The UAE has always sought to develop the UAE into a business-friendly region and to have the best facilities and policies that encourage foreign direct investment. The United Arab Emirates have grown in leaps and bounds and established themselves on the world page. It no longer identifies itself as an oil-dependent economy and has instead developed a well-diversified economy. The establishment of the Dubai International Financial Center (DIFC), Dubai International Arbitration Center (DIAC) and Abu Dhabi Commercial Conciliation and Arbitration Center (ADDCCAC) court system, enabling judgment in English , is an alternative legal mechanism other than the local UAE. courts.
The UAE has also developed and offered nearly 40 Strategic Economic Zones or Free Trade Zones which allow foreign investors to own and establish a business or branch of a foreign business. Recently, the UAE government enacted a landmark law that now allows foreign investors to own 100% stake in a mainland UAE company without necessarily appointing a local sponsor who owns 51% of the shares. Certain strategic activity sectors would still remain excluded according to the decision of each emirate.
The UAE offers a strong banking infrastructure and banks often provide loans to foreign investors. There are specific banks that serve the needs of small and medium-sized businesses and issue bank loans. The percentage of interest, the guarantee and the repayment term differ between each. Business entities with years of successful operations and good credit history to build on are more likely to get larger loans. Banks also carefully examine and treat the company’s capabilities, management structure, turnover and guarantees as decisive factors.
Other critical items controlled by banks could include:
- Cash flow: The cash flow obtained by the company through its day-to-day operations is a key element monitored by banks and is considered a primary indicator of the financial stability of the company.
- Professional know-how: a lack of experience in this sector of activity can worry banks. Therefore, banks usually thoroughly check the level of experience gained in the intended trade or trade flow.
- Business plan: Through its business plan, a company can present its clear vision for its operation and future expansion. Banks often review a company’s business plan to see a realistic expectation for the company’s success.
The UAE is extremely focused on changing the legal regime and the economy that ensures that foreign investors continue to enjoy all the UAE has to offer. Alternative financing options may also be sought by foreign investors, especially entrepreneurs, who include financing options in the form of venture capital and angel investors. These are slowly becoming extremely popular and viable financing options in the UAE.