Economic system

Emirates News Agency – Development of legislative and economic system attracts foreign investment to region: World Government Summit

DUBAI, 30th June, 2021 (WAM) — Omar bin Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy and Teleworking Applications, and Director General of the World Government Summit Organization, has said social and economic priorities are key to the work of governments, which has been radically altered due to the effects of the COVID-19 pandemic.

This came on the occasion of the launch of a new report for the World Government Summit, in partnership with global management consultancy Oliver Wyman, entitled “De-risking the Investment Landscape… High-impact FDI Policies for the GCC,” which is part of a series of new reports that aim to predict the future of governments in a post-pandemic phase.

The reports aim to propose and recommend the new mechanisms and methodologies based on the latest innovations, best practices and smart solutions to enable the next generation of governments.

Al-Olama said, “The Global Government Summit report series, in cooperation with its Knowledge Members, reflects the summit’s efforts to improve government knowledge, highlight the most important global trends and transformations, help governments align their plans, chart the future of key sectors and improve preparedness. »

“Oliver Wyman is proud to once again be part of the World Government Summit,” said Pedro Oliveira, IMEA Region Managing Partner at Oliver Wyman. “The Summit provides an important international platform for many groundbreaking initiatives that can be leveraged as nations emerge from one of the most challenging years in recent times. We look forward to addressing the key topic of the ‘FDI (foreign direct investment) in GCC states and support regional and global recovery through our expertise and thought leadership.’

The report highlights the significant drop in foreign direct investment worldwide, which is 42% in 2020, or around $859 billion, compared to $1.5 trillion in 2019, and this is due to the uncertainty caused by the COVID-19 pandemic; These figures are the lowest recorded since the 1990s, highlighting that they are also 30% below the level of foreign direct investment in 2009 after the global financial crisis.

The decline was evident in developed countries, with flows down 69% to around $229 billion, while foreign direct investment flows to North America fell 46% to $166 billion. billion, with a 43% decrease in cross-border mergers and acquisitions. %. There was also a significant drop in investment on previously announced projects of 29% and a clear drop of 2% in funding.

Although inward foreign direct investment for developing economies fell by 12%, registering around $616 billion, these economies accounted for 72% of global foreign direct investment, the highest percentage of foreign direct investment flows.

The report indicates that the Gulf Arab States, in recent years, have begun to consider foreign direct investment as an essential element in their long-term policies aimed at economic development and diversification.

This change is due to the growing awareness of the potential for great economic impact that foreign direct investment will generate; and how it is crucial to focus on innovation and invest in human capital; these are two key factors that make foreign direct investment more valuable than just an external source of finance.

FDI in the Arab Gulf region has seen a steady increase since 2017, by 26% over the period from 2017 to 2019. The main reason for this increase is the effort made by the United Arab Emirates and the Saudi Arabia in this area. area, and he also points out that the Sultanate of Oman and Bahrain have recorded an increase in foreign direct investment in relation to GDP (Gross Domestic Product).

The report also indicates that to face the current state of uncertainty, Arab Gulf countries must prepare for a series of scenarios and develop strong policies with specific strategic objectives that will contribute to strengthening the long-term structural attractiveness. term of the main economic sectors for foreign investors.

The report also presented a set of policies successfully targeted to attract foreign direct investment, such as the Dubai International Financial Centre, which has enhanced Dubai’s regional and global leadership in financial services; which led it to be among the top 10 cities in the Global Financial Centers Index.

The report also states that the center has managed to register assets worth more than $178 billion and 820 companies. The report also highlighted the success of Khalifa Industrial Zone Abu Dhabi (KIZAD) in attracting investment worth around $20 billion.

The report also presented the efforts and experiences of the Royal Commission for Jubail and Yanbu in the Kingdom of Saudi Arabia in which it diversified the sources of its economic activity and reduced its dependence on the extraction of crude hydrocarbons.

The report also pointed out that each city has developed into an urban industrial center using the current advantages of the petrochemical sector in broader economic development and that Jubail has attracted foreign direct investment worth more than 30 billion dollars, while Yanbu attracted $8 billion. in investments.

The report suggests that the global pandemic has had a negative impact on foreign direct investment worldwide, bringing the decline to a record number not seen in the world since World War II. There is still a lot of ambiguity about when foreign direct investment will resume globally; however, most estimates point to a slight recovery in 2021, with absolute values ​​remaining well below those of previous years.

The report suggested that global economic factors would make it more difficult to increase foreign direct investment in the near future, in light of the financial shock to which many economies have been exposed, which could have been a source of significant inflows.

The report recommended strengthening tax incentives to attract foreign direct investment in all countries of the region; encouraging them to take advantage of the relatively low tax rate compared to many other countries in the world.

He also highlighted how important it is for policy makers in economic sectors to support the development of more flexible financial and regulatory policies, improve the scope and levels of international trade relations as well as align with sovereign wealth funds. to unite their efforts to attract foreigners. direct investment.

The report also underscored the importance of lowering broader investment barriers, carrying out comprehensive regulatory reforms that help ensure the sustainability of foreign investment, and opening markets to international businesses.

The World Government Summit recently announced the signing of eight new Knowledge Accessions with a selection of the world’s leading consultancy agencies and research institutes, to launch a series of reports and studies that will identify trends and opportunities most important to support governments and improve their preparedness for the future.

These reports will focus on forecasting the future of governments around the world, studying global transformations and challenges facing humanity, defining priorities and requirements for the next era, and developing new mechanisms. and working methodologies based on modern data to empower the next generation of governments.