Question remain, but increased foreign ownership is a game changer

The Federal government’s announcement yesterday that 122 business activities in 13 sectors will be opened for up to 100 per cent ownership is the news that many companies, foreign and domestic, have been waiting for. The easy takeaway here is that investment into the country will raise significantly. There is no doubt the UAE is laying out the welcome mat to drive foreign direct investment and boost economic activity.

Increased foreign ownership will also have a positive impact on the morale of local businesses, many of which have struggled in a challenging economy. Business people who have spent decades in the country will now be able to gain a sense of ownership over their accomplishments as well as their businesses. It will also force businesses to be more competitive, as more foreign investments will bring new players into the market place.

The actual financial impact of the announcement will be determined by some as yet unknown factors, including the per cent of ownership allowed, which will be determined by each emirate. While 51 per cent gives a foreign company the ownership and control many want, it’s not the same at 100 per cent, and it remains to be seen if there is an incentive for local governments to award complete ownership over more than a handful of activities.

There are some questions that may be difficult to answer, too. How will the government handle companies that work across multiple sectors? But even gives the need for additional details, if yesterday’s announcement comes close to living up to the hype, it will be a game changer when it happens.