The Federal Decree-Law No. 25 of 2022: The new law changing UAE's industrial sector

The President of UAE, His Highness Sheikh Mohamed bin Zayed Al Nahyan issued Federal Decree-Law No. 25 of 2022 on the Regulation and Development of Industry, with hopes to encourage both local and international investments. The new law envisions a bright future for the industrial sector through its emphasis on incentives, trade, and globalization.

The law aims to target the national industrial sector by allowing more flexible and supportive policies to be put into place and increasing the frequency of incentives within the sector. The incentives endorse competitive advantages such as regulatory frameworks, logistical capabilities, and advance technology adoption that encourages investments.

International investors and conglomerates are attracted by the incentives that the law facilitates since the package of incentives also enhances industrial competition through the introduction of a comprehensive database. The law’s imposition of this database includes details of industrial projects and records their contributions to the national economy. This allows companies and investors to evaluate prospects and investment opportunities within the territory of UAE. Thereby, access to this spread of information, although restricted, aids in the promotion of both local and foreign investments.

The new law is expected to take effect in January 2023 and shall be applied to all sectors of the industry, including economic, free, and specialized markets. It will replace Federal Law Number 1 of 1979 where the new law intends to focus on competitive sectors and local economies by standardizing the process for issuing licenses in the industry.

The Ministry of Industry and Advanced Technology (“MoIAT”) and the Industry Development Council ("Council”) noted during the third council meeting that the law enhances private sector, drawing special attention to emerging industries such as space, hydrogen, and agriculture technology and bridges gaps within saturated markets like the pharmaceutical industry. The law will aid the industrial sector to attain greater growth opportunities and self-sufficiency, generating capital under the nation’s approaching campaigns. This law will drive industrial development through empowerment, integration, and partnership.

The MoIAT reports that the law is set to enhance the legislative system by supporting the industrial sector to increase the nation’s GDP through its contribution to the country’s newest strategies and objectives and views the law as the mainstay of such projects. The law heightens the role of the MoIAT by placing greater importance on the industrial sector. The MoIAT and the Council will jointly organize information workshops for manufacturers to create awareness about the law for protecting national interests, nevertheless aiming for Bilateral trade agreements, Integrations, and Mergers and Acquisitions among local businesses.

The law also supports “Make it in the Emirates” initiative launched by MoIAT to enhance the role of the private sector. This strategy aims to unify industrial standards based on the highest standards of efficiency and production, which enhances access to global markets and raises the competitiveness of UAE manufactured products.