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Monday, October 2, 2023

Saudi Arabia FDI falls 59%, UAE breaks FDI record


DUBAI – Although foreign direct investment (FDI) inflows to Saudi Arabia fell 59 percent to nearly $7.9 billion last year, the united arab emirates Foreign direct investment inflows will hit a record high of nearly $23 billion in 2022, according to a United Nations report released on Wednesday.

Israel and the UAE lead in the Middle East and North Africa (MENA) Highest FDI inflows Ranked 15th and 16th globally, respectively, according to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2023.

Here are the 10 MENA countries with the highest FDI inflows in 2022, according to UNCTAD:

1. Israel — $27.76 billion

2. United Arab Emirates — $22.73 billion

3. Türkiye — $12.88 billion

4. Egypt — $11.4 billion

5. Saudi Arabia — $7.87 billion

6. Oman — $3.72 billion

7. Morocco — $2.14 billion

8. Bahrain — $1.95 billion

9. Iran — $1.5 billion

10. Jordan — $1.37 billion

The United States and China occupy the first and second places on the list for two consecutive years. In 2022, the US will receive FDI inflows of USD 285 billion (a decrease of more than USD 100 billion compared to 2021), and China will receive FDI inflows of USD 189 billion. In 2022, Singapore moved up one place to third with FDI inflows of US$141 billion, ahead of fourth-ranked Hong Kong with inflows of US$118 billion.

Israel ranked 15th, attracting about $28 billion in FDI inflows, followed by the UAE at about $23 billion, with the Gulf state growing at an annual rate of 10% since 2021.

Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Ruler of Dubai, praised the country’s economic record in a press statement on Wednesday.

“Despite a 12 percent decline in global FDI flows, the UAE has achieved the highest FDI inflows in history in 2022 at AED84 billion (US$23 billion),” he said, according to the Emirates News Agency.

Global income fell to $1.3 trillion, according to the UNCTAD report. The decline was mainly due to lower financial flows and transaction volumes in developed countries, the report added.

The decline in global FDI is due to multiple global crises, including the Russian invasion of Ukraine, high food and energy prices, and debt stress. The investment report pointed out that rising interest rates and uncertainty in the capital market have affected international project financing, especially cross-border mergers and acquisitions.

“High energy prices have boosted revenues for oil and gas, commodity trading and utility companies, but this has not translated into increased investment abroad,” UNCTAD said, despite Saudi Arabia’s recent announcement that foreign direct investment inflows fell last year 59% Voluntary production cut of 1 million barrels per day until August.

For example, Chevron and ExxonMobil (both from the U.S.) and Saudi Aramco (from Saudi Arabia) divested foreign assets while increasing domestic investment, the report said.

That doesn’t mean Saudi Arabia and countries facing similar declines in FDI aren’t trying to encourage foreign investment. Saudi Arabia launched its first integrated logistics zone last year, offering investors 100 percent foreign ownership and a 50-year tax holiday.also open four special economic zones In April, the government set its sights on attracting foreign investment.

Egypt announced a tax-free incentive of up to 55% for FDI-funded projects in key industries that are at least 50% financed in foreign currency.

Algeria has implemented a law on free trade zones exempting companies from certain taxes and levies to encourage foreign investment.

The UNCTAD report also ranks the UAE as the fourth largest recipient of greenfield investment projects (where a parent company creates a subsidiary in another company), with 997 projects, after the US, UK and India.

Such greenfield investment trends increase by 15% in 2022 from the previous year, offsetting last year’s overall decline in FDI inflows, which is expected to continue into 2023. Early indicators for the first quarter of 2023 are already showing a softening trend in international project financing and M&A, UNCTAD reports.


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