U.A.E. Long-Term Visa Rules Bypass Most of Country's Residents

(Bloomberg) -- The United Arab Emirates’ plan to grant long-term visas to the country’s largely expatriate population excludes most foreign residents, benefiting only the affluent and people with specialized expertise.

The long-awaited program falls short of many people’s expectations after the Arab world’s second-largest economy said it plans to ease residency rules earlier this year. Foreigners make up close to 90 percent of the U.A.E.’s 9.7 million people, and the policy shift was meant to give expatriates a bigger stake in the economy and foster long-term growth.

Long-term visas of five to 10 years will be limited to wealthy property investors, entrepreneurs and “specialized talents and researchers,” according to a statement on state-run WAM news agency. A minimum investment of 5 million dirhams ($1.4 million) is needed to obtain a five-year visa, and double that amount is necessary for a decade-long visa.

For the policy “to have a much wider impact on the economy, they would need to widen the eligibility requirement to bring in more people,” said Jean-Paul Pigat, head of research at Dubai-based Lighthouse Research. “They’re liberalizing the visa scheme for the wealthy and the highly educated now, but perhaps that’s going to get extended to the wider population moving forward.”

Additional Reforms

Massive liberalization isn’t feasible in a residency structure built around jobs, and additional reforms would be needed, such as unemployment benefits, Pigat said.

Oil-rich Gulf states, which for decades jealously guarded privileges for the small number of citizens, have been forced to consider longer residency and limited citizenship for foreigners as they seek to attract investment and diversify from oil. In addition to loosening residency requirements, the U.A.E. also plans to ease restrictions on full foreign ownership of businesses and scrapped billions of dollars in fees that private-sector companies must pay to hire foreign workers.

The loosening of U.A.E. visa restrictions was meant to encourage more people to come, stay longer and spend more, but the new rules do little to address the underlying sense of transiency that has hobbled the economy. Many expatriates rely on jobs to remain, and that often leads to noticeable swings in the population, as economic downturns push many foreigners and their families to return home, depriving the economy of much-needed spending.

While the new measures are helpful first steps, “the current thresholds for investors and entrepreneurs mean that only a small minority of expatriates will benefit from these measures,” said Ziad Daoud, a Bloomberg economist based in Dubai.

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