SAFE HAVEN?

Can the UAE uphold its status as a bright spot when it comes to netting FDIs?

FOREIGN DIRECT INVESTMENT (FDI) flows were on the rise since 2011, aided by an economic revival in the larger markets and rapid growth in the emerging markets. But 2014 has effectively halted that trend. Global FDI flows fell by eight per cent to reach $1.3 trillion last year, down from $1.4 trillion in 2013 amidst slowing economic growth, according to a report issued at the Annual Investment Meeting in Dubai (AIM).

The year marked an interruption in the recovery of global FDI flows, which were gradually rising back towards an all-time high of $1.9 trillion in 2007.

Although global FDI prospects were gloomy, local prospects for foreign investment showed promise. According to UAE’s minister of Economy, Sultan Saeed Al Mansouri, FDI in the UAE rose by 25 per cent to reach $13 billion last year. This growth mirrored a trend which saw FDI flows to emerging markets increase despite a global lull.

However, foreign investments to the country fell short of the $14.4 billion predicted by the UAE’s Ministry of Economy, and could be impacted further by the ongoing geopolitical tensions in Yemen and oil price volatility. “The UAE has been able to cement its position as a stable and business friendly destination in the region,” said Phil Gandier, MENA Transaction Advisory Services leader at audit firm EY. “However, while the UAE may attract increased interest from Middle Eastern investors, investors from outside the region will exercise a significant amount of calculated caution in the context of the widening regional instability.”

Regardless, the UAE has no plans to be idle, and is actively trying to woo investors. Al Mansouri said in his opening speech that the country aims to