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The UAE made its entry into the top 10 most attractive markets globally for foreign direct investment on global consulting firm Kearney’s latest FDI Confidence Index, jumping 10 spots y-o-y to be ranked the eighth most appealing market for foreign investors. The UAE is the MENA region’s highest-ranked leading emerging market, securing second place as the top emerging economy as an FDI destination, after China.
REMEMBER- Total FDI flows into the UAE reached USD 23 bn in 2023, Economy Minister Abdulla bin Touq Al Marri said in January. The government is looking to draw in USD 150 bn worth of FDI inflows by 2031.
The government is relaxing its regulatory restrictions to lure in FDI inflows: The report points to the UAE’s legal reforms the government implemented in recent years as a key driver of its improved positioning. In 2021, the government rolled out a decree abolishing the requirement for businesses to have an Emirati shareholder holding at least 51% in onshore businesses, instead allowing 100% foreign ownership.
Confidence in the UAE is high: The UAE ranked highest in optimism among emerging markets and made it to the top five markets globally with the most optimistic economic outlook, with 38% of the surveyed investors expressing confidence in the economy’s future performance. Investors’ confidence in the UAE — along with Saudi Arabia, which also made it to the 25 global rankings — “reflect the strong overall performance from emerging markets,” said Erik Peterson, managing director of Kearney’s Global Business Policy Council.
What are investors looking for? Investors cited technology and innovation capabilities as the top priority when looking to deploy capital, followed by regulatory efficiency and ease of capital movement. Government regulatory transparency and lack of corruption fell from being the most important factor to the fourth for investors when choosing their investment destination. This shift could signal that “growing protectionism and a push to self-sufficiency post-pandemic is making foreign investment into some markets more difficult,” the report reads.
ICYMI- The newly formed Investment Ministry is working on a national investment strategy to unify the investment policies of the seven emirates, designed to bolster the country’s economic standing by attracting more national and international investments, Minister Mohamed Al Suwaidi said in December.
How did our neighbors fare? Saudi Arabia also jumped 10 spots from last year’s global ranking, coming in 14th globally and third among emerging markets for FDI. Oman joined the emerging market list for the first time, ranking 25th on the back of the Oman Investment Authority sovereign wealth fund launching a USD 5.2 bn fund to attract FDI and bolster investments in SMEs.
