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    Investment Reform in The UAE: Aref Al Farra

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    Shoaib Zaheer
    The document summarizes the key points from a presentation on investment reform in the UAE. It discusses how investments flourished in the UAE due to economic diversification and rising oil prices. It highlights the non-oil sector's increasing contribution to GDP. Successful sectors included tourism, air transport, real estate, and ICT. The UAE received increasing foreign investment and has advantages for foreign companies due to low costs. Reforms included a draft foreign investment law to further attract investment and a national development strategy. The law would apply broadly with exceptions and establish new bodies to promote investment.

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    Investment Reform in The UAE: Aref Al Farra

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    Shoaib Zaheer
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    The document summarizes the key points from a presentation on investment reform in the UAE. It discusses how investments flourished in the UAE due to economic diversification and rising oil prices. It highlights the non-oil sector's increasing contribution to GDP. Successful sectors included tourism, air transport, real estate, and ICT. The UAE received increasing foreign investment and has advantages for foreign companies due to low costs. Reforms included a draft foreign investment law to further attract investment and a national development strategy. The law would apply broadly with exceptions and establish new bodies to promote investment.

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    The document summarizes the key points from a presentation on investment reform in the UAE. It discusses how investments flourished in the UAE due to economic diversification and rising oil prices. It highlights the non-oil sector's increasing contribution to GDP. Successful sectors included tourism, air transport, real estate, and ICT. The UAE received increasing foreign investment and has advantages for foreign companies due to low costs. Reforms included a draft foreign investment law to further attract investment and a national development strategy. The law would apply broadly with exceptions and establish new bodies to promote investment.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    49 views22 pages

    Investment Reform in The UAE: Aref Al Farra

    Uploaded by

    Shoaib Zaheer
    The document summarizes the key points from a presentation on investment reform in the UAE. It discusses how investments flourished in the UAE due to economic diversification and rising oil prices. It highlights the non-oil sector's increasing contribution to GDP. Successful sectors included tourism, air transport, real estate, and ICT. The UAE received increasing foreign investment and has advantages for foreign companies due to low costs. Reforms included a draft foreign investment law to further attract investment and a national development strategy. The law would apply broadly with exceptions and establish new bodies to promote investment.

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    Investment Reform in the UAE

    Aref Al Farra
    Senior Economic Advisor- Ministry of Economy- UAE

    Amman- September 4th, 2007

    Todays Topics
    Economic highlights Why investments flourished in the UAE Highlights of the Draft Foreign Investment Law

    Successful diversification and the increase in international oil prices led to a doubling of nominal GDP over four years
    180 60% 160 50%

    140

    40%

    30% 120 20%

    USD billion

    100 10% 80 0% 60 -10% 40

    -20%

    20

    -30%

    0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

    -40%

    average oil prices (US$ per barrel) average oil prices- % growth

    UAE exports (US$ billion) UAE exports- % growth

    nominal GDP (US$ billion) nominal GDP- % growth

    growth rate

    And yet the total share of the non-hydrocarbon sector increased over the last few years!
    The non-hydrocarbon sector contribution to real GDP growth has been increasing steadily over the past few years, even with soaring international oil prices 46% in 1990 62.5% in 2006 This is indicative of successful economic diversification policies by the government

    Success Story: Tourism


    Most tourists come to the UAE for recreational triple S (sun, sea and sand) tourism, shopping tourism, and MICE tourism (meetings, incentives, conferences and exhibitions) We attract a number of tourists that is approximately double our population Hotel occupancy is above 90% for most of the year!

    Success Stories: Air Transportation


    Emirates Airlines established itself as a global transport hub which has serviced a thriving world class tourist industry Ettihad Airlines is providing tough competition, while Air Arabia is focusing on the lower-income niche Two other airlines are being established in Ras Al Khaima and Fujaira Open Skies Policy

    Success Story: Real Estate


    It is estimated that around 25% of the worlds cranes are currently working on UAE construction sitesquite an achievement for a country that makes up less than 0.1% of the worlds population!
    Nakheel is building the huge new real estate development project of "Palm Island" or "the World" in Dubai. These projects and others will add 1,500 km of waterfront to Dubai

    Success Story: ICT


    The Information and Communication Technology sector has witnessed rapid growth in:
    m-penetration (mobile penetration), which in 2006 exceeded 100% of the population e-penetration (internet penetration): at least one in five subscribers use broadband, which is one of the highest rates in the Middle East

