flag United Arab Emirates United Arab Emirates: Investing

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

 

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 201820192020
FDI Inward Flow (million USD) 10,38517,87519,884
FDI Stock (million USD) 127,915131,012150,896
Number of Greenfield Investments* 382445375
Value of Greenfield Investments (million USD) 11,89513,5579,531

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.

 

FDI INFLOWS BY COUNTRY AND INDUSTRY (Available data for Dubai)

Main Investing Countries 2019, in %
United States 21.0
France 16.0
Japan 11.0
United Kingdom 7.0
Germany 6.0
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 available data.

 
Form of Company Preferred By Foreign Investors
The form of company for foreign investors is the Limited Liability Company. On one hand, it offers a flexible management structure and protection for minority shareholders. On the other hand, it is easy to form as it is governed by the Company Law, and the Ministry of Economy plays no substantial role in issuing of license.
Form of Establishment Preferred By Foreign Investors
A branch is the best form of company because it has proper receipts and can perform trading transactions contrary to a representative office. In both cases, a represetative agent is required.
Main Foreign Companies
Exxon Mobile, Total, Landmark Group, Carrefour,Unilever, Fedex, Citibank, Boeing.... Most of the large global companies have made different kinds of investments in the UAE.
Sources of Statistics
The Federal Competitiveness and Statistics Authority

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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. The strategic plan Vision 2021 promoted by the government intends to favour FDI. 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.

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Protection of Foreign Investment

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.
International Controversies Registered By UNCTAD
The ISDS Navigator contains information about known international arbitration cases initiated by investors against States pursuant to international investment agreements. UAE is involved in 12 cases as Home State of claimant and in 4 cases as Respondent State.
Organizations Offering Their Assistance in Case of Disagreement
ICSID , International Centre for the Settlement of Investment Disputes
ICCWBO , International court of arbitration, International chamber of commerce
Member of the Multilateral Investment Guarantee Agency
UAE is a signatory to the Convention of the MIGA.
 
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.

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Procedures Relative to Foreign Investment

Freedom of Establishment
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. Nevertheless, in practice, increased foreign ownership is limited to a few sectors and linked to costly requirements. Therefore, the cases in which it will be possible and feasible for a company to increase its foreign shareholdings beyond 49% remain rare.
Acquisition of Holdings
The Council of Ministers approved on 3 March 2020 a positive list of economic sectors eligible for 100% foreign ownership. 
Obligation to Declare
There is no special obligation to declare.
Competent Organisation For the Declaration
World Association of Investment Promotion Agencies
Requests For Specific Authorisations
Foreign ownership is restricted in companies that perform certain regulated activities. In the sectors of banking, insurance, health, maritime transport, education, media, and telecommunications, specific authorisations from the ministries in charge are required.

Learn more about Foreign Investment in the United Arab Emirates on Globaltrade.net, the Directory for International Trade Service Providers.

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Office Real Estate and Land Ownership

Possible Temporary Solutions
Temporary facilities in the UAE.
The Possibility of Buying Land and Industrial and Commercial Buildings
The Civil Code of the United Arab Emirates (Federal Law no. 5 of 1985, Civil Code) does not provide for any express prohibition against the ownership of foreign land. However, each Emir is entitled to adopt its own laws to regulate the ownership of property.
Risk of Expropriation
Until now, no foreign investor has been concerned by expropriation. There are no fixed federal rules governing compensation for expropriations, and each emirate would probably treat expropriations differently. It is indeed clear that this type of procedure will be used only in case of very serious risks and the compensation would be generous.

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Investment Aid

Forms of Aid
The incentives are granted to foreign investors in free zones. The primary benefits of setting up a business in the free zone include exemptions from import and export tax, corporate tax, personal income tax, repatriation of capital and profits, multi-year leases, easy access to sea and airports, buildings for lease, energy connections (often at subsidized prices), and assistance in labour recruitment.
Privileged Domains
No special aids.
Privileged Geographical Zones
The free trade areas in the United Arab Emirates are areas that have special tax, customs and import regimes, and are regulated by their own regulatory framework for foreign investment.
Free Zones
Many advantages are given to foreign companies which are established in free zones. These are not subject to the requirement of having a local majority shareholder. Foreign investors can hold 100% of the capital. Moreover, there is no customs duty on imports nor corporate or income taxes. The UAE has more than 40 free zones, including the:

  • Jebel Ali Free Zone.
  • Dubai Multi Commodities Center.
  • Dubai Airport Free Zone.
  • Dubai South.
  • Dubai Intl Financial Centre.

In general, the free zones focus on different business areas, including shipping, commodities, media, financial services and telecommunication, and have their own regulator.

Public aid and funding organisations
The Arab Trade Financing Program whose mission is to promote Arab exports proposes refinancing possibilities, credit loans for pre-shipment export and buyer's credit.
 
 

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Investment Opportunities

The Key Sectors of the National Economy
The FDI in the UAE is mainly in the sectors of: wholesale and retail trade, real estate activities, financial services and insurance, manufacturing, mining and quarry exploitation.
High Potential Sectors
Aeronautical equipment and services, defence, franchise, healthcare, education, electrical energy, equipment and services related to the oil and gas industries, renewable energies (huge photovoltaic potential), natural resources management (water treatment).
Privatization Programmes
Abu Dhabi has launched a policy of attracting foreign direct investment and has planned to accelerate the privatisation of several state-owned companies. In 2018, Mubadala, one of Abu Dhabi's sovereign wealth funds, sold a stake in Emirates Global Aluminium, one of the largest companies in the United Arab Emirates, as reported by the Financial Times. There are no further privatisation programmes.
Tenders, Projects and Public Procurement
Tenders Info, Tenders in United Arab Emirates
DgMarket, Tenders Worldwide

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Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
Telecommunications and post are monopolies. The oil industry is a protected national sector.
State-owned enterprises are powerful in the United Arab Emirates. SOEs are present in a number of sectors, including construction, hospitality, transport, banking and telecommunications (e.g. Emirates Airline, Etihad Airways, Etisalat in telecommunications).

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Learn more about Investing in the United Arab Emirates on Globaltrade.net, the Directory for International Trade Service Providers.

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Latest Update: May 2022