Foreign direct investments: KSA top choice among Arab states

Foreign direct investments (FDI) in the Kingdom dropped by 25 percent to reach $12.2 billion in 2012 although the Kingdom remained the most attractive destination for FDIs among Arab countries, says a report released by the National Bank of Kuwait (NBK).
It said Foreign direct investments stabilized in GCC countries in 2012 on the positive sentiments of the region.
The volume of FDI increased slightly over the previous year to reach $26.4 billion, the NBK report said, citing data released by the UN Conference on Trade and Development (UNCTAD).
This brings to an end three consecutive years of declining FDI inflows to the region since the pre-financial crisis peak of $61.7 billion in 2008, the report said.
Meanwhile, FDI flows from the GCC countries to other countries declined last year by 17.7 percent to $18.6 billion.
Kuwait was reportedly the largest investor overseas, accounting for 41 percent of the GCC outflows with $7.6 billion, followed by Saudi Arabia with $4.4 billion and the UAE with $2.5 billion.
The GCC’s positive performance is further accentuated when placed in the context of developing economies and world FDI flows, both of which declined in 2012 by 4.4 percent and 18.2 percent respectively.
The GCC increased its share of developing economy FDI to 3.8 percent from 3.6 percent, the report said.
While global FDI flows, especially those originating from developed economies, remain inhibited by the deleveraging of international banks and investors’ heightened sensitivity to risk, the GCC, as a destination for foreign investment, has benefited from a combination of relatively high hydro-carbon prices, buoyant economic growth and an ambitious program of government-sponsored investment projects, the report said.
The region also regularly accounts for more than 50 percent of all FDI to the Arab, Middle Eastern and North African countries, it said.
The GCC flows have also been facilitated by the significant improvements made by individual countries to ease business dealings.
Saudi Arabia and the UAE, for instance, ranked 22 and 26 in the world, respectively, and have made positive strides in reforming procedures, costs and time taken to start a business, trade across borders and deal with construction permits, according to the report.