JEDDAH, 30 March 2006 — The Middle East needs $1 trillion in investments in productive projects in order to create 100 million new jobs, says Lubna Al-Qassimi, minister of economy and planning in the United Arab Emirates. She made this comment in a keynote address to the first IPO and asset management conference in Dubai organized by the magazine, MEED. Al-Qassimi urged Gulf Cooperation Council (GCC) states to do more to attract foreign direct investment (FDI).
“FDI is still the lowest level in the region,” Al-Eqtisadiah business daily quoted the UAE minister as telling the conference. Al-Qassimi’s speech was delivered on her behalf by Abdullah Al-Turaifi, chief executive of the Emirates Securities & Commodities Authority. She said the weak flow of FDI had played a big role in weakening GCC economies from 1992 to 2000.
“The Gulf region is currently witnessing an economic boom, thanks to rising oil prices,” she added. Al-Qassimi urged GCC countries to make use of rising oil prices and growing liquidity to increase capital base, boost production capacity and open new outlets for industries.
She emphasized the need for GCC countries focusing on productive and service industries by drawing foreign direct investment. She believes such a move would not only strengthen the GCC economies but also create millions of jobs for its citizens.
Another thrust of Al-Qassimi’s speech was family businesses in the Gulf. She urged them to transform into public joint stock companies and list themselves on local stock exchanges. “None of the family businesses in the UAE has become joint stock firms because of a law that insists that they should float 55 percent of their shares for public subscription and that has been rejected by their owners,” she pointed out. “The owners believe that such a sell-off would result in losing the grip on their companies, which they created after years of hard work,” she said.
Al-Qassimi indicated that her ministry was in the process of issuing a new law to allow family businesses to hold 70 percent of shares while going public since the businesses would need to float only 30 percent.
Osama Al-Zamil, business development manager at Zamil Holding Group, also spoke about the poor response of family businesses in Saudi Arabia and other Gulf countries to launch their IPOs. “There are 2,300 family businesses in Saudi Arabia. Only three of them have become joint stock firms. The reason is that owners of these companies do not want to publish their financial statements in newspapers as they want to keep them secret, although such a policy is no longer acceptable under new economic developments at both local and international levels.”
He also pointed out that family members were not in agreement on changing their businesses into joint stock firms, especially those who had taken part in their formation. “As a result, the conversion of family businesses to joint stock firms will take time,” he concluded.
Al-Zamil proposed that family businesses first change to closed joint stock companies and prepare their subsidiaries to go public. “That is exactly what we have done at Zamil.” He said that after going public, Zamil Industrial Investment Company was able to find new markets in Europe, Vietnam and Egypt.
