UAE launches new strategy to boost FDI inflows to Dh1.3 trillion by 2031

Strategy also aims to triple the FDI balance to Dh2.2 trillion and will target key sectors such as advanced manufacturing and renewable energy

Dubai skyline. The UAE was ranked the second-largest market after the US for greenfield foreign direct investment in 2023. AFP

The UAE has launched a new strategy to double cumulative foreign direct investment to Dh1.3 trillion ($354 billion) by 2031 amid its economic diversification push.

The investment strategy was launched at the annual meetings of the UAE government in Abu Dhabi, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said on X on Tuesday.

The strategy, which also aims to triple the cumulative FDI balance to Dh2.2 trillion by 2031, will target key sectors such as advanced manufacturing and renewable energy, the UAE government said in a statement.

“This will be achieved through five strategic directions: attracting new investments in priority sectors, expanding FDI in existing projects, strengthening international partnerships, enhancing investor relations, and boosting the UAE's overall competitiveness,” it said.

The UAE had previously set a target to attract Dh550 billion in foreign investment by 2031 and to eventually reach Dh1 trillion by 2051. It also aims to rank among the top 10 countries globally in terms of attracting FDI.

“The National Investment Strategy 2031 builds on achievements driven by carefully crafted plans, programmes and initiatives aimed at positioning the UAE as a global strategic investment hub,” Sheikh Mohammed said. “The UAE possesses strong fundamentals to attract investments, companies, businesses and talent.”

The UAE, the Arab world’s second-largest economy, has been striving to boost FDI as it moves forward with its aim to diversify its economy away from oil.

The Emirates attracted $30.68 billion of FDI inflows in 2023, compared with $22.73 billion in 2022, an annual growth of 35 per cent, the UN Conference on Trade and Development stated in its 2024 World Investment Report in June. FDI outflows from the country stood at $22.3 billion, compared with $24.8 billion in 2022.

In terms of cumulative FDI balance, the UAE has “significantly outpaced global growth rates” over the past decade, according to the UAE's Ministry of Investment. From 2013 to 2023, the UAE’s FDI balance increased by 150 per cent, compared with the global average growth rate of 97 per cent.

The country was also ranked in the Unctad report as the second-largest market after the US for greenfield foreign direct investment in 2023, as it continues to boost business with its investor-friendly policies. Greenfield FDI involves a company establishing operations in another country by building new facilities from the ground up.

The Emirates made 1,323 greenfield FDI project announcements last year, up 33 per cent annually, while the US had 2,152 greenfield FDI project announcements, the Unctad report found. The UAE gained two places in the ranking of top destinations for greenfield projects, after entering the top five in 2022.

To boost FDI, the UAE has unveiled initiatives including 100 per cent foreign ownership of companies, reduced visa restrictions and incentives for small and medium enterprises. It also unveiled the NextGen FDI programme, which seeks to speed up licensing, increase the issuance of bulk or golden visas, improve banking services and provide commercial and residential lease incentives for technology companies seeking to relocate to the country.

The country's comprehensive economic partnership agreements are also aimed at enhancing bilateral investments.

According to the Ministry of Economy, the “promising foreign investment sectors” in the UAE include FinTech, AgriTech, health care, education, e-commerce, tourism, space, logistics services, information and communications technology, manufacturing, renewable energy, gaming and smart cities.

At the meetings on Tuesday, the UAE also launched the InvestUAE brand to act as a unified platform for promoting the country as a global investment hub. While the Ministry of Investment handles policy and regulation, InvestUAE will lead promotional efforts, including awareness campaigns, summits, international events and digital marketing targeting global investors, the statement said.

The UAE also moved up on Kearney’s 2024 Foreign Direct Investment Confidence Index, jumping to eighth place from 18th. It also came second on Kearney’s emerging market index – behind China, rising from third last year.

The UAE’s higher ranking “is a clear reflection of its … decisive push towards economic diversification, which [has] firmly cemented the UAE’s position as a magnet for global investment”, Rudolph Lohmeyer, partner at the National Transformations Institute, Kearney Middle East, said during the launch of the report in April.

The ranking also “reflects growing investor confidence driven by the UAE’s sustained track record of policy reform”, he said.