Governments across the Middle East have been attempting to attract talent and startups to their cities in their quest to establish knowledge-driven and innovation-led economies. The UAE recently issued several new licences and visas to simplify the process of setting up in the country and attract higher-skilled talent.
In this oped, Robert Mogielnicki, resident scholar at the Arab Gulf States Institute in Washington explains the impact these initiatives will have in the region.
A 2021 study by Boston Consulting Group listed Dubai as the third and Abu Dhabi as the fifth most desirable cities globally for overseas relocation. These positive rankings emerged alongside the release of conflicting and contentious population figures for the United Arab Emirates, a country where expatriates constitute a majority of residents. According to S&P Global Ratings, Dubai’s population contracted by an estimated 8.4 per cent in 2020 – the steepest decline in the Gulf region. Abu Dhabi’s 5 per cent estimated population decline in 2020 was smaller than Dubai’s but still higher than the Gulf Cooperation Council country average of 4 per cent. The Dubai Statistics Centre refuted these figures, reporting instead a population growth of 1.63 per cent in 2020. In further defiance of pessimistic demographic forecasts, Dubai’s government predicted that the emirate’s population will swell by 76 per cent over the next two decades.
The differing population estimates nevertheless have a common thread: The UAE’s expatriate population is central to economic development trajectories within the country. Population contractions driven by outflows of expatriates are likely to have outsized economic impact, given that expatriates account for more than 90 per cent of Dubai’s total residents and approximately 80 per cent of the population in Abu Dhabi. UAE officials – as well as those in neighbouring Gulf Arab states – are therefore rolling out an array of policies and initiatives intended to retain and attract higher-skilled expatriates.
In January, the UAE announced legal changes permitting certain expatriates to receive Emirati citizenship. The naturalisation procedure appears based on nomination by royal court officials or members of the government rather than an objective application process. The scope of benefits afforded to naturalised expatriates remains unclear. On the one hand, this announcement is symbolically significant, given the controversy surrounding previous calls to allow expatriates to apply for UAE citizenship. On the other hand, the naturalisation measures have been preceded by several initiatives in recent years enabling select expatriate residents to reside longer in the country.
The federal government and those at the emirate level in the UAE rolled out several visa and residency schemes in the wake of the coronavirus pandemic and oil price rout of 2020. The country’s Cabinet passed a resolution in January permitting foreign university students in the UAE to sponsor their family members, provided that they can afford suitable housing. In March, Dubai’s government announced that it will grant 1,000 cultural visas to artists and other “creators”. Dubai had launched another tailored visa scheme in October 2020 allowing remote workers and their families to relocate to the emirate.
These recent long-term visa schemes build upon earlier initiatives. The UAE’s launch of a golden visa system in 2019 coincided with an easing of foreign ownership regulations in the country. Talented expatriates and specialised professionals and entrepreneurs are eligible to apply for the five and 10-year golden visa, which is automatically renewable. In 2018, the Cabinet approved a law permitting a five-year renewable retirement visa for residents over 55 years old, and a shorter-term medical treatment visa has been available since 2017. Other visa options exist for entrepreneurs and real estate investors. The country’s policymakers are especially eager to attract entrepreneurs who can contribute to innovation-led growth and founders of startups that will boost the UAE’s technology credentials.
UAE authorities also implemented social and legal reforms – at least in part – to improve the appeal of the country for expatriate residents and visitors. In November 2020, the UAE government introduced a series of new laws intended to loosen the influence of Islamic law over foreigners. Cohabitation of unmarried couples and consumption of alcohol have been decriminalised. Other legal changes link divorce and inheritance procedures to the laws and regulations practised in an expatriate’s home country.
The rapid pace and nature of these citizenship and residency developments entail risks. Some of the high-net-worth individuals clamouring for a second citizenship or long-term residency options may also come with baggage of an illicit nature. The UAE has long sought to counter concerns over it being a global tax haven by establishing various financial intelligence units and committees. In February, the country established a new executive office to prevent money laundering and terrorist financing. The golden visa meanwhile enables foreigners to own 100 per cent of certain businesses outside of free zones, potentially dampening demand for free zone services.
The multitude of visa initiatives will likely heighten competition to attract foreigners – beginning at a subnational level. In February, Abu Dhabi launched Thrive in Abu Dhabi – a programme designed to encourage professionals, investors, and students to “set down roots” in the capital emirate. On 13 March, Dubai’s ruler unveiled the Dubai 2040 Urban Master Plan, which includes initiatives like increasing the length of public beaches by 400 per cent by 2040 and expanding green spaces to enhance the emirate’s appeal. The plan’s projection of a daytime population of 7.8 million by 2040 would include around 2 million daily visitors from neighbouring emirates. The remaining emirates may respond with tailored initiatives but generally possess more limited governmental capacities and financial resources.
The various emirates of the UAE are not alone in seeking to retain and attract talented expatriates who can contribute to economic growth in the Gulf. On 15 February, the Saudi government announced that foreign firms’ eligibility to secure government contracts would be linked to their establishing regional headquarters in Saudi Arabia by 1 January 2024. Additionally, part of the economic incentive plan approved by Oman’s sultan in March included the eventual granting of long-term residency visas to foreign investors.
Overlapping initiatives will likely heighten regional competition over foreign talent, but – for now – the UAE remains high on the list of desirable locations for those expatriates and entrepreneurs looking to stay in or relocate to the Middle East. Increasing the supply of citizenship and long-term residency schemes is the easy part: Global demand for relocation to the UAE meanwhile depends on many variables. New programmes in the UAE that focus on retaining expatriates already in the country and enabling more family members to join them may have a greater impact over the short run, with newcomers serving as an added bonus.
This article was originally published on Arab Gulf States Institute in Washington and has been reproduced and edited by Wamda