The UAE rose three places in a global competitiveness ranking as the country pressed on with reforms and benefited from increased trade and investment.
The UAE clinched the seventh spot out of 63 ranked countries, the highest of any Arab state, moving up three places from last year, according to Swiss business school IMD’s World Competitiveness Yearbook released on Wednesday.
Underpinning the country's leap are improvements in the export of commercial services and goods, employment, the current account balance, higher education achievement and business expenditure on research and development, according to the report.
"The UAE has benefitted tremendously from the increase in the international trade and also in the increase in international investment, which strengthened its position," Christos Cabolis, chief economist and head of operations at the IMD's World Competitiveness Centre told The National. "It has a very efficient government and business sector. It has also a business friendly environment."
The Arab world's second largest economy is undertaking wide-ranging reforms to become more competitive, streamlining the process of setting up a business to attract more foreign investors. The country is also relaxing regulations aimed at boosting non-oil growth and contribution to the gross domestic product to 80 per cent by 2021 from 70 per cent now. Foreign direct investment increased 6.7 per cent to $10.3 billion in 2017, according to government data and the country is keen to woo international money.
This week, the government announced plans to grant up to 10-year visas to certain professionals compared with the current maximum of three years. It also plans to relax investment regulations that will allow 100 per cent foreign ownership of a business outside freezones from the current limit of 49 per cent, among other measures. The present framework requires foreign businesses to forge partnerships with UAE stakeholders.
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These reforms are expected to boost foreign direct investments, attract professionals, and increase inflows into the property market, according to analysts. In a country where the majority of the population's nine million people are expatriates, the changes will transform the economy.
Mr Cabolis said the new measures will help improve the country’s competitiveness even further as well as attracting and retaining talent.
“This visa relaxation will attract international talent into the country and this is a good thing,” he said, adding “the final outcome will be a function on how these [reforms] will be implemented.”
Of the 15 key attractive indicators about the UAE about 72 per cent of respondents believe the most appealing trait of the country's economy is its business friendly environment. That's followed by a dynamic economy, reliable infrastructure, open and positive attitudes, competency of government, policy stability and predictability, a competitive tax regime and access to financing. .
Challenges for the year cited by the UAE Federal Competitiveness & Statistics Authority include minimizing administrative and compliance costs on businesses from VAT, the need to accelerate regulatory and legislative reforms to keep pace with the modernisation of government services and products, maintaining a strong economic diversification agenda, strengthening innovation capabilities across the nation and boosting investments in research and development through public-private partnerships.