Monday, Apr 03, 2017

Dubai: Services sector represent more than 70 per cent of cross-border investment flows and it represents more than two-thirds of investment flows into the UAE and services will continue to dominate both global and regional foreign direct investment flows, said Hamid Mamdouh, director trade services, World Trade Organisation (WTO).

Delivering a keynote address on “Services in the global investment landscape’ Mamodouh said services related to distribution (wholesale and retail), real estate and financial services represent 75 per cent of global investment flows into the UAE.

“Globally services are heavily regulated across most countries and have high entry barriers. Despite the high level of restrictions FDI statistics point to the importance of this sector,” said Mamdouh.

According to WTO, lack of policy coherence among various government departments is resulting in high level of entry barriers for services, although governments across the world have broad commitment towards attracting investments into services sector.

FDI and sharing of global knowledge base in services sector is increasingly becoming an imperative in the context of services becoming an intermediate product in the global value chain. “Global economy is dominated by value chains where services are crucial connecting links. When services are not adequate, the rest of the economic activities in the value chain can remain sub-optimal,” said Mamdouh.

Challenges faced by FDI into service sectors are global and are mostly regulatory in nature. Seamless operation of services depends on cooperation among global regulators.

While efforts are underway among various regulators to remove such barriers to FDI in services sector, WTO is also concerned that bilateral arrangements between some regulators could lead to restrictive practices that limit free competition.

“We support efforts at reducing entry barriers to FDI in services sector, but in the context of multilateral arrangements. It is very important support and encourage multilateralism, especially in the context of rising protectionism across the world,” said Mamdouh.

bY Babu Das Augustine Banking Editor

Gulf News 2017. All rights reserved.