    The second operator (Du) with a comprehensive license has begun commercial operations in the first quarter of 2007

    Indications of the UAEs Success


    The UAE had 215 greenfield investments, up from 88 greenfield investments in 2002*

    144% increase in number of greenfield investments over four years

    25% a year

    *Source: the 2006 World Investment Report of the United Nations

    UAE is the regional leader in both the numbers of inward and outward greenfield investment projects

    *Source: ibid

    Indications of the UAEs Success


    The UAE received FDI inflows of $12 billion, to become the largest recipient of FDI in West Asia in 2005. The next largest was Turkey, primarily on account of a few mega cross-border M&A sales in services

    *Source: ibid

    Advantages of Investment in UAE Free Zones


    100% foreign ownership No minimum capital investment requirements No corporate or personal income tax Low tariffs (around 5% for virtually all goods) No restrictions on repatriation of profits or capital Excellent infrastructure, support services, and communications At least 40 double taxation agreements and at least 30 bilateral investment treaties An opportunity to penetrate fast growing neighboring markets

    Why Investments Flourished in the UAE


    Cost Efficiencies Comments

    Power tariffs- US$ per kilowatt hour (kWh)


    Power tariffsUS$ per kilowatt hour (kWh) 0.20 0.15 0.10

    Netherland

    U.K.

    Vietnam

    Canada

    Turkey

    Malaysia

    France France

    Spain

    USA

    Water tariffs US$ per cubic metre (m3 )

    Water Tariffs- US$ per cubic meter


    2.0 1.5 1.0 0.5 0.0

    Gas tariffs US$ per cubic metre (m3 )

    Gas Tariffs- US$ per cubic meter

    0.30 0.20 0.10

    Netherland

    Vietnam

    Singapore

    France

    Malaysia

    Canada

    U.K.

    Turkey

    Spain

    Netherland

    USA

    U.K.

    0.00 Malaysia UAE

    Turkey

    Singapore

    Canada

    USA

    UAE

    Spain

    Singapore

    UAE

    Foreign companies investing in the UAE enjoy cost efficiencies, mostly in power and gas

    0.05
    0.00

    What the government has done and is doing


    Concluded
    Several rent ceilings were issued at the Emirate level to deal with the rent increases in the short to medium run A Consumer Protection Law was passed late 2006 A National UAE Development Strategy was announced in April 2007

    In the Pipeline
    The Ministry of Economy has drafted a Competition Law- the law will be the main vehicle to combat cartels and abuse of dominant position The government is currently working on introducing a Foreign Investment Law that will further increase private sector competition A Statistical Bureau is being established in line with a recommendation from the National UAE Development Strategy

    The NIRA Process and Progress towards a Foreign Investment Law


    Mandate from the Cabinet to Form a National Investment Reform Agenda Committee

    NIRA Workshop

    Drafting a Foreign Investment Law

    Discussions with all relevant stakeholders (two meetings held)

    Legal Process with the Ministry of Justice

    Goals of the Draft Foreign Investment Law


    To attract investments in areas that are not the countrys core competencies To further develop the investment climate in the UAE To attract investments that achieve any of the following objectives: Increase economic diversification Increase technology transfer Training local citizens High value added industries and services To direct investments towards underdeveloped geographical locations

    Highlights of the Draft Investment Law

    The law would apply to all foreign investments in the country with the exception of:
    investments in oil, gas, electricity and waterthese are regulated by the relevant laws at the Emirate-level investments in the Free Zones

    Highlights of the Draft Investment Law (cntd)

    A Higher Committee for Foreign Investment would be established by the Council of Ministers and would comprise the Ministry of Economy, relevant Ministries and Federal institutions, local governments, and private sector representatives

    Highlights of the Draft Investment Law (cntd)

    A Foreign Investment Department would be established in the Ministry of Economy and would engage in the following, inter alia:
    Establish a database of existing FDI Create periodic foreign investor guides Engage in investment promotion Assist local governments in streamlining registration procedures Engage in dispute settlement

    Highlights of the Draft Investment Law (cntd)

    Expropriation or confiscation of foreign investments is not allowed except for public benefit and with fair compensation according to the relevant laws of the country

    Highlights of the Draft Investment Law (cntd)

    The Council of Ministers, upon the Minister of Economys recommendation, issues the list of sectors open to foreign investment as well as the foreign ownership caps for the different economic sectors Incentives may be given to foreign investors based on its economic significance, value added, use of local resources, technology transfer, registered capital and other factors

    ...
    Thank you

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