Published on
August 13, 2025
The UAE has once again emerged as a leader of global significance and has come to rest in second place in the 2024 global foreign direct investment (FDI) rankings, trailing only the United States. This remarkable feat has come to the UAE as the country is now ahead of the United Kingdom, India, Germany, and other multi-billion dollar economies in the race to receive international investments. The most notable factors attributing to the increase are the UAE’s aggressive policies reaping economic diversification, 100% foreign ownership regulations, and the establishment of a business-friendly ecosystem. Moreover, the country is now widely known for its relaxed visa policies, incentives for small and medium enterprises (SMEs), and goal to consolidate international trade agreements, all of which strengthen the reputation of the UAE as a foreign capital hub. These factors help consolidate the multi-billion dollar UAE economy in the ambit of foreign investment, helping the country gain a foothold in the global investment arena to increase its competitiveness as compared to its European and Asian counterparts.
In recent years, the UAE has taken significant steps to cultivate an investment-friendly environment. As reported by FDI Intelligence, the country attracted Dh167 billion (\$45.5 billion) in foreign direct investment (FDI) last year, highlighting a robust influx of capital. This surge in investment aligns with the UAE’s broader goal of reducing its reliance on oil and diversifying its economy. With a target to raise FDI to Dh1.3 trillion by 2031, the UAE is clearly committed to maintaining this upward trajectory and fostering a more diversified, knowledge-driven economy.
Notably, the UAE has emerged as the world’s top FDI performer relative to the size of its economy. In the FDI Intelligence Greenfield FDI Performance Index, the UAE was ranked first, followed by Namibia and Costa Rica. The report emphasizes that the country attracted more than 14 times the volume of FDI projects expected based on its economic size, which reflects the robust investor confidence in the UAE’s business environment.
A major factor driving this success is the UAE’s ongoing efforts to simplify the process for international investors to set up and expand businesses within the country. To support this, the UAE has introduced a range of initiatives designed to boost FDI across multiple industries. A key development has been the implementation of 100% foreign ownership in select sectors, removing the requirement for a local partner in numerous business ventures. This policy change provides foreign investors with increased flexibility and greater control over their operations in the UAE.
Alongside the foreign ownership policy, the UAE has implemented several additional measures to attract and retain international investors. Visa regulations have been relaxed, simplifying the process for foreign workers and entrepreneurs to live and work in the country. The government has also introduced a range of incentives aimed at supporting small and medium-sized enterprises (SMEs), which are essential to a robust economy. Through financial assistance, tax breaks, and enhanced access to funding, the UAE is positioning itself as a prime destination for both major corporations and emerging startups.
Another significant initiative is the NextGen FDI programme, launched to expedite the licensing process for businesses, improve banking services, and provide commercial and residential lease incentives for technology companies seeking to relocate to the UAE. This program has already begun to show promising results, as more tech firms and startups are attracted to the UAE’s advanced infrastructure, favorable regulatory environment, and access to a wide pool of talent.
Moreover, the UAE’s push for comprehensive international partnerships has further strengthened its position as a top FDI destination. The government’s strategy of entering into Comprehensive Economic Partnership Agreements (CEPA) with various global partners has played a crucial role in attracting investment. These agreements, which began in 2021, are designed to reduce trade tariffs, eliminate logistical bottlenecks, and promote bilateral investments in priority sectors. By reducing trade barriers and enhancing ease of business, the UAE is not only attracting FDI but also fostering stronger economic ties with key global players.
The CEPA agreements have already had a positive impact on the country’s trade and investment landscape. By providing preferential access to key international markets, these agreements have made it easier for companies in the UAE to expand their reach and tap into new growth opportunities. With many CEPA agreements already signed and more in the pipeline, the UAE’s commitment to strengthening its global economic ties is expected to continue yielding substantial benefits for the economy in the years to come.
Foreign investment is actively being pursued in the UAE and is expected to grow in the coming years as a result of the UAE’s efforts to diversify and improve the business environment and international relations of the country. The UAE policy to bolster the economy in the coming years is likely to keep the country in the “top tiers” attracting Foreign Direct Investment, aiding the local economy and offering benefits to the international partners in a two-way investment friendly environment.
