Sohar University
Faculty of Business
Gulf Business Environment
BUBS4401
Tem Paper Tittle:
FDI and its future in GCCs
Writing By:
Athari Mohammed Al-Qutiti 120632
Maryam Mohammed Al-Badi 130744
Mazoon Rashid AL-Bakri 103017
Afrah Zaied Al-Hatmi 102754
Date: November 14th-2017
Abstract
Foreign direct investment (FDI) is an important factor that leads to the recording of high rates of economic development, which contributes to the development of the target country of the host country by raising the rates of GDP growth, creating jobs, transferring modern technology, raising production efficiency, stimulating exports and supporting competitive capacities.
GCC countries are no different from other countries in the need for foreign direct investment where they still rely heavily on oil and there has been no significant change in the diversification of the productive base, so the need for foreign investment to diversify the productive base, which contributes to creating jobs in the private sector and increase Competitiveness and productivity and the establishment of an industrial economy will be of future importance when oil revenues begin to decline and stability of growth rates in the Gulf countries. FDI flows contribute effectively to the economic growth of these countries and help to produce many new commodities that can enrich intraregional trade and thus contribute to increased economic integration among GCC States.
Introduction
The six Gulf States (Bahrain, Kuwait, Saudi Arabia, the UAE, Oman and Qatar) enjoy their geographical location, oil and gas resources as well as other cultural and civilizational factors, which are important in the global economic balance. The oil and gas sector should become a sector that take both international and domestic investments as it is the leading apart in the economic development process and the main factor for achieving the financial surpluses in these countries for several decades. Foreign direct investment has become a major reason for achieving growth and improving the competitiveness of countries where It has started to encourage foreign investments and serious attempts to reform its economic, legal and administrative systems to improve its investment environment worldwide. Some of these countries have succeeded in finding sectors that attract foreign investments such as the petrochemical sector, construction and rationalization, and the establishment of free zones to attract investments to these regions. In local savings and achieve an increase in GDP growth rates and contribute to the creation of employment opportunities that contribute to reducing unemployment levels, raising the level of well-being and keeping pace with the world under the concept of globalization.
Foreign Direct Investment in Oman and its future
Oman is taken on foreign investment in sales operations, and from time to time these investments are not achieved it is goals. In practice, Oman strengthened for the first time, through the work manually, healthy ,educationally , renewal of energy ,technology in the communications , information, tourism, and various areas in need of aid. Investors looking for creativity through training and drive their ways to it, and the development of the private sector. The US is looking for joining work in Oman and invest without any local partnership, and keep track of free trade in Oman through its insistence on an agreement to increase support opportunities before the US budget, as well as assistance providers seeking to provide help by technology, communications, health and others. It looking to give other services, such as advisory services, and include 30% owned by Oman government for the exercise of its services, which is consistent with the Ministry of Trade and Industry through licenses.
In 2012, proportion of direct foreign investment in Oman is increasing to 1 billion US dollars, and with the flows exceed the acceleration in investment in order to development in the economic zones, airports, infrastructure and tourist.
Figure 1: Oman Foreign Direct Investment
Figure 1 shows the foreign direct investment in Oman from 1998 to 2016. From 1998 to 2015, the FDI in Oman averaged 351.22 OMR Million while FDI decreased by 1035 OMR Million. In addition, in 2015 a record low of -1035 OMR Million while in 2007 was reaching highest by 1281 OMR Million as reported by Central Bank of Oman (Trading Economies).
Oman Foreign Direct Investment
Foreign direct investment in Sultanate of Oman increased by 717.50 million RO in 2016. Foreign direct investment in Oman has reached 370.50 million RO from 1998 to 2016, reaching its highest level since RO 1281 million in 2007. In 2015, the RO is 1035 million.
Outlook for Foreign Direct Investment in Oman
According to macroeconomic forecasts and analysts' forecasts, foreign direct investment in Oman is expected to be -559.6 million Riyals at the end of the quarter (fourth quarter of 2017). According to our econometric model for a long time, Oman's foreign direct investment is expected to reach $ 255.63 million by 2020.
Oman FDI net inflow (% of GDP)
Oman's foreign direct investment (GNP) ratio is 0.2142% in 2016, collected from officially recognized sources according to World Bank Development Indicators.
Direct foreign investment in Kuwait
In recent periods, Kuwait have been the recipient of direct foreign investment in the Arab area, especially the GCC, thanks to a set of legislations that allowed the foreign investor to work in an environment conducive to creating comfortable investment opportunities with guarantees, benefits and exemptions for any investor.
