First study conducted about the investment climate in Saudi Arabia, Bahrain and the UAE

The study was conducted in Saudi Arabia, Bahrain and UAE in coordination with Saudi Arabian General Investment Authority (SAGIA), Economic Development Board of Bahrain (EDB) and Dubai Development and Investment Authority (DDIA).

It revealed that the regional governments have to make more efforts to make their countries more attractive to FDI.

H.H. Prince Abdullah bin Faisal bin Turki Al Saud, SAGIA Chairman said: "This study which was developed as a part of the joint initiative to promote investments, is important as it covers three major economies of the Gulf and comments from major multinationals and large business houses based in these countries who are the most important source of FDI.

"The results of this study show that most of these companies said that the large percentage of FDI will come from the region itself."

Fifty-three per cent said FDI would be generated from within the Arab world, and 24 per cent thought Europe could be a main source. About 16 per cent saw U.S. as a main source while 7 per cent believed it could be Asia.

Mohammed Al Gergawi, DDIA Chairman, pointed out that these results assure that the success of the region in catalysing the local investments is essential in generating more FDI.

Al Gergawi added that the study clarifies the points of weakness and strengths of the three countries regarding the investment climate and the obstacles that impede investments in them, which have to dealt with effectively in order to increase the FDI in the region.

The study points out that to attract more FDI, governments have to reform the laws and regulation to enlarge markets, provide more investment opportunities, facilitate manufacturing projects, create an active business environment, infrastructure and licencing procedures."

Half the respondents said regional governments need to do more while 35 per cent believed the performance so far has been average. The remaining 15 per cent believe the governments have done all they can.

The study places great emphasis on further integration within the region and closer ties with Europe.

Work has to be done to make the Arab markets a cohesive unit. Seventy-nine per cent believed that Arab world was composed of separate markets with non-harmonious laws, no coordination, weak common road/infrastructure network, and restricted labour and capital movements.

The vast majority of respondents (97 per cent) believed that the value of FDI in any economy is highly positive as it has a affirmative effect on employment, economic growth and development and knowledge transfer.

Awareness low
Local awareness of investment opportunities was high, but beyond that, such awareness levels fell drastically. Almost 70 per cent of the respondents were not aware of investment opportunities outside their region. For example, Gulf businesses were not aware of opportunities in the Levant and 82 per cent do not know what North Africa offers.

Seventy-three per cent named laws and regulations and market size and lack of availability of investment opportunities as the main impediments to FDI inflows.

93per cent want to join effort
One of the most outstanding findings was that the private sector overwhelmingly (93 per cent) wished to be part of the effort to attract FDI and some 85 per cent said the creation of the proposed umbrella organisation would be beneficial.

They suggested that it should be a one-stop-shop, a think-tank, that should fill the gap in information and research about investment opportunities. It should create a database of investment opportunities. They saw its main activities revolving around policy review, research and matchmaking activities.

Ninety-seven per cent believed in regional cooperation saying it would build larger markets and achieve economies of scale. Eighty-seven per cent respondents felt that Arab countries should complement each other and 97 per cent said if cooperation grew, business will grow tremendously.