Remittances climbed to Dh43.5 billion, led by Indian workers
Remittances by UAE expatriates rise 17% in the first quarter
Remittances by expatriates living in the UAE rose 17 per cent in the first quarter, led by Indian workers.
Foreigners living in the UAE remitted Dh43.5 billion in the first three months of 2018 compared with Dh37.1bn a year ago, according to state-run Wam news agency.
About 70 per cent of remittances were done through money exchanges.
Indian workers led the remittances with Dh16bn, Wam said on its website. They were followed by Pakistanis, Filipinos, Omanis, Egyptians, Americans, British and Bangladeshi expatriates.
Last week, the UAE issued a landmark law allowing foreign investors to own 100 per cent of companies and offering some foreigners long-term residency permits. The changes, which will take effect by the end of this year, are a departure from a model in which foreign investors had to seek local partners to set up businesses outside free zones. Non-citizen workers are expected to leave once their employment ends and many send their earnings to their home countries. The announcement is expected to bolster economic growth and offer a more attractive environment to foreign investors and skilled workers as the UAE continues to find sources of revenue beyond oil.
The new ownership rules are expected to encourage expatriates to keep more of their earnings in the country, analysts said. In 2017 alone, foreigners in the UAE remitted Dh164bn, according to Wam.
The new ownership rules "will provide incentives to reduce the outflow of remittances and capital,” said Dr Nasser Saidi, an economist and a former Lebanese economy minister. “Long-term, protected residency and visas, will encourage residents to invest in the UAE instead of sending their savings abroad. So the move will help improve the balance of payments of the UAE by retaining capital and savings.”
Remittances in the first quarter of the year made up 27 per cent of the UAE’s current account.
The long-term residency programme could also encourage eligible expatriates to retain their savings and increase their investments in the UAE, thereby reducing remittances, Dr Saidi said.
The laws will grant residents “longer term visibility” that may help reduce remittance outflows, Monica Malik, chief economist at Abu Dhabi Commercial Bank, said.
To encourage residents to save their earnings in the UAE, it will be important to develop the financial markets and offer more medium to long-term investment instruments, Dr Saidi said. These could range from issuing long-term government bonds and encouraging the issue of high grade corporate bonds to facilitating access to finance, developing the mortgage market and developing a pensions system.