The Arab Investment & Export Credit Guarantee Corporation (Dhaman) has urged Arab countries to step up efforts to attract more foreign direct investments, especially amid fierce competition between regional and world countries, and to draw more investors, mainly multinational companies, in light of their dwindling investment activities due to health challenges and relevant measures. This could be achieved through a continuing, comprehensive and long-term process purposed to improve the investment climate, focusing on, inter alia, improving rankings in relevant significant international indexes by means of assessing the components of the investment climate in world countries.
Dhaman’s Director-General Abdullah Ahmad Al-sabeeh said in a press statement on the occasion of issuing the second quarterly bulletin (Dhaman’s Investment Bulletin) for 2021 that the corporation does not rule out that the positive performance of foreign direct investments in Arab countries could continue during 2021 following an unexpected rise by 2.5% during 2020 despite a decline in the number of greenfield FDI projects in Arab countries and their capital investment during the same year.
Al-sabeeh said in the editorial entitled: “Mixed Expectations of Foreign Investment in the Region”, that disparity between the decreasing number and cost of greenfield FDI projects in Arab countries on the one hand and the growth of FDI influx thanks to acquisitions and investment in other tools on the other hand, thus buoying positive forecasts versus negative indications in the number of projects in Arab countries in the first five months of 2021.
He added that the database of the FDI Markets shows a fall in the number of foreign projects in the region in the first half of 2021 by 6.9% to 285 projects, in addition to a drop in the capital investment by 16.8% to USD 12.4 billion, compared with the same period of 2020.
Al-sabeeh went on to say: “The peculiarity of the Arab situation, the expected extraordinary activity of several countries in the field of enterprise attraction and foreign direct investment, and the epidemic, political and economic developments in the region would determine how the year 2021 exactly looks like.”
Internationally, he cited global reports as expecting a limited recovery of FDI influx worldwide by 10-15% during this year, following the negative impacts of the novel Coronavirus pandemic on the size of inflows during 2020. They are also predicted to keep rebounding during 2022 to reach, according to the best-case scenario, the 2019 level of USD 1.5 trillion.
However, Al-sabeeh believes that this optimistic scenario of the United Nations Conference on Trade and Development (UNCTAD) and other international agencies would be contingent upon the early control over the pandemic through various preventive measures, mainly the distribution of vaccines, reopening of economic sectors and regaining of earlier business levels worldwide, especially main investment source and destination countries. More importantly, multinational companies need to give up fears over economic and market uncertainty, and to respond to the G20’s resolution imposing an international more stable and fairer tax of no less than 15% on their profits.
In this context, Al-sabeeh affirmed that the corporation would step up efforts to offer insurance packages covering various political and commercial risks that foreign investors may face in the region, and to raise awareness of the developments and challenges of the investment climate and requirements for improvement in cooperation with member states.
The Arab Investment & Export Credit Guarantee Corporation (Dhaman) is a multilateral credit and political risk insurance provider. Established in Kuwait in 1974, Dhaman comprises all Arab countries and four joint Arab financial institutions. It provides insurance services against credit and political risks in order to facilitate the flow of Foreign Direct Investment into Arab Countries and to support Arab exports and imports.
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