A new United Arab Emirates (UAE) legislation aims to boost the growth of small and medium-sized enterprises by  requiring 10 percent of future federal government contracts to be awarded to SMEs, the economy minister said on Sunday.

"We want to encourage government agencies to support SMEs to meet their purchasing, service and consulting needs," Sultan bin Saeed Al-Mansouri told reporters.

He also said a UAE "development bank", which he did not name, would assign up to 10 percent of its annual financing to SMEs, because obtaining access to funds was one of their main challenges. In addition, SMEs will receive tax incentives.

The government is keen to promote SMEs in order to reduce unemployment among UAE citizens and help them establish their own companies, a step towards diversifying the economy beyond oil.

The law is expected to be enacted within three months or less, Al-Mansouri said, adding that it would boost SMEs' contribution to gross domestic product to 70 percent by 2020 from 60 percent in 2011.

Most state spending in the UAE is conducted not by the federal government but by the governments of the country's seven individual emirates. Al-Mansouri did not say whether the new law would influence that spending. - Reuters