26/10/2010 00:00 AST
The Arab Investment and Export Credit Guarantee Corporation (Dhaman) expects that flows of foreign direct investment (FDI) in 2010 into the Arab region will increase at rates ranging between 10 and 15 percent compared with 2009, reaching about 88 billion US dollars, and more than $91 billion according to the optimistic scenario. Dhaman disclosed this information in its first specialized report on "Projected Inward FDI Trends to Arab Countries" released on Monday Oct. 25, 2010.
Dhaman's General Manager Fahad Al-Ibrahim noted in the editorial of the Quarterly Bulletin "Dhaman Al Istithmar" that 12 Arab countries will attract more than $85 billion in FDI inflows during the year 2010 according to preliminary indications and expectations of government and international organizations, and also by monitoring the performance of many factors affecting the flows of foreign direct investment.
Dhaman reviewed in its quarterly bulletin a number of key factors influencing FDI flows into Arab Region, as follows:
Macroeconomic and uncertainty factors:
A number of macroeconomic indicators signal a slow recovery for international investment as the International Monetary Fund (IMF) latest World economic Outlook, released in October 2010, forecasts a 4.8 percent growth in Global gross domestic product (GDP) for 2010, as against -0.6 percent in 2009.
Also, it is expected for economic growth in Arab countries to improve reaching on average 4.5 percent in 2010. As for Arab trade with the rest of the world, it is set to have growth rate of 14 percent, reaching $1.9 trillion, as well as the improvements that have occurred in most of the Arab countries' stock exchange markets since the second half of 2009. Also a remarkable jump in Arab oil revenuers, especially in Gulf Cooperation Council (GCC) countries, would significantly contribute to FDI recovery in Arab region.
Meanwhile, prospects growth for the role of the guarantee scheme in the promotion of foreign direct investment flows regionally and globally, with expected high levels of demand for protection by banks, lenders and investors around the world in order to maintain liquidity during the year 2010.
Investment policy factors:
During 2009, and the first half of 2010, the investment policy measures taken in Arab region have generally improved the investment climate to became more favorable for foreign investment. For instance, some countries have opened new sectors to FDI, others raised the ceiling for foreign ownership, while some others reduced the tax rate and/or implemented fiscal policy stimulus with aiming at stimulating the economy. As a matter of fact, 38 legal reforms were undertaken by about 16 Arab countries in their doing business environments during 2009.
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