Saudi Arabia is expected to surpass the UAE in receiving foreign direct investment in 2023, for the first time since 2012, as both nations continue to be major beneficiaries of the inflow of funds, a recent industry report showed.
According to the Lumina Cross-Border insights report, FDI into Saudi Arabia and the UAE hit record highs with $40 billion in 2022, showing a rise of 58 percent over the previous year.
“Key MENA projects driving FDI and UK-to-Middle East investment in 2023 will include infrastructure and engineering, tourism and hospitality, and clean/renewable energy, most notably, the megaprojects in Saudi Arabia,” stated the report.
For instance, Saudi Arabia’s top seven infrastructure projects will cost $690 billion to construct. These schemes are NEOM, ROSHN, Diriyah Gate, Jeddah Central, Red Sea Project, AlUla, and Qiddiya.
It added: “Regional presence for aspiring global firms to take advantage of such growth is now seen as a must rather than a nice-to-have.”
The report further predicted that the two-way investments between the Middle East and Europe will drive record FDI levels in 2023.
“As global corporates and funds increasingly set up roots in the region, with talent continuing to move in, 2023 is anticipated to be another record year for FDI in the Middle East.”
It said that deal-making is also expected to flourish due to a largely resilient regional-led global mergers and acquisitions environment last year.
The report also predicts a significant change in existing partnerships in the region as firms in the UK will reassess joint ventures in the Middle East to determine their relevance today.
“2023 will be a tale of two halves, with H1 seeing highly active Middle East corporates and funds continuing to invest into European companies, as domestic markets continue to face varying levels of economic turbulence.
This will create a myriad of investment opportunities to diversify globally and gain access to best-in-class skills and talents,” said Andrew Nichol, partner at Lumina Capital Advisers.
He added: “In H2 we anticipate improving sentiment across developed markets, which will drive global demand for natural resources, oil included. The region is extremely well positioned for yet another strong year ahead.”
source: Arab News
Egypt continues to be Africa’s largest recipient of foreign direct investment (FDI) flows in 2019, marking a 10.7% hike, despite the slump in FDI inflows to the entire continent to USD 45 bn (EGP 727.2 bn), Invest-Gate reports.
“FDI inflows to North Africa decreased by 11% to USD 14 bn (EGP 226.2 bn), with reduced inflows in all countries except Egypt,” read the United Nations Conference on Trade and Development’s (UNCTAD) “Global Investment Trends Monitor 2019” report, noting that Egypt posted USD 9 bn (EGP 145.4 bn) in FDIs last year.
UNCTAD highlighted that economic reforms undertaken by the Egyptian government have improved macroeconomic stability and boosted investor confidence in the country. Although FDIs were still driven by the oil and gas industry, investment in the non-oil economy was also taking place.
According to the report, communications, consumer goods, and real estate sectors have seen significant investments in 2019.
“Egypt ranked first in Africa in re-investing the profits of foreign companies by 41%, where the reinvested profits for multinational companies represent a remarkable share of foreign direct investment inflows to the economies of the countries of the continent,” it confirmed, pointing out that lowering profit expectations will have a tangible impact on investment flows to Africa in 2020.
UNCTAD revealed that global FDI flows are forecast to drop by as much as 40% in 2020, from USD 1.54 trn (EGP 24.9 trn) in 2019, bringing FDIs below USD 1 trn (EGP 16.2 trn) for the first time since 2005.
In addition, FDIs are set to decline by a further to 10% in 2021; and to initiate a recovery in 2022, the report concluded.
source: invest-gate
Foreign direct investment (FDI) inflow into the UAE jumped over 34 per cent to $14 billion (Dh51.4 billion) in 2019 as compared to $10.4 billion (Dh38.2 billion) in the previous year following major investments by US private equity firms in Abu Dhabi's energy sector.
The UAE surpassed Turkey to become the largest recipient of foreign investment last year in the Middle East and also accounted for half of total investment that flowed into the region in 2019, according to World Investment Report released by UN Conference on Trade and Development (Unctad).
The large increase in FDI to UAE was largely due to major investments made to Abu Dhabi National Oil Company (Adnoc) assets.
The US-based asset managers BlackRock and KKR Global Infrastructure acquired a 40 per cent stake in Adnoc's pipeline assets for about $4 billion.
Italy's Eni SpA also acquired a 20 per cent stake in Abu Dhabi Oil Refining Company for more than $3 billion.
"Abu Dhabi has supported FDI inflows to the UAE for the past few years with its streamlined procedures and capacity in facilitating megadeals. In 2019, the emirate further strengthened its commitment to foreign investment by launching the Abu Dhabi Investment Office under the Ghadan 21 programme, a broad-based initiative to enhance the commercial ecosystem, including by cultivating an attractive and diversified environment for FDI," Unctad said.
