One of the best articles about investment that I have read recently was the one in Okaz by Muhammad Al-Hassany. Among his comments was one which is to the point. “In order to attract foreign investment to the Kingdom, we must be able to reassure foreign investors of our sincerity and credibility. Also we must re-evaluate our investment regulations and facilities and see if they are competitive with those offered by other countries. We must be prepared to compete or there is no point in getting into the game. A country which seeks foreign investment without providing adequate facilities and privileges cannot possibly succeed.”
It is true that investments need right conditions, diversification of opportunities, efficient administration and proper licensing. For instance, investments in tourism differ from industrial or agricultural ones and there are also differences between commercial and industrial development. Commercial investment depends on a flourishing trade, diversification, rapid and continuous innovations while industrial investments are long term and strategic. Industrial projects, however, involve research, training, patents and inventions; hence it is imperative that there be coordination and interaction between industrialists and decision-making bodies in order to expand and attain stability. In fact, the industrial world is heavily influenced by industrialists and the politician takes a back seat in terms of establishing policies or in the making of vital decisions. In addition, it is not wise for any developing country to depend on foreign or internal initiatives for its investment program but it should assess its economic potential and national production, evaluate its strength and meet challenges or existing obstacles. These should include fluctuations in national income, unemployment and other factors that hinder progress. The best way to absorb unemployment is through increasing production. In addition, foreign investment may be attracted to a developing economy such as Brazil’s with a population of nearly 180 million. This is not the case in the Arab world where many countries’ populations are very small indeed. Therefore, the foreign investment makes its own conditions for investing in natural resources, gas and minerals and is hesitant unless the right regulations and exemptions are offered. Furthermore, foreign investment hesitates to go into projects that create jobs or increase income or boost the balance of trade, because under the WTO it is searching for the best markets with the highest possible returns and the lowest operating costs. For example, there are six washing powder factories in the Gulf States while available technology would enable two to satisfy the needs of the whole Arab world. The Arab countries, whether stable or not, rich or poor, open or closed, should understand that international changes present many opportunities for industry and trade . However, the Arab investors will not aim at manufacturing for many reasons including unwillingness to learn new skills and systems from foreign partners. It is true that Arabs are excellent traders but not in industry because they don’t understand the importance of long-term planning. Look at examples from Aramco and SABIC and other successful petrochemical industries. In fact, these industries could be expanded and could also explore other possibilities that we might be successful in. So alternative development can be sought regionally and its viability investigated. As neighboring countries have their own laws, rules and regulations, these should be unified over time and government staff trained to apply the changed regulations.
To be frank, foreign investment will not increase unless the government and citizens take the lead and present a role model in order to encourage partnerships or joint ventures. So far this part of the world has not been the ideal place for foreign investors because investors have their own agenda except for a few that select certain opportunities to suit their needs. The entrance of local investors in industry, agriculture, services and tourism requires close interaction of investors and decision-makers to remove obstacles and achieve efficient management along with the acquisition of new technology and training of qualified personnel. No doubt a healthy environment is necessary to encourage local capital to invest in the country which will in in turn attract foreign capital and much-needed investment.