Record surge in Dubai FDI flow

Record surge in Dubai FDI flow Issac John / 29 April 2013 Foreign direct investment flow into Dubai soared at a record rate in 2012 underscoring the resilient economy’s fast growing global investor appeal. The flow of foreign direct investment, or FDI, into Dubai recorded a 26.5 per cent surge to Dh29.4 billion in 2012 compared to the previous year as ease of doing business and expanding services sector enhanced Dubai’s reputation as a sought-after haven for foreign investment, the data released on Sunday by Dubai FDI, the foreign investment office in Dubai’s Department of Economic Development, shows. “While proximity to strategic markets as well as domestic growth potentials guaranteed by the expanding infrastructure and logistics were the key FDI drivers in Dubai earlier, 2012 saw investors quoting improvements in business climate and regulations as their main incentives,” Dubai FDI said. “Dubai’s focus on creating a world class infrastructure and competitive business environment is producing remarkable outcomes. Proactive government initiatives to improve regulations and facilitate business are enabling Dubai to remain one of best FDI choices in the emerging picture,” said Fahad Al Gergawi, Chief Executive Officer of Dubai FDI. In 2012, FDI flow into the UAE is estimated to have risen 21 per cent to Dh32.9 billion from Dh27.6 billion in the previous year with Dubai accounting for almost 90 per cent of the total foreign capital inflow. The rate of growth in FDI flow into Dubai also far surpassed the GCC average. FDI flow into the GCC, which controls over 40 per cent of the world’s recoverable crude deposits, rose 13.8 per cent in 2012 to around $27.9 billion from $24.5 billion in 2011, according to the Kuwaiti-based Gulf Investment Corporation. Analysts, who attributed the rise in investment flow to rising confidence in Dubai’s bounce back, said there has been a big spurt in FDI growth rate in the 2012 second half compared to the previous year as improvements in regulations and ease of doing business stoked positive investor sentiments. Last year, Dubai registered a year-on-year increase of 14 per cent in its share of global FDI projects from 1.4 per cent to 1.6 per cent. The largest number of projects came in November 2012, as 28 projects accounting for 10.8 per cent of total FDI into Dubai and 2.2 per cent of the global FDI were launched that month. The United States, Britain and India remained the top source countries for FDI into Dubai in 2012. The US increased its contribution to 24.6 per cent from 22 per cent in 2011. Germany, France, Saudi Arabia, China and Qatar were also among leading FDI source markets in 2012. Al Gergawi said Dubai witnessed remarkable levels of activity across its traditional economic sectors such as trade, tourism and logistics. “Ongoing infrastructure improvements to reinforce Dubai’s regional hub advantage and the leadership’s clear vision of the future business landscape will help win over more and more investors,” he said. The FDI data also shows investors are generally upbeat on the growth momentum and quality of life visible across the UAE that accounts half of the regional spending on infrastructure worth over Dh210 billion. The Economic Intelligence Unit recently ranked the UAE one of the top 20 in the world and the leading Arab country to be born, based on life expectancy, quality of family life and job security. According to the trends analysed by Dubai FDI, efforts to host the Expo 2020 and the predicted surge in GDP from 3.5 per cent in 2012 to four per cent in 2013 are also influencing investor sentiment. Dubai was named the overall leading investment destination in the ‘Middle East Cities of the Future 2012-2013’ report of the fDi Magazine and was also rated first in the categories of Economic potential, Infrastructure, Business friendliness and Strategy. Al Gergawi argued that services expanding their profile in Dubai underlined the emirate’s efforts to evolve into a knowledge economy serving the region and beyond. The FDI data also shows investors are generally upbeat on the growth momentum and quality of life visible across the UAE. issacjohn@khaleejtimes.com Taylor Scott International