Foreign investors may soon be welcome in Dubai as the government puts together a blueprint to revitalise the flagging economy.
The idea is that investors would not tie up with a Dubai national, as is currently required, but could start a business with someone from the Gulf Cooperative Region (GCC).
This would be a major change in Dubai’s position in allowing foreign investors to start up in the United Arab Emirates (UAE).
That means investors from Bahrain, Kuwait, Oman, Qatar and Saudi Arabia would be free to link with a foreign business and begin trading in Dubai.
Dubai’s Department of Economic Development has formed a committee to look at how the rule could be implemented – and how it will benefit the economy.
Currently foreign businesses are only allowed to have a minority stake in a business in Dubai, and the wider UAE, and they must have a local partner.
However, foreign firms can own 100% of a company but only when they are the country’s ‘free zones’.
The move widens the net for potential investors to team up and bring investment to a country keen on bringing in foreign capital after a property market collapse and a corporate debt crisis.
Dubai is particularly keen to develop industry, services and tourism and will expect a minimum investment of £1.7 million is needed before any business without the involvement of a Dubai national could go-ahead.
According to government data, foreign investment in the country is slowly increasing with investment projects worth £2.9 billion unveiled in the first six months of 2012 – up 7% on the year before.
No timescale is laid out for the introduction of new investment rules. Critics say the government could spend several years bringing in regulations allowing foreign investors to do business outside of the ‘free zones’.
Meanwhile, Dubai is also making strong moves to establish the emirate as a leading centre for Islamic banking and finance.
The emirate already has the top banking centre for the Gulf, a position reinforced by the opening of the International Finance Centre more than 10 years ago.
The government is keen to attract fresh investors and will promote Islamic banks and insurance companies, and their products, to other Islamic countries.
Though the Islamic finance market is much smaller than mainstream finance, the sector is rapidly growing as people are attracted to its ban on interest and financial speculation.
Dubai’s government is also looking at creating international standards for halal foods and becoming the main arbitrator for Islamic business contracts.