The United Arab Emirates (UAE) plans to bring new changes in its custom and regulations standards by removing monopolies, on the sale of imported goods, by prominent family businesses in the country to attract investors.
As the UAE intensifies economic reforms in an effort to attract more investment, the government has proposed a reform, ending the automatic renewal of existing commercial agency agreements, reported the Financial Times.
The change in policies, that are part of the growing competition between the country and Saudi Arabia aims to provide an opportunity and freedom to foreign investors.
Investors may choose to be their own distributor or change their local agent after the expiration of a contract. It is also being speculated that at the end of a contract, the local agents will receive compensation for investing in the market.
Although uncertainty looms over its timing, the new law is expected to be passed by the UAE government.
The new law is certain to bring conflicts between the government and giant merchant families including Al Futtaim, Al Rostamani, and Juma Al Majid as the decades-old law of protecting local interests over foreign entities is thrown away.
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 proposed changes have left the leading merchant families alarmed. “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 Financial Times quoted a family business owner.
The UAE government believes that these changes, opening the domestic market, will lower prices for consumers.