The UAE government has created a buzz of expectation with its plans to introduce a 10-year residency visa to attract investors and new talent.
The new visa rules, to be in place by the end of 2018, have potentially far-reaching consequences at a time when major developed countries such as the US are putting up barriers in visas and immigration policies.
But what does it mean for entrepreneurs and the UAE economy?
Here are four key benefits of the government initiative and how they might impact your company:
1. More investment: In a sign of a more progressive, open-door policy towards investors and entrepreneurs, the new residency visa was announced, together with a 100 per cent foreign company ownership reform, on the Twitter account of Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on May 20.
This demonstrates the importance the UAE government places on investors and entrepreneurs from overseas. According to the World Bank, foreign direct investment (FDI) in the UAE had been stagnating somewhat in recent years, dropping from a peak of $14.2bn in 2007 to $8.9bn in 2016. But according to data from the International Institute of Finance, FDI had recovered to $11bn in 2017: it’s no doubt hoped the new visas will help continue this more positive trend.
Benefits for businesses
This announcement can also be seen as part and parcel of the government’s strategy to create a more robust economy by reducing its dependence on oil and gas. It will undoubtedly make the UAE a more attractive long-term prospect for investors in other fields, such as tech, and boost confidence in the Emirates.
2. More business opportunities: Residency visas of up to 10 years (as opposed to the current two and three-year visas) will make the UAE more attractive for business owners planning to relocate to the Emirates as well as those already based here. At present, companies are required to have a local partner who owns a 51 per cent stake in the business and the 100 per cent sole ownership mainland company still needs a local service agent, which is another form of sponsorship. Only those based in free zones can be 100 per cent foreign-owned.
The new initiative should remove many of these restrictions, loosen up the local service agent structure and attract investors and entrepreneurs looking to seize the opportunity and adopt a more long-term view. For example, Uber has outreached to create Uber Eats, which is one example of established companies taking risks to grow and diversify their activities up and down their supply chain.
Benefits for businesses
With more business comes more competition but this should create a drive for companies to develop a leading edge in specific sectors. New entrepreneurs will be attracted to set up in related industries, creating new business hubs and reinforcing the UAE’s credentials as a global leader for technology and innovation. This will provide a boost for all those doing business here.
3. More talent: By limiting 10-year visas to top-level talent like innovators and entrepreneurs, the UAE government clearly wants to attract the highest calibre individuals to the country. The new visas will also be offered to ‘exceptional’ students, and to families of those granted visas, demonstrating a desire to make the Emirates a highly desirable place to live, work and study.
With business owners and top talent on potentially longer-term contracts and visas, we will see growth in career planning within businesses and a greater investment in upskilling and re-training of talent to progress within a business.
One of the greatest shifts in business management over the last 20 years is inward investment in staff and training. The MENA region has lagged behind the rest of the world in this shift, mainly due to uncertainty, with the exception of Dubai Duty free, where 100 per cent of their top management has been promoted internally over the last 10 years.
The visas will be particularly welcome among Indians, who make up the largest expatriate community in the UAE at 2.8 million individuals, including 15–20 per cent who are professionally qualified.
Benefits for businesses
Attracting young talent in particular is great news for businesses seeking to tap into the next generation of business leaders and entrepreneurs. And it could also be significant for your company’s bottom line in the long-term.
According to a new study by global consulting firm Korn Ferry, ongoing talent shortages across the UAE could add more than $593bn to annual payrolls in the EMEA region alone. It goes without saying that many small businesses would struggle to support this salary surge – but an influx of young talent to the country now could help to prevent it.
4. More time: More time will lead to better planning, greater staff retention and more success for business owners whom have been under undue planning pressure to plan on two and three-year cycles. Longer residency visas will allow business owners more leeway on timelines.
The most successful businesses globally start their plans on a three-year outlook, with most companies now planning over five to 10 years. Companies in the UAE will now have longer to make a success of a venture or project, without having to worry about the visa. This should help boost confidence among business owners and provide more stability and investment in the UAE.
The relaxed time restrictions might also mean that more money is invested in the country long-term. Currently, the majority of the UAE’s expat population leave once their employment ends or when they retire – and this means they are sending a large proportion of their earnings elsewhere. According to WAM, in 2017 expatriates sent $45bn abroad.
Benefits for businesses
A longer-term approach should help your business develop better strategies for growth and hopefully improve your employee retention rates, which are notoriously low in the UAE. For the country as a whole, it could provide a significant boost to the economy as more investors are encouraged to stay.
Making 10-year visas a success
The above lays out the benefits for your business – but how can the government ensure the new residency visas work to the UAE’s best advantage?
Introducing limits such as a points-based system, similar to that of Canada or Australia, would ensure that each new startup is real and active and people do not just set up dormant companies in order to get the visa.
It means new entrants would need to show their commitment to the country by having, for example, a business licence for more than three years and an average of seven or eight employees for at least 70 per cent of that time to meet the target.
Existing established companies and their leaders could be rewarded for their historical commitment to the country. Many companies under a system like this may already automatically qualify for a longer visa, and this in turn will encourage these leaders to invest more in the UAE to create more wealth and employment.
It would also be worth considering restricting longer-term visas to those entrepreneurs with a good UAE credit rating, and no criminal record. This would ensure applicants are serious and add value to the visa itself.
The government needs to avoid giving too much away all at once if it is to protect the Emirates’ image as an exclusive but highly rewarding place to do business. On the other hand, it needs to continue the UAE’s incredible development as a global business hub.
But whether the government decides to impose restrictions or not, longer-term visas are without doubt a step in the right direction.
Michael Burke is the managing director of EER Corporate Services