New Foreign Investment Policy Help Reduce Labour Market Risk
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May, 28 2018

New Foreign Investment Policy Help Reduce Labour Market Risk

The report notes that the move will help the UAE remain a step ahead in terms of competitiveness, as ongoing economic diversification programmes are heavily reliant on foreign expertise and investment.

New Foreign Investment Policy Help Reduce Labour Market Risk

According to a new report from BMI Research, the UAE’s move to ease restrictions on foreign investment will lead to an uptick in investment inflows, while the introduction of 10-year residency permits will help reduce labour market risks.

The changes are a net positive for the country’s business environment, which in turn will help the UAE maintain its position as a regional outperformer at a time when competition for foreign investment is heating up across the GCC.

The report said, “We believe that the new regulations will make it easier for investors to enter the country, as it no longer requires finding a reliable local partner, while the introduction of 10-year residency permits for investors and selected professionals will provide additional visibility and stability.”

The report notes that the move will help the UAE remain a step ahead in terms of competitiveness, as ongoing economic diversification programmes are heavily reliant on foreign expertise and investment.

The report noted, “By remaining ahead of its GCC peers from a business environment perspective, the UAE is therefore well positioned to benefit from the uptick in investment associated with rising oil prices, especially in high-value added sectors. This will enable the UAE to maintain its regional lead.”

From a labour market perspective, BMI said it believes the decision to allow 10-year residency permits signals that ‘Emiratisation’ is not a core priority for the government, and that it will not be pursued at the expense of competitiveness in the labour market.

The report notes, “Several GCC states have implemented, or are in the process of preparing, regulations restricting the participation of foreigners in their local job market.”

It added, “This does not mean that the government will not continue to encourage the participation of nationals in the workforce but it will likely do so largely through positive incentives, rather than punitive measures.”

The report concluded that the move will also help to significantly lower labour market risks by reducing the likelihood of local businesses experiencing labour shortages and related cost increases.

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