The Emirati leadership wants to encourage more foreign investment and believes that such a move will lower prices for consumers
Reports state that 90 percent of UAE’s private sector, from small companies to multinational corporations, which accounts for three-quarters of employment in the country, is run by family-owned businesses. AP
The business sector in the United Arab Emirates (UAE) is about to change. The UAE government has told some of its biggest family businesses that it plans to remove their monopolies on the sale of imported goods, in an effort to attract more investment.
We examine why UAE has brought out this legislation and how it will affect the monopolies.
The new reform
As per existing norms, multinationals across the world have had to appoint local partners to distribute their goods in the UAE.
The proposed reform will now allow foreign companies to distribute their own goods or change their local agent when the contract expires.
According to Financial Times, a law is expected to be approved by the Emirati leadership. However, the timing remains uncertain.
An Emirati official, speaking to Financial Times was quoted as saying, “It no longer makes sense for individual families to have such power and preferential access to easy wealth. We have to modernise our economy.
The UAE government believes that these changes, opening the domestic market, will lower prices for consumers.
Family businesses and impact on them
Family businesses make up the majority of business activities in the Gulf country, holding franchises from supermarket chains to car dealerships. Some of the well-known family businesses in Dubai, which are part of the United Arab Emirates, include Majid Al Futtaim Holding, the operator of Carrefour SA stores in the Middle East, and Al Habtoor Group, which owns hotels, properties and owns car dealerships.
Reports state that 90 percent of UAE’s private sector, from small companies to multinational corporations, which accounts for three-quarters of employment in the country, is run by these family-owned businesses.
The move will definitely affect these families and one of them was quoted as saying, “This is the right thing to do now, but perhaps not the right way of introducing it. We have to move with the times, but the changes also need more consultation.”
The family-owned businesses also complained that these changes were being brought in when business was already down owing to the coronavirus pandemic and moreover at a time when the government is putting more pressure on the private sector to employ more nationals.
Few exceptions made in the past
A change was already on the horizon when the UAE government allowed some new entrants, including Apple and Tesla to open their own stores in the UAE without local agents.
With inputs from agencies