The previous list of investment was also revised to comply with Saudi Arabia’s commitments under the regulations and conditions of the World Trade Organization (WTO). The Kingdom became the 149th member of the WTO in December 2005.

“Also commercial agencies, except franchise rights are now open for foreign investment,” Tuwaijeri said.

According to the UNCTAD report, FDI inflows to the 14 economies of West Asia surged by 44 percent in 2006 to an unprecedented $60 billion. Turkey topped the list with $20 billion, a 100 percent increase over 2005, Saudi Arabia second with $18 billion and the UAE third with $8 billion, with a 23 percent decline in inflows or $8 billion. Jordan with $3.1 billion FDIs and Bahrain with $2.9 billion, were on fourth and fifth positions, respectively.

Efforts by Gulf countries to diversify their production activities beyond oil-related activities succeeded in attracting greater FDI flows to the manufacturing sector. FDI outflows from West Asia totaled $14 billion, an increase of 5 percent over the 2005 level.

The value of mergers and acquisitions (M&As) by investors from West Asia increased by 78 percent, amounting to $32 billion, as a result of high oil prices and the current account surpluses of oil-producing countries.

About two-thirds of those M&As were targeted at developed countries, in particular the United Kingdom (35 percent by value), Canada (11 percent) and the United States (9 percent).

Accounting for 8 percent of the value of such M&As, Pakistan was also an important target nation. In developing regions, investments in telecommunications (mainly in sub-Saharan African countries), real estate and leisure industries were notable in 2006, the report said.

Services remained the dominant sector for FDI in West Asia, a major proportion of which went to financial services as a result of the privatization and liberalization policies of a number of countries in the region.

Kuwait accounted for more than half of the region’s total outward FDI, mainly in the telecommunications industry.

In light of the region’s high GDP growth and ongoing economic reforms, supported by the prevailing high oil prices, the upward trend in FDI to West Asia is likely to continue, the report said.

The UN agency’s investment assessment of West Asia came two weeks after a World Bank report described Saudi Arabia as the seventh fastest reformer globally and the second fastest in the region.

“This year Saudi Arabia made bold business reforms making it one of the world’s leading reformers. Saudi Arabia is now the top ranked economy in the Middle East,” said Jamal Haider, co-author of the bank’s Doing Business Report 2008.

Amr Al-Dabbagh, governor of Saudi Arabian General Investment Authority (SAGIA), said the jump in the new ranking was a major step toward achieving the “10 by10” goal sought by SAGIA to place the Kingdom in the top 10 countries in terms of investment.

“Saudi Arabia has become the number one recipient of foreign direct investment in the Middle East.

Inflows have increased from $2 billion to $18 billion in the last two years,”Al-Dabagh said.

The SAGIA chief said the figures would grow more rapidly with the development of the Kingdom’s six new economic cities, and special economic zones that are attracting top global companies with major investment opportunities.

King Abdullah bin Abdul-aziz launched four mega-economic cities in Rabigh, Hail, Madinah and Jizan, which are expected to draw SR300 billion in investment and create more than a million jobs.

“With Saudi Aramco’s recent expansion of refineries and the building of the Kingdom’s economic cities, foreign investment in the country has become more attractive to investors abroad, mainly due to the liberalization of investment rules in which SAGIA has played a vital role,” said Abdul Rahman Mousa, an investment specialist at SAGIA.

© Saudi Press Agency 2007