Kuwait is a profitable business environment for investors, working hard to remove barriers to investors by adopting new economic laws or developing some of the previous rules through legal instruments for foreign investors and creating the right environment for investment.
Kuwait's direct foreign investment contributes to a different economy
Foreign companies established in Kuwait contribute positively to job creation and education opportunities for Kuwait citizens. In 2016, foreign companies in Kuwait have created more than 1,000 jobs for the Kuwaiti people. In addition, world-renowned companies are establishing long-term relationships in Kuwait by opening educational and research centers in line with Korea's vision for a sustainable economy for future generations. New Kuwait, a national vision in 2035, is a strategic roadmap for attracting FDI, emphasizing the importance of FDI.
Industries that can benefit from FDI in Kuwait
Under the current development plan, nine strategic areas for the development are planned: electricity and water, oil and gas, urban development, education, health, transport and communications, tourism, the media and the environment. Kuwait allocates about $ 103 billion for investment costs over 30 major projects and keeps the Kuwaiti project market. Most projects are committed to involving the private sector, simplifying, and improving the partnership between the two sectors to provide timely projects and within the budget.
Foreign Direct Investment in Kuwait
As indicated by macroeconomic models and experts' desires, outside direct interest in Kuwait is relied upon to achieve 74.44 million Dinars before the finish of the quarter. Outside direct interest in Kuwait is relied upon to achieve 105.18 out of a year. Over the long haul, Kuwait's outside direct venture is relied upon to achieve 12.2 million dinars by 2020, as per the econometric model.
Foreign Investment Forecasts in Kuwait
According to macroeconomic models and analysts' expectations, foreign direct investment in Kuwait is expected to reach 74.44 million Dinars by the end of the quarter. Foreign direct investment in Kuwait is expected to reach 105.18 in 12 months. Over the long term, Kuwait's foreign direct investment is expected to reach 12.2 million dinars by 2020, according to the econometric model.
Kuwait's net foreign direct investment (FDI) and net outflow (currently US $) are expected to reach US $ 27475,999 in 2016, according to the World Bank Group Development Indicators collected from officially recognized sources Adjusted.
Foreign direct investment in Qatar
The Development Planning Department, in cooperation with the Central Bank of Qatar, conducted a fourth foreign investment survey based on 2015 as of 2015. The survey gathers data from about 150 large companies that account for more than 90% of total investment, depending on various functional, geographical, and economic characteristics. For other companies where foreign investment is "internal and external", data was estimated based on historical trends. According to the survey, foreign investment increased by 15% (70.9 billion yuan) from RMB 470.9 billion to RMB 541.8 billion at the end of 2015. Other foreign investment accounted for 61% (330.7 billion yuan), followed by foreign direct investment of 133.7 billion (25%). SR 73.9 billion portfolio investment. Foreign direct investment balance decreased by 3.9 billion SR due to foreign direct investment inflows and other changes throughout the year.
Qatar Foreign direct investment
The foreign direct investment of Qatar reached 6143.3 million during 2011-2017, from 174.4 In the third quarter of 2012, it decreased to 17.44 billion.
Foreign Investment Forecasts in Qatar
According to global macroeconomic models and analysts' expectations, by the end of the quarter, Qatar's foreign direct investment is expected to be in the range of QAR $ 556.68 million. Foreign direct investment in Qatar is expected to reach 467.53 in the next 12 months. In the end, net foreign direct investment is expected to reach 5623.8 million QR by 2020, according to the econometric model.
Foreign direct investment of UAE
An analytical study issued by the Ministry of Economy to monitor the foreign direct investment of the Group of Arab States during 2016 shows that the UAE exports Arab countries in the field of attracting foreign direct investments during the past year by acquiring 29% of total foreign direct investment Arab countries, worth nine billion dollars. Study confirms that the UAE has a globally competitive economy. About 25% of the top 500 international companies in the UAE reside for regional operations., including political and security stability and strategic location. The UAE victory in the hosting of Expo 2020 in Dubai has increased, with government service development, smart government development, ease of banking and, high transparency.
Cumulative balance of foreign direct investment in the UAE
FDI in the United Arab Emirates increased by 8.2% to $ 117.9 billion at end-2016, compared with $ 109 million at end-2015. By the end of 2016, the UAE's foreign direct investment accounted for 16.9% of total foreign direct investment (FDI) in West Asia and the UAE accounted for 26.5% of foreign direct investment (FDI) by the end of 2016.
