Citizens from Gulf Co-operation Council (GCC) countries might be granted permission to invest in Dubai without seeking a local partner, as Dubai’s government has announced plans to reform foreign ownership laws. In a sign that the government is looking to attract FDI into the emirate, which is still suffering from the exogenous economic shocks brought about by the collapse of its property market in 2008, Dubai’s Department of Economic Development formed a new committee that has advocated removing foreign ownership restrictions on selected projects involving GCC nationals that are deemed as valuable to Dubai’s economy.

In a statement issued in late January 2013, Dubai’s government announced that it may revise its regulations on foreign ownership of businesses, and that nationals of Saudi Arabia, Kuwait, Qatar, Bahrain and Oman may gain the legal right to directly invest in onshore projects without requiring a domestic partner. Current regulations stipulate that all foreign companies that wish to operate onshore in Dubai can only hold a minority stake of 49% in their business ventures, and that the remaining 51% stake must be handed over to a local partner. As a result, foreign investors that have wished to bypass this requirement have operated in one of the city’s offshore 'free zones' in which 100% foreign ownership is allowed.


Dubai's recent decision to revise its regulation signals growing concerns within the government about declining FDI performance. Greenfield investment monitor fDi Markets found that capital inflows into Dubai are yet to recover from their 2008 peak of $23bn, and in 2011 capital expenditures declined to a new low of $4bn.

Although it is unclear how the new policy will be applied, it could be a significant step forward for foreign investors, as it would give them a greater flexibility to choose partners from the GCC’s six countries, rather than restricting potential business partners to the smaller pool of citizens from the United Arab Emirates.