In this page: FDI in Figures | What to consider if you invest in the United Arab Emirates | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information
According to the UNCTAD's World Investment Report 2022, the UAE saw its FDI inflows increase by 11% from USD 19.8 billion in 2020 to USD 20.6 billion in 2021, confirming its role as the leading destination for FDIs in the Arab world (and 19th globally). Over the same period, the stock of FDI reached USD 171 billion (around 41.8% of GDP). 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. According to Investment Monitor, in 2021, Dubai ranked first globally in terms of number of FDI projects, recording 441 projects, an 87% increase year-on-year. The U.S. was the main investor (87 projects), followed by the UK (71) and India (60). 26% of these projects were in the software and IT services sector, 17% in business and professional services, and 8% in tourism. Furthermore, Dubai attracted a record 492 FDI projects during H1/2022 (+80.2% year-on-year), with greenfield projects accounting for a 56% share of the total (official governmental figures).
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 high purchasing power. The absence of direct business taxation (excluding banks, oil companies and telecommunications operators – see after) 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 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 working week (Oxford Business Group). 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. Furthermore, the UAE introduced a federal corporate tax on business profits starting in 2023, with a headline rate of 9% (for incomes exceeding a particular threshold). Several exemptions are available for businesses operating across strategic sectors (e.g. exploitation of UAE natural resources, Government-controlled entities, pension or social security funds, certain investment funds, etc.). The UAE ranks 24th out of 82 countries in the Economist Business Environment ranking and 12th in the 2022 World Competitiveness Index.
|Foreign Direct Investment||2020||2021||2022|
|FDI Inward Flow (million USD)||19,884||20,667||22,737|
|FDI Stock (million USD)||150,896||171,563||194,300|
|Number of Greenfield Investments*||389||541||997|
|Value of Greenfield Investments (million USD)||8,069||6,631||11,086|
Source: UNCTAD, Latest data available.
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.
|Main Investing Countries||2019, in %|
|Main Invested Sectors||2019, in %|
|Accommodation and food services||40.0|
|Electric power generation||13.0|
|Other information services||8.0|
|Healthcare and social assistance||4.0|
|Retail and wholesale trade||4.0|
Source: Dubai FDI Monitor (Department of Economic Development), Latest data available.
The strengths of the country for FDI are:
Some of the disadvantages for FDI include :
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.
|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: The World Bank - Doing Business, Latest data available.
In general, the free zones focus on different business areas, including shipping, commodities, media, financial services and telecommunication, and have their own regulator.
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Latest Update: September 2023