GCC accounts for 60% of FDI in Arab World

(SUPPLIED)   

The GCC accounts for more than half of the foreign direct investment flowing into the Arab World, but there is still a lot of room for growth in the Gulf countries, according to the undersecretary of the UAE’s Ministry of Economy.A large number of investment opportunities in the region are not being taken advantage of, according to Abdullah bin Ahmed Al Saleh.

“The size of actual foreign direct investments in the Arab World is very small if compared to the volume of FDI in the GCC region. Here, we can see the GCC countries have taken more than 60 per cent of the direct foreign investments, however, this figure is only 2.5 per cent of the world’s marketshare of foreign investments.

“On the other hand, the volume of investments among the Arab countries has increased tremendously from $6 billion [Dh22bn] in 2004 to $60bn in 2006. This is considered a massive jump, but it is still small if we look at the volume of investments outside the Arab World, which is around $1.2 trillion in 2006. This shows there are huge investment opportunities in the Arab World.”

However, he said the Arab League has taken up the issue and is exerting efforts to attract more foreign direct investments by breaking down barriers of trade. “The Arab League was successful in liberalising commodities. However, there are many commodities that do not fall into the liberalised goods category despite the fact that the league held 15 meetings in this regard. The main hindrance is the conditions set by the country of origin of these goods.”

Al Saleh said one reason the GCC has done better than the rest of the Arab World is the fact that it has moved towards becoming a common market. “If we take the GCC common market, we can see the goods are moving among them without barriers. However, there are still some rules that are not being implemented in some GCC countries. The main rule is treating all GCC citizens equally in all the countries in regards to ease of doing business.”

“Investors are looking for opportunities and the right place that can absorb these huge investments. The entry of these investors into the common market will give them the opportunities. Also, if the decisions and rules of the common markets are implemented fully, this will attract more foreign investments,” he said.

As far as the UAE is concerned, Al Saleh said it was a strong global competitor for investment but it could still do with more. “According to reports, the UAE was ranked 18th out of 41 countries in terms of attracting foreign investments in 2007. In another report on investors’ confidence in doing business, the UAE was ranked eighth internationally. Also in a report about the volume of foreign investments, the UAE received $18.7bn in 2006.

“The main challenges are the economic and trade laws and regulations, and the lack of implementation of these laws and regulations on both local and federal levels. This made the UAE to come up with free zone areas, and this is what has pushed the trade and business cycles.”

The Numbers

2.5%:The percentage of GCC’s  marketshare of global FDI

 $60bn:The  volume of investments among the Arab states in 2006

 $1.2trn:The FDI outside the Arab World