Why is the money not flowing in?

Why is the money not flowing in?

According to a report by the United Nations, foreign direct investment in the Middle East fell considerably in 2008, and is set to decline further this year.

September 15, 2009 1:11 by Aarti Nagraj

Foreign direct investment (FDI) in the Arab world has decreased by 6 percent from 2007 to 2008, according to a report by the United Nations Economic and Social Commission for Western Asia (UN-ESCWA), says official news agency WAM.

The report says that FDI fell from $64 billion in 2007 to around $60 billion in 2008, and thanks to the current financial crisis, experts believe that investments will fall further in 2009. The economic slowdown has had a severe impact on “transnational corporations,” said the report, which led to delays in the implementation of numerous investment projects in the region.

Saudi, UAE and Egypt accounted for nearly 76 percent of FDI flows to the region in 2008, but individually, they too saw a decrease in the amount of investments; while FDI to Saudi fell from $24.3 billion in 2007 to $22.5 billion in 2008, the UAE and Egypt saw a drop of saw 3.2 percent and 18 percent respectively. Only five countries, Bahrain, Jordan, Lebanon, Sudan and Syria saw investments increase between 2007 and 2008.

The report found that investments in the region have concentrated on petrochemicals, financial services and real estate, and primarily come from the European Union, specifically the UK and France, followed by Japan and the US.

However, “the benefits of FDI inflows to the region are still not completely reaped,” the report said. It added that there has been very little cooperation between foreign and local investors, and that the FDI inflows have not positively affected the region’s exports.

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Tags: decreasing, Financial Crisis, investment, Middle East, Oman, UAE