The United Arab Emirates [UAE] approved a sweeping legal reform on Nov. 27, aiming to boost its economy, maximize the commercial opportunities and enhance social stability.
The new changes include 40 laws ranging from trade, online security, copyright, residency, narcotics and other social issues.
To keep its competitive edge, the UAE government has intensified its efforts since the beginning of the year, allowing foreigners to own 100% of the shares in UAE companies in all sectors except the strategic ones. Previously, foreigners could own a maximum of 49% of a company.
The Gulf state also moved to make investing easier and more attractive for talented people through new types of visas and easy procedures to register businesses which makes it 16th globally in the World Bank’s 2020 Ease of Doing Business rankings. In addition, it announced big spending to boost the private sector, as reported earlier by Al-Monitor.
These measures come as the UAE is facing growing regional competition from its close neighbor Saudi Arabia, which started its own plan to diversify its economy and attract foreign investors and talents.
Abdulkhaleq Abdulla, retired professor of political science at Emirates University, told Al-Monitor that the work on these amendments started long ago, and is being done gradually, to prepare the UAE for the future. He said that many countries in the region are working to improve their economies, including Saudi Arabia, Qatar and Egypt.
On Feb. 15, Saudi Arabia told international firms to relocate their Middle East headquarters to its capital Riyadh or else lose government contracts starting from 2024. This move was described by Bloomberg as a direct challenge to neighboring UAE, where most of these companies have regional offices.
Wadah Al Taha, advisory board member of the UAE Chartered Institute for Securities and Investments, said that the Emirates is working continuously to remain an attractive business hub in the region, as it ranks first in the Arab world in the size of foreign investment.
In order to maintain this position, three factors must be present: the infrastructure, the legislative system and investment laws. All these are well available now, Al Taha told Al-Monitor.
The recent changes in the legal system, he added, will add more flexibility to a wide range of economic sectors and industries. He expects that the new changes in commercial law will increase direct foreign investment, localize projects and support small and medium-sized enterprises.
In addition to the economy, the changes also touched on social issues and personal rights, according to Abdulla, who noted that these changes are needed to the “Emirates of the 21st century.”
Previously, it had been illegal for an unmarried couple to live together, or even flatmates to share an apartment — although authorities rarely prosecute anyone.
The new legal reform also decriminalizes sexual relations out of marriage and alcohol consumption for UAE nationals and foreigners. Ona Bustani, an Indonesian chief accountant, who is working for an offshore company in Abu Dhabi, told Al-Monitor that these social issues regularly came up in conversations with her colleagues, especially newcomers.
Bustani, who moved to UAE two years ago after working in Singapore for three years, said that the new laws may put new residents at ease about moving to the country.
The new social amendments, Abdulla said, mean that the UAE is updating its legal system to align with international standards and to reassure foreign communities of their importance and contribution to the state.