Gulf FDI flow soars, says report
The Gulf Cooperation Council (GCC) states recorded substantial increases in both inward and outward Foreign Direct Investment (FDI) during 2005, according to a UN report.
Inflows of FDI to the West Asia region, which includes the GCC, were not only the highest ever at $34 billion but also the highest in the developing world – up 85 per cent on 2004, according to the World Investment Report 2006.
The report, published annually, looks at FDI from economies in development and transition and the implications that this investment has on development.
The major drivers for the increase in inward FDI were strong economic growth, global oil demand and an improved investment environment in the region.
Oil-rich nations were also major contributors to the growth in FDI outflows, reaching a total value of $16 billion – up 50 per cent on 2004 figures.
Of the Gulf states, the UAE and Saudi Arabia attracted the highest volume of inward investment – attracting $12 billion and $4.6 billion respectively.
Only the UAE, Kuwait and Saudi Arabia recorded higher values of outward FDI during 2005 compared to the previous year. Bahrain had the fourth highest volume of FDI outflows in the West Asia region in 2005, with more than $1billion being outwardly invested.
Increased levels of FDI have positive impacts on economies, reflecting increased transparency, stability, and creating a more dynamic and diverse workforce.
Growth in FDI, both inward and outward, is viewed by economists and investors as a marker for the ‘good health’ of an economy, and provides a strong indicator of capacity for growth and development.
UAE top importer
The UAE topped the list of Arab importers in 2005 with the value of goods imported totaling $80.7 billion, accounting for 25.1 per cent of the Middle East’s $322.1 billion imports.
Imports by the UAE, the Arab world’s second biggest economy, grew 12 per cent, a report quoting WTO statistics said.
Among the 10 Middle East exporters, the UAE ranked second after Saudi Arabia with a 27 per cent growth and the exports reaching $115.5 billion, which is 21.5 per cent of the Middle East’s $538 billion exports.
The Middle East’s merchandise exports jumped 35 per cent to $538 billion in 2005, more than twice the level recorded only three years earlier, said the latest International Trade Statistics 2006, report said.
“As the Middle East’s merchandise exports consist largely of fuels (69 per cent), it is not always realised that the region’s exports of manufactured goods are also growing rapidly. The UAE has become a large trading hub and its exports (including re-exports) exceeded $48 billion,” the report said.
Saudi Arabia and Jordan more than tripled their exports over the last five years, the first mainly due to its chemical and the latter due to its clothing exports, the report said.
UAE growth to touch 23pc
The economy of the UAE is expected to grow 23 per cent in current prices in 2006, Economy Minister Sheikha Lubna Al Qassemi has said.
“The gross domestic product is forecast to grow 23 per cent in current prices to Dh597 billion ($162.7 billion) compared with Dh485 billion ($132.2 billion) in 2005,” Al Qassemi said in a media report.
She said the country’s economy is growing at a high rate thanks to high crude prices, as well as growth in other sectors of the economy.
Addressing a conference on partnership between the Middle East and South Asia in Dubai, she said: “The UAE’s economy has become more diversified as a result of the government effort to develop sectors like aviation, logistic operations, tourism and industry.” Non-oil economy in the federation grew 18.6 per cent to reach Dh312 ($85 billion), representing 64.3 per cent of the GDP in 2005.
The International Monetary Fund has put real growth in the UAE economy at 8.5 per cent in 2005, and expected it to grew by 11.5 per cent in 2006, one of the highest in the world.
Bahrain-US trade hits $1bn
Trade between Bahrain and the US will top the $1 billion mark for the first time this year. Exports from Bahrain to the US have soared by 72.9 per cent to $433 million in the first eight months of this year.
They have already exceeded total exports to the US for the whole of last year, said US Ambassador to Bahrain William Monroe. US exports to Bahrain for the first eight months of the year totalled $296 million, up 43.6 per cent on the same time last year, he said. He described the rise in Bahrain exports to the US as “amazing,” saying the surge kicked in even before the Free Trade Agreement between the tow countries became effective on August 1.
“I think this reflects both the strong economic performance of Bahrain this year, as the country benefits from high oil prices and the inflow of money into the region, as well as the fact that companies are already lining themselves up to benefit from the FTA,” he noted.
Emirates’ reserves $25bn
The UAE has hard currency reserves of around $25 billion and is still looking into converting part of them into euros, the Central Bank governor said.
“The Central Bank’s reserves amount to around $25 billion,” Sultan bin Nasser Al Suwaidi said.
“The Central Bank is still considering the possibility of converting 10 per cent of its reserves (from dollars) into euros... The issue is still under study,” he said.
Saudi divestment plans
The Saudi government has planned to divest itself of $800 billion worth of state-run companies in the next 10 years, a senior official said. The companies will be in the areas of water, power, transport, telecommunications, higher education and aviation.
Outlining prospects for investors in Saudi Arabia, Abdul Wahab Al-Sadoun, director general of the energy sector, Saudi Arabian General Investment Authority (Sagia), told the Jeddah Water and Power Forum that low corporate tax — 20 per cent — compared favourably with the United States and Europe and helped stimulate inward investment.
