Qatar among top FDI destinations, says report Friday, 23 July 2010 05:56

By Nasser Al Harthy

DOHA: Qatar was second among the five largest recipient countries in the Middle East with foreign direct investment (FDI) worth over $10bn in 2009, according to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2010, which was released yesterday.

The report notes that governments’ sustained commitment to ambitious infrastructure plans is expected to support the recovery in FDI flows this year. In the GCC, inflows decreased in 2009 after six years of consecutive increases, growing from less than $10bn in 2000 to approximately $60bn in 2008 and dropping to $50bn last year.

The World Investment Report 2010 also notes that investment policy measures such as fully opening up new sectors for FDI like in Qatar, reducing taxes to stimulate the economy as a whole, or particular sectors or regions like in Oman and Turkey, and raising the ceiling for foreign ownership like in Syria have generally improved the conditions for FDI in the region.

The report sees significant opportunities for foreign investors due to ambitious infrastructure development plans in the region. On the other hand, says the report, there are mixed prospects for outflows in the short term, with some countries like Qatar already looking for investment opportunities abroad and others, like the UAE, refocusing on their home economies.

In the medium term, cash-rich and well capitalised Gulf financial institutions would like to acquire foreign companies that can deliver both short and long-term gains to investors, the World Investment Report (WIR) 2010 said.

This year’s report focused on investing in a low-carbon economy, examining the role that transnational corporations (TNCs) can play in supporting the transition of developing countries to such an economy.

The UNCTAD Secretary-General, Supachai Panitchpakdi, noted at the launch of WIR 2010 last evening that this year’s report provides arguments for the role that the private sector can play in the process of adapting to a low-carbon economy.

He said this year’s report examines the latest trends in FDI flows and policies, especially as the global economy starts to emerge from the crisis.

Speaking of the latest trends in FDI flows, Panitchpakdi pointed out that after falling 37 percent last year, mainly due to continued weakness in the global cross-border merger and acquisition market, global FDI flows began to bottom out in the latter half of 2010, which suggests brighter FDI prospects in the short term.

UNCTAD estimates that global inflows are expected to increase to over $1.2 trillion in 2010, rising further to $1.3-1.5 trillion in 2011, and then $1.6-2 trillion in 2012.

However, Panitchpakdi cautioned that FDI flows were recovering in the wake of a drastic decline in 2009 and the brighter FDI prospects for 2010-2012 remained fraught with risks and uncertainties, particularly because of the fragility of the global economic recovery.

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