Foreign Direct Investment in Qatar jumps by 700%

DI in Qatar rises seven-fold; outward flows jump 41 times

DOHA: Qatar saw a more than seven-fold rise in foreign direct investment (FDI) inflows, while the outward FDI jumped 41-fold in 2007, according to the World Investment Report (WDR) 2008 by United Nations Conference on Trade and Development.
In the WDR ranking of 141 world economies, Qatar is placed at 110 for inward FDI performance and 25 for outward FDI in 2007.
Bahrain is ranked 12 in inward FDI performance and ninth in outward FDI; Kuwait (134 and eighth); Oman (48 and 47); Saudi Arabia (51 and 41) and the UAE (34 and 23).
Qatar’s FDI inflows rose to $1.14bn in 2007 from $159mn a year ago, the report said.
In the case of other GCC countries – which come under West Asia in the WDR – Bahrain saw a 39.73% dip in FDI inflows to $1.76bn, while Kuwait saw a marginal rise of 0.82% to $123mn and the UAE’s by 3.43% to $13.25bn.
Oman’s inward FDI rose by 46.91% to $2.38bn and Saudi Arabia’s by 32.97% to $24.32bn.
Qatar’s outward FDI saw a 41-fold jump to $5.26bn; Saudi Arabia’s by 10-fold to $13.14bn; Oman’s by 73.78% to $570mn; Kuwait’s by 72.96% to $14.20bn and Bahrain’s by 70.31% to $1.67bn, while in the case of the UAE, it was 39.12% dip to $6.63bn in 2007.
FDI in the GCC rose by 20% to $43bn in 2007, the WDR said, adding these countries – especially Saudi Arabia, the UAE and Qatar – have seen relatively high inflows in recent years due to a growing number of energy and construction projects as well as notable improvements in the business environment.
“The most significant rise in FDI in the sub region was in Qatar where there was a seven-fold increase from the previous year,” the report said.
Although developed countries continued to be the major sources of FDI flows into the West Asian region, FDI by transnational corporations from developing countries has risen “substantially.”
In 2007, like the previous year, West Asia attracted Greenfield FDI primarily from the US, the UK, France and Germany. Inflows from South, East, South-East Asian countries, particularly China and India, was also significant, followed by intra-regional flows, particularly from the UAE and Saudi Arabia, the report said.
High oil prices have continued to boost economic growth rates in the oil-exporting countries of the West Asian region, WDR said. Rising revenues have encouraged the GCC governments to spend heavily on infrastructure, particularly for revamping water and energy industries and services, often in collaboration with private investors, including foreign ones, it said.
In addition, WDR said, export-oriented economic activity in some West Asian economies, especially in Turkey, benefited from higher demand in European economies. All these factors have contributed to sustaining high FDI inflows to the region.
On the outbound FDI, WDR said “the GCC countries, led by Qatar, accounted for 94% of the region’s outward FDI, with about $41bn in outflows.”
The GCC countries have built up a substantial windfall from oil exports since 2002 when global oil prices started to rise. High prices enabled them to accumulate huge stocks of net foreign assets estimated at around $1.8tn and to implement their diversification strategy, it said.
Sovereign wealth funds based in the sub-region are playing a key role in boosting outward FDI flows, WDR said. Several Islamic private equity firms and other alternative asset management companies from the GCC countries were also investing abroad, particularly in the developed countries, it said.
Although the US has attracted the largest share of investments from the GCC countries, a growing number of GCC investors are now moving to Asia, particularly China and India, to diversify their investment portfolio, WDR said.
“A growing amount of GCC capital is being invested in various sectors such as banking, telecom, real estate and manufacturing in West Asia and North Africa, including export-oriented manufacturing activities to supply to the European and West Asian markets, as a result of accelerating liberalisation, privatisation and the increasing use of Islamic financial instruments,” WDR said.
By Santhosh V Perumal