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|United Arab Emirates||Info-Prod Country Guide|
|CHARACTERISTICS INDICATORS THE ECONOMY INVESTMENT ISSUES PROJECTS PROSPECTS|
All six members of GCC currently have privatization plans of some form as a means to reduce government expenditures and to turn around unprofitable state-owned businesses. The UAE especially has been testing plans for privatization on small agricultural enterprises and now hopes to open strategic sectors of its economy, such as the petrochemical industries, to private investors. Further, Abu Dhabi's Crown Prince, Sheik Khalifa bin Zayed, has ordered, in May 1997, the formation of a special committee to oversee the privatization of the power and water sectors in Abu Dhabi. The Committee, headed by the Crown Prince himself, has the authority to draft legislation and regulations governing the execution of the privatization process and the implementation of privatization plans.
As part of the UAE's ongoing commitment to the privatization process, in 1996 Abu Dhabi sold shares by public subscription in Food Co., a food products retailer and floated majority stake in the joint-stock company Abu Dhabi Shipbuilding Co. In 1997, shares were publically sold for al-Kanza Insurance Company and Oasis International Leasing Company. The General Industrial Corporation, a diversified Abu Dhabi-owned company, is also slated for sale, although the Emirate would prefer local citizens to be the major purchasers.
Unlikely to ever be sold are government holdings in the oil sector. Foreign companies Nestle and Statoil have formed a joint venture with Abu Dhabi National Oil Company in the Ruwais project. Giat Industries has proposed buying the Taweelah power and desalinization complex as part of its offset obligations.
Although public stock companies may be registered in the UAE, there is no official stock exchange at the present time. Trade is conducted informally by phone. Shares of public companies are bought and sold through private investment agencies, and share price information is based on the latest transactions.
After several delays and previous announcements, the UAE is expected to open a formal stock exchange in 1999. A proposed law is expected to provide the regulatory framework for the exchange. The UAE stock market is believed to currently have a market capitalization of more than DH 67 billion, and the primary market is also expected to become very active in the future. The Emirates Bank group has currently established the Emirates Equity Index (Emnex), a composite of thirty-one actively traded UAE stocks. There are also sub-indices for the three main market segments-banking, services and insurance. Yet to be resolved is the issue of whether to allow foreign investment in the proposed exchange. Official reports state that the UAE is keen on setting up an exchange to absorb planned privatization of service sector companies and shares in new commercial joint ventures, to be set up to offset foreign military sales to the UAE.
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