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United Arab Emirates Local partner for investment

Tariffs, taxes, and trade barriers of United Arab Emirates. Also covers UAE government procurement regulations and documentation.

United Arab Emirates Local partner for investment

Postby bridgat » Tue Nov 18, 2008 8:30 am

UAE: Laws pose barrier to growth in foreign direct investment

The Commercial Companies Law and the Commercial Agencies Law are the two principal barriers to foreign direct investment (FDI) in the UAE, according to a report.

While the Commercial Companies Law includes the regulations that oblige foreign companies to have local sponsors or partners holding 51 per cent of their equity, the Commercial Agencies Law states that the foreign non-resident companies must have a local agent to sell their products.

The report prepared by National Bank of Dubai (NBD) said the existing companies law does not suit large corporations that are likely to make substantial investments and want to have complete management control over their operations.

The agency law contains provisions for exclusivity, meaning that the foreign companies may not have more than one agent in one territory, though they can have different agents for different lines of products. The law also makes it very difficult for a company to change its agent.

There are other barriers also, according to the report. The law concerning the restriction on foreigners - individuals and companies - owning land, is also perceived as a deterrent to foreign investment into the country.
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