A conservative policy on foreign ownership of businesses would prevent the UAE from realising its potential as a global hub for several industries.
Now is the time to overhaul rules on foreign ownership in UAE
The freedom to create, and the freedom to own what you create, are two of the most critical forces that drive innovation in any economy.
The business environments that can attract the best and brightest companies and individuals are those offering them the most confidence that they can reap what they have sowed.
So when I read reports that the UAE's Federal National Council spent the bulk of two days debating foreign ownership, with a focus on fear of increased competition and decreased Emiratisation efforts, I grew worried. Maintaining the status quo could well come at the cost of a more dynamic and innovative economy in the future.
I'm a strong advocate of improving business in my country. I have spent the last six months at Stanford University's Graduate School of Business, in California, and my professors and classmates get really excited when we discuss the UAE's potential.
My country has all the right attributes, including forward- thinking leadership, emerging market status, a youth-driven population, and an excellent location.
Yet I can't help but notice the energy drain from my new colleagues when I start to discuss what is required to set up a business in the UAE, and the ownership law in particular leaves a sour taste in their mouths. It's like entering an amusement park and being allowed on only half, or to be precise 49 per cent, of the rides.
Sultan Al Mansouri, the UAE Minister of Economy, suggested four main areas of inquiry when considering any overhaul of the foreign ownership laws: taking into account a foreign company's capital; whether it would create jobs for Emiratis; whether it would pose direct competition to existing local companies; and how much its presence would benefit the local economy.
Each of these questions requires careful consideration.
First, foreign capital. This is where Ministry of Economy officials really earn their paycheques. Several officials have argued that increased foreign direct investment would by default require economic reforms, and that it would be necessary to maintain a healthy ratio of local to foreign investment, to ensure economic stability.
Certainly, foreign investment in UAE-based companies sends a strong statement of the strength of the company both financially and on a strategic level.
Additionally, this would allow the government to free up capital for national and social projects.
Even though there are potential risks associated with heavy flows of foreign capital, if the process is carefully monitored by relevant authorities, the rewards could be significant. So let the capital flow. Just make sure hands are close enough to the tap when it needs to be shut off.
Second is the issue of job creation for Emiratis.
One of the greatest challenges faced by foreign companies when entering a national market is that of cultural distance. And there is no better way to bridge that gap than through the training and employment of a local workforce.
There are aspects of doing business in a local economy that a foreign business person could spend years trying to understand, and still get nowhere.
That all-important local touch is necessary to win the hearts of local customers and consumers. Great global businesses understand this.
By hiring locally, these firms encourage their new customers to become closer to the brand as they see relatives and friends grasp new opportunities.
Third, would foreign ownership lead to direct competition with local companies?
I certainly hope so. Several consumer- and customer-driven companies in the UAE could use a little healthy competition. Is competition really bad for the growth and development of our economy? I for one don't think so.
In several sectors in the UAE you are put in a situation where you have to accept a certain level of product or service because there is just no alternative, and so companies care very little about customer satisfaction. They know you must come back.
But bring in some big corporations from around the world, and watch some local players start dancing to a different beat, perhaps ours. Wouldn't that be nice?
As for benefits to the local economy, I could name several. In fact I just have. But to me the biggest benefit from foreign ownership comes through innovation.
Allowing global companies and entrepreneurs the freedom to "create and own" right in our back yard could have one of the greatest domino effects that the economy of this country has ever seen.
A knowledge-driven economy is not created solely by investments in tech companies, knowledge parks, and education programmes. It also requires the creation of policies and an environment that allow talented people from around the world to innovate, create, own, produce, succeed or fail, then repeat. Some of the world's leading business hubs have prospered from this very model, so why shouldn't we?
The FNC's approach to the foreign ownership issue is well meaning and has the protection of national companies and Emiratis at heart. But I fear that a conservative foreign ownership policy would prevent the UAE from realising its potential as a global hub for several industries.
We are at an exciting time for global business. The world has never been as connected as it is today, and now we have a choice: we can embrace everything the world has to bring to our great nation, or we can cap it at 49 per cent.
Khalid Al Ameri is a social affairs commentator
On Twitter: @KhalidAlAmeri