The UAE’s latest regulations governing labour relations to patent registrations are expected to boost investor confidence, promote ease of doing business and strengthen its non-oil economy as the country builds on reforms to make it a more competitive destination to live and work, analysts say.
In its first meeting of 2022, on Friday, the UAE Cabinet approved regulations guaranteeing rights for employees, organising new types of work and protecting industrial property rights. It also adopted 13 agreements to encourage investment and avoid double taxation.
"These measures will boost efforts to diversify further the UAE’s hydrocarbon-dependent economy, improve the business environment, make the economy more competitive and efficient, and thus raise potential growth," said Garbis Iradian, chief economist, International Institute of Finance.
"In 2020, World Bank ranked the UAE among the top 16 countries out of 190 countries in terms of ease of doing business. I expect the announced measures or approved new regulations will improve further the UAEs business environment and rank the emirates among the top 10 best countries in the World in terms of ease of doing business by 2023. The manufacturing and trade sectors will benefit most."
The latest regulations are “a step in the right direction", according to Aathira Prasad, director of macroeconomics at consultancy Nasser Saidi & Associates, said.
"It is imperative that the ‘soft infrastructure’ of laws and regulations should complement the ‘hard infrastructure’ in the UAE," she said.
“The latest approval of the labour relations and industrial property rights laws, by providing greater clarity on the regulatory side, will offer investors greater confidence and help attract more FDI into strategic projects. It will further ease of doing business as well as strengthen and support the non-oil economy in the UAE.”
The UAE, the Arab world’s second-biggest economy, has embarked on economic, legal and social structural reforms aimed at strengthening its business environment, attracting foreign investment, drawing high-skilled talent and incentivising companies to set up or expand their operations in the country.
The reforms include the expansion of longer-term residency visas to broader categories of residents, wide-ranging changes to personal and labour laws, allowing 100 per cent foreign ownership of onshore companies and, most recently, the decision to change the UAE’s working week to Monday to Friday to align with other major economies.
The Emirates’ economy is expected to grow 4.2 per cent in 2022, higher than the previous forecast of 3.8 per cent, the UAE Central Bank said in December.
The UAE Cabinet’s new approved regulations include an industrial property law that is designed to strengthen the intellectual property and patent environment in the country,
“These are important steps and will strengthen the UAE’s business and investment environment and build on other reforms we’ve seen over the last few years,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, said. “They should continue to strengthen the UAE’s investment environment, particularly for manufacturing and production in the case of the patent laws.”
New regulations could further help increase foreign direct investment to around $26 billion in 2022, one of the highest in terms of GDP among emerging and developing economies, Mr Iradian said.
As a result, "more FDI could be allocated to the non-energy sectors to boost manufacturing and non-hydrocarbon trade", he added.
The UAE expects a 20 per cent increase in the number of patent applications in 2022, aided by the new industrial property law that aims to attract more foreign investments to priority sectors and make it easier for start-ups to operate, the Ministry of Economy said last week.
The Ministry of Economy received 2,428 patent applications last year, up from 1,917 requests in 2020, mainly within sectors including machinery, construction, chemical engineering, pharmaceuticals and biotechnology, electricity, metals and information and communication technology.
The number of patent filings is one of the metrics used to gauge the level of innovation in a country, according to the World Intellectual Property Organisation (Wipo). The UAE climbed one spot in Wipo’s Global Innovation Index 2021 to rank 33rd out of 132 countries.
The country ranked 32nd among the 51 high-income group economies and third among the 19 economies in Northern Africa and Western Asia.
The UAE’s new industrial property and patents law is expected to be of particular benefit to individual investors, universities or academic institutions that oversee the development of inventions by their students, companies with inventions or R&D centres, innovative entrepreneurs, small and medium businesses and start-ups, the information and technology sector, and tech companies.
Through the new law, the ministry aims to reduce the time taken for patent examinations to six months, from 42 months previously, in line with best practices followed by global patent offices in Japan, South Korea, US, China and the EU.
The UAE unveiled its road map for the next 50 years of development and economic growth, focusing on new technologies, the fourth Industrial Revolution and AI. More importantly, it seeks to develop renewable and clean energy; oil, petrochemical and mining industries; and land and sea transport and storage sectors.
The UAE economy has made a strong recovery from the Covid-19 pandemic-induced slowdown. Emirates NBD, the biggest lender in Dubai, estimates that the UAE’s non-oil sector grew by 3.5 per cent in 2021, with a growth of 4 per cent expected this year.
The country's growth rate could accelerate due to the latest business reforms that were put in place to attract $150bn in investment over the next nine years.
"I expect real GDP to grow by 5.4 per cent this year, as compared with my estimate of 2.3 per cent in 2021. The strong growth in 2022 is partly due to the rebound in crude oil production. I expect the non-oil real GDP growth of 4.4 per cent this year, which could improve further in the medium-term," Mr Iradian said.
"The drive to attract $150bn in overseas investment within nine years is reasonable given the Emirates perfect infrastructure, ease of doing business, regional trade and financial hub, attractive social life, and flexible labour market. The UAE authorities have set clear goals for encouraging diversified and knowledge-based growth to achieve a competitive knowledge-driven economy and are implementing a broad range of policies to achieve their goals."