GENERAL INTRODUCTION

The UAE economy is booming and the opportunities to do business in the country are limitless. The UAE’s currency, the dirham, is secure and freely convertible; there are no restrictions on profit transfer or capital repatriation; import duties are low (around 5 per cent for virtually all goods) and, in the case of items imported for use in the free zones, non-existent; labour costs are competitive; corporate tax and personal taxes are nil and 44 double taxation agreements and 32 bilateral investment treaties are in place. In addition, the financial risk is minimal (Moody’s credit rating Aa3). These factors, combined with a strategic, accessible location for major regional markets, an excellent reliable infrastructure and an extremely pleasant, stable and safe working environment bode well for investment.
Not surprisingly therefore, the UAE ranks high in the list of the Middle Eastern and GCC countries deemed to be the most attractive to direct foreign investments (FDI), securing 60 per cent of FDI flows to the region during 2006.
But the country is not resting on its laurels and every effort is being made to foster an enabling regulatory environment. For example, amendments to the company law are currently being made in order to streamline procedures; the federal commercial Law that requires a 51 per cent local partner for businesses located outside of free zones is under review; the Ministry of Economy is in the final stages of drafting competition law that should provide further assistance in combating cartels; and the Government is working on introducing a foreign investment law that will further increase private sector competition and therefore lower inflation. Indeed, several steps have already been taken to deal with inflation: a consumer protection law was recently passed and several rent ceiling initiatives were issued at the emirates level to deal with rent increases.
Finally, the UAE is a contracting party to the General Agreement on Tariffs and Trade (GATT) since 1994 and a member of the World Trade Organisation (WTO) since 1996. It is also a member of the Greater Arab Free-Trade Area (GAFTA) in which all Gulf Cooperation Council (GCC) states participate. The UAE is in the process of negotiating free trade agreements with the US and has embarked on negotiations, either individually or with the GCC, on several regional trade agreements.