FDI into the region, which controls over 60 per cent of the world’s recoverable oil deposits, totalled around $438.5 billion during 2005-10, compared with only 67.2 billion during 1999-2004 ..
FOREIGN direct investments (FDI) into the Gulf countries are on the rise. Reforms carried out by several Arab countries boosted FDI into the region by nearly seven times during 2005-10, but many of them still have investment barriers.
FDI into the region, which controls over 60 per cent of the world’s recoverable oil deposits, totalled around $438.5 billion during 2005-10, compared with only 67.2 billion during 1999-2004, said Fahd Ibrahim, Director-General of the Kuwaiti-based Inter-Arab Investment Guarantee Corporation (IAIGC).
The surge was due to a large improvement in the investment climate in the Arab world mainly because of reforms, adding that his Arab League group has recorded nearly 120 reform procedures in the Arab region over the past three years.
Such reforms also boosted inter-Arab investment by nearly six times to $138.1 billion from $19.4 billion in the same period, said Mr Ibrahim in writing in the IAIGC bulletin.
“Besides increasing FDI into the region, these reforms contributed to offsetting the negative repercussions of the 2008 global fiscal crisis and the present political upheaval in the region. Yet the share of the Arab region from global FDI remained low, not exceeding five per cent…it has also not reached the required level, considering the massive financing needs in the Arab countries. This means the Arab world is still suffering from investment obstacles and this should prompt them to carry out more reforms, particularly in the field of improving the business environment,” said Mr Ibrahim.
In a previous study, IAIGC said it expected FDI into the Arab states to slump in 2011 because of the region’s political unrest and global financial problems. Its forecasts showed total FDI into the 21 Arab League nations would dip to nearly $55 billion in 2011 from around $66.2 billion in 2010, a decline of nearly $11.2 billion or around 16.7 per cent.
The level is expected to be the lowest since 2005, when FDI stood at $47 billion. It will also be way below the record high FDI flow of around $96.7 billion in 2008.
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