Prior to the Covid-19 pandemic the Abu Dhabi government was in the process of diversifying the emirate’s economy to reduce its dependence on hydrocarbons revenue and insulate it against global oil price volatility. Significant developments included the 2019 establishment of the Abu Dhabi Investment Office (ADIO) and the activation of a new law regarding public-private partnerships (see overview). Post-pandemic, the government has redoubled these efforts in a bid to empower the private sector to propel a diversified economic expansion programme.
Multiple policies have been implemented during the 2021-23 period to that end, with a core focus on boosting the high-value, high-productivity sectors identified in both the federal and emirate-level economic development agendas, improving the overall business environment and raising the quality of local talent. The last of these incorporates amendments to visa laws and the implementation of specialised training and human capital development programmes. Those policies have contributed to Abu Dhabi becoming MENA’s fastest-growing economy in 2022.
Foreign Ownership
In 2021 foreign direct investment in Abu Dhabi expanded by 2.6%, representing the fastest growth for the emirate since 2016 and a solid rebound from the 0.5% contraction in 2020. In January 2022 Federal Decree Law No. 32 of 2021 on Commercial Companies came into force, which should enable further growth in that metric. Key among the law’s various articles is the fact that 100% foreign ownership of companies established inside the UAE is now permitted. It applies to all areas of the country outside its various economic and industrial zones – those areas are governed by their own laws, with full foreign ownership among the range of incentives and conditions on offer for a number of years (see Industry & Retail chapter).
Labour & Visa Regulations
Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations was enacted in February 2022. The new law sets minimum standards relating to issues such as employment termination, working hours, contractual terms and safety standards that apply regardless of any contradictory contractual stipulations. The law’s terms do not apply to UAE nationals employed overseas, employees of UAE companies working overseas, government employees, domestic servants, agricultural workers or individuals employed in UAE free zones. The law does, however, apply to foreign nationals employed in the UAE and states that those persons must obtain both a work permit and a residency visa. To qualify for the former, a foreign national must be contracted for employment by a UAE-registered company, and that contract must be registered with the Ministry of Human Resources and Emiratisation. All foreign national employees require a residency visa, which can be obtained through corporate sponsorship or one of the recently expanded range of available visa categories.
The UAE Golden Residency Visa was originally launched in 2018 and was designed to attract highnet-worth individuals to live and work in the UAE. To qualify for the visa, applicants had to make a significant investment, such as in residential property or a local company. On October 3, 2022 the list was expanded and now comprises investors, entrepreneurs, talented individuals and workers, scientific researchers, and outstanding students and graduates. Additional allowances and flexibility relating to qualifying individuals’ family members’ legal status in the UAE were also announced. The visas can be obtained for either five or 10 years, and can be renewed pending the fulfilment of specific criteria. The implementation of the changes saw 100,000 such visas issued in the UAE in the first month, an increase of 35% on the first nine months of the year.
Other notable visa categories include the Smart Visa, which is aimed at attracting skilled professionals and tech experts, with fast-tracked procedures and family sponsorship among its key incentives. Meanwhile, recent amendments to tourist visa regulations are intended to fuel arrivals and stimulate growth for hospitality and retail businesses, among others.
Entrepreneurship
An estimated 94% of businesses in the UAE are start-ups and small and medium-sized enterprises (SMEs); in Abu Dhabi, the figure is 90%. As such, fortifying the SME ecosystem is a key area of focus for both the federal and Abu Dhabi governments. Multiple initiatives designed to boost SME participation in crucial value chains are in operation (see Industry & Retail chapter).
The Entrepreneurial Nation initiative, launched by the UAE Ministry of Economy, offers a digital platform for public and private entities to offer programmes focused on enabling SMEs to start and scale their businesses, as well as upskilling initiatives. The second phase of the project began in October 2022, building on the Dh20m ($5.4m) in funding for around 5000 SMEs during the first phase.
ADIO was administering one of the six active programmes available via the platform as of September 2023. The programme is designed to enable expansion into the Abu Dhabi economy for global entrepreneurs and SMEs, with a range of financial and administrative incentives on offer for entities able to meet specific criteria and demonstrate their potential benefit to the high-potential sectors targeted by ADIO, including financial services, agricultural technology, tourism, health, biopharmaceuticals and ICT.
Digital Facilitation
The Investor Journey programme, launched by the Abu Dhabi Department of Economic Development (ADDED) in 2021, is designed to enhance the efficiency of business establishment and operational procedures for existing and prospective investors in Abu Dhabi. Digitising government services has been a core area of focus in the emirate for a number of years, and with that drive now at an advanced stage (see ICT chapter), the Investor Journey programme seeks to bring investment- and business-related services from a range of government authorities into a single digital portal. Through the portal, investors are guided through each step of the investment process, and the ease of access to crucial government services it offers enables swift integration into Abu Dhabi’s business ecosystem. Phase two of the project was announced at a tech industry event in October 2022, with 25 new public and private partner entities adding services to the platform. The emirate’s leading real estate portals can also be accessed through the site, with an interactive map enabling more efficient site location.
Land & Real Estate
The government has launched various land incentives and programmes in recent years to attract greater inflows of private investment, with new areas of prime residential and commercial real estate opened up to international investors (see Real Estate & Construction chapter).
Building on the musataha scheme (see overview), which was updated in 2020 and enables enhanced land rights to local and international private investors, ADDED launched an initiative in July 2022 which removes the need for premises leases for a full year for entities operating in 1200 segments of the emirate’s economy. Retail, food and beverages, and certain types of consultancy businesses are among the areas targeted under the scheme as the government works to expand and facilitate access to its catalogue of services.
Furthermore, in August 2022 a land incentives programme was opened up to attract investment in Abu Dhabi’s manufacturing sector, whereby companies that meet criteria can now apply for long-term rental opportunities with rates starting at Dh5 ($1.36) per sq metre (see Industry & Retail chapter).
Positive Response
There is strong evidence to suggest that the various policies designed to streamline investment procedures are drawing a positive response. According to ADDED data, the number of business licences issued in 2021 rose by 21.5% to reach 25,427, with 24,077 of those for commercial sector operators. There was continued growth in 2022, which saw the total number of economic licences issued in the emirate rise to 25,593, 95% of which belonged to the commercial sector. At the same time, respective growth rates of 161%, 44% and 18% were seen in the number of professional, tourism and industrial entities licensed.
The Abu Dhabi Department of Municipalities and Transport announced that the value of real estate transactions rose by 8.5% in 2022, reaching Dh77.6bn ($21.1bn). The number of transactions also increased, up 27% on the year for a total of 19,033. Significant increases were also seen in the number of control measures and inspections carried out and the penalties incurred, further reflecting the fact that at a time of global macroeconomic uncertainty, Abu Dhabi’s continues to present a safe and attractive environment in which to work, invest and do business.
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