Are we ready for Expo 2020?
Expo 2020 is the UAE's chance to take a serious look at legal reform. – writes Jayshree Gupta
Dubai’s glorious victory over the efforts of Sao Paulo, Izmir and Yekaterinburg to host Expo 2020 is a testament of the rapid growth and success of the United Arab Emirates. However, despite the economic benefits and opportunities that it is anticipated to bring – Dubai’s foreign trade is projected to reach Dhs 4 trillion by hosting Expo 2020 – the question really is whether Dubai is ready to host the world’s largest exhibition.
Living in the UAE, one is used to reading about records the country is constantly setting or breaking and we marvel at the amazing urban developments. Home to the world’s tallest building and highest restaurant, skiing facilities in the midst of a desert, holder of umpteen records such as the longest gold chain, longest moving envoy of flags and the largest tennis ball mosaic in the world, the country has certainly earned its place on the map of the great and wonderful. Dubai is banking on tourism to grow in the coming years leading up to Expo 2020 and travel to the country is expected to grow strongly over the next 10 years. The combination of a strategic location and investment in airports and infrastructure establishing the emirate as an important global hub.
Just as significantly, however, Dubai is looking to be the regional investment centre of choice, attracting global enterprises basing their Middle East and African and even South Asian headquarters here. We also anticipate that there will be a large influx of companies looking to establish themselves here in Dubai or form ventures with local partners and business to provide a range of services.
In order to incentivise and attract these ventures, there have been landmark changes in the emirate’s investment regime such as the creation of a number of bespoke industry and service free zones, including the launch of the Dubai International Financial Centre. The DIFC, its authority, its courts, its world class arbitration centre and most recently the newly launched Wills and Probate Registry have instilled a level of investor confidence. Especially in the real estate sector, which struggled to make a comeback after the recent economic crisis.
Additionally, the UAE’s Commercial Companies Law was recently revamped and the new Commercial Companies Law will come into force on July 1. There has been discussion about the new CCL for a long time now and much was expected in relation to liberalisation of the limits on foreign ownership. The new CCL has brought some important changes such as allowing shareholders in public joint stock companies to sell their rights of issue and prohibiting financial assistance. However, foreign ownership restrictions remain in place with maximum foreign ownership in local limited liability companies restricted to 49 per cent. Historically, this high level of protection granted under the legal regime to Emirati nationals or ‘sponsor’ entities has discouraged many businesses from investing. The setting up of free zones and the DIFC, as mentioned, has slightly mitigated this. But it is a regime that is seen to be behind the times compared to various other Arab states.
The combined fact that Dubai is turning into a hub for business, future mega events and emerging as a magnet for shopping travelers also provides for a wealth of opportunities. Both hotel operators and owners and the real estate, and hospitality, sectors have seen a resurgence since the crisis. Real estate investment by foreigners is limited to specific designated areas, under present laws. As free zone companies are limited to doing business