The planned companies law is unlikely to usher in 100 per cent foreign ownership as previously thought, a senior government official says. The remarks cast doubt on earlier statements from a senior Ministry of Economy official who said that international firms in certain sectors or certain projects would be allowed to own their companies entirely.
Full ownership is allowed now only in specific business parks known as free zones. "We will make some relaxation of foreign ownership rules. It will not be 100 per cent but some improvement and more than 49 per cent," said Mohammed Omar Abdullah, the Under Secretary at the Department of Economic Development in Abu Dhabi. Mr Abdullah said the draft Companies Law, which has been in the making for several years, was complete and would be passed this year. The Federal National Council must approve the law.
Sultan al Mansouri, the Minister of Economy, said this month the revised Companies Law would probably be submitted to the Cabinet within a month, with the expectation that it would be passed before the end of the year. Investors have been excited by the prospect of stronger foreign ownership rights and many believe the new law will spark the creation of new businesses and new jobs. "This new law will give strong impulse to the creation of new businesses. It is one of the most important economic reforms," said Nasser Saidi, the chief economist at the Dubai International Financial Centre Authority.
Foreigners need an Emirati as a sponsor and can own up to 49 per cent of a business. The exceptions are free zones, where full foreign ownership is allowed. "The draft law has been finished and the final touches have been given," Mr Abdullah said. Mohammed al Shihhi, the Director General of the Ministry of Economy, said in September that international firms in certain sectors, such as industry, would be allowed to own up to 100 per cent under the new companies law.
The new law will be tailor-made for each sector instead of one size fits all. It will be adjusted to the specific foreign-investment needs of each sector and depend on how much each company contributes to the economy, said Mohammed al Qamzi, the chief executive at the Higher Corporation for Specialised Economic Zones (ZonesCorp), the largest free-zone developer in the emirate. ZonesCorp, which comes under Abu Dhabi's Government Holding Company, is responsible for expanding the capital's industrial base as part of a drive to boost economic growth and diversify away from oil revenues.
"The Government will decide on a case-by-case basis 'can the company have more'. It will be linked to conditions," said Mr Abdullah. At present, there are different ownership rules for different sectors. For example, foreign companies investing in the petrochemical or in the oil and gas industry are more restricted and must work through the Abu Dhabi National Oil Company. Mr al Qamzi said the foreign ownership law would be set by the Federation and "cascade down". Each emirate will be allowed to adjust and fine-tune the law according to its own needs. "We hope that all emirates will apply the federal law. They are likely to follow but it allows some flexibility in implementation."
Some government officials have hinted the law may be passed in the first half of this year, but Mr Abdullah said only that it would be some time this year. uharnischfeger@thenational.ae
