United Arab Emirates: Real estate, transport, renewable energy and tourism

 

 Promising sectors:

The real estate sector is still the main driver of the economy, especially in the Emirate of Dubai. There are other important sectors, like the transport sector that is growing at a record pace, thanks to the actual efforts aiming at developing the infrastructure and the railways networks. As well as the renewable and alternative energy sector, in particular solar energy, travel and tourism, education and processing industries.

UAE are perceived as a global hub for attracting foreign investments in light of the considerable progress achieved in the investment environment. Most of the foreign direct investments focus on the oil sectors, as well as on water and electricity production, alongside the logistics sector that is growing at an intensive speed, after UAE were selected for hosting the Expo 2020 event.

No doubt that the progress achieved in diversifying the economy and reducing dependency on oil as the main income source open wide the door to investments in various sectors, especially that no efforts are being spared to strengthen the legislative framework in order to facilitate business and meet the modern economy requirements. Indeed, a new law on investment is expected to be issued soon, thus granting foreign investors full ownership rights in specific sectors. This initiative reinforces the open policy adopted by the UAE with regards to foreign investments, and provides more incentives and facilities to both Arab and foreign investors. According to official sources, this new law would create many investment opportunities for the private sector in the coming years, in particular in industrial sectors.

 

Business environment:

The UAE enjoy an exceptional and smooth tax system, as personal and commercial taxes are either insignificant or nonexistent while profits and capitals are transferred freely with no restrictions whatsoever. According to the World Bank, the UAE rank first in the Arab region and 26^th worldwide with regards to business environment. Moreover, foreign investors can conduct any commercial business, except for few activities like importing labor force par example. The Emirates also enjoy a developed economic legislative environment, as well as a top-notch logistics infrastructure, in addition to electronic and smart administrative services. Thus, they have become a world destination for major global companies and for all individuals seeking both investment and job opportunities.

United Arab Emirates’ ranking in the World Bank indicators for ease of doing business for 2017 among 190 countries

 

Source: World Bank Doing Business 2017

 

United Arab Emirates: Foreign Direct Investments by the 10 top sectors (US$ million)

 

Source: Fdi markets

 

Strategy 2021

The UAE set up a roadmap to pave the way to the “post oil” economy that aims at strengthening innovation and knowledge economy, and at reducing the contribution of oil revenues to the GDP in 2021 from an actual 30% to 20%, while the economic revenues coming from other fifteen sectors will increase. The contribution of processing industries is expected to rise to around 15% in 2021 for 8,7% in 2014. This sector will be at the core of development, alongside four other sectors: transport and storing, transportations, financial services and agriculture.

Free zones:

There are several specialized free economic and industrial zones, most famous being Jabal Ali in Dubai, with Khalifa Industrial Zone in Abu Dhabi (KIZAD), as well as many other industrial zones in the remaining Emirates. It is worth in this regard noting that the Higher Corporation for Specialized Economic Zones is the major operator of the free zones in the UAE.

 

Major countries investing in the UAE, 2012-2016

Ibid.

 

Areas needing reforms

It is of paramount importance that initiatives continue to be launched with a view to improve the business climate and the competitiveness of the economy, as well as to scale up investment opportunities in order to attract more direct foreign investments and contribute to the diversification of the economy and the income sources. Moreover, improving access to finance for Small and Medium Enterprises would strengthen entrepreneurship and create more job opportunities in the private sector. More efforts are also needed to encourage innovation, improve the quality of education and health services so as to cultivate the skills and take productivity up to sought after levels.