UAE is the Most polarized
The UAE ranked second in the list of countries with the most attractive foreign direct investment in Western Asia last year and estimated 32.3% of its total investment at $ 27.8 billion. The GCC country, which earned 50.2% of the GCC investment, is estimated at $ 17.9 billion in 2016.
Economic activity of FDI in UAE
According to the study, by the end of 2015, the UAE was 80.6% in four activities, wholesale, retail and automobile repair accounted for 26.2% of total FDI inflows, followed by real estate and business services 25.8%, financial institutions and insurance 19.1%, manufacturing 9.5%.
UAE Foreign Direct Investment 2007-2017
Foreign direct investment (FDI) in the United Arab Emirates increased by $ 33 million in 2016. Foreign direct investment in the United Arab Emirates rose from $ 512 million to $ 344 million between 2007 and 2016.
Direct Foreign Investment Forecasts in UAE
According to macroeconomic models and analysts' expectations, foreign direct investment in the UAE is expected to reach $ 355.6 million (AED) by the end of the quarter. In the long term, UAE foreign direct investment is expected to reach 500 million by 2020, depending on the econometric model.
Direct Foreign Investment in KSA
Saudi Arabia is one of the top 20 economies in the world, ranking first in the Middle East and North Africa, and ranked 22nd among 185 countries in the World Bank rankings. Saudi Arabia accounts for 25% of the largest free Arab GDP and 25% of the world's largest oil reserves. With plenty of natural resources in the mining sector and the geographical location of the Kingdom, and easy access to European, Asian and African markets, making the Kingdom an ideal destination for projects based on energy consumption.,
FDI inflows into Saudi Arabia during the year 2016 amounted to US $ 7.5 billion, down 8 per cent, or about US $ 600 million of total Saudi investments in 2015 (US $ 8.1 billion). Global FDI flows declined by 13 per cent in the same year to $ 1.52 trillion, according to a report by the United Nations Conference on Trade and Development (UNCTAD).
Saudi Arabia Foreign Direct Investment – Net Income 2006-2017
In 2017, foreign direct investment in Saudi Arabia increased by $ 175 million. Foreign direct investment in the Kingdom amounted to $ 411.44 million, an average of $ 461.3 million between 2006 and 2017. In 2010, the lowest level was $ 1,711 million.
Direct Foreign Investment Forecasts in Saudi Arabia
According to global macroeconomic models and analysts' expectations, foreign direct investment in Saudi Arabia is expected to reach $ 210 million by the end of the quarter. In the future, we estimate the FDI in Saudi Arabia to be 2549.57 within 12 months. In the long term, domestic inflows are expected to reach $ 2.430 billion by 2020, depending on the econometric model.
Foreign direct investment of Bahrain
In 2016, Bahrain secured about $ 280 million in foreign investment flows. Most of them were 40 investment companies. Bahrain accounted for nearly three-quarters of FDI inflows, with production and logistics services accounting for about 15%. And the financial services sector by 9%, in addition to the tourism sector which represents 75% of companies such as India, China, the United States and Germany. In 2016, Bahrain was selected by the top 10 countries in the Middle East and Africa through foreign investment projects for the first time since 2012. Bahrain ranks 63 out of 189 countries in the Business Plan Practice Reports for 2015. In addition, Bahrain is an interesting foreign investment factor. One of the most important investments in Bahrain, such as IKEA, has announced an investment of $ 124.8 million ($ 48 million) to build one of its main warehouses in the Gulf region, covering 37,000 square meters.
Bahrain's foreign direct investment
Foreign investment in Bahrain increased by 106 million dinars during 2016, The average foreign direct investment has reached 349.47 million Bahrain, from 1998 to 2016, reaching the highest level since 1401, 60 million in 2013.
Bahrain Foreign Direct Investment – Forecast
Trading economics global macro models and analyst s expectations that by the end of this quarter, foreign direct investment in Bahrain is expected to be 319.63 BHD million, while in the long-term, according our econometric models, Bahrain foreign direct investment that projected to trend around 443.16 BHD million in 2020.
Foreign direct investment in the Gulf countries in 2016
Oman Kuwait KSA UAE Qatar Bahrain
717.5 -13 1711 33000 1251 106
Direct Foreign Investment Forecast in GCC for 2020
Oman Kuwait KSA UAE Qatar Bahrain
255.63 12.2 2.43 500 5623.8 443.16
Conclusion
Reference
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