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29 March 2024

UAE tops Arab capital exporters

The UAE also emerged as the top investor in merger and acquisitions (M&A), with a total purchase value of $43.1 billion during 2006-2008. (SUPPLIED)

Published
By Nadim Kawach

The UAE has emerged as the largest capital exporter in the Arab world, pumping more than $53 billion into global markets since it was created nearly four decades ago, according to a United Nations group.

The country has also remained the most attractive Arab destination for foreign direct investment (FDI) flow after Saudi Arabia, receiving over $73 billion, the UN Conference on Trade and Development (UNCTAD) said in a report.

By the end of 2009, FDI flow out of the UAE totalled around $53.5 billion, the largest in the region, the report showed.

FDI outflow from the UAE sharply gained pace during the latest oil boom of 2000-2008, when its coffers were flush with petrodollars and the country was locked in a drive to invest in global market to tap excess funds.

Total capital exported by the UAE was a meager $40 million in 1992 before it started its climb in the following years. It soared to $648 million in 1994 and topped $one billion in 1997 then leaped to $1,938 million in 2000.

The flow maintained its climb to reach around $2.6 billion at the end of 2002 before rising to nearly $3.5 billion a year later.

In 2004, it jumped to $5.7 billion and nearly doubled to $9.6 billion in 2005. The flow shot up to $20.4 billion in 2006 and again rocketed to $35 billion in 2007 before recording its largest increase to reach $50.8 billion at the end of 2008. The flow climbed to $53.5 billion in 2009 after a sharp slowdown in both inflow and outflow because of the repercussions of the 2008 global fiscal distress.

UNCTAD figures showed Saudi Arabia was second to the UAE in capital outflow, with around $40.3 billion. Qatar and Kuwait came third and fourth, pumping nearly $16.03 billion and $16.01 billion respectively.

As for FDI inflow, Saudi Arabia topped the list, with around $147.1 billion, followed by the UAE, with nearly $73.4 billion.

The bulk of the FDI flows into the UAE were also received during the oil boom, mostly through 2004-2008. From around $7.8 billion in 2003, FDI flow into the UAE surged to $17.8 billion in 2004, to nearly $28.7 billion in 2005 and to around $41.5 billion in 2006. It leaped to $55.7 billion in 2007 and $69.4 billion in 2008.

Despite the surge in its FDI outflow, the UAE has remained a net capital importer. Despite a sharp slowdown in 2009 capital inflow, the UAE recorded a net FDI surplus position of about $19.9 billion.

The UAE also emerged as the top investor in merger and acquisitions (M&A), with a total purchase value of $43.1 billion during 2006-2008, according to the Kuwaiti-based Inter-Arab Investment Guarantee Corporation (IAIGC).

It was followed by Saudi Arabia, with around $19.5 billion and Egypt with nearly $11.6 billion. M&A purchase operations were estimated at around $11.2 billion in Qatar, $8.03 billion in Bahrain AND $6.6 billion in Kuwait.

In a recent report, IAIGC said Saudi Arabia accounted for the bulk of the UAE’s investment in the Arab region. It gave no figure but the Dubai-based Emaar and Etisalat telecommunications company are the largest investors in the Gulf Kingdom, covering economic cities and the GSM provider Mobily.

During 2004-2008, the UAE was the second largest foreign investor in Saudi Arabia after Japan but it is expected to top the list with the completion of the giant Economic City project in the country, according to official Saudi data.

In terms of projects licensed by the Saudi Arabian General Investment Authority (SAGIA), the UAE becomes the dominant foreign investor in the Kingdom, with a total committed capital of SR122.9 billion (Dh121.6 billion), nearly 41 per cent of the overall FDI licensed by the Authority since it was established in April 2000.

The report showed the main Arab capital exporters to the UAE were Kuwait, with about $3.55 billion, Saudi Arabia, with nearly $2.46 billion, Lebanon with $1.5 billion and Qatar, with around $1.41 billion.

Total inter-Arab investment stood at $163.3 billion, nearly 35 per cent of the overall Arab FDI of around $470 billion pumped worldwide during that period.