Foreign direct investment (FDI) in the GCC fell to $24 billion last year from $28 billion in the previous year, down 14.6 per cent, according to United Nations Conference on Trade and Development’s (UNCTAD) annually published World Investment Report 2014.
The world FDI, however, increased 9.1 per cent from its level in 2012 to reach %1.5 trillion last year, it said.
The UAE led the GCC in FDI for the first time last year, with $10.5 billion, pushing Saudi Arabia into second place. Along with Bahrain, the UAE is the only country to record four consecutive years of increasing FDI inflows, as investors returned to the property, manufacturing and services sectors and as the country gears up for the Dubai World Expo in 2020.
Saudi Arabia, which is historically the region’s largest recipient of foreign investment, has, however, experienced five consecutive years of declining FDI flows.
The FDI decreased by 24 per cent from $12.2 billion in 2012 to $9.3 billion last year. This was despite significant investment in capital projects including infrastructure, oil refining and petrochemicals.
The FDI flows to Kuwait were also estimated to have decreased last year to $2.3 billion. However, the country has experienced a resurgence in FDI as a string of acquisitions by mainly GCC based-entities helped to boost investment.
The government, for its part, last year unveiled an update to its FDI law of 2001 in order to streamline the FDI approvals process and expand the list of eligible investments. A fully resourced and independent public authority (KDIPA) for the promotion of FDI has been set up to replace the previous FDI office and approvals committee.
The unit will have full control over its own budget and hiring and be able to assess and approve FDI applications more quickly through the creation of a ‘one stop shop.’