New research finds stability and reform critical to improving FDI in the Middle East

David McLean, Executive Director of the Middle East Infrastructure Development Congress, commented that the research study highlighted both opportunities and threats to the flow of investment:

'There is huge potential in the region and major investment projects are happening. However, there are some challenges concerning broader political stability, economic reform, and legal frameworks that need to be successfully tackled or they will hamper further opportunity and growth.'

The research study was conducted during a series of in-depth interviews with 30 senior executives from companies representing the banking and finance, power, water, oil and gas, and construction sectors many of whom are looking to expand their investment base in the region.

The overwhelming majority of executives interviewed identified the creation of an attractive environment for foreign direct investment in key countries of the region as the most vital factor. The role and political will of host governments was seen as critical to providing a workable framework with acceptable terms and conditions for infrastructure investment. The most significant components of this framework were identified as follows: Ensure political and social stability; demonstrate a genuine commitment to reform; and establish a commercial environment that provides predictability in the marketplace.

However, it was also noted that many countries in the region have committed themselves to removing these obstacles and are making significant progress in the creation of an environment conducive to private sector investment in infrastructure.

Ibrahim El Husseini, Vice President with Booz Allen Hamilton said: 'In assisting its clients on major infrastructure projects in the region, Booz Allen identified a set of challenges that need to be addressed to ensure successful implementation. They include managing contract complexity in a relatively immature legal and financial environment, navigating through sensitive political issues and constraints, exploiting the regional debt financing market, leveraging both the public and private sector and finally engaging the right strategic partners to drive the process' concluded El Husseini.

With rapidly growing demand for core infrastructure services such as water and energy in the region likely to be the most attractive opportunities for international investment, Eryl Edwards, Country Director for the Gulf States of Thames Water said:

'Sustainable water and sanitation services can only be achieved if the public sector make the right choice in terms of how they want to involve the private sector, with due regard for the legal and regulatory framework and appropriate risk allocation. Thames Water firmly believe that Private Sector Participation
can contribute powerfully to sustainable development in the Middle East'.

The full findings of the research study will be released at the forthcoming meeting of the Middle East Infrastructure Development Congress to be held in Dubai at the Moevenpick Hotel on the 21st and 22nd of September 2003. The conference features keynote speakers such as H.H. Prince Abdullah bin Faisal bin Turki Al Saud, Chairman of the Board and CEO of the Saudi Arabian General Investment Authority (SAGIA), H.E. Tahmasb Mazaheri, Iran Minister of Finance & Economic Affairs, H.E. Fidel Ramos, former President of the Philippines and the initiative has been undertaken with the support of Dubai 2003 and in strategic partnership with Total, Thames Water, Booz Allen Hamilton, Honeywell, PricewaterhouseCoopers, Denton Wilde Sapte and Metito.