Foreign Direct Investment Growth in the UAE

November 22, 2022

Foreign Direct Investments (FDIs) can be seen globally as the cornerstone for local governments and businesses alike. As a result, businesses can acquire controlling interest in foreign assets and diversify their income.

In the UAE, FDIs continue to grow and are a key factor in leading economic growth. This growth leads to new employment opportunities, the transfer of new technology, the promotion of secure long-term lending and integration in global markets. The driving force in this sector is the alignment with the UAE’s vision of being more self-sustaining.

The Global Attraction of FDIs

Investors across the globe are choosing to invest in foreign markets thanks to the advantages it provides. Businesses have access to the latest technology and operational practices, which can help increase revenue, eventually transferring into the local economy. Investors also have the opportunity to expand into global markets and diversify their portfolios.

FDI Boosts UAE’s Economy

UAE’s strong efforts to curb the Covid-19 pandemic led to top rankings as a tourism destination in 2021 and the first part of 2022. This helped the economy rebound quickly and attract foreign investors. In 2021, FDI inflows to the UAE reported a 3.9% growth, reaching nearly 76 billion AED ($20.7 billion). The growth average over the next three years is expected to reach 5.4% with the help of improvements and reforms in trade and investment.

FDI Laws & Recent Developments in the UAE

The UAE is committed to boosting FDI inflows and encouraging foreign investments, which is evident in its new strategies. In the industrial and manufacturing sectors, the UAE will increase contributions from 133 billion AED to 300 billion AED ($81.68 billion) over the next ten years, leading the way toward self-sufficiency. In addition, Decree-Law no 19 of 2018 was issued by Sheikh Khalifa bin Zayed Al Nahyan which allows global investors to have 100 per cent foreign ownership of local businesses on the mainland and 100 per cent profit repatriation.

FDI Investments & Benefits in the UAE

The UAE has seen record FDI growth and top rankings, making it a strategic choice for foreign investors. In H1 2022, Dubai brought in 492 FDI projects, a new record with an 80.2% year-on-year increase. Greenfield projects made up a 56% share of the projects. Dubai’s FDIs also generated 15,164 new jobs, which is a 33.5% year-on-year increase.

There are multiple ways FDIs can help improve the UAE:

Increase in Economics & Employment
FDIs create new jobs and increase manufacturing. The UAE can attract talented individuals across sectors. New jobs generate more economic income, with workers having money to spend.

Exchange Rate Stability
The constant movement of funds in the UAE helps the Central Bank maintain a foreign exchange reserve.

Human Capital Development
Workers can gain valuable job-related skills and training, leading to more significant economic growth and equity. They will be able to work more effectively and efficiently, which is essential for growth.

There are many reasons why FDIs will benefit both investing businesses and the UAE. With increased FDI growth, the UAE is paving the way for investors globally and helping its economy reach new heights.