UAE net FDI importer despite rising outflows

The UAE remained a net capital importer although it pumped more than $45 billion (Dh165bn) in foreign direct investment (FDI) into global markets over the past few years, official figures showed yesterday.

During 2004-2008, the UAE's cumulative FDI in other Arab countries and foreign markets totalled around $45.08bn, becoming the largest capital exporter in the region, showed the Kuwaiti-based Inter-Arab Investment Guarantee Corporation (IAIGC), a key Arab League financial establishment.

But FDI flow into the country stood at nearly $51.5bn during that period, the second largest Arab FDI recipient after Saudi Arabia.

The figures showed the UAE enjoyed a net FDI surplus position of about $6.51bn during those four years. The report showed the UAE accounted for nearly 42 per cent of the total FDI outflow by the six-nation Gulf Co-operation Council (GCC) of around $107bn and 29 per cent of the GCC investment inflow of $179.2bn.

Saudi Arabia, the world's top oil exporter, recorded a much bigger net FDI surplus given its large investment inflow and the fact that the kingdom has been locked in a drive to attract rather than export capital.

Cumulative FDI flow into the kingdom stood at around $92.9bn while investment outflow was about $15.5bn, a net of around $77.4bn.

Kuwait emerged as the GCC's second largest capital exporter after the UAE, with around $32.05bn. But the report showed it was the least attractive destination for FDI, which stood at only about $535 million.

FDI out of Qatar stood at around $8.14bn and inflow at $17.4bn while that into Bahrain stood at $5.4bn and outflow at $7.5bn.

Oman exported around $1.08bn and attracted nearly $9.27bn.

As a whole, the GCC net FDI position was in a surplus of around $72bn during 2005-2008, according to IAIGC.

The report did not give details of the UAE's FDI operations but several government and private companies in the country have been locked in a massive overseas investment drive over the past few years. They include Mubadala Development Company, the Abu Dhabi Energy Company Taqa, Aabar Investment and the International Petroleum Investment Company.

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

It was followed by Saudi Arabia, with around $19.5bn and Egypt with nearly $11.6bn.

M&A purchase operations were estimated at around $11.2bn in Qatar, $8.03bn in Bahrain and $6.6bn in Kuwait.

Total Arab M&A buying operations stood at nearly $102.1bn during 2006-2008, including around $23.8bn in 2008. In the sales operations, total Arab M&A value stood at around $19.3bn, the report said.

It provided no data for 2009 but in a recent study, IAIGC said preliminary estimates showed FDI into the Arab region declined for the first time during that year because of the global financial distress.

The drop followed a surge of nearly 25.9 per cent in FDI flow into the region to around $89.2bn in 2008 from $70.3bn in 2007.

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

"Another factor is the continuation of turbulence in 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."

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