Marina District, Dubai, United Arab Emirates. Picture: THINKSTOCK
Marina District, Dubai, United Arab Emirates. Picture: THINKSTOCK

Dubai — The United Arab Emirates (UAE) plans to allow full foreign ownership in companies and grant long-term visas to some investors and professionals as the second-biggest Gulf economy seeks to attract more investments.

The new rules will offer residency of up to 10 years to specialists in medical, scientific, research and technical fields, as well as five-year visas to students and 10-year visas to exceptional students, state-run WAM news agency reported on Sunday. The changes were approved by the cabinet and will take effect by the end of this year.

"Many people held back from investing here as they felt there was no long-term tenure, dependent on a short-term visa, etc," said Chavan Bhogaita, head of market insights & strategy at First Abu Dhabi Bank. "Now with a 10-year visa and 100% foreign ownership, investors and people looking to set up/grow business here would have more confidence."

Changes to ownership rules are a significant departure from the policy of restricting foreign ownership outside free zones. Expatriates seeking to establish businesses outside the zones must seek partnerships, with UAE citizens owning 51% in the ventures.

Like in most other Persian Gulf states, a majority of the UAE’s population of 9-million consists of expatriate workers and families who are expected to leave once their employment ends. Unable to set roots in the country, many send earnings abroad. In 2017 alone, expatriates remitted 164-billion dirhams ($45bn), according to WAM.

A relaxing of residency rules follows legislation in neighbouring Qatar last August that granted some foreigners the right to remain indefinitely. The decision was taken amid a crisis in relations between Qatar and a bloc of Arab states led by Saudi Arabia.

"We expect a significant positive effect on foreign direct investments — 100% ownership will help spur FDIs outside the existing free-zones," said Jaap Meijer, managing director and head of equity research at investment bank Arqaam Capital in Dubai. "The decision should also help net immigration, which should significantly alleviate the current pressure on housing markets."

Abu Dhabi is the capital of the UAE, which is made up of seven emirates. Dubai’s is the nation’s business hub. The benchmark stock index in Dubai climbed 1.3% at 10.39am, while the gauge in Abu Dhabi rose 0.3%.