Enacted on December 1, 2023, this law is a strategic initiative to foster closer collaboration between the public and private sectors. It is designed to attract private sector investment in federal government projects that hold substantial social and economic value, thereby enabling the government to execute strategic projects more efficiently.
The Federal Law No. 12 of 2023 on PPP in the UAE brings several advantages to both the government and the private sector, and is expected to have a significant impact on the economy:
Advantages for the Government:
- Enhanced Economic Value and Efficiency: The law encourages private sector participation in projects with social and economic importance, potentially leading to more innovative and cost-effective solutions.
- Risk Minimization: By involving the private sector, financial and operational risks associated with large projects can be shared, reducing the burden on government resources.
- Improved Public Services and Infrastructure: The law aims to improve the quality and management of public services, potentially leading to better infrastructure development.
- Substantial Social and Economic value: enabling the government to execute strategic projects more efficiently enhance the management of some infrastructure projects and public services, and raise the competitiveness of projects in local, regional, and global markets.
- Competitiveness in Global Markets: The involvement of the private sector could enhance the competitiveness of UAE projects, both regionally and globally.
Advantages for the Private Sector:
- New Investment Opportunities: The law opens up opportunities for private investors to participate in federal projects, expanding their business scope.
- Knowledge and Expertise Transfer: There’s potential for a beneficial exchange of skills and knowledge between public entities and private companies.
- Market Expansion: Private entities can benefit from the expanded market opportunities that come with participating in government projects.
Impact on the Economy:
- Economic Diversification: By encouraging private investment in various sectors, the law supports the UAE’s aim to diversify its economy beyond oil.
- Growth in the Industrial Sector: It aligns with initiatives like Operation 300bn, which seeks to grow the industrial sector’s contribution to the GDP.
- Job Creation: The influx of new projects and investments can lead to job creation, further stimulating economic growth.
- Attracting Foreign Investment: The law may attract more foreign investors, keen on capitalizing on the stability and growth potential of the UAE market.
- Boost in Public-Private Collaborations: The law will likely increase the number and scale of PPPs, leading to more robust development projects across the country.
To maintain operational fluidity and continuity, the UAE’s Federal Decree-Law No. 12 of 2023 incorporates a provision for the ongoing application of existing Cabinet Resolutions on public-private partnership procedures. These include Cabinet Resolution No. (1/1) of 2017 and Cabinet Resolution No. (4/8) of 2019, which will remain effective until the new Partnership Projects Manual is released, provided they are in compliance with the new law.
Overall, Federal Law No. 12 of 2023 is a strategic move to strengthen the collaboration between the public and private sectors and leverage on the financial and administrative expertise, technical know-how, and technological solutions available to the private sector and the government aim to deliver world-class services at optimal value.
The law is designed to promote productivity, elevate the quality of public services, and ensure effective management in the development of these services. Additionally, it seeks to expedite the transfer of knowledge and expertise from the private sector to federal entities, offering training and qualification opportunities for UAE-based federal entity employees to manage and operate projects effectively.
