UAE Qatar competitive attract high FDI: AIM

4/14/2016 10:09:09 AM

(MENAFN- Khaleej Times) The UAE and Qatar are looking highly competitive as far as business environment's go in attracting foreign direct investment (FDI) among the Gulf countries according to an annual AIM FDI report.

The competitiveness of the business environments of Bahrain Kuwait and Saudi Arabia are expected to be very similar by 2020 whilst the economies of the UAE and Qatar are to become considerably more competitive. The UAE's expected strong performance should be associated with enhanced political stability more liberal government regulation increased freedom to compete for private enterprises better price controls and the protection of minority shareholders.

Over 2015 the UAE maintained its dominance with respect to attracting FDI within the GCC region. Over the period 2008-2014 the UAE already captured 55.7 per cent of all FDI projects into the GCC region which increased to 61.6 per cent over 2015.

The UAE comes close to Saudi Arabia as largest attraction of FDI capex. Both countries saw their portions of FDI capex channeled to the GCC region increasing over 2015. Saudi Arabia attracted 43.7 per cent of all FDI capex direct to the GCC countries over 2015 - which can partly be attributed to Saudi Arabia's appeal to capital-intensive FDI in the oil and gas industry. Meanwhile the UAE's share increased considerably from 29.6 per cent in the period 2008-2014 to 39.3 per cent in 2015. The strong position maintained by Saudi Arabia may be related to the fact it opened its stock market to foreign investors last year.

On the contrary the gap between Saudi Arabia and the UAE in terms of jobs created by FDI widened to the advantage of the UAE. Out of 10 jobs created by FDI across the GCC region five jobs were created in the UAE at 50.1per cent as opposed to nearly three in Saudi Arabia at 28.3 per cent. The increased shares for the UAE have come at the expense of the FDI performance of other GCC countries notably Qatar and to a lesser extent Oman and Kuwait. Over 2015 Qatar experienced considerable decline in its share of FDI projects capex and jobs directed into the GCC region. In particular intra-regional FDI from the Middle East to Qatar has decreased. The world today is faced with an ever changing global investment map. Based on preliminary FDI data from UNCTAD global FDI flows increased 36 per cent in 2015 to an estimated $1.7 trillion - the highest since 2007.

This increase was largely driven by growth in FDI flows to the European Union and the US. The increase in FDI flows was largely due to cross-border Merger & Acquisitions - a rise of 61 per cent in 2015 with only a very limited contribution from greenfield investment projects - meaning very limited growth in actual productive capacities.

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