to international markets.”

“We want the Emirati nationals to be a creative and innovative entrepreneur,” he added. SMEs owned and managed 100 per cent by Emiratis are guaranteed privacy and preference in many initiatives to support national entrepreneurship, especially those related to government procurement, Al Falasi said.

Al Zeyoudi stressed the efforts of the UAE to bring about a qualitative transformation to the existing economic model. The new reform gives a real opportunity to encourage Emiratis to directly engage in business and invest in the local market.

This initiative will enhance the transparency and integration of the country's economic legislation, especially the investment climate, the regulations for establishing companies and the ease of doing business. “It will also boost UAE’s ability to attract startups, innovative companies, and SMEs focusing on advanced technology.”

Al Saleh said as per the new law, foreign companies can now open a branch in the country without a Local Agent. Among the main amendments is the one concerning the establishment of “solo company” as a private joint-stock company. This was previously limited to the citizens of the country, and according to the new amendments, foreign investors can now establish a company owned by just one person as a private joint-stock company, according to the aforementioned regulations and provisions mentioned in the law.

Al Zaabi said the amendments will accelerate the transformation of small, medium and family companies into joint stock companies listed in the financial markets to obtain public financing. They will also help develop the market for risk-based capital financing activities. — issacjohn@khaleejtimes.com