Foreigners who set up industrial companies may be the first to have 100 per cent controlling interests in their firms under the relaxation of ownership rules, a senior Ministry of Economy official says. International firms in certain sectors, such as industry, would be allowed to own a greater stake under the new companies law, said Mohammed al Shihhi, the director general of the Ministry of Economy, on the sidelines of an export event in Dubai.
"It will give special Cabinet approval to certain sectors to have more ownership than 49 per cent," Mr al Shihhi said, adding that certain sectors such as industry may be allowed 100 per cent ownership. "It will offer special approval from the Cabinet for certain sectors and certain strategic projects with certain minimum capital," he said. The law now requires foreigners to have an Emirati as a sponsor and limits them to a maximum 49 per cent ownership of businesses. The exceptions are free zones, where foreign companies can have 100 per cent ownership.
Mr al Shihhi said there was a waiting list of international companies wanting to set up in the country's free zones. A committee of the Ministry of Justice will meet next week to finalise the draft Companies Law before it is sent to Federal National Council to be approved, he said, but declined to say when the law would be introduced. "It's a very big law and it's up to the Federal National Council as to when it's passed," Mr al Shihhi said.
The legislation is part of the Government's drive to encourage foreign investment and expand the value of the non-oil sector into areas such as industry. A separate proposed law to provide legal protection for overseas investors is also in the pipeline. "If the companies law enables greater foreign ownership in certain sectors of the economy, it will do a lot to encourage foreign investment," said Saed al Awadi, the chief executive of Dubai Export Development Corporation.
The Ministry of Economy was working on a "basket of legislation", as well as signing free trade agreements to open the way for UAE companies to enter export markets, said Mr al Shihhi. He said it was too early to elaborate on the details of the planned legislative changes. Sultan al Mansouri, the Minister of Economy, last month met with Lord Mandelson, the UK business minister, to discuss ways of boosting trade between the two countries.
"We are encouraging UK ventures to come and open manufacturing units here to export to other markets in the MENA region," said Mr al Shihhi. Last year, the UAE's non-oil exports increased to Dh60.36 billion (US$16.43bn), a 66.5 per cent increase from 2007. @Email:email@example.com