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It is only by addressing these concerns that we are able to convert economic potential into economic reality. The success of countries such as Qatar, which will be supplying some 30% of the world's gas exports by 2010, has been in developing those bonds of trust throughout the global oil and gas community.
This is how Qatar has been able to commit $130 billion in investment across its economy over the next five to seven years. The ramifications of this ambitious investment programme will go well beyond reinforcing Qatar's energy infrastructure, and will extend into other sectors, e.g. utilities, ships and aircraft, tourism, and broader infrastructure projects covering everything from healthcare to education.
Put Qatar's national investment budget into a regional context, and it is immediately clear that the Middle East is emerging as the global destination for capital investment, just as much as it has emerged as a centre of capital creation. Both need managing with equal care and attention.
$50bn project finance
HSBC reports that the region has become the world's largest project finance market. It says that one in every three of the $99 billion raised in the first half of this year is directed at Middle East projects. The bank predicts that by the end of the year, project finance earmarked for the Middle East will total some $50 billion.
Meanwhile, Deutsche Bank this month put the value of identifiable projects across the region at some $1 trillion. However, it did so only to make a more pressing point. Corporate borrowing requirements have tested to breaking point the ability of banks to service demand through traditional lending arrangements.
Looking forward, some economists believe this is only the beginning of a regional boom - and a sustainable one at that - with oil prices stabilising at around $50/barrel.
Talking at a conference in Doha last month, Brad Bourland of SAMBA Bank projected capital flows for the GCC of some $24 trillion. This would turn the GCC into the world's most prominent force in investment both domestically, given the new inward bias to finance mega-projects, and overseas, where the value of official assets is growing by some $150 billion a year.
Nations such as Qatar have done well in translating resource-based potential into economic reality. But all the while the bar is being raised in terms of the levels of corporate governance, financial transparency and regulatory best practice.
A recent report from the Economist Intelligence Unit (sponsored by the Qatar Financial Centre) found three over-riding concerns of potential investors to the region. They were the rule of law; the quality of the regulatory and legal regime and government policies towards foreign investment.
Governance standards
To be sure, poor governance remains a real threat to the economies of the Middle East, and a real bar to development of the region's capital markets. It is a principal reason for the relatively low levels of Foreign Direct Investment in the region up to recent times.
