UAE consolidating its position as strategic destination for FDI

The UAE has solidified its position as one of the world’s most preferred investment destinations, successfully attracting foreign direct investments that have boosted its cumulative balance.

In 2024, the UAE issued 200,000 new economic licences across various economic activities, with more than 1.1 million companies and economic institutions operating in its markets.

According to data from the Ministry of Investment, the total new and announced capital inflows of foundational Foreign Direct Investment (FDI) in 2023 reached $16 billion, reflecting the UAE’s status as a preferred destination for international investors.

The UAE continues to attract significant foundational investments from various countries, highlighting its dynamic business environment and strategic economic initiatives that create job opportunities, drive innovation, and support sustainable growth. The country’s vibrant investment landscape serves as a key driver of economic expansion and capital inflows, reinforcing its position as a leading global investment hub.

Abdullah Bin Touq Al Marri, Minister of Economy, told the Emirates News Agency (WAM) that the UAE is committed to providing a competitive legislative environment for new economy sectors. Over the past six years, the country has developed and issued more than nine key economic legislations aimed at expanding businesses and projects in new economy sectors within its markets.  He further noted that, over the past four years, the UAE has issued more than 30 laws, regulations, and economic policies, including new legislation for family businesses, e-commerce, cooperatives, consumer protection, commercial transactions, trademarks, copyright, and related rights.

The primary sectors driving foundational investment growth in the UAE include business services, software, and IT services, which have generated numerous job opportunities and attracted substantial capital inflows.

Sectors such as financial services, industrial equipment, transportation, and storage have also played a significant role in foundational investment growth, leading to a 7.5% increase in total jobs created, a 31% rise in announced projects, and a 37% surge in total announced foundational foreign direct investment inflows.

Emerging sectors, including renewable energy, electric vehicles, and cloud computing, have made significant contributions to the UAE’s economic growth and created major investment opportunities.

The UAE’s diversified economy and its business-friendly environment for sustainable growth have enabled it to maintain its position as the leading investment destination in the Arab world and the region while achieving comprehensive global development. This is reflected in the record growth of FDI inflows, which increased by 35% to reach Dhs112.6 billion in 2023, according to the 2024 World Investment Report issued by UNCTAD.

According to the World Investment Report 2024 by UN Trade and Development (UNCTAD), the UAE has strengthened its position as a leading global destination for promising investment opportunities and a key player in the global economy by capturing 45.4 per cent of the total foreign direct investments (FDIs) flowing into the Arab states, amounting to Dhs248.3 billion in 2023.

This is evident from the record growth in FDI inflows to the UAE, which increased by 35 percent to reach Dhs112.6 billion in 2023.

The UAE topped the list of countries in attracting FDIs, thanks to its enablers, flexible policies, and competitiveness that facilitate the establishment of diverse business activities and pioneering startup projects.

The country also boasts advanced investment legislation and incentives that boost FDI inflows. Amendments to the Commercial Companies Law, allowing foreign investors to establish and fully own companies, facilitated over 275,000 new companies within a year and a half, bringing the total to over 788,000 companies by the end of 2023.

The UAE continues to collaborate across various government and private sectors to achieve the goals of the ‘We the UAE 2031’ vision, aiming to double the GDP to Dhs3 trillion and increase UAE’s foreign trade to Dhs4 trillion.

Notably, the UAE ranked second globally after the United States in greenfield FDI project announcements in 2023, with 1,323 new projects registered, marking a growth rate of approximately 33 percent compared to the previous year.

In October 2024, Mohammed Abdul Rahman Al Hawi, Under-Secretary of the UAE Ministry of Investment, said that in 2023, key sectors driving the growth of greenfield investments in the UAE included business services and software and IT Services, which created a significant number of jobs and attracted substantial capital.

Additionally, sectors such financial services, industrial equipment, and transportation and warehousing played an important role in contributing to this growth.

“These investments led to a 7.5 per cent rise in total jobs created, along with a 31 percent increase in the number of announced projects, and a 37 percent rise in announced greenfield Foreign Direct Investment (FDI) capital inflows,” he said in statements to the Emirates News Agency (WAM).

WAM