Bold de­ci­sions are needed as we head for a tough year

More can be done to im­prove the UAE’s sta­tus on all fronts

Arabian Business English - - 2019 PREDICTIONS LAW - By Dr Habib Al Mulla, EX­EC­U­TIVE CHAIR­MAN, BAKER MCKEN­ZIE HABIB AL MULLA

IN THE PAST TWO YEARS, we have seen the UAE vig­or­ously de­velop its leg­is­la­tion. There was the en­act­ment of the long awaited companies law and bank­ruptcy law, though the lat­ter has not been used as much as most hoped it would be. In 2018 alone, we wit­nessed sig­nif­i­cant amend­ments in laws and reg­u­la­tions deal­ing with res­i­dency, al­low­ing, for the first time in the his­tory of the UAE, long-term res­i­dency for ex­pats in cer­tain cri­te­ria. The for­eign in­vest­ment law was also is­sued, per­mit­ting full own­er­ship of cer­tain busi­ness ac­tiv­i­ties sub­ject to cer­tain qual­i­fi­ca­tions, while a new anti-money laun­der­ing law which com­plies with US reg­u­la­tions was im­ple­mented to al­low the con­cept of ‘con­trol de­liv­ery,’ whereby a sus­pi­cious trans­ac­tion is pro­cessed in or­der to help catch of­fend­ers. More­over, the long awaited ar­bi­tra­tion law fi­nally saw the light, and ar­bi­tra­tion prac­ti­tion­ers are con­tent that they no longer face crim­i­nal li­a­bil­ity pre­vi­ously im­posed on them.

The scope of bribery and cor­rup­tion has been widened in the amended pe­nal code, which now has ex­ter­ri­to­rial reach if the crime im­pacts the UAE. And fi­nally, a new law reg­u­lat­ing the UAE Cen­tral Bank was is­sued. To ap­pre­ci­ate the sig­nif­i­cance of the change, one has to be re­minded that the law had not been amended since 1980.

The en­act­ment of all these laws in a short pe­riod of time in­di­cates how ac­tive the UAE has been on the leg­isla­tive front. The ques­tion is, will this trend con­tinue in 2019? I have no rea­son to doubt that. Con­sid­er­ing that the UAE’s cab­i­net un­der the lead­er­ship of Sheikh Mohammed Bin Rashid Al Mak­toum is con­tin­u­ously rais­ing the coun­try’s rank­ing in the com­pet­i­tive­ness in­dex, we can only ex­pect more ini­tia­tives to im­prove the UAE’s sta­tus on all fronts, par­tic­u­larly when it comes to com­mer­cial law. And while the UAE has done much in this re­gard, I believe there is still room for im­prove­ment. And so I pre­dict a fur­ther re­lax­ation of res­i­dency laws through mi­nor al­ter­ations in or­der to make them more ap­peal­ing, once the new reg­u­la­tions find their way into im­ple­men­ta­tion.

The same would ap­ply to for­eign own­er­ship laws. In my view, the cur­rent changes, al­though highly wel­comed, re­main in­suf­fi­cient in at­tract­ing se­ri­ous and large for­eign in­vest­ments, par­tic­u­larly with the in­cen­tives that other coun­tries in the re­gion are of­fer­ing. In­vestors will de­mand, rightly so, fur­ther ac­tiv­i­ties to be sub­ject to the for­eign own­er­ship ex­emp­tions.

I PRE­DICT A FUR­THER RE­LAX­ATION OF RES­I­DENCY LAWS THROUGH MI­NOR AL­TER­ATIONS”

Nat­u­rally, with more ex­emp­tions, free zones will feel the pres­sure and will strug­gle to com­pete un­less they man­age to change their modus operandi, al­though com­pe­ti­tion is healthy and can only ben­e­fit the econ­omy.

What I wish to see, how­ever, is a dif­fer­ent story. I will try to be mod­est in my wish list. What I think the coun­try needs, and soon, is a cap­i­tal mar­kets law, in or­der to prop­erly reg­u­late and ul­ti­mately im­prove ini­tial pub­lic of­fer­ings (IPOs), and pre­vent ir­reg­u­lar­i­ties ex­pe­ri­enced in the past.

A prop­erly reg­u­lated mar­ket will send a sig­nal of con­fi­dence to in­vestors and will help, to­gether with im­proved liq­uid­ity, to push the mar­kets up­ward.

What I also hope to deal with is the is­sue of crim­i­nal sanc­tions on the is­suance of bounced che­ques. There have been few moves in this di­rec­tion, such as no im­pris­on­ment for che­ques un­der $54,450 in value, lim­ited pro­tec­tions as per the bank­ruptcy law and the waiv­ing of crim­i­nal charges if the value of the cheque is paid.

But we need to make a bold de­ci­sion to deal with this taboo once and for all, in or­der to ben­e­fit the econ­omy as a whole, par­tic­u­larly when we are head­ing to­wards a tough year ac­cord­ing to many eco­nomic com­men­ta­tors.

Whether this is go­ing to hap­pen in 2019 is un­cer­tain, but I am a firm be­liever that progress will be made.

A PROP­ERLY REG­U­LATED MAR­KET WILL SEND A SIG­NAL OF CON­FI­DENCE TO IN­VESTORS”

Chang­ing times UAE leg­is­la­tion is set for more up­dates

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