UAE As A Viable Investment Destination

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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 the repatriation of funds, Good quality business climate Long term political stability, A dynamic and diversified economy, Very rich hydrocarbons resources, Solid and profitable banking sector with a powerful sovereign fund, and favorable regulations for foreign investments, The geographical location of the country, makes it a potential platform of influence on the Gulf, Iran, Asia, and the Middle East, Low-cost foreign labor force, Good transport and production infrastructure financed by hydrocarbon income and access to low-cost energy.

Here are the top investment opportunities in UAE:

  • Wholesale and retail trade
  • Real estate
  • Financial services and insurance
  • Manufacturing
  • Mining
  • Quarry exploitation

Keep reading as we discuss each of the top investment opportunities in UAE

INVESTMENT OPPORTUNITIES IN UAE :

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, defense, franchise, healthcare, education, electrical energy, equipment and services related to the oil and gas industries, renewable energies which have huge photovoltaic potential, and natural resources management majorly water treatment.

 

Privatization Programmes

Abu Dhabi has launched a policy of attracting foreign direct investment and has planned to accelerate the privatization 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 privatization programs.

Tenders, Projects, and Public Procurement
Tenders Info, Tenders in the United Arab Emirates
DgMarket, Tenders Worldwide

 

SECTORS WHERE INVESTMENT OPPORTUNITIES ARE FEWER

Telecommunications and postsal services are monopolies. The oil industry is also a protected national sector.
State-owned enterprises are powerful in the United Arab Emirates. State-owned enterprises are present in several sectors, including construction, hospitality, transport, banking, and telecommunications e.g. Emirates Airline, Etihad Airways, and Etisalat in telecommunications.

 

Five Strategic Industry Sectors Ideal For Foreign Direct Investment In The UAE

 

Healthcare Sector:

The healthcare sector in Dubai is going through a technology transformation with a key focus on research and development. UAE has the support systems like ICU units, makeshift hospitals, ventilators, PPEs, and testing kits in place to keep things under control.

Investments in Healthcare and Pharma sector

In the UAE, government investments in healthcare accounted for around 15 billion dollars in 2018. The private sector healthcare spending is set to grow at a CAGR of 9.5 percent from 2018 to 2022.

Foreign Direct investments into healthcare, pharma, and medical equipment sectors over the past five years are seeing an enormous spike. The FDI in this sector is valued at about 3.82 Billion dollars between 2015 to 2020. The FDI investment and more healthcare services and medical equipment trading and manufacturing units are expected to be set up in UAE. Medical research facilities and healthcare centers are given high priority by the UAE government to raise medical standards in the region and convert UAE into a popular medical tourism destination in the Middle East.

 

Aviation Sector:

UAE is investing significantly in the aviation sector, with the state-owned Emirates Airlines and the airport infrastructure on the key focus. Efforts are focused on building the infrastructure for providing sufficient air space capacity to meet travel and airline parking demand. The airport-free zones are set up to promote business opportunities and seamless trade and support economic growth.

 

Shipping Sector:

The amount of cargo handled by UAE ports is increasing on a year-on-year basis and was worth 3.2 billion dollars as of 2017. Dubai is in constant effort to connect aviation, shipping, and road transport to create a transport link that will help in seamlessly transport goods across the UAE and overseas.

 

Tourism Sector:

As part of Dubai's efforts to boost tourism and investment in the region, Dubai is setting up 50 regional offices across the world. A 1 billion fund and plans for subsidized housing for entrepreneurs are to be launched to target new areas of opportunity and move ahead with the non-oil-dependent sectors. UAE is planning for building an economic research center, incubators, accelerators, and space for entrepreneurs in the tourism sector to grow their businesses.

 

The Covid 19 has hit hard the tourism industry; however, it can be seen as a short-term slowdown. Once the international borders are open and airlines start flying, the tourism sector will bounce back.

Dubai has some of the world's best hotels and travel destinations in the world. Many tourism infrastructure projects are scheduled in the coming years. It includes the completion of hotels, hotel apartments, amusement parks, etc. Dubai is aiming to welcome the tourists in full fledge once the pandemic situation eases and travel restrictions will be lifted.

Real Estate Sector: Real Estate sector is the face of Dubai. The property rental yields in Dubai are higher than the other popular financial markets such as New York, London, Singapore, or Hong Kong.

With a multitude of real estate projects completed such as the iconic Burj Khalifa, Dubai Mall, Dubai International Airport, Palm Jeremiah, and more, the city is in a continuous development phase.

With the Government-funded infrastructure projects in line and more real estate project investments sanctioned, the real estate investment in Dubai is one of the major support systems for the UAE economy.

The stable political situation in UAE, world-class lifestyle, business opportunities, tourism, and shopping areas make it a perfect choice for ex-pats to settle. Dubai has one of the world's best luxury residential properties. Recently Dubai is also building districts that are focusing on affordable living too with attractive financing options.

The absence of a property tax makes it a lucrative choice when compared to other global destinations.

