Report sees positive growth opportunities for GCC FDI inflow

MUSCAT: Countries across the GCC can significantly increase foreign direct investment (FDI) inflows by applying different mechanisms and methodologies, according to a new report published by Oliver Wyman and the World Government Summit (WGS).

Titled “De-risking the Investment Landscape: High-impact FDI Policies for the GCC”, the report details FDI fluctuations within the region and ways they can be addressed. The report comes as part of a series by the WGS that aims to enhance government activity in the post-pandemic recovery phase.

Matthieu De Clercq, Partner Public Sector and Economic Development, Oliver Wyman, said: “Earlier this decade, worldwide economic trends paired with reduced investor appetite made it harder for GCC countries to garner investments from foreign countries. However, economic diversification in UAE ensured that FDI remained resilient even with low oil prices, which allowed for a higher inflow of FDI into the country. Soon after, Saudi Arabia began implementing policy reforms, which increased the country’s attractiveness. Still, Covid-19 has had unprecedented impacts, stalling much of the progress that has been in the works over the past few years.”

“With current uncertain events due to the onset of the pandemic and the recovery period to follow, GCC countries should prepare for a wide variety of scenarios to counter the social and economic impact of the pandemic. These include strong and strategically targeted policies aimed to enhance the long-term structural attractiveness of key economic sectors to foreign investors,” added De Clercq.

Globally, countries use targeted policies to attract FDI. Some targeted policies proposed by Oliver Wyman and the WGS include providing fiscal incentives, implementing regulatory policies, and generating outreach among others. The potential benefits from attracting FDI into the GCC are diverse and include boosting human capital, providing technology transfer, and increasing private market competition in the GCC.

“To fully realize the opportunities of foreign investment, GCC countries should tailor policies to attract FDI. This will allow each country to choose the appropriate policy mix that best suits its goals and circumstances,” concluded De Clercq.