Eastern attractions beckon Middle Eastern investors

Eastern attractions beckon Middle Eastern investors

Investors and companies from the Middle East are saving their pennies for projects in India and China.

November 16, 2008 1:42 by kippreport

As the financial crisis envelopes global economies, countries around the world are looking to the Middle East for funds. And it looks like countries in Asia are becoming the lucky winners. Several Middle Eastern companies and wealth funds have already started investing their funds in countries like India.

Last month, the investment arm of Ras al-Khaimah announced plans to build $5 billion business center in Hyderabad in the south of India. UAE-based mobile retail company Axiom Telecom Mobile also entered a joint venture along with Indian-based mobile retailer Future Group. The new joint venture plans to set up more than 1,500 outlets across India by 2009, entailing an investment of $40 million. Earlier in the year, Swan Telecom, which has telecom licenses in 13 circles in India, sold 45 percent stake to UAE-based Etisalat for $900 million.

Earlier this month, Indian Prime Minster Manmohan Singh visited Oman and Qatar as a means to accelerate investments into his country. He also signed an India-Oman Joint Investment Fund, to facilitate infrastructure projects in both the countries. When the Indian Minister for External Affairs, Pranab Mukherjee visited Saudi Arabia in April this year, he said the kingdom may invest up to $600 billion in India’s infrastructure.

It was a statement that a recent study by KPMG International confirms. The company conducted a survey of 50 senior corporate investment strategists representing large multinational companies based in the region, and asked them where they plan to invest during the year ahead and in five years’ time.

For next year, 26 percent of the respondents prefer to invest in the UAE, and 22 percent choose Qatar and India. Saudi Arabia, Bahrain and China are joint third on 14 percent.

But in five years’ time, 34 percent of investors say they will invest in India. The UAE is second with 22 percent, and China is third with 16 percent.

“The worldwide problems with credit do not seem to worry these people (investors) very much. Only 13 percent think that this will be a problem for the foreseeable future, and many say that it will affect investment plans for no more than two or three years,” says Abdelhamid Attallah, a partner in KPMG’s Egypt member firm.

The survey says that the most internationally minded investors seem to be those from Saudi Arabia, whose investment intentions five years from now are dominated by investments in India, China and the United States.

The respondents were also asked which countries they expect to be most influential in their region, and the results show that among the Gulf States, Saudi Arabia is expected to be the most influential state in the coming year, followed by the UAE and Qatar. But in five years the respondents believe that Saudi Arabia and the UAE will share the number one spot.

On a global scale, between next year and 2013/14, China is expected to displace the US as the most influential country and India will move ahead of both the US and the Britain.

Regional investors will probably continue buying iconic structures across in like the US and the UK, but with Asian countries becoming stronger economically, it will become difficult for smaller companies and funds from the West to woo the Middle Eastern investor.