The Most Attractive Real Estate Investment Options in UAE are:

Purchasing a residential property in Dubai

Purchasing a commercial property in a freehold mainland area and renting it out

Buying commercial and hospitality facilities and taking the franchise for operating hotels and resorts

Starting a real estate investment firm in the mainland or the free zones

Hence, in a nutshell, Dubai is an investment hotbed with a huge business opportunity across the core industry sectors as well as other niche sectors.

The United Arab Emirates is a country in Western Asia located at the eastern end of the Arabian Peninsula. It borders Oman and Saudi Arabia and has maritime borders in the Persian Gulf with Qatar and Iran.

The UAE is an elective monarchy formed from a federation of seven emirates, consisting of Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah, and Umm Al Quwain. Each emirate is governed by a Sheikh and, together, they form the Federal Supreme Council one of them serves as President of the United Arab Emirates. In 2013, the UAE's population was 9.2 million, of which 1.4 million were Emirati citizens and 7.8 million were expatriates. The estimated population in 2020 was 9.89 million.
Islam is the official religion and Arabic is the official language. The UAE's oil and natural gas reserves are the sixth and seventh-largest in the world respectively. Zayed bin Sultan Al Nahyan, the ruler of Abu Dhabi and the country's first president oversaw the development of the Emirates by investing oil revenues into healthcare, education, and infrastructure. The UAE's economy is the most diversified of all the members of the Gulf Cooperation Council, while its most populous city, Dubai, is a global city and international hub. The country has become less reliant on oil and gas and is economically focusing on tourism and business. The UAE government does not levy income tax, although there is a corporate tax in place and a 5 percent value-added tax was established in 2018.

 

The UAE is recognized as a regional and middle power. The UAE is a member of the United Nations, the Arab League, the Organisation of Islamic Cooperation, OPEC, the Non-Aligned Movement, and the Gulf Cooperation Council (GCC). The UAE is described as an authoritarian state. According to human rights organizations, there are systematic human rights violations, including the torture and forced disappearance of government critics.

 

Even as competition builds within the region for foreign investments, the UAE is putting more distance between it and the others. The country is ranked first regionally and ninth worldwide in the Global Competitiveness Report 2021.

 

It was also ranked first on 22 economic indicators globally in the report issued by the Global Competitiveness Center. The priority for the next 50 years remains to accelerate economic development and unlock opportunity, especially by encouraging small and medium-sized enterprises and instilling a culture of entrepreneurship throughout the country.

In 2020, the UAE ranked first in West Asia, receiving 54.4 percent of the total FDI inflows, amounting to 36.5 billion dollars, and first in the MENA region, receiving 40.2 percent of the total FDI inflows, at 49.4 billion dollars.

 

UAE Foreign Direct Investment

According to UNCTAD World Investment Report 2021, the UAE saw its FDI inflows increase by 11 percent from 18 billion dollars in 2019 to 20 billion dollars in 2020, despite the outbreak of the Covid 19 pandemic. Over the same period, the stock of FDI reached 151 billion dollars. Natural resource transactions drove investment in the country, The country rounded up a 10 billion dollar sale of a 49 percent stake in its natural gas pipelines to a group of six investors including Global Infrastructure Partners, Brookfield Asset Management, and Singapore's sovereign wealth fund. In addition, around 53 percent 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 acquiring a majority stake in StratHealth Pharma for an undisclosed sum. The country's political and economic stability is attracting new investors fleeing from less stable countries in the region. In addition, the UAE further liberalized 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. 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 easy access to oil resources, low energy costs, willingness to diversify the economy, and high purchasing power.

The absence of direct business taxation excluding banks, oil companies, and telecommunications operators and direct income taxation, exchange controls, and 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 labor are the country's undeniable assets.

Moreover, a decision of the Federal cabinet approved in 2020 allowed up to 100 percent foreign ownership for 122 economic activities across 13 industry sectors, including manufacturing; agriculture; construction; space; renewable energy; hospitality and food services; healthcare; transport, and storage; ICT; professional, scientific and technical activities; administrative and support services; educational activities; art and entertainment.

A new foreign investment law has also been approved recently with the establishment of an FDI unit within the Ministry of Economy, with the mandate to propose and implement FDI policies. On the other hand, the country’s main weaknesses are the small size of its domestic market, the dependence on imports, and 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.

 

Abu Dhabi and Dubai have also implemented a dual licensing regime: entities located in the free zones may be authorized to carry out commercial activities outside the free zone in selected sectors specifically authorized by the Department of Economic Development for that emirate.

Depending on your business expertise, and domain knowledge it is very easy to secure a business license and channel your investments in Dubai as per your interest.

 

WATCH FULL VIDEO BELOW: BUSINESS INVESTMENTS IN UNITED ARAB EMIRATES - WHY FOREIGNERS SHOULD INVEST IN UAE (WESTERN ASIA)

 

https://www.youtube.com/watch?v=7waUHVWjoO4&t=3s

 

 

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Conclusion

Abu Dhabi has launched a policy of attracting foreign direct investment (FDI) into the United Arab Emirates. FDI in the UAE is mainly in the sectors of wholesale and retail trade, real estate activities, banking, insurance, manufacturing, mining, and quarry exploitation.

 

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