UAE's commercial agencies' draft law to boost country’s competitiveness

The new law will permit public joint-stock companies with at least 51% national capital contribution to register as commercial agencies, economy minister says

Downtown Dubai. The UAE is adopting various measures to attract more foreign direct investment to the country. Reuters

The UAE's new commercial agencies' draft law will allow public joint-stock companies with at least “51 per cent of national capital contribution” to act as commercial agents, Minister of Economy Abdullah bin Touq has said.

The draft, which is currently being reviewed by the Federal National Council, will boost the country's competitiveness “while ensuring alignment with international business standards”, Mr bin Touq told state news agency Wam on Wednesday.

The new law is similar to the old law where only Emiratis can act as commercial agents “but the new draft law gives the right for public joint-stock companies and public legal entities with at least 51 per cent national capital contribution to register (as) commercial agencies", he said.

The UAE, the Arab world’s second-largest economy, is putting in place various measures to boost foreign direct investment.

It aims to attract Dh550 billion ($149.7bn) in FDI by 2030, and eventually reach Dh1 trillion by 2051.

The government is keen to continue increasing FDI at a time when the global investment landscape is changing rapidly, thanks to post-coronavirus trends, changing economic priorities and a sharp rise in digitisation, Mr bin Touq said earlier this year.

The country overhauled its commercial companies' law in 2020 to attract more foreign capital and removed the requirement for onshore companies to have an Emirati shareholder.

Only 6,000 commercial agencies have been registered in the country since the original law was drafted 40 years ago, despite the economic potential and the conducive business environment in the country, he said.

The draft law is expected to provide more business opportunities for UAE citizens and allow new categories of citizens to gain access to business services of commercial agencies, an advantage not provided by the current law, he said.

Meanwhile, the UAE's new draft law on co-operatives will help the sector to increase its contribution to the country's gross domestic product, Mr bin Touq told Wam.

The UAE Cabinet approved a decision in February to let co-operative associations trade their shares on the local financial markets and raise new capital to expand their businesses.

The UAE economy is set to expand by an annual 5.4 per cent this year, driven by the country’s success in containing the health and economic effects of the coronavirus pandemic, according to the latest figures from the UAE Central Bank.

The 2022 real GDP growth estimate is higher than the 4.2 per cent projection the Central Bank made in April, the banking regulator said in its 2021 annual report released earlier this month.