“Being the largest FDI recipient in the region, Saudi Arabia has projected impressive growth last year and it has earned investor confidence from global entrepreneurs,” Taffere Tescfachew, chief of the Office of UNCTAD Secretary-General and Strategy and Policy Coordination, told reporters Thursday at a packed press conference held at Riyadh’s Faisaliah Hotel.
The report that covered 192 countries was released simultaneously in 42 countries on Thursday.
Last year, the Kingdom was placed 14th in a similar ranking published for the year 2008. The inflows were lower by 5 percent than the total FDI inflows of $38.1 billion attracted in 2008. Net FDI inflows contributed to raising the internal FDI stock value to $147.
These levels of FDI inflows, although high, are yet below the aspirations of the Saudi Arabian General Investment Authority (SAGIA), taking into considerations the great potentials of the Saudi economy, and its grid of developed infrastructure and investor-friendly laws.
Analysis of FDI inflows to the Kingdom revealed that sources of largest FDI inflows during 2009 were United States with FDI inflow amounting to $5.8 billion, followed by Kuwait with $4.3 billion, UAE with $3.8 billion, France with $2.6 billion and Japan with $2 billion, while others making up the rest.
FDI inflows to the Kingdom in 2009 were distributed over a wide range of economic sectors, including investments in real estate and infrastructure, building contracts, financial services, mining, oil and gas exploration, transportation, telecommunications and information technology.
The total foreign and joint investments in the Kingdom for 2009 was recorded at $300 billion, while foreign direct investment stock was estimated at $147 billion. The number of employees in the FDI projects in the Kingdom were 375,000, 27 percent of which were Saudis. Total salaries and wages given for the FDI workers was $7.8 billion while the total export value stood at $43 billion.
The top 10 countries that attracted FDI during 2009 included the United States, China, France, Hong Kong, United Kingdom, Russian Federation, Germany, Saudi Arabia, India and Belgium.
According to the report, the Kingdom has the potential to attract more FDI than current levels. Recent statistics showed that the discrepancy between the potential to attract FDI and actual FDI inflows is closing and a significant decrease in the gap occurred during the last two years of 2008 and 2009. SAGIA aims at doubling the levels of FDI annual inflows so that levels of FDI inflows match the potential of the Kingdom.
The tightening of credit markets has affected cross-border mergers and acquisitions and development projects in West Asia involving significant foreign investment. This was the main reason for the decline of FDI inflows to the region by 24 percent to $68 billion in 2009 after six years of consecutive increase.
The report on investment issues subtitled “Investing in a low-carbon economy” stated that FDI inflows fell in all of the region’s main recipient countries except Qatar and Lebanon. The UAE and Turkey were hit the hardest with declines of 71 and 58 percent respectively. The Kingdom remained the largest followed by Qatar and Turkey in the region.
FDI outflows from Middle East decrease by 39 percent in 2009 to $23 billion, mainly due to falling outflows from UAE, from $16 billion to $3 billion. The Dubai financial crisis downgraded the country’s position from the largest outward investor in the region to the third largest. With $9 billion, Kuwait was the region’s largest outward investor, followed by Saudi Arabia, where outward investment increased significantly from $1.5 billion to $6.5 billion.
The report also said that the FDI inflows worldwide plummeted by 37 percent to $1.114 billion in 2009, following a 16 percent decline in 2008. After this free fall, a timid and uneven recovery appears on its way, it added, pointing out that it could exceed $1.2 trillion during the current year.
