The landmark announcement of changes to visa rules and allowing full foreign ownership of businesses represents the "significant first step among many" to create a "sustainable and progressive" environment of innovation and creativity that will allow the younger generation to compete globally.
Sultan Al Mansoori, UAE Minister of Economy, said that the new measures would provide "a distinct advantage" to the country's global competitiveness, its ability to attract investment and "consolidating its position as a preferred destination for exceptional talent".
Entrepreneurship will be revitalised under the new rules, the minister said.
"Global investments and competencies in the medical, engineering and science sectors will create several opportunities for building productive partnerships and the transfer of knowledge, technology and best practices, for sustainable economic and social development," he said.
The UAE cabinet approved a raft of amendments to the residency status of students, entrepreneurs and professionals working in select industries on Sunday night. The changes are expected to be in place by the end of the year. They include visas of up to 10 years for specialists working in the fields of medicine, science, research and technical fields – in addition to their families.
“This clearly gives the UAE an edge over other GCC countries to attract and retain professional talent,” said Vijay Gandhi, regional director for the Middle East at Korn Ferry Hay Group.
It will help "bolster innovation and creativity in the young generation, by allowing them to interact and associate with global talents and expertise, that will be attracted to this country," said the minister.
Long-term visas will also help to attract the best specialist consultants and offer stability to other medical professionals already working in the UAE, experts said.
Students will also be able stay on and look for professional opportunities, "they could be innovators or start new jobs or set up a start-up,” according to Dr Warren Fox, chief of higher education for the Knowledge and Human Development Authority.
Under the plans, foreign investors will be able to fully own a company in the UAE, a significant departure from the current policy that restricts foreigners to a 49 per cent stake in entities based outside designated free zones.
This will "bolster the UAE’s image on the global investment map and major global firms will now be keen to set up branches in the country," Mr Al Mansoori said.
Mr Al Mansoori said that the changes would also increase the flow of foreign direct investment into the UAE, increase the number of projects and firms, boosting the overall business environment as well as economic growth.
Efforts to increase FDI flows are part of broader measures aimed at boosting the contribution of the non-oil sector to the economy to 80 per cent by 2021, from the current 70 per cent, following sluggish economic growth on the back of low oil prices.
“This new law will contribute to increasing transparency, quality of service and the adoption of international best practices, while boosting the UAE’s competitiveness on the global stage and cementing its role in shaping the future of investment in the region,” said Essa Kazim, governor of Dubai International Financial Centre.
The proposed residency and ownership changes will help boost local consumption in the economy and may curb remittance outflows which were estimated at $45bn in 2017, according to government data.
Ehsan Khoman, head of research and strategist for Mena at Japanese lender MUFG, said the rules could remove the transitory mindset of certain expatriates which could lead to less repatriation to their home markets, and more consumption within the UAE economy, which in turn will boost economic growth.
Overall, depending on the timing and scope of implementation, the changes should prove positive for the UAE’s medium-term macro outlook by boosting demand, according to Bilal Khan, senior economist for Mena and Pakistan at Standard Chartered Bank.