Foreign Direct Investment (FDI) in the UAE
According to the UAE’s Economic Report 2019 (PDF, 18.5 MB), the UAE was ranked 27th globally in 2018 (up by 3 positions from 2017), in terms of its ability to attract foreign direct investment (FDI). The value of FDI inflow grew to about USD 10.385 billion in 2018 as compared to USD 10.354 billion in 2017.
The UAE ranked 1st in the Arab world, accounting for 36 per cent of the total FDI inflow to Arab countries in 2018. It ranked 2nd in the West Asia region with 35.5 per cent of total FDI inflow to the region and about 22 per cent of total annual FDI inflows to the Middle East and North Africa region.
The FDI in the UAE is mainly in the sectors of:
- wholesale and retail trade
- real estate activities
- financial services and insurance
- mining and quarry exploitation.
The main investors in the UAE are: Switzerland, the United Kingdom, India, the United States of America, France, Austria, Japan, Kingdom of Saudi Arabia, Kuwait and The Netherlands.
Foreign Direct Investment law
Foreign Direct Investment (FDI) in the UAE is regulated by the Federal Law by Decree No. 19 of 2018 Regarding Foreign Direct Investment (PDF, 106 KB). The law aims to promote the investment environment, expand and diversify the production base and attract foreign direct investment in advanced technology, knowledge and training.
It allows foreign investors to own up to 100 per cent of the business. Before the issuance of this law, foreign investors could hold only 49 per cent of the company’s shares, while their partners who would be UAE citizens would own the other 51 per cent share.
Other incentives and advantages include investment protection guarantee, financial transfer facilities, the possibility of modifying the partnership, merger, acquisition and transfer of ownership in accordance with the investor's interest.
Scope of the law
The law applies only on foreign nationals who establish investment projects on the UAE’s mainland and meet the criteria of the minimum share capital required for each FDI permitted activity. Other conditions include the ability of the investment project to:
- use modern technology
- bring high added-value
- contribute in research and development
- meet the requirements of licensing entities in the UAE.
FDI law does not apply on Emirati investors or on investment projects that are established in the financial or non-financial free zones.
Foreign Direct Investment Unit
Foreign Direct Investment Unit in Ministry of Economy is in charge of proposing foreign direct investment policies, compiling a comprehensive database of investment data and information and creating an attractive environment for foreign direct investment.
Foreign Direct Investment Committee
Foreign Direct Investment Committee is presided by Ministry of Economy. It is responsible for preparing a list of economic sectors and activities that are permitted for FDI. The list of permitted activities is called the Positive list. The committee may also approve more FDI activities which are not included in the Positive list, according to the recommendations of the relevant local and federal licensing entities.
FDI Committee may prepare another list called the Negative list, which would contain a list of restricted businesses for FDI.
Activities not permitted for FDI - the Negative list
There are certain sectors and economic activities that are not permitted for FDI. This Negative list includes the following activities:
- exploration and production of petroleum materials
- investigations, security, military sectors, manufacturing of arms, explosives and military equipment, devices and clothing
- banking and financing activities, payment systems and dealing with cash
- insurance services
- Hajj pilgrimage and Umrah services and other activities mentioned in article 7 of the FDI law.
Legal form of FDIs
FDI projects may take any of the following legal forms:
- a limited liability company, including a one-person (single-owner) company
- a private joint stock company, including a one-person (single-owner) company.
The licensing authority and the competent authority in any of the emirates of the UAE, concerned with the affairs of foreign direct investment, each within its jurisdiction will specify the conditions and procedures required to establish and license foreign direct investment projects listed in the Positive list and the documents required in accordance with the provisions of the FDI law and other the federal or local laws in force. The following image shows steps for licensing FDI projects in the Positive list.
Read more information on UAE federal law on foreign investment and the incentives given to investors (PDF, 6.61 MB).
Learn about the business regulations applicable in the UAE and laws that are specific to the industry.
Check the UAE Foreign Direct Investments Dashboard from Ministry of Economy.
Supporting foreign direct Investment in the various emirates
- Foreign Direct Investment in Abu Dhabi
Abu Dhabi Investment Office (ADIO) is the government hub supporting investment in the emirate of Abu Dhabi. ADIO enables opportunities for domestic and foreign investors aligned with Abu Dhabi’s economic priorities. ADIO offers a range of targeted programmes for private sector entities including competitive cash and non-cash incentives, small to medium enterprise (SME) enablement and public-private partnerships. CheckFDI programmes in ADIO.
- Foreign Direct Investment in Dubai
Dubai FDI offers essential information and invaluable support to foreign companies who intend to invest in Dubai. Dubai FDI guides, advises and provides practical assistance with all aspects of business decisions and management, starting from determining the best legal structures to identifying the appropriate business activities. Check legal business forms for foreign investment in Dubai.
- Foreign Direct Investment in Sharjah
Sharjah Investment and Development Authority (Shurooq) launched Sharjah FDI Office (Invest in Sharjah) to promote a diverse set of investment opportunities in the emirate. Sharjah FDI Office helps investors to fully understand processes, investment advantages and insights on key sectors that fit their business profiles.
Updated on 20 Aug 2020