The Gulf countries need to enhance their investment laws to put an end to the disturbing trend of decline in the inflows of foreign direct investments.

The ‘World Investment Report 2015’, released recently by the World Conference on Trade and Development (Unctad), has confirmed this worrying trend. Together, the Gulf economies enticed some $20.7 billion in 2014, down from $22.5 billion in 2013. As a consequence, their share of the inflow of FDI has fallen from 50.3 per cent in 2013 to 48.1 per cent in 2014 within the West Asia region. The other countries within this territory are Iran, Jordan and Syria and Yemen,

For a second time running, the report confirms the UAE’s regional leadership in attracting foreign investments. This stood at $10.1 billion and $10.5 billion in 2014 and 2013 respectively. As such, the country generated almost 49 per cent of total inward FDI into the Gulf last year, a fact that says a lot about the significance of Dubai in particular.

The overall fall is not significant, but serves as testimony to the situation in the rest of GCC states, except for Qatar. Nevertheless, the UAE’s achievement reflects steady development of the economy, which ranks second in size among Arab countries after Saudi Arabia.

As per reports, the UAE’s gross domestic product (GDP) is projected at $440 billion in 2015 and up from $416 billion in 2014. This translates into growth rate of 4.4 per cent, undoubtedly a remarkable accomplishment.

Saudi Arabia saw inward FDI falling from nearly $8.9 billion in 2013 to $8 billion in 2014, thereby confirming a disturbing trend that started several years ago. The kingdom attracted some $39.5 billion in 2008.

Together, the UAE and Saudi Arabia made up an extraordinary 87 per cent of the total inward FDI into the Gulf last year. Oman’s reported FDI inflow of nearly $1.2 billion in 2014 is down from the previous year’s $1.6 billion. This is an adverse development for a country determined to attract foreign investments in numerous areas including tourism.

Qatar came third with inflows of just above $1 billion. If all goes well, Qatar is projected to attract a sizeable amount of in the years to come, as the country prepares to host the FIFA World Cup 2022.

Bahrain experienced a fall of $32 million from 2013’s $957 million. Kuwait suffered a sharp drop in investment inflows from around $1.5 billion in 2013 to barely $0.5 billion in 2014. This represents the biggest losses for any GCC state, partly reflecting the absence of a working relationship between the elected parliament and appointed cabinet.

Sadly, adverse events like the suicide attack on a mosque on June 26 could further damage the country’s ability in attracting and maintaining foreign investments amid all the regional and international competition.

The fact that all the GCC states except for Qatar experienced a drop in inward FDIs in 2014 should serve as a wake-up call for authorities. Existing laws that impose restrictions on ownership and employment ought to be streamlined.

In an ever competitive world, countries the world over seek foreign investments to help address economic challenges like satisfactory GDP growth rates and employment opportunities for locals.

FDI inflows represent a commitment on the part of investors to particular entities and industries. They study and compare available options from some 200 countries and across economic sectors. Clearly, they have choices.

The writer is a Member of Parliament in Bahrain.