A New Era for UAE Startups?

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After the UAE announced that it will permit 100% foreign ownership of companies, we checked in with two expat-run digital agencies in Dubai to ask how the long-anticipated ruling would change their business lives.

“More competition” was at the top of their list of anticipated changes.

Erik Bjerlestam is CEO of digital agency bFound. And Andrew Thomas is Managing Director of Nexa Digital. As a Swede and a Brit, respectively, we thought they'd have a perspective on what this development means to their businesses and to the UAE startup ecosystem more generally. 

The UAE ruling eliminates the requirement that foreign-owned companies have a local sponsor.  This is part of a broader, long-term effort to make the UAE attractive to tech start-ups and foreign investors.

The new ruling went into effect on December 1.

"In the long term this is a big deal," Erik said. "This will attract more foreign investment."

And he added that it will make it easier and more costs effective for an ex-pat to set up a business. Currently, an ex-pat owned business can be 100% foreign-owned if it operates in a free zone. But in order to trade outside of a free zone, it requires a license with a local sponsor.

Andrew added that the key is that the ruling is at a federal level. Whereas before, there was more of a patchwork approach across a variety of free zones in the UAE, this ruling offers another opportunity for 100% foreign business ownership across the UAE.

"It's a positive move," Andrew said. "As we become more global because of COVID, this is another opportunity to openly do free trade."

The two agency leaders agreed that another by-product will be an increase in competition as more companies will relocate to or launch new businesses in the UAE. But this increase in competition will not be without benefits for existing players.

"The competition is good and healthy," Erik said. "It also attracts new resources and a lot of new, qualified people as well coming into the region."


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