13 hurdles to FDI identified

It is going to cost more for a certificate of origin in the UAE (FILE)

Foreign investors have to deal with a mixed bag of difficulties and facilities when setting up their businesses in the UAE, according to the biggest ever survey by the Ministry of Economy (MoE) of foreign companies in the country.

The survey, covering more than 800 foreign companies in the UAE, listed 13 difficulties faced by foreign investment in the country, as well as 13 "privileges".

Nada Al Hashimi, director of the Ministry of Economy's Foreign Investment Department, said in an exclusive statement to Emirates Business that the ministry found out about the threats and opportunities to foreign investment in the UAE through questionnaires and year-long field survey of foreign-owned factories and companies conducted by its team nationwide.

Among the hindrances that the survey found, rising operational costs came first with a 72.6 per cent frequency, followed in order by rising fuel prices, tough foreign competition, difficulty to get land and property, difficulty to find a UAE national partner or sponsor and difficulty of getting projects approved.

Other factors cited as hindrances were the difficulty of finding credit facilities and adequate finance, lack of skilled labour, non-flexibility of the financial market, lack of information on investment, lack of administrative services, and the shortage of local suppliers.

The survey also listed the 13 positive reasons for investing in the UAE, which was topped by political stability with a 91.4 per cent frequency. It included access to regional markets, geographical position and access to world markets.

Many foreign investors cited the presence of a qualified local partner as a positive, as well as easy investment procedures and sufficient space for activity. Strategic assets, high market value of shares, low cost of finance, and appropriate commercial values of investments were some of the other reasons for FDI favouring the UAE.

Al Hashimi said the survey has shown that foreign firms working in the fields of transformational and knowledge industries, and construction and contracting have the largest percentage of foreign workers. The annual rate of growth in the number of workers in construction and contracting companies was 28.4 per cent, she said.

"Foreign investment [in the UAE] has been increasing annually over the past two years by some $2 billion (Dh7.34bn). The total foreign investment is expected to go up to $23bn this year," she said.