• Home
• News Article

FDI in Arab countries falls by 15.1 percent in 2009 - analysis

09 July 2010

BEIRUT: The Arab Investment and Export Credit Guarantee Corporation indicated that foreign direct investment (FDI) in 18 Arab countries dropped 15.1 percent to about $80.7 billion in 2009 from $95.0 billion in 2008.

The report, published by Bank Audi’s MENA Weekly Monitor, was entitled “Investment Climate in the Arab Countries for 2009.”

According to the report, the decline was due to the continuing impact of the global financial and economic crisis on FDI flows worldwide.

The study added that the Arab region witnessed the lowest decline compared to other economic blocs, as the investment atmosphere in the Arab states remained largely regular due to vital legislations being enacted, increased incentives for investors, slashing of taxes and the drawing up of bilateral and multiparty transactions.

The report added that a number of factors helped the investment atmosphere of the region, including the continuation of reform efforts, namely the expansion of e-government schemes, abidance of Arab governments by privatization strategies, increased investment opportunities and the establishment of industrial zones and towns.

Only seven of the 18 Arab countries – Qatar, Lebanon, Sudan, Algeria, Iraq, Yemen and Kuwait – witnessed an increase in incoming FDI over the 2008-2009 period, while Saudi Arabia, Egypt, UAE, Morocco, Jordan, Tunisia, Syria, Libya, Bahrain, Djibouti and Mauritania experienced a drop.

Kuwait saw the highest yearly increase in FDI of 161.4 percent, followed by Iraq (88.5 percent), Yemen (57.6 percent), Lebanon ( 33.2 percent), Qatar (30.2 percent), Sudan (12.4 percent) and Algeria ( 1.3 percent).

Meanwhile, the highest decline of 85.7 percent was observed in Bahrain, followed by Libya (79.5 percent), Djibouti (60.8 percent), the UAE (37.6 percent), Tunisia (35.2 percent) and Morocco (30.2 percent).

The report indicated that Saudi Arabia attracted the largest chunk of FDI in 2009 amounting to $35.5 billion or 44.0 percent of the overall FDI into the 18 countries, followed by Qatar with $8.7 billion (10.8 percent), the UAE with $8.6 billion (10.6 percent), Egypt with $6.7 billion (8.3 percent) and Lebanon with $ 4.8 billion (6.0 percent).

The report also covered inter-Arab investments and noted that Kuwait topped Arab countries in terms of regional outward investments.

Kuwaiti investments in eight Arab countries amounted to approximately $6.1 billion, some 31.9 percent of the overall inter-Arab business. Kuwait’s investments in Saudi Arabia and the UAE were estimated at $4.3 billion and $1.2 billion respectively.

The UAE ranked second in terms of inter-Arab investments with 26.3 percent, or $5.1 billion of total inter-Arab investments followed by Bahrain with $1.7 billion or 8.7 percent.

Qatar invested $1.2 billion or 6.5 percent and came in third position, with Jordan trailing with $1.1 billion or 5.8 percent of total inter-Arab investments.

The kingdom of Saudi Arabia led the inflow of inter-Arab investments, reaching $11.6 billion in 2009, some 60.4 percent of the total inflow, followed by the UAE with $3.7 billion (19.0 percent), and Egypt with $1.7 billion (8.9 percent).

Total inter-Arab investments for countries with available data amounted to $19.2 billion in 2009, down by 7.0 percent from $20.7 billion in 2008.

The proportion of investments at the inter-Arab level was estimated at 27.7 percent for the industrial sector and 36.7 percent in agriculture. – The Daily Star

© Copyright The Daily Star 2010.