UAE trade minister: ‘NextGenFDI is a game changer’

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• Dr Thani Al Zeyoudi says incentives will lure international business
• Quicker visas and easier banking offered to attract companies

The United Arab Emirates is looking to compete against the world’s most popular cities for international businesses, the nation’s trade minister said as he announced incentives aiming to attract 300 digital companies to set up offices over the next year.

“What we have seen in the last few years is that things are moving, despite the disturbances to the oil prices and other global challenges,” Dr Thani Al Zeyoudi, UAE minister of state for foreign trade, told AGBI at a news conference in Dubai to announce the new NextGenFDI initiative.

“But regardless of what is happening around the world, we want to ensure that our ecosystem is continually attractive to those companies.

“There will be incentives, especially on leasing and on employee housing. There will be dedicated discounts for them from some international companies.”

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As part of the NextGenFDI initiative, the UAE Ministry of Economy has signed partnerships with seven entities – Abu Dhabi Global Market (ADGM), Dubai International Financial Centre (DIFC), Dubai Multi Commodities Centre (DMCC), Dubai Internet City, Dubai South, Emirates NBD and digital banking platform Wio – to expedite the incorporation process for digital companies.

Other incentives include a streamlined visa process, and faster access to the banking system and better access to capital.

“The game changer here is the time,” the minister said. 

“A lengthy process means more costs for the companies. We want to make sure that we’re [reducing] the initial time so they hit the ground running with their operations.”

The move is part of a wider national target to become a top destination for foreign direct investment (FDI). 

“We want to be one of the top 10 countries globally to attract FDI so that overall KPI [key performance indicator] has been already set, and all these initiatives are contributing to the achievement of this KPI,” the minister said, declining to specify how much FDI the new initiative is targeting to attract. 

The UAE ranked first in the Middle East and North Africa (MENA) and 19th globally in attracting FDI inflows, according to the World Investment Report 2022 issued by the United Nations Conference on Trade and Development (UNCTAD) in June.

Despite the repercussions of the coronavirus pandemic that has cast a shadow on the volume of investment, trade and world economies, the UAE attracted $20.7 billion worth of FDI last year, up four percent from 2020.

The UAE has signed approximately 106 agreements with its trading partners to protect and encourage investments.

As oil-rich Gulf states attempt to diversify away from hydrocarbons, nations face increasing, overlapping economic competition to attract foreign companies, investment dollars and high-quality talent.

Last year, neighbouring Saudi Arabia announced that it intends to “cease contracting” with companies and commercial institutions with regional headquarters not located in the kingdom by 2024 – a move that could challenge Dubai’s dominance as a regional business hub.

The state said the decision aims to incentivise the localisation of businesses by foreign companies that deal with the Saudi government or any of its agencies, institutions and funds, in addition to creating more jobs, limiting economic leakage and increasing spending efficiency.

However, Al Zeyoudi said the UAE is playing on a global scale. “We’re moving from a regional hub to a global hub,” he said. 

“We’re competing with the big, big boys now. The competition in the last years was with the region, now we’re moving to become a global hub.”

Free zone business model

The UAE’s free zone business model, which provides private enterprises with infrastructure, zero taxes and 100 percent ownership, has been successful over the years, attracting a larger share of trade and foreign direct investment than any other comparable programme in the world.

Dubai alone is home to more than 30 free zones targeting sectors such as transport and logistics, healthcare, media and technology.

In 2021, Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, established the Dubai Integrated Economic Zones (DIEZ) Authority, an independent legal entity that governs Dubai Airport Free Zone, Dubai Silicon Oasis and Dubai Commerce City.

Today, the DIEZ accounts for more than five percent of Dubai’s GDP with more than 5,000 firms covering 20 key economic sectors and employing 30,000 employees.

Asked about how the NextGenFDI initiative would address competition between Dubai and Abu Dhabi’s free zones, the minister said: “I see more complementing than competing. They are trying to complement the gaps within each other.”

Arif Amiri, CEO of the DIFC Authority, told AGBI that the opportunity for global trading is immense.

“I think the beauty about the UAE is that it provides the luxury of choice and options, which is great for the industry as a whole,” he said.

“There is so much room for a strong market and for us to have a wider, diverse range of institutions that are eager to represent the opportunities available in the region and specifically in Dubai.

“If you reflect on our own numbers, over the past so many years, our numbers are only growing stronger and stronger. We are running at about 98 percent occupancy.”

Amiri said that the DIFC has consistently attracted both large financial institutions and startups because the centre provides “certainty, a track record of stability, access to a growing market, and one of the most progressive, tested regimes within the region”.

“Our pipeline when it comes to the future of finance is one of our strongest,” he added.

“More than 1,000 companies registered last year [and] a third of them were future of finance, or innovation-based firms.”

The DIFC boss added that its new Innovation One space is “already fully booked” and that the centre is now developing a new building to cater to its waiting list.

“I don’t see this as direct competition because every financial centre will have its own proposition and] strength,” Juma Al Hameli, senior executive director of strategy and business development at ADGM, told AGBI.

“The companies that want to come to us are those that are really looking for progressive regulation [and] looking for fund raising and capital – because Abu Dhabi is the home of the largest sovereign wealth fund (SWF) and we have large capital to be deployed and investment opportunities.

“There are such international players that would target all these financial centres, and they know where to go [based on] what they need.”

Al Hameli added that ADGM is continuing to evolve its regulatory framework to attract businesses.

“We want to strengthen our ecosystem even further,” he said. 

“We are always consulting the market and are currently amending lots of our regulations. We are very much focused on new age finance. We understand that there is a lot of disruption happening in the financial industry.”

In April, ADGM licenced Kraken, one of the world’s largest digital asset platforms which serves a client base of more than nine million across 60 countries, to operate a regulated virtual asset exchange platform in the financial free zone.

“We are in ADGM focused on quality not quantity,” he added. 

“We want the good ones. We like regulation and we like those that want to come and get regulated. We believe when you have strong regulations, only then can businesses thrive and grow.

“What you see today in the UAE is a very strong ecosystem and very strong jurisdictions that enables companies to utilise the best of the offshore and the onshore.”