The UAE plans to boost foreign investment in the country with a draft law this year that will beef up legal protection for overseas investors, local daily the National reported on Thursday.

The law will set down "systematic incentives" to lure foreign investors as the country, hurt by the global financial downturn, accelerates economic diversification.

"We are preparing a draft law that guarantees a suitable climate for investors to do business according to the fundamentals of justice," Minister of Economy Sultan bin Saeed al-Mansouri said in a speech to the Dubai Chamber of Commerce and Industry (DCCI).

The legislation, which is in draft form until it receives Cabinet approval, has been in the pipeline for some time, the newspaper reported, adding that it comes as signs emerge that foreign investors are starting to make a return to domestic markets.

Some 180 billion dirhams ($49 billion) of 'hot money', invested in local markets on the expectation of a dirham revaluation, was withdrawn last year when it became clear the currency peg would be maintained.

With more than 2 billion dirhams invested in the UAE's stock markets in the second quarter and third quarter so far this year, some of the cash that was withdrawn is now be starting to return, Mansouri said.

The UAE government last month scrapped the minimum capital requirement of 150,000 dirhams for international investors to start a business in the country.

Mansouri said oil and gas revenue accounted for 38 percent of the country's 2008 gross domestic product of 929 billion dirhams.

"In the next 10 to 15 years getting down to 20 percent is possible to achieve," he said. "We need to come up with a clear plan of how we’re going to achieve that."

Maktoob