Economy minister says it will come by end of year
New legislation liberalising several sectors will be finished by Q4 at the latest, Minister says
The UAE will issue its long-awaited investment law by the last quarter of this year, and expects it will boost foreign investment by up to 15 per cent, with most inflows coming from Asia and Europe, the Economy Minister, Sultan Al Mansoori, told The National yesterday on the sidelines of Annual Investment Meeting in Dubai.
The new investment law will liberalise sectors ranging from the manufacturing industry, including pharmaceuticals, to the services sector, the minister said.
“It will be this year, I can assure you. The latest will be Q4,” Mr Al Mansoori said. “I am optimistic. It is critical that we finish the investment law this year.”
A final draft of the law has been sent to the Cabinet for review and approval, before being forwarded to the legal committee in the Ministry of Justice, he said. The UAE received an estimated $10.3 billion in foreign investments in 2017, Mr Al Mansoori said.
“My expectation is we should probably hit $10.6bn to $10.8bn [in 2018],” he said. “It’s a marginal increase, but we have to take into consideration the current situation and atmosphere in the world right now. The environment is sometimes challenging.”
The new investment law, which paves the way for 100 per cent foreign ownership in specific sectors approved by the government, up from the current 49 per cent, is part of a raft of reforms aimed at lowering the dependence of the economy on oil revenue.
The Ministry of Economy is working on a number of laws to help increase the productivity of the economy and boost the contribution of the non-oil sector to 80 per cent by 2021 from around 70 per cent now.
The UAE is forecasting GDP growth of up to 3.9 per cent for this year, but the projection could be impacted by oil price trends, the regional political situation and the shape of the global economy, the minister said. “We expect it [economic growth] between 3.6 to 3.9 per cent, and of course many factors have to come in,” Mr Al Mansoori said.
“Oil prices, the political situation, some of the issues concerning the global situation as we see it right now between major nations – all this will affect either negatively or positively.”
The UAE economy grew 3 per cent in 2016, and the Government has yet to publish figures for 2017. The International Monetary Fund is projecting 3.4 per cent growth for this year.
The economy is recovering since the 2014 oil slump, as the government continues to diversify income away from crude revenue.
The oil GDP growth is also curtailed by the country’s adherence to a global oil pact that will restrict output till the end of 2018. The agreement between Opec and a group of countries led by Russia could be extended beyond 2018. Oxford Economics, however, is less bullish, forecasting growth of 2.6 per cent, senior Middle East economist Mohamed Bardastani said.
“The economic recovery this year will be driven by the improving oil price environment, higher investment ahead of Expo 2020, expansionary fiscal policy and regional economic recovery,” said Mr Bardastani.
“Oil sector growth will be constrained by the extension of the Opec agreement [to the end of 2018]. As such, we see the bulk of economic growth in the UAE this year coming from the non-oil sector, underpinned by expansionary fiscal policy at the federal and emirate levels and recovery in regional economic activity.”
Middle East and North Africa growth is forecast to recover from the seven-year low of 1.1 per cent last year and expand 2.9 per cent this year, which will benefit the UAE’s open economy, he said.
The UAE is in a wait-and-see mode regarding the potential impact of trade wars involving the US and China over protectionist tariffs, the minister said.
“We are just watching what is happening right now, because there has been this kind of talk about it between the nations and we need to see when they will apply this and if they apply it,” he said. “Eventually, if this [trade war] happens, we will be part of the nations that will be affected. We’re all members of the international community, members of the World Trade Organisation.”
We are just watching what is happening ... if this [trade war] happens, we will be part of the nations that will be affected SULTAN AL MANSOORI Economy Minister