UAE Experiences An Increased Influx Of Foreign Direct Investment By 44% During The Ongoing Pandemic

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UAE Experiences An Increased Influx Of Foreign Direct Investment By 44% During The Ongoing Pandemic

The economy of the UAE has yet again proved its resilience and reliability amid the global pandemic by recording a whopping 44.2% increase in its foreign domestic investments. 

While FDI covered all core segments, the oil and gas sector was the busiest, with Adnoc driving several big investment deals and partnerships that helped its “in-country value strategy”. Most investors and investment companies were focused primarily on technology, covering game-changing sectors from emerging innovations to medicine and energy to agriculture. Investments have also been significant in cutting-edge advanced technologies, which form the core of the digital economy, such as: artificial intelligence, the Internet of Things, blockchain, innovative medical technologies, high-speed transportation, augmented virtual reality, robotics, autonomous cars, renewable energy, among others.

The increase is a testament to the fact that the government’s response to the pandemic effectively minimized the impacts on the economy. The pandemic response involved a slew of pro-business measures combined with the rapid rollout of vaccinations to the residents. 

 

Besides the pandemic response, the investment landscape of the United Arab Emirates has been rapidly becoming more lucrative with the introduction of many progressive measures. In 2020, the country scrapped federal rules that impose a 49% cap on foreign investment in local companies. The removal of limits has attracted many investors to spend money on investment opportunities in the UAE. The earlier system required 51% local sponsorship and a majority Emirati representation on the company board. The new policy, which allows for 100% foreign ownership without local sponsors, has improved investor confidence and helped cut operational costs, thereby driving up the FDI inflows. 

 

The country also started to offer Emirati nationality to select foreigners who are investors, doctors, specialists, among others. The move is seen as a significant change for a heavily dependent country on expatriates, whose residency is typically affected by their employment visa. The step aims to appreciate the competencies and talents present in the UAE and improve the country’s investment prospects. In late 2020, the UAE also expanded its golden visa program, which grants a 10-year residency to select professionals and degree holders. These moves are expected to make the economy more inclusive and enable longer stays for expatriates and investors.

 

There has also been a set of policies to make the United Arab Emirates an attractive destination for global investment in all sectors. The monumental Abraham Accords, signed in 2020, seek to normalize relations with Israel. The Accords are poised to have immense benefits for the trade relationship between the two countries, thereby improving investor confidence in the country to be friendlier to businesses and more open in the region. 

 

The pro-business policy changes in legations, long-term visas, ease of doing business, the UAE passport, low taxes, secured lifestyle, and other positive features have helped the UAE retain its global image as one of the most lucrative places to do business and invest in, not just in the Middle East but in the entire world. The country’s FDI inflows are anticipated to remain high in the coming years.

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