The new legal reforms recently announced by the UAE government are expected to help the country attract more foreign direct investment and support the growth of small and medium enterprises to strengthen its economy, according to experts and top executives.
The President, Sheikh Khalifa formally approved the most extensive legal reforms in the country’s history earlier this week ahead of the Golden Jubilee celebrations of its formation. These include greater protection of personal data, stronger copyright rules and stricter measures to tackle fake news.
Other initiatives include amendments to the law on electronic transactions and trust services that give digital signatures the same weight as a handwritten signature. A law to protect industrial property and to regulate the procedures for its registration, use and assignment was also issued.
The government will also allow investors and entrepreneurs to establish and fully own onshore companies in almost all sectors, except activities deemed to be “strategic” as part of the new changes.
“The leadership’s announcement of the most extensive legal reforms in the country’s history sets the tone for the next 50, with significant amendments that will further safeguard residents and benefit businesses across the UAE,” Talal Al Dhiyebi, group chief executive of Aldar Properties, told The National.
“With changes made around digital signatures, data protection, online security, copyright and the remit of onshore commercial companies, we will attract greater investment to the UAE and strengthen the private sector’s competitiveness.”
The legal overhaul is in line with the UAE's ambitions to become a global business hub and further continue to diversify its economy in the next 50 years.
The Arab world's second-largest economy is undertaking various measures to boost its economy. This year, it unveiled a new industrial strategy to boost the contribution of the industrial sector to Dh300 billion ($81.68bn) in the next 10 years, from Dh133bn currently.
The country also overhauled its commercial companies' law last year to attract more foreign capital and annulled the requirement for onshore companies to have an Emirati shareholder.
The latest changes are expected to supplement the UAE's previous reforms and further help its economy, according to experts.
“The updated laws cover a wide range of areas and are essential for two overarching reasons,” said Scott Livermore, chief economist at Oxford Economics Middle East.
“Firstly, they follow up on announcements made over the past year to solidify the key economic and social policy moves.
"Secondly, they demonstrate that key sectors such as digital and cultural industries need modern regulations that support progress but offer protection in areas such as intellectual property.
"Both of these factors will provide greater confidence to foreign talent and investors.”
Among the latest reforms to be announced, the government strengthened copyright laws to offer greater protection to people working within creative sectors. The law covers all major issues relating to authors’ rights and neighbouring rights, including the right to protest against alteration of the work if the alteration distorts the author’s intent.
“Creative sectors of the economy, including art and culture, music, fashion and the knowledge arena, are expected to benefit significantly from sweeping reforms on intellectual property rights with SMEs leveraging from imploding growth opportunities,” Ullas Rao, assistant professor of finance at Heriot-Watt University Dubai, said.
“SMEs would benefit from improved trust and productivity, and would also promote growth, create employment opportunities and expand business opportunity,” according to Saad Maniar, senior partner at consultancy Crowe. However, the cost of compliance would increase but at the same time the risk will also be reduced to a “great extent”.
The real estate sector, which is bouncing back from the pandemic-induced slowdown, is also expected to benefit owing to the new legal reforms enacted by the government.
The new digital signature law will aid in the increase of new property transactions, said Lewis Allsopp, chief executive of Dubai-based real estate agency, Allsopp & Allsopp.
“The real estate market will benefit from this new law greatly with overseas investors, sellers and end-user buyers having no need to visit the country or be in the country at the time of signing. This makes real estate transactions more efficient and convenient for everyone involved.”
The latest changes are also expected to support the UAE's ranking on various fronts including business and non-business parameters, said Junaid Ansari, senior vice president of investment strategy and research at Kamco Invest.
“The country has seen solid investor interest this year with Abu Dhabi being one of the best-performing markets globally but there are a number of new initiatives in the pipeline relating to privatisation of state entities, listing on local exchanges, attracting companies in the tech sector announced recently. The reforms would ensure the success of these initiatives.”
Earlier this month, Dubai announced plans to list 10 government and state-owned companies on the Dubai Financial Market as part of a broader strategy to double the financial market's size to Dh3 trillion.
The emirate's authorities also launched a market maker fund worth Dh2bn as it seeks to encourage listings from sectors such as energy, logistics and retail.
Abu Dhabi is launching a Dh5bn IPO fund to help encourage and support private companies to list on the local stock market. The IPO fund will invest in five to 10 private companies a year, with a special focus on SMEs, and will aim to have a ticket size of between 10 per cent and 40 per cent of the float.
The new reforms "will bring the UAE closer to the adoption of global best practices and are aimed at pushing the UAE as a trade and business hub of the region", Mr Ansari said.
The country's adoption of the most recent innovations has fuelled strategies for stabilising and advancing economic growth, according to Tareq Hijazi, public sector director at Microsoft UAE.
“The UAE has not only successfully adapted to the past year's seismic shift in the way we work and learn but has also excelled in large-scale digital transformation by facilitating the best in skilling initiatives, hybrid models and championing sustainable operations across all industries,” he told The National.