It said the approval of the positive list for FDI in the UAE in April 2020 paves the way for full foreign ownership in many activities and could support investment flows to the country in the longer term.
While FDI outflow from the UAE also moved up slightly last year from $15 billion to $16 billion, an increase of 5.5 per cent.
Regional performance
FDI to Middle East declined by 7 per cent to $28 billion as against $30.1 billion in 2018. Just three countries - the UAE, Turkey and Saudi Arabia - accounted for the majority of inflows in 2019.
FDI inflows into Turkey slumped from $13 billion in 2018 to $8.4 billion last year, slipping into the second position after the UAE.
In the GCC, Saudi Arabia was the second largest recipient of foreign investment, receiving $4.56 billion last year as compared to $4.24 billion in the previous year.
Flows to Saudi Arabia increased for the second consecutive year by a further 7 per cent to $4.6 billion, mainly because of a few large M&A deals.
FDI to Bahrain fell by 43 per cent to below $1 billion in 2019. The main reason was the country's investment profile, which centres on light manufacturing and services, which are more sensitive to global and regional economic headwinds.
Regional outflows
FDI outflows from Middle East contracted significantly, from $50 billion in 2018 to $36 billion in 2019.
In Saudi Arabia, outward investment declined from $23 billion in 2018 to $13 billion, and firms in Kuwait divested $2.5 billion of overseas investments.
Major outward investments announced in 2019 included a $10 billion project by Saudi Aramco to develop oil and gas facilities in China and a $9 billion oil project by Qatar Petroleum to expand its existing facilities in the US, although it is unclear when these projects will be fully realised.
FDI inflow into the Middle East, 2019
UAE: $13,787m
Turkey: $8,434m
Saudi Arabia: $4,562m
Oman: $3,125m
Lebanon: $2,128m
Bahrain: $942m
Jordan: $916m
Kuwait: $104m
Palestine: $176m
Top global countries for FDI inflows, 2019
US: $246B
China: $141B
Singapore: $92B
Netherlands: $84B
Ireland: $78B
Brazil: $72B
Hong Kong: $68B
UK: $59B
India: $51B
Canada: $50B
source: investinabudhab
This new record represents a growth of 135% compared to the same period last year, Sheikh Hamdan, Crown Prince of Dubai and Chairman of Dubai Executive Council, announced.
The Emirate of Dubai has witnessed exceptional growth during the first half of 2019, with foreign direct investments, FDIs, reaching a record-breaking AED46.6 billion, H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council, announced on Sunday( 29 october).
This new record represents a growth of 135 percent compared to the same period last year, His Highness added, noting that this FDI growth within the emirate is "a testament to global confidence in Dubai's economy." During the first half of 2019, Dubai has continued to progress in global rankings of the most attractive cities for FDI, ranking third in the world in attracting FDI, in terms of both capital flows and the number of greenfield projects.
"Dubai is among the top three global FDI locations thanks to the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, who created a global investment environment in Dubai that keeps pace with the aspirations of investors, entrepreneurs and technology shifts in the region and the world," Sheikh Hamdan bin Mohammed continued.. The FDI flows and rankings results were revealed by Dubai Investment Development Agency, DUBAI FDI, an agency of Dubai Economy, based on the Financial Times’ fDi Markets, a global online platform that monitors data on capital flows and greenfield FDI projects around the world and the ‘Dubai FDI Monitor’ data.
His Highness pointed out that Dubai has been particularly successful in attracting advanced technology and specialised talent in the first half of 2019.
"This is a proud achievement for Dubai. With the growth of talent and technology, Dubai will accelerate its drive to become the smartest and most sustainable city of the future.
" According to ‘Dubai FDI Monitor’ data, FDI projects with High and Medium Technology component reached 47 percent of total FDI projects in the first half of 2019, based on the Organisation for Economic Cooperation and Development, OECD, classification criteria.
Moreover, FDI projects with a high and medium technology component were at the forefront of creating new jobs with a 48 percent share of the 24,294 new jobs created by FDI projects in the first half of 2019.
Sheikh Hamdan noted that according to the Financial Times’ fDi Markets data, the emirate ranking ninth globally in job creation through FDI.
"This achievement will further strengthen Dubai’s position as one of the most attractive destinations for promising talent, thanks to our leadership’s initiatives to develop legislative frameworks that enhance the role of talent in building a knowledge and innovation economy in Dubai and the UAE," he concluded.
source: zawya
