UAE attracts $69bn FDI since founding

The UAE has attracted more than $69 billion (Dh253.43bn) in foreign direct investment (FDI) until the end of 2008 to emerge as the second best capital destination in the Arab region, according to United Nations data.

Saudi Arabia, the world's dominant oil exporter, was the top investment target in the region, attracting over a quarter of the total Arab FDI inflow, showed the figures by the UN Conference on Trade and Development (Unctad). Between 1970 and 2008, FDI flow into the UAE totalled around $69.4bn, nearly 16 per cent of the combined FDI flow into the Arab countries of about $433bn.

The figures showed the UAE was second only to Saudi Arabia, which got nearly $114.2bn during that period. The UAE, the second largest Arab economy, also came after Saudi Arabia in FDI inflow in 2008, when it received nearly $13.7bn. The FDI into Saudi Arabia in 2008 was $38.2bn.

Egypt emerged as the third largest FDI target in the region, attracting a total $38.9bn during 1970-2008. It was followed by Morocco, with about $38.6bn, Lebanon with nearly $24.1bn and Qatar, which attracted around $22bn. Other major Arab FDI destinations were Libya, Algeria, Oman, Bahrain, Tunisia, Sudan, Syria and Jordan.

Kuwait recorded one of the lowest FDI flow rates, with only around $991 million during 1970-2008. The report gave no explanation for the poor FDI inflow, as Kuwait is one of the wealthiest nations in the region, although experts blame strict investment laws and conflicts with Iraq.

The report showed there was a surge in the combined FDI flow into the Arab region in 2008 but gave no data for 2009.

According to the Kuwait-based Inter-Arab Investment Corporation (IAIGC), a key Arab League financial institution, FDI pumped into 17 Arab nations that have provided data on their capital flow soared by around 26.9 per cent to nearly $89.2bn in 2008 from around $70.3bn in 2007.

It showed that FDI flow was much higher in 2008 despite a sharp slowdown in the second half of the year and it followed several years of steady growth in capital flow into many Arab countries because of high oil prices, a surge in regional projects and improvement in investment laws, IAGIC said.

"As for 2009, FDI flow into the Arab region is expected to have declined due to several factors, including the slowdown or contraction in the economies of industrial nations, which have constituted a major source of capital flow into the Arab countries over the past few years," IAIGC said.

"Another factor is the continuation of turbulence in the Arab and global markets as this contributed to increasing uncertainty regarding investment decisions in the medium and long terms and to shelving of more projects in the region in infrastructure, hydrocarbon, and real estate sectors."

The report said a sharp fall in the oil export earnings of Gulf nations would also adversely affect their capital flow into other Arab League members, adding that inter-Arab investments are key components of the region's foreign investment.

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