New rules set for establishing government companies in Dubai

Dubai Crown Prince Sheikh Hamdan says government wants to complement private sector, not compete with it

Government entities looking to set up new companies in Dubai will need to complete feasibility studies and submit them to the emirate's Department of Finance, which will carry out competitor analysis Show more

The Dubai government is looking to curtail competition between the government and private sector, with a new ruling detailing terms under which state entities can form new companies.

The Executive Council resolution was issued on Sunday by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai and chairman of the emirate's Executive Council.

"We are keen that the private sector plays a major role in shaping the future of the national economy and achieving sustainable development," Sheikh Hamdan said.

"A legislative framework that protects their interests is critical to their growth and success.

"We do not want to be a competitor to the private sector, but rather seek to complement it."

The resolution standardises procedures for setting up government-owned companies and ensures they have strong governance, a statement issued on Sheikh Hamdan's website said.

Government entities will be allowed to set up companies if their main activities are in line with the agencies' role, Sheikh Hamdan said.

They should offer products and services of "strategic economic importance".

Feasibility studies must be carried out and reviewed by the emirate's Department of Finance, which will also conduct a competitor analysis before submitting its recommendations to the Executive Council.

Newly established companies should "uphold the principles of fair competition" and not hold any advantage or receive financial support from the government.

They should pay all relevant taxes and fees for which they are liable under federal and local laws.

Dubai, the commercial and trading centre of the Middle East, has made a rule changes aimed at improving its competitiveness in recent years.

A higher committee overseen by Sheikh Maktoum bin Mohammed, Deputy Ruler of Dubai, was set up in September last year to ensure a better balance of supply and demand in the market.

The committee is made up of public and private sector property companies.

In March this year, an update to the emirate's 2018 Foreign Direct Investment Law was published.

It spelt out the 122 different economic activities under which 100 per cent foreign ownership is allowed, subject to certain conditions being met.

Dubai attracted Dh12 billion worth of foreign direct investment through 190 different projects in the first half of 2020, the Dubai Investment Development Agency said this month.