DUBAI, (AP) _ The United Arab Emirates is poised to open sectors of its booming economy to full foreign ownership, ending decades of protections that have hamstrung free trade talks with the United States and European Union, government officials said Tuesday.
Economy Minister Sheikha Lubna al-Qassimi has proposed a new law that would open up a few narrow areas in the services sector and financial services industry to full foreign ownership, a pair of government official said on condition of anonymity because they were not authorized to speak publicly.
The proposed law, expected to be handed to the Cabinet for approval in a few months, would retain the 49 percent cap on foreign ownership in businesses where the Emirates is already competitive, the officials said.
Separately, the government of the emirate of Dubai is considering opening its state-run power generating industry to foreign investment and is considering nuclear power as one generating option, Saeed al-Tayer, chief executive of Dubai Electricity and Water Authority, told Dow Jones Newswires on Tuesday.
Electricity demand in Dubai, among the world’s fastest-growing cities, is surging by 20 percent a year, and the state utility needs foreign companies to help fund the US$37 billion (¤28 billion) required to quadruple capacity to 25,000 megawatts, equal to half Florida’s electricity capacity, by 2017, according to industry estimates.
Al-Tayer said companies like International Power PLC, Suez and AES Corp. may be allowed to invest in the emirate’s power sector if they can deliver electricity at a reasonable price.
The Emirates is already the top recipient of foreign investment in the Middle East, garnering US$12 billion (¤9 billion) in 2005, nearly a third of the regional total of
US$34 billion (¤25 billion), according to the United Nations Conference on Trade and Development.
Foreign companies are already allowed to own 100 percent of businesses that operate in the myriad government-run free zones in the Emirates, mainly in Dubai. Foreign investors outside the free zones are restricted to a minority stake, and require a local partner to hold the majority.
The investment law was among the differences cited in the breakdown of Emirates-U.S. free trade talks this spring. And EU trade commissioner Peter Mandelson said in February that the Emirates was among the six Gulf Arab countries insisting on keeping the ownership restrictions, despite negotiating a free trade agreement with the European Union.
The ban on foreign ownership was the major sticking point in the talks between the Gulf Cooperation Council and the EU, Mandelson said.
Dropping protectionist rules would dampen inflation, diversify economies and provide Gulf consumers with cheaper, better quality European consumer goods, machinery and chemicals, Mandelson said.
For its part, the EU agreed to phase out 100 percent of its import tariffs on Gulf Arab goods and services over four years, Mandelson said.