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Federal Law on Securing Interest with Movable Property supports the UAE’s economy and competitiveness

| 20/08/2020

Legislation and Laws
H.E. Younis Haji Al Khoori, Undersecretary of the Ministry of Finance

In line with the vision, directives and wise leadership of His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, and His Highness Sheikh Mohammed bin Rashid Al Maktoum, the Vice President, Prime Minister and Ruler of Dubai, and based on solid strategies and national programmes that anticipate the future, lay the foundations for financial growth, and consolidate flexible economic diversification, the UAE continues to confidently grow in various fields and achieve comprehensive and sustainable development.

The Ministry of Finance (MoF) enhances the legislative and legal infrastructure of the country’s financial sector in accordance with international best practices, and adopts a strategic approach that aims to diversify sources of national income, attract investments, enhance market liquidity, and improve the SMEs sector – all of which fall in line with the UAE Vision 2021, which aims to make the UAE among the best countries in the world, in terms of economic and social development, by the Golden Jubilee of the Union.

Consequently, the law on Securing Interest with Movable Property, prepared by MoF, is a new step that reinforces the country's leading position in ease of doing business and global competitiveness indices, and increases the nation’s FDI attractiveness. It also contributes to the growth of the commercial and industrial sectors by enabling SMEs to benefit from their movable property and secure their bank and commercial loans.

According to an economic analysis conducted by the International Finance Corporation (IFC), the countries that have adopted effective laws to use various movable property – both currently and in the future – as a guarantee to obtain financing, noted an increase in the opportunity for their SMEs to expand their businesses, achieved a better credit rating in their financial stability, and reduced their non-performing loan ratio. Therefore, this law allows the financial market in the country to drive more financing and liquidity, by enabling business enterprises, especially SMEs, to mortgage their movable properties and ensure the financing of their projects – which in turn leads to attracting more investments and establishing further projects in the country.

Additionally, the law contributes to raising the country's global competitiveness and doing businesses ranking, as the provisions listed in it cover most of the World Bank’s indices included in the Doing Business report on getting credit - which is related to the ease of obtaining guarantees and legal protection of rights.

The positive effects of the law are not limited to the financial, economic and investment aspects, but also covers the development of smart infrastructure in the country, as the law is based on creating an e-registry to record capital assets and ensure project financing. The registry will use movable properties, such as equipment and tools, accounts receivable and cash flows, crops, etc. as a collateral against obtaining loans. The establishment of this registry is in line with the country’s strategic directives to adopt smart government applications.

MoF will continue to work with all the relevant entities to set and boost the country’s financial and monetary policies that improve financial performances, diversifies revenues and encourages investments - to enhance the country's competitiveness and position the UAE as a global hub for business and innovation.


Page last updated : 19/08/2020 9:21 AM