GCC states mutual investment low at $40bn

Gulf Arab states have mutual investments of about $40 billion (Dh147bn) but the figure is a fraction of their total assets abroad, a regional bulletin reported on Thursday.

Trade among the six Gulf Co-operation Council (GCC) countries also accounted for as little as six per cent of their total commercial exchange in 2007 but the level could be as high as 30 per cent if oil is excluded, said Al Iqtisad Al Khaleeji magazine, which is issued by the Dammam-based Federation of the GCC Chambers of Commerce, Industry and Agriculture.

“I think inter-GCC investments are still below the aspired level as they are estimated at $40bn… the level is really very low compared to the actual potential of the GCC countries and their investments abroad,” the magazine quoted Abdul Rahman Al Rashid, the federation’s vice-president, as saying.

He gave no figures about the GCC’s overseas assets but according to the Washington-based Institute of International Finance, they were estimated at nearly $1.8 trillion at the end of 2007 and they are expected to top $2trn by the end of 2008. Its figures showed the UAE was the largest GCC investor with assets totalling nearly $800bn, followed by Saudi Arabia and Kuwait.

GCC investments abroad have sharply grown over the past five years because of a surge in oil prices and intensive investment drive by the region’s private sector, including acquisitions and securities investment.

Al Rashid said he expected the launching of the GCC common market early this year to spur investment among members, adding that the federation is working along with the GCC Secretariat to achieve that goal.

“I can assure you the common market will change the investment map in the region as it means a single market and a single economy… there are huge economic and investment benefits that will be reaped by our companies in the coming period, once the common market takes real effect,” he said.

“The creation of the Gulf common market is a very significant stage in the region… we all are working to take full advantage of this market… we have created a joint committee with the GCC secretariat to tackle any commercial problems that might arise during the implementation of the market… we are now planning to expand this committee to cover investment.”

Al Rashid put the trade volume among the GCC countries at around $30bn in 2007, accounting for between six and seven per cent of their total commercial exchange. But he noted that inter-GCC trade could be as high as 30 per cent of the countries overall non-oil exchange.

“I think this is a good indication of the growing economic and commercial relationship between member states,” he added.

 

Figures released by the federation showed the common market has given birth to an enormous energy bloc, with an estimated 484 billion barrels of proven crude reserves and 1,483 trillion cubic feet of natural gas.

The figures showed the GCC’s combined population totalled about 35.1 million at the end of 2007 while the gross domestic product exceeded $750bn.

This means the collective per capita income stood at nearly $21,500 in 2007, one of the highest per capita GDP levels in the world. On an individual basis, the per capita income could be much higher in some members, mainly Qatar and the UAE.

In 2007, the level exceeded $65,000 in Qatar and $40,000 in the UAE, putting them among the 20 top states in terms of per capita.

The GCC groups the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain and Oman.

Their oil production totalled 15.5 million barrels per day last year, more than 13 per cent of the world’s total crude supply.