The United Arab Emirates (UAE) carry out a vital role as a major investment and trade focal point for an extensive geographic section that covers regions which, among others, include; the Middle East, Central Asia, South Asia and East Africa. The significance of the UAE as a trade and investment center is confirmed by the ranking done by the World Bank in the 2013 Doing Business report that saw the region clinch the 23rd position. Some of the ultimate factors that make this region the best terminus for foreign investment, according to world-class firms, are the increased economic growth as well as the political stability the region enjoys, a high rate of population growth and the unavailability of personal and corporate taxes. Despite the availability of such attractive factors, the region’s legal framework is, however, only best suited for UAE’s locals since direct investors can only own a meagre 49% of their investments which, therefore, makes it a requirement for foreign investors seeking to do business in the region to have local investors who will own a minimum of 51% of the total investments, making it quite petrifying for foreign investors. Get in touch with buytermpaperonline.com.
Research Question
Why can’t the Federal Supreme Council of the United Arab Emirates allow foreign investors to own 100% of their investments?
REVIEW OF RELEVANT SOURCES
The first literature source used is an International Management review, ‘Diagnosis of the Current Situation of Foreign Investment in some Arab Economies’ done by Al Abbadi A. A. which gives an overview of the importance of foreign investment in countries and the foreign investment situations in some Arab countries. According to the review, foreign investments play a critical role in developing the economy of a country through increasing the rate of production as well as inviting in technical developers and aiding them in gaining the necessary skills required and experience while providing them with up-to-date methods of management required by both the public and private sectors in order to transmit and instil such methods and skills of management. For a similar paper follow the link Order Dissertation Paper Online.
The legal framework governing foreign investments in Arab countries has led to a slack in the flow of foreign investors when compared to other countries. In the year 2005, the total flow of foreign investments in Arab countries reached a meagre 10.9 billion U.S dollars yet in the same year, the flow of foreign investments in developing countries got to as high as 301.7 billion U.S. dollars. The foreign investment scenarios in Arab countries have also been plagued by constant volume fluctuations from year to year with uneven investment concentrations in different sectors. In the review, it is also noted that some of these countries such as Yemen noted an increased flow of foreign investors into these countries through enactment of regulations and laws that encouraged the flow of investment and trade in and out of such countries. The laws and regulations enacted include easing restrictions imposed on the flow of capital, taking strides towards liberalization of trade, adoption of customs’ legislation which incorporate large scale use of communication technology and information as well as adopting programs of economic reform that cooperate with the World Bank and the International Monetary Fund. (Al Abbadi, 2009).