Comprehensive Report: Foreign Direct Investment in the UAE

This report provides a comprehensive overview of Foreign Direct Investment (FDI) in the UAE, addressing key questions such as the definition of FDI, its significance for a country's economy, and the motivations behind corporate investment in a foreign nation. It identifies the top five sectors that attracted the most FDI in Dubai in 2019, including Retail and Wholesale Trade, Accommodation and Food Services, and Administration and Support Services. The report also explores strategies the UAE government could implement to attract more FDI into other sectors, such as relaxing FDI norms. Furthermore, it explains the concept of positive and negative lists in FDI, detailing their implications on investment inflows, and how changes in FDI laws, like the introduction of positive and negative lists, are expected to boost technology, manufacturing, and logistics sectors. The strategic location of the UAE is highlighted as a key factor in attracting further investment, with the report concluding that the 2018 changes in FDI policy present significant investment opportunities.

Running head: FDI
FDI
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................2
Introduction on FDI:..............................................................................................................2
Importance of FDI:.................................................................................................................2
Incentive for the Company:....................................................................................................3
Five sectors for FDI:..............................................................................................................3
Attraction of Investment in Other Sector:..............................................................................4
Positive and Negative List of FDI and its impact on funds:..................................................4
Conclusion:................................................................................................................................5

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Introduction:
The following report tends to highlight the various scenario of the Foreign Direct
Investment. The report seeks to define and explain the meaning of the Foreign Direct
Investment and its importance for a country. This is followed by aiming to provide the
rational of a company to invest in a country. Thus, this provides a general idea and rational
for the foreign direct investment and is followed by the top 5 sectors which have attracted the
foreign direct investment and the steps which is taken by the UAE government to attract
foreign direct investment in the country. Thus this report aims to provide all the information
pertaining to Foreign Direct Investment in UAE.
Discussion:
Introduction on FDI:
Foreign Direct Investment is the method by which companies which are located
outside of a country can make investment in the country. The investment is a long term
investment in a foreign country and can be made by any multinational company to expand
their operations to new regions and territories.
Importance of FDI:
The FDI is an important concept for a country, since it increases the economy of the
country and helps to boost the standard of living of the individuals of the country. The FDI
brings in the form of new technology, creation of employment, increase in the trade flows,
and addition of skills and helps the country to make a presence around the globe. Thus, FDI
helps in the infrastructure of the country, creates chain of global value, and creates
employment and taxes for the country. Thus, ultimately FDI helps in the growth of the
economy of the country with increase in the qualification of the people who are employed.

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Incentive for the Company:
The company have operations which are spread around the globe, with manufacturing
facilities located at some location and the market for consumers at some other location. Thus,
the company can move the production of its good near to the consumer market which would
lead to some strategic benefits to the company. The company would be able to use the
resources which is available in the country along with the skilled work force from that
country. The stable legal and political environment would provide additional benefits to the
company which would help the company to grow. Also the FDI in a country also helps the
company to explore new markets with its product which was not feasible in the prior period,
leading to additional sources of revenue.
Five sectors for FDI:
The top five sectors for FDI in Dubai in 2019 are highlighted in the points below
along with the percentage of share,
 Retail and Whole Sale Trade – 25%
 Accommodation and Food Services – 17%
 Administration and support services – 8%
 Software Publishes – 6%
 Finance and Insurance – 6%
The top five countries from which the FDI is attracted in UAE is from the following
listed in the points,
 US - 13%
 UK - 23%
 India - 7%
 France - 9%

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 China - 7%
Attraction of Investment in Other Sector:
Thus as the government has been making changes to the FDI law creating list for
sectors which would provide 100% ownership to the foreign company for investing. Thus,
the government can further relax the norms of the FDI and make it suitable for sectors in
which the government is willing to attract more investment. Thus, the investors would be
interested in sectors which have certain relaxation as it creates incentives for them and hence
increasing the investment in other sectors which was required by the government.
Positive and Negative List of FDI and its impact on funds:
The change which has been made in the FDI law of the country seeks to create two
list of the sectors for investment known as the positive list and the negative list. The sectors
which require the stringent rules of the FDI to be followed along with the support of local
sponsorship for investment and holdings not greater than 51% are considered to be a part of
the negative list. These are sectors which are stringent and require government intervention to
prevent excessive capital inflows.
The change in the list where 100% ownership would be provided to the investor in
certain sectors are known as the positive list, as it is expected to create a huge flow of funds.
Thus, it is expected the change in the FDI law would enable to enhance the technology sector,
the manufacturing sector and the logistic sector of the country. The strategic location of the
country would tend to attract more investment in the positive list which would further boost
the economy.

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Conclusion:
This report tends to provide an insight of the FDI policy which is in place in Dubai.
The change in the FDI policy which was in 2018 would create significant opportunities for
investment in the country. The sectors which the government wants the FDI investment to be
in have been placed in the positive list. Thus, this report highlights the FDI policy and its
importance.